Markets pare some early gains after a good gap-up start

Indian markets showing their jubilation got a good gap-up start with both the benchmarks Nifty and Sensex surging to their fresh record highs in the very early trade on Thursday morning. The last session choppiness was completely missing in the first hour of trade, although the markets have pared a large part of their early gains but still there is no sign of selling with value picking keeping most of the sectoral indices in green. Traders were getting some support with the government, in its effort to boost confidence among taxpayers, setting up a High Level Committee (HLC) to interact with trade and industry and identify areas where clarity on tax laws is needed. On the sectoral front, the defensive FMCG sector is in most jubilant form led by the cigarettes major ITC, on reports that Health Ministry proposal to ban sale of loose cigarettes is likely to be put on hold following objections by some MPs, including some Union ministers, and farmers associations against taking drastic regulatory steps. Realty sector too has continued its gaining momentum after the government relaxed FDI policy for the sector by easing exit norms and reducing built-up area and capital needs.

The BSE Sensex is currently trading at 28593.10, up by 150.39 points or 0.53% after trading in a range of 28561.54 and 28808.78. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.49%, while Small cap index was up by 0.62%.

The top gaining sectoral indices on the BSE were FMCG up by 2.25%, Realty up by 0.89%, Oil & Gas up by 0.46%, Auto up by 0.38%, Bankex up by 0.37%

The top gainers on the Sensex were ITC up by 4.06%, Cipla up by 2.34%, ICICI Bank up by 1.44%, Sesa Sterlite up by 0.98% and Hindalco up by 0.86%. On the flip side, Tata Power down by 0.94%, Coal India down by 0.81%, Bajaj Auto down by 0.57%, Dr. Reddys Lab down by 0.56% and GAIL India down by 0.48% were the top losers.

The activity in Indian services sector, which accounts for around 60% of country’s GDP, expanded at a faster pace in November as order books filled up at a faster rate. The HSBC services Purchasing Managers’ Index (PMI), based on the survey of around 350 private service sector companies, rose to five-month high at 52.6 in the month of November from 50 in October, above 50 mark indicating a seventh consecutive monthly expansion in service sector output.

The HSBC Survey highlighted that business activity was driven higher by faster growth of new business in November and the pace of expansion was solid overall and the quickest since July. The new business sub-index accelerated to 52.5 in November, signaling improving demand. Among the six monitored sub-sectors, Post &Telecommunications was the best performing of the broad areas monitored, while contractions in activity were registered in Financial Intermediation and Hotels & Restaurants. Indicating expansion in business activity overall, the HSBC India Composite Output Index, which measures activity in both the manufacturing and services sector, increased to 53.6 in November from 51 in the previous month. In spite of significant growth of activity and new business, workforce numbers in sector declined for the first time in four months. Amid rising demand and declining employment level, backlogs of work held by Indian services companies increased for the second consecutive month in November. However, the rate of increase eased from the previous month and was moderate overall.

On inflation front, the Survey indicated that input costs for services providers fell for the first time since March 2009 and the rate of decline was the second-quickest in the survey’s nine-year history. Subsequently, prices charged by Indian services firms deteriorated for the first time in more than four years in November. Despite the uptick in order flows, new business optimism index slipped to the weakest since mid-2007, suggesting that continued policy action that addresses investor concerns is needed to sustain growth momentum.

The CNX Nifty is currently trading at 8564.45, up by 26.80 points or 0.31% after trading in a range of 8552.15 and 8626.95. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were ITC up by 3.98%, ICICI Bank up by 1.42%, BPCL up by 1.31%, Cipla up by 0.97% and ONGC up by 0.87%. On the flip side, Indusind Bank down by 1.29%, Tata Power down by 1.05%, Zee Entertainment down by 0.86%, Coal India down by 0.76% and GAIL India down by 0.66% were the top losers.

Asian markets were trading mostly in green, Straits Times gained 10.8 points or 0.33% to 3,314.19, KOSPI Index was up by 17.71 points or 0.9% to 1,987.62, Shanghai Composite surged by 44.91 points or 1.62% to 2,824.43, Taiwan Weighted was higher by 68.45 points or 0.75% to 9,243.71, Hang Seng increased 122.84 points or 0.52% to 23,551.46 and Nikkei 225 was up by 138.96 points or 0.78% to 17,859.39. On the other hand, FTSE Bursa Malaysia KLCI declined by 6.45 points or 0.37% to 1,751.70 and Jakarta Composite was lower by 4.61 points or 0.09% to 5,161.43.