Modest recovery after two sessions of sharp fall; Nifty remains below 8400

Indian indices witnessed some respite on Wednesday after suffering sharp slump in last two back-to-back sessions. Though, choppiness persisted but traders went for value buying and lapped up fundamentally strong shares at lower levels. Traders seems to have taken some cue from international credit rating agency Moody's report that Indian economy is expected to pick up pace in 2015 and grow in the range of 5-6 per cent, helped by strong domestic demand. It also projected that corporates would see improved cash flows on account of acceleration in manufacturing activity.

Asian markets ended mostly in green on Wednesday, the Shanghai Composite Index gained around 3 percent, rebounding after yesterday’s sharp plunge, amid the slowest consumer price gains since 2009. Chinese producer prices slipped 2.7 percent in November from a year before. However, Japanese stocks tumbled to a more than one-week low on worries over global growth and as political uncertainty in Greece spooked world markets already under strain. European markets too rebounded from their biggest slide in more than seven weeks made a good start.

Back home, although the trade remained choppy lacking any major trigger but major indices traded in tight range and hardly showed any signs of sell-off, finally ending slightly higher from their previous close. Broader indices were in comparatively better position and outperformed the benchmarks since beginning. There was some buzz in the gold and jewellery related stocks on report that the government may announce changes as early as this week to a rule mandating so-called star trading houses export 100 percent of their gold imports. There was separate report that gold import in November spiked up on import restriction curb concern. Metals stocks, especially steel remained in limelight, as the World Trade Organisation (WTO) ruled against the US which had imposed high duty on imports of certain steel products from India and said that duty measures imposed by the US against India's certain hot rolled carbon steel flat products are inconsistent with various provisions of ASCM. JSPL was up by around 3%, JSW Steel was up by over 1% and SAIL was up by about half a percent. The companies having interest in insurance business surged after a Parliamentary Committee recommended a composite foreign investment cap of 49 per cent in the insurance sector and supported a government Bill to amend the Act. Presently, a limit of 26 per cent is allowed only through the FDI route. Max India was up by over 5%, while Reliance Capital gained over 4% and Exide Industries was up by around 2%. One another non sectoral gauge that was in action was of NBFC after RBI deputy governor SS Mundra said that the central bank may grant licences for setting up small finance and payments banks by April, 2015.

Finally, the BSE Sensex gained 34.09 points or 0.12%, to 27831.10, while the CNX Nifty added 14.95 points or 0.18% to 8,355.65.

The BSE Sensex touched a high and a low of 27905.25 and 27710.03, respectively. The BSE Mid cap index was up by 0.93%, while the Small cap index was up by 1.06%.

The top gainers on the Sensex were SBI up by 3.06%, ONGC up by 2.44%, Tata Power up by 1.87%, Tata Motors up by 1.53% and Cipla up by 1.48%. On the flip side, BHEL down by 2.30%, GAIL India down by 2.01%, Hindustan Unilever down by 1.79%, Bajaj Auto down by 1.45% and Larsen & Toubro down by 1.01% were the top losers.

On the BSE Sectoral front Consumer Durables up by 2.43%, Infrastructure up by 1.40%, PSU up by 1.12%, Bankex up by 1.01% and Power up by 0.74% were the top gainers, while Capital Goods down by 0.99%, IT down by 0.22%, FMCG down by 0.15%, TECK down by 0.09% and Metal down by 0.07% were the top losers in the space. 

The State Bank of India's newly launched SBI Composite Index has jumped 16% in December to 55.4, suggesting a strong revival in manufacturing activity in the country. The index value for the month of December is the highest in the past 20 months amid a turnaround in sentiment after Prime Minister Narendra Modi was elected to power. The SBI Composite Index tracks primarily manufacturing activity in the country and rivals the existing British lender HSBC's Purchasing Manager Index. The SBI planned to publish the indicator on monthly basis, which will track two months in advance the possible trends in official estimates.

The SBI Composite index has been developed on the basis of the bank’s internal loan portfolio, which mirrors the credit demand in the country, and other data sets available in public domain. With an aim to predict the phase of business cycles for the economy,  this forward looking indicator takes into account detailed activity/traction in consumer spending, mining activity, interest rates, inflation, exchange rates, SBI lending and performance of various thematic indices. The index will help regulators, policy makers and market participants to identify the turning points in the manufacturing cycles in advance and adjust their investment or marketing strategy.

SBI Composite index captures two components of the manufacturing cycle, namely month-on-month and year-on-year growth. The two separate indices have been constructed on a scale of 0-100 and like HSBC Purchasing Manager Index, an index reading above 50 implies growth over the previous respective period and less than 50 would suggest a contraction over respective period. The SBI has notified that during the period 2007-2014, the SBI Composite Index predicts the direction correctly for 72% of times, while the directional predictability for PMI is stood around 50% for the same period. 

The CNX Nifty touched a high and low of 8,376.80 and 8,317.00 respectively.

The top gainers on Nifty were State Bank of India up by 3.34%, Jindal Steel & Power up by 2.76%, ONGC up by 2.58%, PNB up by 2.45% and Bank of Baroda up by 2.38%. On the flip side, NMDC down by 2.46%, BHEL down by 2.45%, Hindustan Unilever down by 2.05%, GAIL (India) down by 1.85% and Tech Mahindra down by 1.69% were the top losers.

European markets were trading in green, France’s CAC 40 was up by 0.40%, Germany’s DAX was up by 0.68% and United Kingdom’s FTSE 100 was up by 0.21%.

The Asian equity benchmarks ended mostly in green on Wednesday, while Japanese stocks fell the most in three weeks as investors looking for safe-haven assets drove the yen higher for a third day. China’s factory-gate deflation deepened and consumer prices climbed at the slowest pace since 2009, signaling room for further monetary easing. Chinese CPI fell to an annual rate of 1.4%, from 1.6% in the preceding month while Chinese PPI fell to an annual rate of -2.7%, from -2.2% in the preceding month. Falling oil and metals prices have cut costs for China’s factories, leading to lower export prices and adding to dis-inflation threats across the world. The People’s Bank of China has more room to free up the world’s biggest central-bank balance sheet now that it’s scaling back purchases of foreign exchange. To prevent the extra yuan from fueling inflation, the PBOC requires banks to set aside 20% of deposits as reserves.

Japanese Household Confidence rose to a seasonally adjusted annual rate of 37.7, from 38.9 in the preceding month while Japan’s Corporate Goods Price Index fell to a seasonally adjusted annual rate of 2.7%, from 2.9% in the preceding month. South Korean Unemployment Rate fell to a seasonally adjusted annual rate of 3.4%, from 3.5% in the preceding month.