Benchmarks trade in fine fettle in early deals

Extending their previous session's rally, Indian equity benchmarks have made a positive start and are trading in fine fettle in early deals on Monday. There was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. Frontline gauges recaptured their crucial 28,000 (Sensex) and 8,400 (Nifty) bastions. Sentiments remained up-beat on reports that foreign portfolio investors bought shares worth a net Rs 259.82 crore on January 2, 2015, as per provisional data. Meanwhile, it has been reported that to boost manufacturing growth under ‘Make in India’ programme, industry leaders and top government officials have suggested duty cuts, easier land acquisition norms and fiscal incentives for research and development especially in sectors like defence.

On the global front, the US markets made a flat closing in last session on getting weak manufacturing data and decline in outlays for US construction projects. The Asian markets were trading mostly in the red, though Japanese markets entered into green terrain as Japanese manufacturing activity showed sustained growth in December.

Back home, on the sectoral front, capital goods, consumer durables and metal witnessed the maximum gain in trade, while there were no losers on the BSE sectoral space. The broader indices too were trading in line with benchmarks, while the market breadth on the BSE was positive; there were 1,455 shares on the gaining side against 525 shares on the losing side while 59 shares remain unchanged.

The BSE Sensex is currently trading at 28016.05, up by 128.15 points or 0.46% after trading in a range of 27919.04 and 28018.66. There were 23 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.75%, while Small cap index up by 0.84%.

The gaining sectoral indices on the BSE were Capital Goods up by 1.50%, Consumer Durables up by 1.24%, Metal up by 0.80%, Auto up by 0.79%, Power up by 0.69%, while there were no losers on the BSE sectoral index.

The top gainers on the Sensex were Maruti Suzuki up by 2.54%, Larsen & Toubro up by 2.04%, Tata Steel up by 1.87%, Wipro up by 1.35% and Sesa Sterlite up by 1.08%. On the flip side, Dr. Reddys Lab down by 1.30%, Bharti Airtel down by 0.93%, NTPC down by 0.62%, Coal India down by 0.25% and HDFC down by 0.12% were the top losers.

Meanwhile, in a big sentiment boost, Indian manufacturing activity expanded at its fastest pace in two years in December as new orders, both from home and from abroad, flooded in and as factories kept price increases to a minimum. The HSBC India Purchasing Managers' Index (PMI), a headline index designed to measure the overall health of the manufacturing sector, climbed to two year high at 54.5 in December, up from 53.3 in the prior month. This is for fourteen straight month that the index has stayed above the watershed 50-mark that separates growth from contraction.

Latest data reflects the improving demand in December as new orders increased for the fourteenth consecutive month. Similarly, Indian manufacturing companies registered a further rise in new export business in December. Notably, new work from abroad expanded at the quickest pace since April 2011.

Moreover, the rate of expansion was marked overall and the fastest since the end of 2012. Although, business conditions improved at a faster pace in all three market groups during the month, the sharpest expansion was seen in consumer goods.  A steep rise in new orders from the consumer sector more than offset a slowdown in new order growth from investment goods. However, rise in the latter is critical for a meaningful pick-up in economic growth.

Surprisingly, contrasting with continued growth of production and incoming new work, factories cut headcount at the steepest rate for nearly three years. An employment sub-index slipped to 49.6 from November’s 50.2. Job losses were evident in two of the three surveyed sub-sectors, with the exception being intermediate goods.

On the inflation front, while higher prices of metals, chemicals and electronics placed upward pressure on input prices in December, the rate of cost inflation eased to the slowest in more than five-and-a-half years and was well below the long-run series average.

Thus, the stronger HSBC India Manufacturing PMI data reinforces Finance Minister Arun Jaitley's view that the economy will grow much better in 2015/16, while weaker inflation provides Reserve Bank of India (RBI) more space to cut interest rates as expected this year.

The CNX Nifty is currently trading at 8424.90, up by 29.45 points or 0.35% after trading in a range of 8401.25 and 8430.45. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Maruti Suzuki up by 2.68%, Jindal Steel & Power up by 2.10%, Larsen & Toubro up by 1.99%, Tata Steel up by 1.80% and Asian Paints up by 1.23%. On the flip side, Dr. Reddys Lab down by 1.60%, DLF down by 1.51%, Bharti Airtel down by 0.93%, Cairn India down by 0.52% and NTPC down by 0.48% were the top losers.

Asian markets were trading mostly in the red; Nikkei 225 rose 10.83 points or 0.06% to 17,461.60, Shanghai Composite soared 78.14 points or 2.42% to 3,312.82 and Hang Seng was up by 118.22 points or 0.5% to 23,976.04. On the flip side, Taiwan Weighted decreased 50 points or 0.54% to 9,257.26, Straits Times declined 34.72 points or 1.03% to 3,335.87, Jakarta Composite slipped 28.23 points or 0.54% to 5,214.54, FTSE Bursa Malaysia KLCI dipped 13.25 points or 0.76% to 1,739.52 and KOSPI Index was down by 10.02 points or 0.52% to 1,916.42.