Benchmarks trade higher in early deals on bargain hunting

Snapping their four-day losing streak, Indian equity benchmarks have made a positive start and are trading in the green in early deals on Thursday with Sensex recapturing its crucial 18,950 and Nifty getting back its important 8,750 level as investors opted to buy beaten down but fundamentally strong stocks. However, gains remained capped as investors remain concerned with RBI Governor Raghuram Rajan's statement that inflation is still a concern for the central bank and the monetary policy continues being "conventional". He also clarified that the mid-policy action was also to assuage the concerns of some people, who were calling RBI as "tardy" in its policy formulating.

On the global front, the US markets made a mixed closing in last session amid choppy trade. Major averages showed a lack of direction throughout the day weighed down by a sharp drop in the price of crude oil and private sector report showing a weaker than expected private sector job growth in the month of January. The Asian markets were trading mostly in the red at this point of time, though the Chinese market was trading in green after People’s Bank of China announced lowering lenders’ reserve ratio by 50 basis points, a move that will inject about 600 billion yuan into the economy.

Back home, on the sectoral front, software, technology and banking witnessed the maximum gain in trade, while consumer durables, realty and power remained the top losers on the BSE sectoral space. The broader indices too were trading with traction, while the market breadth on the BSE was positive; there were 1186 shares on the gaining side against 737 shares on the losing side while 62 shares remain unchanged.

The BSE Sensex is currently trading at 28993.57, up by 110.46 points or 0.38% after trading in a range of 28824.88 and 29011.72. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.56%, while Small cap index up by 0.37%.

The gaining sectoral indices on the BSE were IT up by 0.93%, TECK up by 0.71%, Bankex up by 0.67%, FMCG up by 0.49% and Auto up by 0.41% while, Consumer Durables down by 0.51%, Realty down by 0.50%, Power down by 0.26%, Healthcare down by 0.23% and Oil & Gas down by 0.05% were the losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 2.52%, Wipro up by 1.43%, HDFC Bank up by 1.33%, SBI up by 1.19% and HDFC up by 1.18%. On the flip side, ONGC down by 1.98%, Tata Power down by 1.88%, Sesa Sterlite down by 1.55%, Cipla down by 1.39% and ICICI Bank down by 1.03% were the top losers.

Meanwhile, recovering from last month’s fall, the HSBC India Services PMI Business Activity Index-tracking changes in activity at Indian services companies on a month-by-month basis, came at 52.4 in January, up from 51.1 in December, signaling a solid expansion in business activity. It has been above 50 level since May 2014, which denotes growth.

The new business sub-index - which measures demand - climbed to 52.1 from 51.8. The survey also showed firms' confidence regarding future business grew at the fastest pace since June last year. Based on survey responses, the latest increase in activity reflected further growth of new business during the month. Among the monitored sub-sectors, activity rose quickest in ‘Other Services’, while the sharpest reduction occurred in Financial Intermediation. The composite output of the private sector, comprising both manufacturing and services, signaling further growth of private sector output in January, extended the current sequence of expansion to nine months to 53.3 from 52.9. Manufacturing output continued to rise faster than service sector activity at the start of 2015.

Volumes of work-in-hand at Indian service providers increased for the fourth month running in January, while input costs faced by Indian services firms rose for the second straight month in January, having fallen for the first time in more than five-and-a-half years in November. Similarly, private sector input costs increased at the quickest pace since August, contrasting with weaker cost pressures at goods producers. However, despite solid growth of activity and new business, payroll numbers in the Indian service sector rose only fractionally in January. Moreover, the rate of job creation was slower than the historical average. Staffing also increased marginally at goods producers and across the private sector overall.

The most important fact was that the Indian service providers were the most upbeat regarding the 12-month outlook for activity since mid-2014 in January. Private sector new business expanded for ninth straight month and Business sentiment led by anticipated improvements in demand and new commercial initiatives rose to a seven- month high.

The CNX Nifty is currently trading at 8753.10, up by 29.40 points or 0.34% after trading in a range of 8705.05 and 8757.90. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were BPCL up by 3.09%, Axis Bank up by 2.48%, Asian Paints up by 1.66%, HDFC Bank up by 1.57% and HCL Tech up by 1.51%. On the flip side, Cairn India down by 2.92%, ONGC down by 2.02%, Tata Power down by 2.00%, Sesa Sterlite down by 1.59% and Cipla down by 1.47% were the top losers.

Asian markets trade mostly in the red; Nikkei 225 shed 154.87 points or 0.88% to 17,523.87, Taiwan Weighted slipped 33 points or 0.35% to 9,480.92, Jakarta Composite decreased 25.31 points or 0.48% to 5,289.97, Straits Times declined 14.48 points or 0.42% to 3,403.09, KOSPI Index dropped 12.51 points or 0.64% to 1,950.28 and FTSE Bursa Malaysia KLCI was down by 1.2 points or 0.07% to 1,801.82

On the flip side, Shanghai Composite increased 31.42 points or 0.99% to 3,205.55 and Hang Seng was up by 138.87 points or 0.56% to 24,818.63.