Post Session: Quick Review

Intra-day trend reversal which took place in the second half of trading session mainly led to drubbing of frontline equity indices at Dalal Street, which dragged Sensex and Nifty below psychologically crucial levels of 29,400 and 8,950 levels respectively, with cut of over 3 /4 of a percent. In the extremely volatile session of trade, markets suddenly started drifting lower in the late hours of trade on incremental profit-booking activities as initial euphoria over RBI’s surprise rate cut fizzled out. Markets scaled a record high of 30,000 (Sensex) and 9,100 (Nifty) after Reserve bank of India affirming to the fiscal consolidation measures announced by the government in the Budget, slashed repo rate by 25 basis points or 0.25% to 7.5%. However, profit-booking post the opening of European markets washed away all the bourses gains. Meanwhile, broader indices also succumbed to selling pressure and ended lower with cut of over a percent.

On the global front, Asian shares drifted lower on Wednesday as investors grew cautious before upcoming central banks meetings and US jobs data. Street widely expects U.S. to add 219,000 jobs last month after gaining 213,000 in January, while Chinese Premier Li Keqiang is expected to announce a growth target of about 7 percent for this year during the government’s annual National People’s Congress on Thursday. Moreover, European shares inched higher on Wednesday, halting the previous session’s pull-back as investors awaited a batch of macro-data on the euro-zone, including French and German services PMIs for February.

Closer home, most of the sectoral indices on BSE succumbing to selling pressure, ended in red, nevertheless, major brunt of profit-taking was witnessed by stocks from Metal, PSU and Oil & Gas counters. On the flip side, gains of stocks from Healthcare, FMCG and Realty counters limited further downside of the markets. In stock-specific action, telecom stocks, like Bharti Airtel, Idea Cellular and Reliance Communication advanced as the auction of telecom spectrum begins March 4, 2015. The overall market breadth on BSE was in the favour of decliners which thumped advances in the ratio of 1014:1881; while 111 shares remained unchanged.

The BSE Sensex concluded at 29380.73, down by 213.00 points or 0.72% after trading in a range of 29289.05 and 30024.74. There were 6 stocks advancing against 24 stocks declining on the index. (Provisional)

The broader indices ended red; the BSE Mid cap index was down by 1.06%, while Small cap index down by 1.28%. (Provisional)

The gaining sectoral indices on the BSE were Healthcare up by 1.25%, FMCG up by 0.90% and Realty up by 0.02% while, Metal down by 2.42%, Bankex down by 1.77%, PSU down by 1.75%, Oil & Gas down by 1.33% and Power down by 1.30% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Sun Pharma up by 6.43%, Bajaj Auto up by 1.13%, ITC up by 1.07%, Bharti Airtel up by 0.57% and HDFC up by 0.19%. On the flip side, Sesa Sterlite down by 4.42%, Axis Bank down by 3.56%, Tata Power down by 3.27%, SBI down by 3.27% and Hindalco down by 3.22% were the top losers. (Provisional)

Meanwhile, In an encouraging development for the economy, services sector expanded rapidly in February at the fastest growth rate in eight months on the back of significant rise in new business orders even as jobs fell marginally in the sector. Indicating a robust expansion across the sector, HSBC India Services Business Activity Index, which tracks changes in activity at Indian services companies on a monthly basis, rose to an eight-month high of 53.9 in February as against 52.4 in the previous month. A reading above '50' mark indicates that the sector is expanding, while a figure below that level means contraction.

Strong new business growth was the primary factor for the increase in activity. New business increased markedly in February, amid evidence of strengthening demand conditions, weaker inflation rates and market stability. The new business sub-index, which measures demand, jumped to an eight-month high of 54.1 from 52.1, and while optimism moderated it remained fairly high. Among the six monitored categories, Financial Intermediation was the only sub-sector to post falling incoming new work.

However, growth of manufacturing new orders softened during the month and there was rise in backlogs of work that was broad-based by sector, with manufacturers and services firms registering increases. Also, in not so positive development, amid reports of shortages of skilled workers, employment was broadly unchanged from the levels registered in the previous month, which disappointingly ended a two-month sequence of job creation in the Indian service sector.

On the flip side, positive sentiment towards output growth in the year ahead was sustained in February. Almost 26% of panelists anticipated higher business activity over the course of the next year, which they commonly linked to improved market conditions, low inflation rates, increased marketing and favorable exchange rates. Nonetheless, the level of positive sentiment fell since January.

Notably, the data comes on the day when Reserve Bank of India, in a surprise move slashed rates by 25 basis points. Giving its affirmation to the fiscal consolidation measures announced by the government in the Budget, the Reserve Bank of India (RBI) has cut repo rate by 25 basis points or 0.25% to 7.5%. Dr. Raghuram G Rajan in his statement while maintaining the interest rate stance in its sixth bi-monthly monetary policy statement of February 3 in the absence of new developments on inflation or on the fiscal outlook till then, indicated that it will keenly monitor the revision in the consumer price index (CPI) with regard to the path of inflation in 2015-16 as well as the Union Budget for 2015-16. Inflation in January 2015 at 5.1% as measured by the new index was well within the target of 8% for January 2015.

India VIX, a gauge for markets short term expectation of volatility declined 1.90% at 15.19 from its previous close of 15.49 on Tuesday. (Provisional)

The CNX Nifty settled at 8922.65, down by 73.60 points or 0.82% after trading in a range of 8893.95 and 9119.20. There were 9 stocks advancing against 40 stocks declining on the index. (Provisional)

The top gainers on Nifty were Sun Pharma up by 6.71%, DLF up by 1.85%, ITC up by 0.79%, Bharti Airtel up by 0.57% and HCL Tech up by 0.24%. On the flip side, Sesa Sterlite down by 4.35%, NMDC down by 4.12%, Bank of Baroda down by 3.63%, Hindalco down by 3.53% and Cairn India down by 3.52% were the top losers. (Provisional)

European Markets were trading mostly in the red; Germany's DAX dipped 0.47% and UK's FTSE 100 was down by 0.18%, while France's CAC was up by 0.02%.

The Asian markets ended mostly in red on Wednesday, as investors grew cautious before upcoming central bank meetings and US jobs data. China’s vice finance minister Zhu Guangyao stated that China’s fiscal policy will remain proactive going forward, but added that deflationary pressure is not as intense as in Europe. The finance ministry is forging ahead with fiscal reforms in a bid to deal with the root cause of local government debt piles that have amounted to more than $3 trillion. Activity in China’s services sector grew modestly in February as new orders rose at their quickest pace in three months, a private survey showed just a few days after the central bank cut interest rates to stimulate the world’s second-largest economy. The HSBC/Markit Services Purchasing Managers’ Index (PMI) picked up to 52.0 last month from January’s 51.8 and remained above the 50-point level that separates contraction from growth in activity on a monthly basis. A sub-index for new orders rose to 52.2 in February from 51.2 in January and the sub-index measuring new business also rose. Taiwanese Industrial Production rose to a seasonally adjusted annual rate of 8.14%, from 7.33% in the preceding month.