Benchmarks trade cautiously in early deals

Indian equity benchmarks are trading cautiously in early deals on Thursday amid feeble global cues. Though, some support came in on the back of reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 2786.24 crore yesterday, as per provisional data. Meanwhile, the government has stated that the Gross Domestic Product will remain a comprehensive measure to capture changes in the economic activity and it will not be replaced by Gross Value Addition (GVA).

On the global front, the US markets continued their bearish trend and ended lower once again in last session after ADP said private sector employment increased by 212,000 jobs in February compared to an upwardly revised jump of 250,000 jobs in January. The Asian markets were trading mostly in red at this point of time led by the Chinese market after the country's leaders cut the annual growth target to 7 per cent for 2015, down from 7.5 per cent last year and lowest in last 11 years.

Back home, on the sectoral front, healthcare, fast moving consumer durables and consumer durables witnessed the maximum gain in trade, while realty, capital goods and oil and gas remained the top losers on the BSE sectoral space. The broader indice, however, were outperforming benchmarks, while the market breadth on the BSE was positive; there were 1019 shares on the gaining side against 872 shares on the losing side while 83 shares remain unchanged.

The BSE Sensex is currently trading at 29411.80, up by 31.07 points or 0.11% after trading in a range of 29318.03 and 29496.60. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.38%, while Small cap index up by 0.38%.

The gaining sectoral indices on the BSE were Healthcare up by 1.69%, FMCG up by 0.80%, Consumer Durables up by 0.58%, IT up by 0.17% and Power up by 0.12% while, Realty down by 0.38%, Capital Goods down by 0.20%, Oil & Gas down by 0.15%, Metal down by 0.13% and PSU down by 0.05% were the losing indices on BSE.

The top gainers on the Sensex were Cipla up by 2.28%, Sun Pharma up by 2.11%, Hindustan Unilever up by 1.62%, Wipro up by 1.07% and HDFC up by 0.95%. On the flip side, GAIL India down by 1.86%, Bharti Airtel down by 1.31%, ICICI Bank down by 1.09%, Hindalco down by 0.98% and Hero MotoCorp down by 0.70% were the top losers.

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.

The CNX Nifty is currently trading at 8918.20, down by 4.45 points or 0.05% after trading in a range of 8891.15 and 8949.05. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Cipla up by 2.46%, Sun Pharma up by 1.75%, Lupin up by 1.66%, Hindustan Unilever up by 1.56% and HCL Tech up by 1.30%. On the flip side, Cairn India down by 3.05%, Ultratech Cement down by 2.01%, ACC down by 1.74%, Bharti Airtel down by 1.51% and GAIL India down by 1.49% were the top losers.

Asian markets were trading mostly in the red; Hang Seng decreased 138.55 points or 0.57% to 24,326.83, Shanghai Composite declined 32.85 points or 1% to 3,246.68, FTSE Bursa Malaysia KLCI shed 16.61 points or 0.91% to 1,808.93, Taiwan Weighted slipped 9.96 points or 0.1% to 9,611.77 and Straits Times was down by 5.53 points or 0.16% to 3,410.00.

On the flip side, KOSPI Index rose 0.47 points or 0.02% to 1,998.76, Nikkei 225 increased 16.89 points or 0.09% to 18,720.49 and Jakarta Composite was up by 25.09 points or 0.46% to 5,473.15.