Markets recover from a soft start on lower level buying

Indian markets after making a soft start have recovered from their bearish trend on Thursday morning, supported by some bottom fishing at lower levels. In the early trade they enlarged their cuts after the sharp fall of last session on weak global cues. The sentiments were also impacted by the continuous rise in international crude prices which will have bearing on the inflation in coming times. Traders were also concerned about the doubtful passage of the Goods and Services Tax (GST) Bill, which though cleared a key hurdle in Parliament, when it was passed in Lok Sabha but is likely to be brought before the Rajya Sabha today, where the Bharatiya Janata Party-led NDA is in a minority, with just 62 members in a 245-member house.

Earlier, the US markets made a soft closing overnight, after Federal Reserve Chair Janet Yellen warned about high stock valuations, while the Asian markets too made a weak start, heading for a one-month low.

Back on domestic front, IT and tech sector were majorly pulling the markets up followed by capital goods and FMCG, while healthcare, power and consumer durables were still exerting downward pressure. The broader markets too were finding it difficult to fully recover.

The BSE Sensex is currently trading at 26808.64, up by 91.27 points or 0.34% after trading in a range of 26570.56 and 26809.79. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were still underperforming the benchmarks and were trading in red; the BSE Mid cap index was down by 0.67%, while Small cap index lost 0.24%.

The top gaining sectoral indices on the BSE were IT up by 1.83%, TECK up by 1.57%, Capital Goods up by 0.52%, FMCG up by 0.01%, while Consumer Durables down by 0.34%, Power down by 0.33%, Auto down by 0.31%, Oil & Gas down by 0.29%, Bankex down by 0.29% were the losing indices on BSE.

The top gainers on the Sensex were TCS up by 2.51%, Bajaj Auto up by 2.17%, Infosys up by 1.95%, Coal India up by 1.12% and Bharti Airtel up by 1.08%. On the flip side, Hindalco down by 1.92%, GAIL India down by 1.01%, Dr. Reddys Lab down by 0.92%, Tata Motors down by 0.73% and Cipla down by 0.71% were the top losers.

Meanwhile, slowing down to a three month low, the seasonally adjusted HSBC India Services Business Activity Index pointed to a modest and softer rise in output across the sector on account of softer domestic demand. The slower rise in service sector activity was matched by a softer increase in manufacturing production. The HSBC India Services Business Activity Index, which tracks changes in activity at Indian service companies on a monthly basis, eased to 52.4 in April from 53 in March, indicative of a moderate rate of expansion that was slightly weaker than in the prior month as a score above ‘50’ indicates that the sector is expanding, while a figure below that level means contraction. 

With manufacturing PMI also declining from March to April, HSBC India Composite PMI Output Index fell from 53.2 points in March to a six-month low of 52.5 in April, the first month of FY 2015-16. April data highlighted falling payroll numbers in the Indian service sector. However, the rate of job cuts was only fractional. Employment levels at the private sector have remained largely unchanged for over one year.

Also, unfinished business levels at service firms increased during April mainly on account of postponed payments from clients. Across the private sector, overall volumes of incomplete business rose, albeit slightly.

On the inflation front, in line with rising raw material costs, average input prices in the Indian service economy increased further in April. Nonetheless, the rate of inflation was moderate overall as less than 5% of panellists reported rises. On the flip side, output charge inflation in the service economy softened in April and was historically muted.

Thus, with inflation softening and the growth in manufacturing and service sector softening, the industry is demanding further easing of interest rates to boost growth. Last month, the Reserve Bank had surprisingly reduced the benchmark interest rate by 0.25 per cent to 7.5%.

The CNX Nifty is currently trading at 8109.90, up by 12.90 points or 0.16% after trading in a range of 8034.50 and 8111.95. There were 21 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were TCS up by 2.56%, HCL Tech. up by 2.40%, Bajaj Auto up by 2.15%, Infosys up by 1.93% and Hero MotoCorp up by 1.10%. On the flip side, Lupin down by 2.04%, Hindalco down by 2.00%, NMDC down by 1.80%, Asian Paints down by 1.38% and IDFC down by 1.18% were the top losers.

All the major Asian markets were trading in red, Nikkei 225 slumped by 231.22 points or 1.18% to 19,300.41, Hang Seng lost159.63 points or 0.58% to 27,481.28, Taiwan Weighted declined by 73.99 points or 0.75% to 9,744.21, Shanghai Composite lost 59.63 points or 1.41% to 4,169.64, Straits Times was lower by 24.19 points or 0.7% to 3,435.60, KOSPI Index lost 16.68 points or 0.79% to 2,087.90, Jakarta Composite was down by 16.45 points or 0.32% to 5,168.50 and FTSE Bursa Malaysia KLCI declined by 3.76 points or 0.21% to 1,817.21