Markets firm up to trade near highs of the day

The sluggish start of the Indian markets has gradually firmed up in the early noon session, with diminishing choppiness the benchmarks are near intraday high and Nifty has reclaimed its crucial psychological level of 8550. Traders were rejoicing the report of surge in the manufacturing PMI index which came at six-month high of 52.7 in July, from 51.3 in June. Marketmen have even overlooked the slowdown in the Core sector growth for the month of June. Not only the PSU banks but the whole banking pack was in the jubilant mood ahead of tomorrow’s policy review by the Reserve Bank of India. PSU bank have extended their last session gains, after the government decided to expand the size of an annual capital injection into state-owned banks amid an increase in stressed assets. The bounce back in rupee too was supporting the upbeat mood of the markets, rupee jumped 13 paise to 64 against dollar in early trades today. Most of the sectoral indices were trading in green, though the metal gauge was under pressure on Chinese growth concern. The broader markets were outperforming the benchmarks with a good margin.

In scrip specific action, HCL Technologies was trading down by around 5% after the company posted a 5.94 per cent rise in net profit to Rs.1,783 crore for the quarter ended June, compared with the quarter-ago period, which were less than expected. On the other hand, Maruti Suzuki India was up by over 2%, after the company reported a strong 20% year-on-year (YOY) growth in July sales.

The BSE Sensex is currently trading at 28202.74, up by 88.18 points or 0.31% after trading in a range of 28071.37 and 28231.80. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were outperforming the benchmarks; the BSE Mid cap index was up by 0.97%, while Small cap index surged by 1.10%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.70%, Realty up by 1.39%, Bankex up by 1.38%, Power up by 1.09%, Auto up by 1.00% while, Oil & Gas down by 0.57%, Metal down by 0.55%, Capital Goods down by 0.26%, IT down by 0.20% were the losing indices on BSE.

The top gainers on the Sensex were SBI up by 4.12%, ICICI Bank up by 2.43%, Maruti Suzuki up by 2.32%, Tata Motors up by 2.20% and Axis Bank up by 1.28%. On the flip side, Hero MotoCorp down by 1.66%, Larsen & Toubro down by 1.59%, Coal India down by 1.58%, Lupin down by 1.19% and Hindustan Unilever down by 1.15% were the top losers.

Meanwhile, growth in India’s manufacturing economy rebounded in July, with the PMI rising since the prior month, on the back of strong growth in output amid surge in new work. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index (PMI)-a composite single-figure indicator of manufacturing performance came at a six-month high of 52.7 in July, from 51.3 in June.

As per the survey, growth showed manufacturing business conditions across India improving further, with a solid and accelerated increase in new orders leading firms to raise production accordingly. Growth of new orders gathered pace across the three broad areas of the manufacturing economy. Reflecting the rebound in new orders, Indian manufacturers raised their buying levels in July. The rate of expansion was marked and faster than in June. On the price front, a marginal rise in costs was registered, whereas average selling prices were unchanged over the month.

However, it also highlighted that despite the uptick in growth, Indian manufacturers continued to cut workforce numbers in July. Nonetheless, the rate of job shedding was only marginal as around 96% of panellists reported no change in employment from the levels recorded in the prior month. Also, there was evidence of building pressures on the capacity of Indian manufacturers’ operations, as outstanding business was accumulated for the second month running and at the quickest pace since March. Concurrently, stocks of purchases were accumulated again in July and at a pace that was the fastest in the year-to-date. Conversely, holdings of finished goods fell, with survey respondents indicating that orders were often fulfilled directly from stocks. Efforts to address competitiveness were evident as selling prices were unchanged during July. Cost inflation was, however, weak in the context of historical data.

Pollyanna De Lima, Economist at Markit has said that this is a generally positive set of data; upcoming PMI data releases will indicate whether the manufacturing sector can sustain this momentum.The Nikkei India Manufacturing PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 300 industrial companies.

The CNX Nifty is currently trading at 8553.90, up by 21.05 points or 0.25% after trading in a range of 8508.10 and 8563.75. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Bank Of Baroda up by 5.77%, SBI up by 4.24%, PNB up by 3.97%, ICICI Bank up by 2.48% and Tata Motors up by 2.40%. On the flip side, HCL Tech. down by 5.13%, Hero MotoCorp down by 2.15%, BPCL down by 1.83%, Larsen & Toubro down by 1.52% and Coal India down by 1.49% were the top losers.

The Asian markets were mostly in red barring Jakarta Composite, which was up by 11.31 points or 0.24% to 4,813.84.

On the other hand, Hang Seng plunged by 251.87 points or 1.02% to 24,384.41, Taiwan Weighted lost 140.93 points or 1.63% to 8,524.41, Shanghai Composite was down by 77.2 points or 2.11% to 3,586.53, Nikkei 225 declined by 37.13 points or 0.18% to 20,548.11, KOSPI Index was down by 21.67 points or 1.07% to 2,008.49, Straits Times lost 7.87 points or 0.25% to 3,194.63 and FTSE Bursa Malaysia KLCI was marginally down by 1.53 points or 0.09% to 1,721.61.