Benchmarks continue firm trade in late afternoon session

Indian equity markets continued their firm trade in the late afternoon session on account of buying in frontline blue chip counters. The mood was on up-beat note on moderation in formation of new stress loans, coupled with Finance Minister Arun Jaitley’s plan to infuse nearly $2 billion into state-run lenders. Investors however maintained cautious approach ahead of the RBI’s monetary policy announcement which is scheduled for tomorrow. Moody’s in its report stated that the Reserve Bank of India (RBI) is likely to cut the benchmark rate by 0.25% in its monetary policy review as inflation is likely to remain subdued on the back of average rainfall and lower commodity prices. Traders were seen piling position in Consumer Durables, Bankex and Power stock while selling was witnessed in Metal, Oil & Gas and IT sector stocks. In scrip specific development, Suzlon was trading firm after reporting its April-June quarter. The wind turbine maker’s Q1 consolidated net profit was at Rs 1,047.41 crore from a net loss of Rs 750.74 crore in the year-ago period. However, HCL Technologies was trading weak after the country’s fourth largest software exporter reported lower than expected net profit and contraction in margin for the June 2015 quarter.

On the global front, the Asian markets were trading mostly in red, while the European markets were trading mostly on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,550 and 28,200 levels respectively. The market breadth on BSE was positive in the ratio of 1735:1022 while 104 scrips remained unchanged.

The BSE Sensex is currently trading at 28201.59, up by 87.03 points or 0.31% after trading in a range of 28071.37 and 28240.81. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.53%, while Small cap index up by 0.93%.

The gaining sectoral indices on the BSE were Consumer Durables up by 1.05%, Bankex up by 1.05%, Power up by 0.98%, Realty up by 0.87% and PSU up by 0.67%, while Metal down by 0.76%, Oil & Gas down by 0.39% and IT down by 0.09% were the losing indices on BSE.

The top gainers on the Sensex were SBI up by 4.18%, ICICI Bank up by 3.12%, Maruti Suzuki up by 2.14%, ITC up by 1.78% and Tata Motors up by 1.21%.

On the flip side, Mahindra & Mahindra down by 1.95%, Lupin down by 1.81%, Coal India down by 1.79%, HDFC down by 1.50% and HDFC Bank down by 1.35% 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 8551.85, up by 19.00 points or 0.22% after trading in a range of 8508.10 and 8563.95. There were 26 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Bank of Baroda up by 4.65%, SBI up by 4.35%, PNB up by 3.31%, ICICI Bank up by 3.13% and BHEL up by 2.96%.

On the flip side, HCL Tech down by 5.73%, Lupin down by 1.79%, Mahindra & Mahindra down by 1.75%, Coal India down by 1.66% and HDFC down by 1.51% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 224.86 points or 0.91% to 24,411.42, Taiwan Weighted decreased 140.93 points or 1.63% to 8,524.41, Shanghai Composite decreased 40.82 points or 1.11% to 3,622.91, Nikkei 225 decreased 37.13 points or 0.18% to 20,548.11, KOSPI Index decreased 21.67 points or 1.07% to 2,008.49, Jakarta Composite decreased 14.02 points or 0.29% to 4,788.51 and Straits Times decreased 12.11 points or 0.38% to 3,190.39.

On the other hand, FTSE Bursa Malaysia KLCI increased 0.54 points or 0.03% to 1,723.68.

The European markets were trading mostly in green; France’s CAC increased 1.85 points or 0.04% to 5,084.46, Germany’s DAX increased 33.15 points or 0.29% to 11,342.14 and UK’s FTSE 100 decreased 13.02 points or 0.19% to 6,683.26.