Benchmarks extend losses; Bankex, Metal drag

Indian equity markets extended losses continuing their weak trade in the late afternoon session on account of selling in frontline blue chip counters. Concerns over China slowdown and uncertainties over a possible US Federal Reserve rate have led to turmoil in global markets. The sentiments were under pressure since the start of the trade on reports that the country’s growth rate declined to 7% in the first quarter of 2015-16 even as the core sector output sputtered to a three-month low of 1.1% in July. Traders were seen piling position in IT stocks while selling was witnessed in Bankex, Metal and Realty sector stocks.  In scrip specific development, realty stocks were seen under pressure on international rating agency Moody’s report which showed that realty companies will continue to face a challenging operating environment over the next 12 months.

On the global front, the Asian markets traded in red, while the European markets were trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 7,850 and 25,800 levels respectively. The market breadth on BSE was negative in the ratio of 501:2015 while 90 scrips remained unchanged.

The BSE Sensex is currently trading at 25794.41, down by 488.68 points or 1.86% after trading in a range of 25750.15 and 26141.07. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 2.13%, while Small cap index down by 2.13%.

The gaining sectoral indices on the BSE was IT up by 0.09%, while Bankex down by 3.56%, Metal down by 3.32%, Realty down by 3.12%, Capital Goods down by 2.90%, Consumer Durables down by 2.60% were the losing indices on BSE.

The top gainers on the Sensex were Infosys up by 0.65%, TCS up by 0.65%, NTPC up by 0.33% and Sun Pharma up by 0.19%.

On the flip side, Axis Bank down by 4.94%, Coal India down by 4.12%, Hindalco down by 4.06%, Larsen & Toubro down by 3.44% and Tata Steel down by 3.33% were the top losers.

Meanwhile, adding worries to the government and the policy makers, after the slow growth of the core sector, manufacturing sector too grew at a slower pace in August, as order flow turned sluggish and forced the companies to cut prices. The Nikkei India Manufacturing PMI -- a composite monthly indicator of manufacturing performance -- stood at 52.3 in August, down from a six-month high figure of 52.7 in July, indicating a slower pace of growth in the sector.

The data pointed to weaker rates of expansion for both output and new orders due to downward movement in the headline index were there was softer increases in output, new orders and stocks of purchases. New order growth also moderated in August, reflecting weaker improvements in both domestic and foreign demand.

Employment levels stagnated over the month and manufacturing employment was unchanged in August, with respondents indicating that hiring had been stymied by relatively weak growth and economic uncertainty. Nonetheless, companies were able to lower their levels of outstanding business in August.

The survey however pointed that manufacturing production across India rose further in August supported by sustained demand growth amid evidence of increased production requirements and efforts to replenish stocks, Indian manufacturers raised their buying levels in August. Purchasing activity grew at a sharp rate that was the quickest in 2015 so far. On the price front, input costs decreased for the first time in six months and, subsequently, firms lowered their selling prices.

Industry wise, the consumer goods category outperformed the capital and intermediate goods sub-sectors in terms of growth of output, new orders and buying levels. Reflecting lower prices paid for metals, plastics, chemicals and petroleum-based products, average costs faced by Indian manufacturers fell in August.

There was increase in both output and new orders, albeit a slower one, the output growth is likely to rebound in coming months, as indicated by buying levels coupled with a record drop in stocks of finished goods. Stocks of finished goods witnessed sharpest pace of drop in survey history.

The CNX Nifty is currently trading at 7807.95, down by 163.35 points or 2.05% after trading in a range of 7798.00 and 7929.10. There were 7 stocks advancing against 43 stocks declining on the index.

The top gainers on Nifty were Infosys up by 0.71%, Tech Mahindra up by 0.56%, TCS up by 0.45%, Bajaj Auto up by 0.38% and Sun Pharma up by 0.36%.

On the flip side, PNB down by 6.73%, Bank of Baroda down by 6.47%, Axis Bank down by 5.22%, Kotak Mahindra Bank down by 4.88% and Idea Cellular down by 4.62% were the top losers.

The Asian markets were trading in red; Nikkei 225 decreased 724.79 points or 3.84% to 18,165.69, Hang Seng decreased 485.15 points or 2.24% to 21,185.43, Taiwan Weighted decreased 157.36 points or 1.92% to 8,017.56, Jakarta Composite decreased 89.48 points or 1.98% to 4,420.13, Shanghai Composite decreased 39.36 points or 1.23% to 3,166.62, KOSPI Index decreased 27.26 points or 1.4% to 1,914.23, Straits Times decreased 21.43 points or 0.73% to 2,900.01 and FTSE Bursa Malaysia KLCI decreased 8.68 points or 0.54% to 1,604.06.

The European markets were trading in red; UK’s FTSE 100 decreased 151.45 points or 2.42% to 6,096.49, Germany’s DAX decreased 264.14 points or 2.57% to 9,995.32 and France’s CAC decreased 113.41 points or 2.44% to 4,539.54.