Markets retain gains in early noon trade

Markets are retaining their gains in the early noon trade, with no sign of any major profit taking. Sentiment remained upbeat after India's services industry grew for a second month in August, the Nikkei/Markit Services Purchasing Managers' Index rose to 51.8 in August from July's 50.8. Markets were also drawing some comfort with International Monetary Fund’s (IMF) report that near-term growth prospects remain favourable in India but some macroeconomic imbalances still exist.

Asian markets were trading mostly in the green as a two-day holiday in China gave investors respite from the market that's been at the centre of recent global volatility. Back home, Both Sensex and Nifty were trading above the crucial 25,700 and 7800 levels respectively. Apart from blue chips, broader indices too were equally participating in the rally with both mid cap and small cap indices trading up by over a percent each. The market breadth on BSE was positive in the ratio of 1593: 640, while 80 scrips remained unchanged.

In sector specific development, auto stocks are trading with traction post August sales numbers. Capital goods shares which had weakened post weak core sector growth also witnessed value buying at lower levels. Shares of cement companies too remained in focus with frontline stocks such as Ambuja Cements, ACC, UltraTech Cement, Dalmia Bharat and JK Lakshmi Cement trading higher on the BSE.

The BSE Sensex is currently trading at 25704.76, up by 251.20 points or 0.99% after trading in a range of 25555.77 and 25745.46. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.10%, while Small cap index up by 1.25%.

The top gaining sectoral indices on the BSE were Realty up by 4.35%, Capital Goods up by 1.92%, Auto up by 1.78%, Bankex up by 1.63%, Metal up by 1.51%, while there were no losers on sectoral index.

The top gainers on the Sensex were Tata Steel up by 3.98%, BHEL up by 3.87%, Tata Motors up by 3.43%, Vedanta up by 2.98% and Axis Bank up by 2.97%. On the flip side, Lupin down by 0.79%, GAIL India down by 0.63%, Hindustan Unilever down by 0.61%, TCS down by 0.51% and Coal India down by 0.42% were the top losers.

Meanwhile, services sector activities improved further in August as new orders received by private firms increased at the fastest rate in five months. The seasonally adjusted Nikkei Services Business Activity Index rose from 50.8 in July to 51.8 in August. As per the survey response, services activity growth was recorded in three of the six monitored categories, namely, Hotels & Restaurants, Post & Telecommunication and ‘Other Services.’

Even though the manufacturing production softened in August, the seasonally adjusted Nikkei India Composite PMI Output Index rose to a five-month high of 52.6 in August from 52.0 in July, mainly due to a quicker expansion of services activity. While manufacturing new work rose at a weaker pace than in July, growth outpaced that seen at their services counterparts.

While increase in activity and new business across the sector accelerated in August, moderations in growth rates were noted at goods producers. New business improvement was led by higher demand coupled with capacity improvements and increased marketing.

Indian services companies indicated that backlogs of work decreased in August, reflecting a general lack of pressure on capacity and efficiency improvements. However, input prices faced by Indian services firms rose for the ninth month running in August. Further increases in costs led services firms to raise their selling prices again in August. Despite accelerating since July, the rate of charge inflation was only marginal and below the series long-run average.Having eased to the weakest in this sequence, the rate of inflation was marginal overall.

Although, Indian services companies remained optimistic that business activity will increase over the course of the next year, with positivity linked to forecasts of demand growth, but the Business Expectations Index dipped to a survey low, also the situation of the labour market remained a concern, as both manufacturers and service providers left payroll numbers unchanged in August.

The CNX Nifty is currently trading at 7800.70, up by 83.70 points or 1.08% after trading in a range of 7754.05 and 7811.80. There were 37 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were Ambuja Cement up by 4.41%, BHEL up by 3.97%, Tata Steel up by 3.92%, Tata Motors up by 3.70% and HDFC up by 3.14%. On the flip side, Idea Cellular down by 2.72%, BPCL down by 1.74%, Lupin down by 0.82%, GAIL India down by 0.66% and Grasim Industries down by 0.49% were the top losers.

Asian markets were trading mostly in the green; KOSPI Index increased 0.31 points or 0.02% to 1,915.53, FTSE Bursa Malaysia KLCI increased 12.67 points or 0.8% to 1,602.86, Straits Times increased 21.34 points or 0.74% to 2,899.47, Jakarta Composite increased 25.08 points or 0.57% to 4,426.38, Taiwan Weighted increased 60.66 points or 0.75% to 8,095.95, Nikkei 225 increased 86.99 points or 0.48% to 18,182.39.