Markets turn positive after a choppy start

Key domestic bourses have turned positive after a weak opening, amid volatile trade, with investors awaiting the outcome of UP state election results due later today. Globally, the US equity markets slipped overnight after economic data raised expectations of a recession in Europe and global growth driver China signaled a slower economic pace ahead. Moreover all the Asian equity indices were trading in the negative terrain. Back home, banking shares are in focus on the bourses at early trades on hopes of another reduction in the cash reserve ratio (CRR) of banks by the Reserve Bank of India (RBI) to ease the severe liquidity in the system. Stocks like ICICI Bank, PNB, SBI Canara Bank and HDFC Bank have gained by 1-2.50 percent. Realty witnessed the maximum gain in trade followed by consumer durables and capital goods while, oil and gas remained the lone loser on the BSE sectoral space. The broader indices too were trading on a firm note. The market breadth on the BSE was positive; there were 925 shares on the gaining side against 467 shares on the losing side while 40 shares remained unchanged.

The BSE Sensex opened at 17,336.64; about 26 points lower compared to its previous closing of 17,362.87, and has touched a high and a low of 17,467.05 and 17,185.24 respectively.

The index is currently trading at 17,464.77, up by 101.90 points or 1.59%. There were 22 stocks advancing against 8 declines on the index.

The overall market breadth has made a strong start with 64.59% stocks advancing against 32.61% declines. The broader indices too were trading firm note; the BSE Mid cap and Small cap indices rose 0.74% and 0.43% respectively.

The top gaining sectoral indices on the BSE were, Realty up by 2.23%, CD up by 1.21%, CG up by 1.19%, Bankex up by 1.12% and Power up by 1.09%. While, Oil and Gas down by 0.04% remained the lone loser on the index.

The top gainers on the Sensex were DLF up by 3.02%, Tata Motors up by 1.61%, SBI up by 1.49%, Coal India up by 1.48% and Infosys up by 1.45%.

On the flip side, Hindalco down by 2.29%, Hero MotoCorp down by 0.91%, RIL down by 0.86%, Tata Steel down by 0.54% and Sterlite Industries down by 0.42% remained the top losers on the Sensex.

Meanwhile, HSBC India Composite Index - which covers both the manufacturing and service sectors - fell from January’s nine-month high of 59.6 to 57.8 due to a fall in both the manufacturing as well as the services sector. On a more positive note, the expansion of overall new work intakes accelerated slightly to reach an eleven-month high marking a rise in business activity for the Indian private sector.

The seasonally adjusted HSBC Services Business Activity Index fell to 56.5 in February from 58.0 in January (the 50.0 no-change threshold separates growth from contraction).Even though it has fallen month-on-month, the sector has been growing continuously for the past 4 months. Service companies are also optimistic of work increasing over the next year and confidence levels are at an eight month high, as per the latest survey.

New business received by Indian service providers in Feb 2012 has increased markedly although the rate of growth has remained unchanged from the previous survey period. The rise in business has been attributed to the acquisition of new clients. Higher new work intakes, supported by marketing initiatives and the good quality of services provided, alongside ongoing improvements in market conditions are expected to boost activity in the coming year.

Manufacturing production growth has also come down though it is still marked. Manufacturers reported a marginal strengthening in new order growth. February data has however signaled that employment in the manufacturing sector has fallen slightly in February. Increase in input prices have eased slightly and have risen at the weakest rate in four months. However, the rate of cost inflation has remained marked and above the long-run trend. Manufacturers have also reported a marginal strengthening in new order growth.

Service providers have also registered slower increases in input prices. Overall charge inflation has also eased, with a faster rise in manufacturers’ output prices offset by a slower increase in charges in the service sector.

Leif Eskesen, Chief Economist for India & ASEAN at HSBC has cautioned that the Reserve Bank India will have to approach the easing cycle cautiously as inflation is likely to hover above the comfort zone. Prices of oil are likely to impact the timing as well as speed of rate cuts by the apex bank.

The S&P CNX Nifty opened at 5,266.00; about 14 points lower compared to its previous closing of 5,280.35, and has touched a high and a low of 5,314.60 and 5,222.70 respectively.

The index is currently trading at 5,307.15, higher by 26.80 points or 0.51%. There were 38 stocks advancing against 12 declines on the index.

The top gainers of the Nifty were DLF up by 2.97%, Siemens up by 2.95%, RInfra up by 2.90%, RPower up by 1.88% and IDFC up by 1.85%.

On the flip side, Hindalco down by 2.39%, Hero MotoCorp down by 1.15%, RIL down by 1.00%, Ambuja Cement down by 0.83% and Sterlite Industries down by 0.58% remained the top losers on the index.

All the Asian equity indices were trading in the red; Shanghai Composite was down 27.71 points or 1.13% to 2,417.29, Hang Seng was down 320.77 points or 1.51% to 20,944.54, Jakarta Composite was down 25.20 points or 0.63% to 3,959.70, KLSE Composite was down 8.34 points or 0.52% to 1,580.88, Nikkei 225 was down 81.89 points or 0.84% to 9,616.70, Straits Times was down 34.00 points or 1.14% to 2,957.80, Seoul Composite was down 25.73 points or 1.28% to 1,990.33 and Taiwan Weighted was down by 134.05 points or 1.67% to 7,870.69.