Benchmarks continue to trade southward in noon deals

Indian equity benchmarks continued to trade southward in noon deals with Sensex and Nifty declining below their crucial 26,500 and 8,050 mark, respectively. Sentiments remained downbeat after India’s manufacturing sector growth slipped further and touched a 22-month low in October largely due to a slower increase in new orders, but firms hired additional workers. Traders failed to draw any sense of relief with report that Global rating agency Moody's has upgraded its outlook for the Indian banking system to stable from negative on gradual improvement in operating environment. Bucking the trend, stocks related to Auto sector remained on buyers’ radar post October sales numbers.

On the global front, Asian markets were trading mostly in red at this point of time after weak Chinese manufacturing data for October fuelled fears about the state of the world’s number two economy. Back home, depreciation in Indian rupee too dampened the sentiments. The rupee fell by 20 paise to 65.47 against the dollar in noon deals today on sustained foreign fund outflows amid increased demand for the US currency from importers. On the sectoral front, consumer durables, realty and auto witnessed the maximum gain in trade, while metal, capital goods and public sector undertaking remained the top losers on the BSE sectoral space. The broader indices too were reeling under pressure, while the market breadth on the BSE was negative; there were 823 shares on the gaining side against 1,522 shares on the losing side while 107 shares remain unchanged.

The BSE Sensex is currently trading at 26447.33, down by 209.50 points or 0.79% after trading in a range of 26421.28 and 26824.30. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.35%, while Small cap index down by 0.52%.

The few gaining sectoral indices on the BSE were Consumer Durables up by 0.48%, Realty up by 0.29% and Auto up by 0.28%, while Metal down by 1.60%, Capital Goods down by 1.51%, PSU down by 1.00%, Power down by 0.90% and Oil & Gas down by 0.63% were the losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 3.33%, Tata Motors up by 1.31%, ICICI Bank up by 0.97%, Maruti Suzuki up by 0.85% and Axis Bank up by 0.45%. On the flip side, Bajaj Auto down by 4.40%, Hindalco down by 3.81%, Tata Steel down by 3.24%, Vedanta down by 2.70% and Lupin down by 2.52% were the top losers.

Meanwhile, showing further loss of growth momentum, manufacturing activity in India fell unexpectedly in October, highlighting weaker growth of both output and new orders. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index, showed a weakest rise in output in current 24-month, posting a 22-month low of 50.7 in October against 51.2 in September. However, the PMI has recorded above the crucial 50.0 threshold in each month since November 2013 that gave some solace along with report of companies adding to their workforces for the first time since January and continued to increase buying levels. A figure above 50 represents expansion while one below that means contraction.

The survey though said that business conditions across the Indian manufacturing economy improved further in October but the output growth eased in the month on the back of a slower increase in new orders. Rates of expansion in both production and order books were the weakest in their current 24-month sequences of growth, with panellists reporting challenging economic conditions and a reluctance among clients to commit to new projects.

Sectorwise, consumer goods was the best performing one in October, while improving operating conditions were also seen in the intermediate goods sub-sector. Conversely, capital goods firms saw business conditions deteriorate in the latest month as output and new orders declined for the first time since September 2014 and August 2014 respectively.

The survey further pointed that October saw inflationary pressures return to India’s manufacturing economy, with average purchase costs rising, amid reports of higher metal, paper and food prices. Part of the additional cost burden was passed on to clients as tariffs were raised. Nonetheless, the rate of charge inflation was marginal overall. The rise in inflationary pressure could lead to RBI pausing its loosening cycle for the rest of the year.

On positive side, employment rose for the first time since January, although only marginally. Those companies reporting higher staffing levels commented on expectations of a pickup in demand in coming months. Also, the new business from abroad placed with Indian manufacturers rose for the twenty-fifth straight month in October. However, growth was little changed from the marginal pace seen in September.

The CNX Nifty is currently trading at 8011.15, down by 54.65 points or 0.68% after trading in a range of 8003.70 and 8060.65. There were 18 stocks advancing against 31 stocks declining on the index while 1 stock remained unchanged.

The top gainers on Nifty were Mahindra & Mahindra up by 3.22%, Ultratech Cement up by 1.49%, Tata Motors up by 1.29%, Zee Entertainment up by 1.26% and Tech Mahindra up by 1.16%. On the flip side, Bajaj Auto down by 4.48%, Hindalco down by 3.99%, Tata Steel down by 3.14%, Lupin down by 2.73% and Sun Pharma Inds. down by 2.51% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 declined 399.86 points or 2.1% to 18,683.24, Hang Seng decreased 231.88 points or 1.02% to 22,408.16, Shanghai Composite dropped 47.89 points or 1.42% to 3,334.67, Jakarta Composite slipped 3.09 points or 0.07% to 4,452.09 and FTSE Bursa Malaysia KLCI was down by 2.24 points or 0.13% to 1,663.47.

On the flip side, KOSPI Index increased 5.77 points or 0.28% to 2,035.24 and Taiwan Weighted was down by 60.46 points or 0.71% to 8,614.77.