Benchmarks end a lackluster session with modest cut; broader markets outclass blue-chips

Indian stock indices showed a disappointing performance in today’s trading session after a fantastic show in Friday’s trade. Investors squared off position in the dying hours of trade as sentiments turned pessimistic ahead of Reserve Bank of India’s next monetary policy, slated to be announced tomorrow. The central bank is widely expected to maintain status quo thus adding pressure on banking and financial shares. ICICI Bank was the worst performing stock on both the benchmark indices and lost nearly 5.63 per cent. Other banking stocks such as SBI, Bank of Baroda and Axis Bank also shed up to 4 per cent.  Sentiments remained down-beat with Standard & Poor's Ratings Services’ statement that India will face challenges in sticking to the fiscal consolidation roadmap as the expected revenues may not be fully realised and subsidy cuts may be delayed. Besides, a fall in auto stocks on tepid January sales data and mixed cues from global markets pulled the indices down towards the end of the session. However, losses remained capped with the report that India's manufacturing activity unexpectedly returned to growth in January as firms raised output on stronger demand.  The Nikkei Manufacturing Purchasing Managers' Index (PMI), compiled by Markit, jumped to a four-month high of 51.1 in January after slumping to a 28-month low of 49.1 in December. Some support also came with Finance Minister Arun Jaitley’s statement that the 8% GDP growth can be achieved next fiscal on account of improved rural demand and better monsoon.

On the global front, Asian markets ended mostly in green on Monday, as Bank of Japan’s stimulus move provided respite, but weakness in China dented the sentiments. China's Purchasing Managers' Index (PMI) contracted at its fastest pace in almost three-and-a-half years in January, missing market expectations, and marking the sixth consecutive month of factory activity contraction. Further, European markets started on a negative note with major indices down between 0.5-0.8 percent each.

Back home, the benchmark got off to a positive start after sentiments got buttressed by sharp gains on Wall Street on Friday and firms gains in Japanese shares amid Bank of Japan’s surprise decision to cut interest rates to negative territory. But the optimism soon started showing signs of easing in late hours of trade and profit booking in few sectors and drifting European markets weighed down the local bourses by the end of session. Finally the NSE’s 50-share broadly followed index Nifty, suffered a moderate cut of one tenth of a percent to settle above the crucial 7,550 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex- slipped around forty five points and closed above the psychological 24,800 mark. Moreover, the broader markets showed some resilience and settled on a positive note, outperforming their larger peers by quite a margin. On the BSE sectoral space, the rate sensitive Banking index remained the top laggard in the space and settled with over a percent laceration followed by the Power and PSU pockets which went home with around half a percent cuts. On the flipside, buying was evident in FMCG and Capital Goods counters which climbed by around a percent.  Meanwhile, aviation stocks gained after the oil marketing companies slashed aviation turbine fuel prices by 12 per cent, while Sugar stocks surged after the government raised sugar cess to Rs 124 per 100 kg. The market breadth remained in favour of advances, as there were 1429 shares on the gaining side against 1259 shares on the losing side while 144 shares remain unchanged.

Finally, the BSE Sensex declined by 45.86 points or 0.18% to 24824.83, while the CNX Nifty ended down by 7.60 points or 0.10% to 7,555.95.

The BSE Sensex traded in a range of 25002.32 and 24788.58. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices made a positive closing; the BSE Mid cap index ended up by 0.57%, while Small cap index ended up by 0.29%.

The top gaining sectoral indices on the BSE were FMCG up by 0.98%, Capital Goods up by 0.98%, Metal up by 0.78%, TECK up by 0.70% and IT up by 0.57%, while Bankex down by 1.40%, Power down by 0.55%, PSU down by 0.38%, Auto down by 0.36% and Oil & Gas down by 0.26% were the top losing indices on BSE.

The top gainers on the Sensex were Adani Ports &Special up by 3.67%, Coal India up by 2.67%, Bharti Airtel up by 2.35%, Asian Paints up by 2.12% and Cipla up by 2.07%. On the flip side, ICICI Bank down by 5.63%, SBI down by 3.92%, Maruti Suzuki down by 3.68%, Axis Bank down by 2.17% and Hindustan Unilever down by 1.96% were the top losers.

Meanwhile, Bouncing back after contracting in December, India’s manufacturing sector growth rose to a four-month high in January driven by rising inflows of new business orders from domestic as well as export clients. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index (PMI) rose to 51.1 in January from December’s 49.1. The PMI moved back above the 50 mark denoting expansion. A figure above 50 represents expansion while a reading below this level means contraction. Though the trends in the growth rates are relatively weak in comparison with the long-run series averages, January’s PMI data paints a brighter picture of the Indian economy.

According to the survey, following the contraction in December in the wake of Chennai floods, January saw India’s manufacturing sector rebound into expansion territory, as production and new orders recovered. The new export orders sub-index rose to 52.5 from 51.5, the highest reading in five months, which coupled with a similar increase in domestic orders suggest renewed demand for Indian goods both home and abroad.

Further the survey notified that the consumer goods sub- sector remained the principal growth engine at the start of the year, seeing substantial expansions of both output and new orders. In contrast, producers of investment goods saw output, while production volumes stagnated in the intermediate goods category. The trend in new export order inflows strengthened during January, amid reports from companies of improved sales demand. The levels of incoming new export business has now risen in each of the past 28 months. The survey noted that though there was mild job creation in the month, the increase in employment was insufficient to reduce the pressure on manufacturers' capacity. On inflation, the survey said price pressure remained on the upside in January, with input costs and output charges both rising during the month.

Moreover, the survey in its outlook indicated an unchanged repo rate at 6.75% by the Reserve Bank of India in its policy review on February 2 even though the central bank is likely to continue its monetary policy loosening cycle in 2016.

The CNX Nifty traded in a range of 7,600.45 and 7,541.25. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Adani Ports & SEZ up by 3.93%, Yes Bank up by 3.80%, Ambuja Cements up by 2.48%, Bharti Airtel up by 2.45% and Coal India up by 2.36%. On the flip side, ICICI Bank down by 5.63%, SBI down by 3.89%, Maruti Suzuki down by 3.53%, Bank of Baroda down by 2.39% and Axis Bank down by 2.25% were the top losers.

European markets were trading lower; Germany’s DAX decreased 52.82 points or 0.54% to 9,745.29, UK’s FTSE 100 dropped 36.59 points or 0.6% to 6,047.20 and France’s CAC was down by 32.06 points or 0.73% to 4,384.96.

Asian equity markets ended mix on Monday as oil prices declined after last week's sharp rally and a slew of data painted a mixed picture of the Chinese economy. Japan shares gained after the Bank of Japan's shock move last week to adopt negative interest rates. Seoul shares closed notably higher on stimulus hopes after official data showed South Korea's exports shrank to nearly a seven-year low in January. Exports dropped 18.5 percent from a year earlier in their biggest drop since the depths of the global financial crisis in 2009. However, China shares fell after China's official manufacturing purchasing manager's index (PMI) came in at 49.4 in January, slightly down from December's 49.7 reading and missing estimates for a score of 49.6 while growth in the services sector activity slowed from the previous month. However, the Caixin China manufacturing PMI, a private gauge of nationwide factory activity, edged up to 48.4 from 48.2 in December, offering some respite to investors worried over slowing growth in the world's second-largest economy. The Malaysian market was closed in observance of Federal Territory Day.