Benchmarks hover near neutral line

Indian equity benchmarks erased most of the gains and are now hovering near the neutral line in the late afternoon session on account of selling in frontline blue chip counters. The mood was on optimistic note from early trade after India Meteorological Department (IMD) retained its earlier ‘above normal’ forecast for this year’s southwest monsoon, at 106% of the Long Period Average (LPA). However, some pressure crept in after the growth of services activity in India softened for the second straight month in May, as new business inflows expanded at the slowest rate since July 2015. Traders were seen piling position in Bankex, Auto and Oil & Gas stocks while selling was witnessed in Consumer Durables, Capital Goods and TECK sector stocks. In scrip specific development, NMDC was trading firm following the company’s announcement that its board will meet on June 07, 2016 to consider a proposal for buyback of equity shares. The announcement was made after market hours yesterday. Navkar Corporation was trading in green after the company’s wholly-owned subsidiary received contract for operation and management of container freight station and handling of container trains.

On the global front, the Asian markets were trading in green while the European markets traded on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,200 and 26,800 levels respectively. The market breadth on BSE was negative in the ratio of 1139:1353 while 164 scrips remained unchanged.

The BSE Sensex is currently trading at 26830.16, down by 12.98 points or 0.05% after trading in a range of 26829.66 and 27008.14. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.06%, while Small cap index down by 0.15%.

The gaining sectoral indices on the BSE were Bankex up by 0.80%, Auto up by 0.69%, Oil & Gas up by 0.26%, IT up by 0.11% and Power up by 0.09%, while Consumer Durables down by 1.21%, Capital Goods down by 0.89%, TECK down by 0.28%, FMCG down by 0.19% and Metal down by 0.13% were the losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 3.30%, Bajaj Auto up by 1.68%, Mahindra & Mahindra up by 1.49%, Hero MotoCorp up by 1.44% and Hindustan Unilever up by 1.41%.

On the flip side, Lupin down by 1.75%, SBI down by 1.60%, Bharti Airtel down by 1.56%, BHEL down by 1.50% and ITC down by 1.34% were the top losers.

Meanwhile, after the weak manufacturing activity, the growth of services activity in India too softened for the second straight month in May, as new business inflows expanded at the slowest rate since July 2015. The seasonally adjusted Nikkei Services Business Activity Index fell to 51.0 in May from 53.7 in April. Although service providers remained optimistic that output will expand in the year ahead, the level of confidence was the lowest recorded since February.

The seasonally adjusted Nikkei India Composite PMI Output Index, which measures both the manufacturing and the services sectors, fell to a six-month low of 50.9 in May, from 52.8 in April. As per the survey panellists growth of new work at services firms eased for the second month running in May. Where new business inflows expanded, aggressive marketing campaigns were reported. Nonetheless, there were mentions that growth was restricted by increased competition and the assembly elections in some regions. Manufacturing order books increased at a quicker pace that too was modest.

Although some firms took on additional staff, the overall pace of job creation was fractional. Services staffing levels increased in May, following a stagnation in the prior month. But with only 1% of survey participants signalling higher payroll numbers, the overall rate of job creation was fractional. A marginal increase in manufacturing employment was also registered.

Input costs rose again amid reports of higher petrol prices, average cost burdens facing service providers in India rose during May, leading to a further increase in prices charged. The latest increase in input prices was the eighth in as many months, but the rate of inflation eased since April and was lower than its long-run average.

Going forward, the Services companies expect output to increase over the coming 12 months; however the degree of optimism reportedly weakened to the lowest since February. As per the Markit’s survey exactly 15% of firms forecast activity growth, citing favourable government policies, improved marketing strategies, business expansion plans and hopes of better demand conditions.
 
The CNX Nifty is currently trading at 8233.70, up by 14.75 points or 0.18% after trading in a range of 8224.05 and 8262.00. There were 24 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 3.41%, Kotak Mahindra Bank up by 2.99%, Tata Motors - DVR up by 2.94%, Tata Power up by 2.42% and BPCL up by 1.86%.

On the flip side, Idea Cellular down by 10.29%, Lupin down by 1.58%, Bharti Airtel down by 1.56%, BHEL down by 1.37% and SBI down by 1.20% were the top losers.

The Asian markets were trading in green; KOSPI Index increased 0.73 points or 0.04% to 1,985.84, Jakarta Composite increased 6.6 points or 0.14% to 4,839.83, FTSE Bursa Malaysia KLCI increased 7.32 points or 0.45% to 1,637.85, Shanghai Composite increased 13.45 points or 0.46% to 2,938.68, Taiwan Weighted increased 31.34 points or 0.37% to 8,587.36, Nikkei 225 increased 79.68 points or 0.48% to 16,642.23 and Hang Seng increased 88.02 points or 0.42% to 20,947.24.

The European markets were trading in green; UK’s FTSE 100 increased 53.72 points or 0.87% to 6,239.33, France’s CAC increased 7.81 points or 0.17% to 4,473.81 and Germany’s DAX increased 31.7 points or 0.31% to 10,239.70.