Sensex oscillates in tight range in noon trades; broader markets outperform

Stock markets in India continued to gyrate in an extremely tight range on the first trading session of the financial year with the frontline equity indices slowly but steadily gathering momentum. The benchmark indices are trading with around half a percent gains around the session’s highs in afternoon trades as sentiments got support from the positive European market opening after the decision to increase the region's firewall against the debt crisis to about 800 billion euro. Also most markets across Asia traded on a positive note on the back of surprisingly upbeat Chinese manufacturing data which gained momentum for a fourth straight month to reach 11 month high levels in March alleviating worries over the world’s second largest economy’s hard landing. Back home, the key gauges gained some ground after breaching the psychological 17,450 (Sensex) and 5,300 (Nifty) levels as investors showed largely across the board buying interests. The rate sensitive counters like Bankex and Realty surged over a percent in the session as investors at large have now shifted their focus towards the RBI's quarterly monetary policy review meet scheduled in April, hoping that the central bank would employ some liquidity easing measures to stimulate economic growth. Besides, most automobile companies traded on a positive note after reporting pretty strong sales numbers for the month as well as for the financial year. Furthermore, the power sector stocks rallied with fervor amid reports that Tamil Nadu Electricity Regulatory Commission (TNERC) approved a steep 37% hike in power tariff for one year, effective from April 1. The move would not only generate additional revenue of Rs 7,874 crore for Tamil Nadu Generation and Distribution Company (TANGEDCO), but also help it to recover its full costs in the ensuing financial year of 2012-13. Meanwhile, investors shrugged the manufacturing PMI numbers for March which showed the expansion of India's factory sector slowed for the third month as growth in new orders eased and costs for raw materials kept rising. Also investors were seen booking some profits in sectors like Oil & Gas and defensive Healthcare.

Moreover, the broader markets showed resilience and surged by over a percent, comprehensively outperforming their larger peers. The bourses rose on low volumes of over Rs 0.5 lakh crore since it was the second day of a new F&O series. Market breadth on BSE was in favor of advances in the ratio of 1728:745 while 93 scrips remained unchanged.

The BSE Sensex is currently trading at 17,482.09 up by 77.89 points or 0.45% after trading as high as 17,487.97 and as low as 17,382.38. There were 22 stocks advancing against 8 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index surged 1.04% and Small cap soared 1.39%.

On the BSE sectoral space, Consumer Durables up 3.79%, Realty up 1.99%, Power up 1.79%, Capital Goods up 1.54% and Bankex up 1.01% were the major gainers, while Oil & Gas down 0.09% and Healthcare down 0.02% were the only laggards in the space.

DLF up 3.13%, NTPC up 2.15%, L&T up 1.61%, Mahindra & Mahindra up 1.59% and SBI up 1.39% were the major gainers on the Sensex, while Bajaj Auto down 1.77%, Coal India down 1.49%, Sterlite Industries down 1.08%, HUL down 0.95% and RIL down 0.37% were the only losers in the index.

Meanwhile, manufacturing activity in India has declined marginally in the month of March as compared to February, as per the HSBC PMI numbers. The seasonally adjusted HSBC Purchasing Managers’ Index (PMI) - a headline index designed to measure the overall health of the manufacturing sector - registered 54.7 in March, down from February’s 56.6. It stood at 57.5 in January. Though the numbers have been above the 50 mark that separates growth from contraction, they are tad disappointing.

The rate of expansion has been the weakest in three months. This has been attributed to shortages in power supply and increasing prices of raw materials. Even though demand has improved, the manufacturers’ propensity to process new orders has been limited due to these shortages. As a result customers have also been hesitant in placing new demands. There has also been a marked increase in the backlog of work, in fact the fastest in the history of the series and an increase in delivery timing. 

On a more positive note, new export order growth gained momentum in March. Employment also went up marginally to accommodate the increase in output. On the inflation front, while inflation of output prices has eased, the prices of raw materials have increased. This suggests that inflation could pick up again as cost pressures are passed on to customers. Given these upside risks to inflation the RBI's easing cycle, in terms of timing and magnitude, depends on the extent to which these risks materialize.

The HSBC PMI number is closely followed as it is a fairly good indicator of the level of industrial activity in the country. In fact in the past these numbers have been more accurate than the government’s estimates. Even though the numbers have been declining for the third consecutive month, they are depicting a consolidating growth trend.

The S&P CNX Nifty is currently trading at 5,313.25, higher by 17.70 points or 0.33% after trading as high as 5,316.25 and as low as 5,278.80. There were 32 stocks advancing against 18 declines on the index.

The top gainers on the Nifty were R Infra up 3.47%, DLF up 3.17%, R Power up 2.99%, SAIL up 2.60% and NTPC up 2.27%.

Ranbaxy down 2.20%, Ambuja 1.80%, Bajaj Auto down 1.70%, Coal India down 1.61% and BPCL down 1.25% were the major losers on the index.

In the Asian space, Jakarta Composite advanced 0.59%, KLSE Composite rose 0.21%, Nikkei 225 gained 0.26%, Straits Times added 0.16% and Seoul Composite climbed 0.36%.

On the other hand, Hang Seng declined 0.50% and Taiwan Weighted sank 0.88%.

Meanwhile, markets in mainland China will remain closed for a three day public holiday starting Monday on account of Qingming Festival and will reopen on Thursday.

The European markets were trading in green as France’s CAC 40 gained 0.17%, Germany’s DAX rose 0.38% and Britain’s FTSE 100 advanced 0.25%.