Firm trade prevails in late morning session

Indian equity benchmarks continued their firm trade hovering near the highest point of the day in the late morning session on account of buying in frontline blue chip counters.  The sentiments were on optimistic note on reports that growth in India’s services industry accelerated to its fastest pace in more than 3-1/2 years in August, driven by a surge in domestic and foreign demand. The Nikkei/Markit Services Purchasing Managers’ Index jumped to 54.7 in August, it’s highest since January 2013, from 51.9 in July. Also there were reports that Prime Minister’s Office (PMO) will soon clear projects worth Rs 20 lakh crore, stating that the Project Monitoring Group (PMG) has already cleared 276 projects worth 10 lakh crore which were stalled due to various reasons including roads, environment, coal and power among others. Some additional support came after the Indian rupee opened firm against the US dollar at the Interbank foreign exchange (Forex) market following increased selling of American currency by banks and exporters. The Indian rupee hit a four-month high against the US dollar after lower-than-expected US payroll data reduced fears of a rate hike by the US Federal Reserve. Gains were also boosted due to continued buying interest from foreign institutional investors (FIIs) in local equity markets. Traders were seen piling position in Auto, Bankex and FMCG sector stocks. In scrip specific development, Jubilant Foodworks was trading weak on a slew of downgrades and poor June quarter results. Mindtree was trading in red following the company’s warning about lower-than-expected margin and revenue in the September quarter.

On the global front, Asian shares traded mostly in green; as investors digested the Reserve Bank of Australia’s decision to keep cash rates unchanged at 1.5%. The yen kept some distance from a one-month low against the dollar after Bank of Japan Governor Haruhiko Kuroda held back from signaling further easing, acknowledging instead the costs of the BOJ’s aggressive stimulus. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,850 and 28,800 levels respectively. The market breadth on BSE was positive in the ratio of 1509:676, while 127 scrips remained unchanged.

The BSE Sensex is currently trading at 28832.73, up by 300.62 points or 1.05% after trading in a range of 28631.27 and 28833.27. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.23%, while Small cap index was up by 0.79%.

The top gaining sectoral indices on the BSE were Auto up by 1.92%, Bankex up by 1.67%, FMCG up by 1.09%, Realty up by 1.02% and Capital Goods up by 0.99%.

The top gainers on the Sensex were Axis Bank up by 3.30%, Tata Motors up by 3.05%, Maruti Suzuki up by 2.30%, Hero MotoCorp up by 1.99% and Asian Paints up by 1.62%.

On the flip side, Bharti Airtel down by 1.61%, TCS down by 0.64%, Coal India down by 0.42%, Wipro down by 0.29% and Cipla down by 0.03% were the top losers.

Meanwhile, India’s service sector industry growth accelerated to its fastest pace, driven by a surge in domestic and foreign demand. Output was raised in response to a marked improvement in new work inflows and increased levels of business confidence. The trend in employment remained comparatively subdued, with a slight decrease in jobs signaled for the first time since September of last year. The seasonally adjusted Nikkei India Services Business Activity Index rose to 54.7 in August from 51.9 in July. The index posted its highest level for over three-and-a-half years and signaled expansion in each of the past 14 months.

The seasonally adjusted Nikkei India Composite PMI Output Index which measures both manufacturing and services, climbed to a 42 month high at 54.6 in August from 52.4 in July, with a stronger improvement in private sector economic activity. The level of incoming new work rose at the quickest pace for three-and-a-half years. Where an expansion was registered, companies mainly linked this to improved market conditions. Similarly, manufacturing order books increased at a sharp rate that was the quickest since December 2014.

Price pressures in the service sector remained subdued in August. Average costs declined marginally for the second successive month, which firms attributed to lower diesel, fuel and vegetable prices. Meanwhile, average service charges ticked higher. Goods producers signaled further increases in purchase costs and factory gate charges, although rates of inflation eased in both cases. The numbers of in-house staff fell, as firms remained somewhat uncertain regarding the sustainability of the upturn in demand. However, a further uptick in backlogs, the sharpest in nearly two years may lead service providers to create jobs in coming months. The index pointed to additional pressure on the capacity of private sector companies in India as outstanding business rose at manufacturers and service providers alike. Rates of accumulation were at 32- and 22-month highs respectively.

The CNX Nifty is currently trading at 8892.95, up by 83.30 points or 0.95% after trading in a range of 8848.45 and 8893.75. There were 41 stocks advancing against 10 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 3.22%, Tata Motors up by 3.14%, Indusind Bank up by 2.68%, Tata Motors - DVR up by 2.66% and Yes Bank up by 2.52%.

On the flip side, Bharti Airtel down by 1.63%, Idea Cellular down by 1.60%, HCL Tech. down by 0.81%, TCS down by 0.77% and Ultratech Cement down by 0.42% were the top losers.

The Asian markets were trading mostly in green; Shanghai Composite increased 1.36 points or 0.04% to 3,073.46, KOSPI Index increased 1.96 points or 0.1% to 2,062.04, FTSE Bursa Malaysia KLCI increased 7.89 points or 0.47% to 1,685.97, Nikkei 225 increased 20.39 points or 0.12% to 17,058.02, Hang Seng increased 59.35 points or 0.25% to 23,708.90 and Taiwan Weighted increased 63.68 points or 0.7% to 9,153.81.

On the other hand, Jakarta Composite decreased 8.67 points or 0.16% to 5,348.28.