Indian equities trim gains in the late afternoon session

Indian equities trimmed their gains further in the late afternoon session as investors have started booking profits in the frontline blue chip counters. The benchmark equity indices traded with meager gains after hitting fresh intraday low while the global markets showed some strength. Traders were seen piling up position in Consumer Durables, TECk and IT sector while selling was being witnessed in Auto, Power and Capital Goods sector. Meanwhile a HSBC survey indicated that India's manufacturing sector inched up in April, supported by rising order books, but slower output growth and rising price pressures dampened sentiment. Also, another data showed growth in the eight core industries' slowed down to 2% in March as against 6.5% in the same month last year reflecting a slowdown in the economy.

In the scrip specific development, cable companies including Hathway and WWIL rallied in the session after Telecom Regulatory Authority of India (TRAI)’s notification on digitizing cable TV distribution which recommended a mandatory 'carriage fee' - or, the money that broadcasters have to pay to cable companies for them to carry their channel. Kingfisher Airlines was trading weak in red on reports that a section of the airline staff including engineers and pilots is mulling the option of moving the labour court to expedite settlement of their dues.

On the global front, all the Asian markets were trading in green while the European markets were trading mixed. Investors added positions with conviction ahead of a slew of economic reports due out from the Euro-zone later in the day. On the home turf, the NSE Nifty and BSE Sensex were trading below their psychological 5,250 and 17,400 levels respectively. The market breadth on BSE was neutral in the ratio of 1328:1332 while 133 scrips remained unchanged.

The BSE Sensex is currently trading at 17,323.58 up by 4.77 points or 0.03% after trading as high as 17,432.33 and as low as 17,309.69. There were 12 stocks advancing against 18 declines on the index.

The broader indices were trading on a mix note; the BSE Mid cap index lost 0.01% while Small cap rose 0.23%.

On the BSE sectoral space, Consumer Durables up 2.47%, TECk up 0.99%, IT up 0.72%, FMCG up 0.47% and Bankex up 0.43% were the major gainers, while Auto down 1.28%, Power down 1.12%, Capital Goods down 0.68%, Oil & Gas down 0.45% and PSU down 0.37% were the top laggards in the space.

Bharti Airtel up 2.66%, HUL up 2.14%, DLF up 2.03%, TCS up 1.65% and Cipla up 1.57% were the major gainers on the Sensex, while Tata Motors down 3.44%, Tata Power down 2.37%, Maruti Suzuki down 2.18%, Coal India down 1.63% and NTPC down 1.35% were the major losers in the index.

Meanwhile, the data of Purchasing Managers’ Index (PMI) suggests that factory output has inched up in April, supported by bulging order books. However, growth slowed down due to supply side constraints and inflationary pressures. Also prices of output have gone up. The HSBC India Manufacturing Purchasing Managers' Index (PMI), compiled by Markit, rose marginally to 54.9 in April from 54.7 in March. The index has remained above the 50-mark that divides growth from contraction for more than three years now.

New orders continued to pour in, including those for exports. The new orders sub-index rose to 61.1 in April after falling to 58.1 in March, buoyed by strong exports. However, manufacturers found it difficult to meet their commitments due to power shortages. As a result, backlogs of work increased substantially. In fact manufacturers have had to dip into inventory to meet their clients’ requirements.

Further the input price sub-index has moved up quite sharply. The PMI survey showed the costs of raw materials grew at their fastest pace since August. As a result, the output price sub-index, which saw a deceleration in March to 54.1 after remaining at around 56 for several months, is back up to 58.7 in April.

Given the numbers one can deduce that upside risks to inflation remain. It also suggests that the RBI’s reading that core inflation is coming down may be premature and the rate cuts a bit too aggressive. The upshot is that the new orders/ inventory ratio has gone up in April, which means that growth should remain strong in May too, as producers replenish inventory.

The S&P CNX Nifty is currently trading at 5,243.60, lower by 4.55 points or 0.09% after trading as high as 5,279.60 and as low as 5,240.75. There were 17 stocks advancing against 33 declines on the index.

The top gainers on the Nifty were Bharti Airtel up 2.62%, DLF up 2.27%, SAIL up 2.01%, HUL up 1.71% and Cipla up 1.70%.

Tata Motors down 3.30%, Tata Power down 2.56%, Maruti Suzuki down 2.30%, Siemens down 1.67% and NTPC down 1.66% were the major losers on the index.

In the Asian space, Shanghai Composite surged 1.76%, Hang Seng soared 1.02%, Jakarta Composite advanced 0.45%, KLSE Composite climbed 0.67%, Nikkei 225 gained 0.31%, Straits Times Index rose 0.68%, KOSPI Composite garnered 0.86% and Taiwan Weighted jumped 2.33%.

The European markets were trading on a mix note with France’s CAC 40 surged 1.16%, Germany’s DAX rose 0.73% and Britain’s FTSE 100 lost 0.15%.