Domestic gauges continue trading subdued in afternoon trade

Indian equity benchmarks continued to trade subdued in last leg of trade amid a selloff in global markets. Traders failed to get any sense of relief with report that the Indian service sector remained in expansion mode in January, registering the fastest rise in activity in three months driven by a renewed increase in new business orders. The seasonally adjusted Nikkei Services Business Activity Index improved to 51.7 in January, up from 50.9 in December. Traders also remained on sidelines ahead of Reserve Bank of India’s (RBI’s) monetary policy meeting to be start from tomorrow. Weak opening in European counters too dampened sentiments tracking big drops in Asia as growing inflation expectations and rising bond yields took their toll on equity markets. Asian markets also traded lower amid speculation that global central banks might be forced to tighten policy more aggressively. Back home, Escorts edged higher on entering into distribution agreement with Doosan and Prabhat Telecoms gained on entering into agreement with Pocketbook International SA.

The BSE Sensex is currently trading at 34677.65, down by 389.10 points or 1.11% after trading in a range of 34520.80 and 34874.17. There were 10 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.59%, while Small cap index was down by 0.86%.

The top gaining sectoral indices on the BSE were Telecom up by 1.73%, Utilities up by 0.51%, Power up by 0.43%, PSU up by 0.21%, Auto up by 0.16% while, Capital Goods down by 2.67%, Bankex down by 1.46%, Basic Materials down by 1.39%, Industrials down by 1.01%, Consumer Disc down by 0.83% were the losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 4.20%, Tata Motors up by 2.62%, Tata Motors - DVR up by 2.08%, Power Grid Corporation up by 2.08% and Sun Pharma Industries up by 1.19%. On the flip side, HDFC down by 4.23%, Larsen & Toubro down by 3.38%, Indusind Bank down by 3.11%, Kotak Mahindra Bank down by 2.62% and Bajaj Auto down by 2.28% were the top losers.

Meanwhile, maintaining expansion mode for the second straight month, activity in India’s services sector grew at the fastest pace in three months in January, with recovery in new business orders. Signaling a further increase in activity at the start of 2018, the seasonally adjusted Nikkei Services Business Activity Index remained above the neutral mark of 50.0 in January, posting reading at 51.7, up from 50.9 in December. Besides, as manufacturing production growth eased from December’s 60-month high, the Nikkei Composite Output Index, which measures both manufacturing and services, fell to 52.5 in January from 53.0 in December.

The report stated that new orders rose for the third consecutive month at manufacturing companies. It also said that growth rates for activity and employment accelerated since December, but remained weaker than their respective long-run survey averages. The latest survey data signalled that capacity constraints remained evident across both the manufacturing and service sectors, as the volume of outstanding business rose for the twentieth successive month.

It added that higher backlogs partly reflected delayed customer payments for orders. Reflecting improved demand conditions, manufacturers raised their payroll numbers for the sixth consecutive during January. Job creation accelerated to the second strongest in over six-and-a-half years, but, as firms struggled in receiving timely payments, the Goods and Services Tax (GST) continued to be a key constraint to businesses and the service sector remained a laggard relative to its manufacturing counterpart.

As per the report, Indian manufacturers registered a further marked increase in their average cost burdens during January. Subsequently, manufacturing companies reportedly raised their output charges to pass on higher input costs to consumers. On inflation front the survey revealed that service sector input price inflation stabilized at a moderate pace in January, remaining below the long-run survey average. That said, costs rose sufficiently to generate another increase in prices charged by service providers, with those in the Information & Communication sector registering the strongest inflation of charges.

The CNX Nifty is currently trading at 10652.35, down by 108.25 points or 1.01% after trading in a range of 10586.80 and 10702.75. There were 17 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 4.12%, Tata Motors up by 2.67%, HPCL up by 2.26%, Bosch up by 1.98% and Bharti Infratel up by 1.73%. On the flip side, HDFC down by 4.50%, Larsen & Toubro down by 3.46%, Indusind Bank down by 3.24%, Kotak Mahindra Bank down by 2.47% and Adani Ports & Special Economic Zone down by 2.27% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 tumbled 592.45 points or 2.55% to 22,682.08, Hang Seng declined 356.56 points or 1.09% to 32,245.22, Taiwan Weighted fell 179.98 points or 1.62% to 10,946.25, KOSPI Index dropped 33.64 points or 1.33% to 2,491.75, Jakarta Composite shed 29.89 points or 0.45% to 6,598.93 and FTSE Bursa Malaysia KLCI was down by 14.61 points or 0.78% to 1,855.87.

European markets were trading in red; Germany’s DAX dropped 95.43 points or 0.75% to 12,689.73, UK’s FTSE 100 decreased 83.11 points or 1.12% to 7,360.32 and France’s CAC was down by 54.98 points or 1.02% to 5,310.00.