Factory PMI data fails to prop-up mood at D-Street; Nifty settles flat

Stock markets in India commenced the first week of June month on a lackadaisical note as the benchmark equity indices hardly budged from their previous closing levels on Monday. The key indices oscillated in an extremely tight range through the session as market participants remained on the sidelines lacking conviction amid the persistent worries over global economic growth prospects.

Investors chose to consolidate their positions around previous closing levels, a session after witnessing markets’ vehement rally of over two and half a percentage points, which had helped the bourses not only extend their gaining streak for the fourth successive session but also soared to highest levels in more than two-months.

The key equity gauges continued to move in a sideways direction around the psychological 5,250 (Nifty) and 17,400 (Sensex) levels, lacking any significant upside triggers as investors indulged only in stock specific activities. The quiet performance of domestic indices appeared even shoddier because of the fact that major stock markets across the globe climbed higher amid the tentative improvement in investors’ risk appetite.

On the domestic front, the investors at large overlooked India’s manufacturing PMI data which expanded to 55 in June, 2012 as against 54.8 in the previous month of 2012, helped mainly by product quality improvement and stronger demand. The survey underscored that India’s industrial activity intensified in June and factories hired at the fastest rate in more than two years. However, it also highlighted that the inflationary pressure and gloomy global scenario posed challenges to manufacturing growth.

The downside for the markets was also capped by the supportive cues from money market where Indian rupee extended its streak of appreciation and traded at sub 56 levels against the US dollar. On the BSE sectoral space, profit booking was largely evident in the defensive FMCG sector, which got pummeled by over two percent and remained the top laggard in the space.

The rate sensitive Auto counter too slipped lower, falling over half a percent after majors including Tata Motors and Bajaj Auto reported weaker than expected monthly sales numbers. On the other hand, investors piled up positions in the high beta Realty pocket, which surged over two percent and topped the sectoral space followed by the Consumer Durables sector, which went home with over a percent.

On the global front, most Asian peers settled on a positive note as the optimism over last week's series of unanticipated new measures to resolve the onerous financial trouble in the Euro-zone counterbalanced worries over global growth after a survey showed weak manufacturing sector growth in Asian nations especially in the region’s biggest economy - China.

However, European markets surged after a soft start as sentiments got underpinned by hopes of more policy action, most likely in the form of an interest rate cut from the European Central Bank, which is scheduled to meet later in the week.

Back home, the NSE’s 50-share broadly followed index Nifty, hardly budged from its previous closing levels to settle above the psychological 5,250 support level while Bombay Stock Exchange’s Sensitive Index - Sensex shed thirty one points to finish a tad below the crucial 17,400 mark. Moreover, the broader markets too settled on a strong note with notable gains of around a percent and outclassed their larger peers by a fat margin.

The markets eased on weak overall volumes of over Rs 1.05 lakh crore on the second day of a new F&O series while the turnover for NSE F&O segment also remained on the lower side as compared to that on Friday at over Rs 0.78 lakh crore. The market breadth remained in favor of advances as there were 1,807 shares on the gaining side against 1,033 shares on the losing side while 108 shares remained unchanged.

The BSE Sensex lost 31.00 points or 0.18% to settle at 17398.98, while the S&P CNX Nifty declined by 0.30 points or 0.01% to close at 5,278.60.

The BSE Sensex touched a high and a low of 17486.57 and 17363.04 respectively. The BSE Mid cap index was up by 0.90% and Small cap index up by 1.09%.

HDFC Bank up 1.84%, Bharti Airtel up 1.59%, Sterlite Industries up 1.56%, BHEL up 1.31% and Tata Steel up 1.29% were the major gainers on the Sensex, while ITC down 3.42%, Jindal Steel down 2.49%, HUL down 1.61%, Tata Motors down 1.53% and TCS down 1.3% were top losers on the index.

The top gainers on the BSE sectoral space were Realty up 2.32%, Consumer Durables (CD) up 1.24%, PSU up 0.74%, Bankex up 0.66% and Power up 0.65%, while FMCG down 2.08%, Auto down 0.56% and IT down 0.27% were top losers on the BSE sectoral space. 

Meanwhile, as an attempt to garner more foreign capital into India’s ailing aviation sector, the Ministry of Civil Aviation is planning to overarch a new law as to ease foreign airlines equity participation in domestic aviation, while protecting interests of passengers and ensuring safety.

As India being the world's ninth biggest civil aviation market, it expects to cater about 180 million passengers by 2015. The New Civil Aviation Act of 2012 will replace the Aircraft Act of 1934, which does not cover critical issues like viability and security, and has been severely criticized in safety audits conducted by global aviation bodies. The current governing law focuses primarily on aircraft manufacturing and operations, while the new law is expected to comply with international best practices in sync with the times and attract investors to a market, which expects an annual growth of 20%.

The Aviation ministry has proposed Department of Industrial Policy and Promotion (DIPP) to allow foreign airlines participation up to 24% in local carriers within the existing cap of 49% for foreign investors, despite of strong opposition from private carriers like Jet Airways and Spice Jet. The government emphasized the importance of compliance of new law with international best practices, in hopes that it can attract the best global aviation leaders to Indian market.

The S&P CNX Nifty touched a high and low 5,302.15 and 5,263.35 respectively.

The top gainers on the Nifty were ACC up 3.98%, DLF up 3.02%, Grasim up 2.16%, HDFC Bank up 2.03% and Bharti Airtel up 1.93%. On the flipside, ITC down 4.21%, Jindal Steel down 3.41%, Hero MotoCorp down 1.93%, Tata Motors down 1.92% and HUL down 1.74% were the top losers on the index.

The European markets were trading in green, as France's CAC 40 up 1.24%, Germany's DAX up 0.93% and United Kingdom’s FTSE 100 up 0.53%.

Asian market gave up some gains on Monday, though starting the new quarter on a mildly positive note, as reports showed that Chinese manufacturing data slowed down tempering optimism over last week’s agreement in Europe to solve the regions’ debt crisis. The China’s official purchasing managers' index was recorded at 50.2 - the worst number since November 2011.

Nikkei fell from its two month intraday high to end almost flat on Monday after an early gain, as an agreement to shore up European trouble banks faltered. Shanghai Composite remained flat as investors were not eager to invest after two economic indicators showed countries manufacturing activity slowed down last month. Kospi Composite gave up its early gains to close on a weaker note as heavy weight stocks such as Samsung Electronics incurred losses.

Jakarta Composite saw an unusual move in trading as country’s energy related companies such as PT Adaro Energy rose 7.6 percent to 1,560 rupiah its steepest increase since October 6 and PT Energi Mega Persada climbed 2.1 percent to 146 rupiah.  Strait Times rose to its highest level in seven weeks as oil rig builders Keppel Corp and Sembcorp Marine saw the strongest gains on the benchmark Straits Times Index, after oil prices staged a strong rally on Friday.

Hang Seng index remained closed today due to public holiday.