Weak trade persists on D-Street

Weak trade persisted on Dalal Street in late afternoon session, as Sensex and Nifty continued their lackluster trade below neutral lines, amid mixed cues from European markets. Heavy sell-off at Power and Oil & Gas counters also kept the markets down in late noon deals. Domestic sentiments remained pessimistic with former RBI governor and top economist Raghuram Rajan’s statement that cross-border capital flows have been a source of financial fragility and he underscored that countries should see how best they can benefit from cross-border flows, without incurring the costs. Traders were taking note of eminent economist Arvind Panagariya’s statement that India and several other Asian countries have in the past defied the belief that protectionism is good for developing economies as these nations reaped benefits of opening up trade and lower tariffs.  However, downside remained capped, with a private report that the government has generated higher-than-expected revenues from customs duties, which may help it rein in the fiscal deficit within its FY19 target of 3.3 percent of gross domestic product.

On the sectoral front, IT stocks were trading higher, supported by a private report stating that India's information technology and infrastructure sectors will be central to its journey of becoming a $10-trillion economy by 2030. Stocks related to metal companies too gained, amid reports that the country’s finished steel production is projected to grow by six to eight per cent in this fiscal, aided by spike in demand from key user industries like construction, infrastructure and automobiles.

On the global front, European markets were trading mixed, as the euro area manufacturing sector expanded at the slowest pace in more than two years in October. The final data from IHS Markit showed that the manufacturing Purchasing Managers' Index for Eurozone fell to a 26-month low of 52.0 from 53.2 in September. Separately, German manufacturing sector growth eased to its lowest in nearly two-and-a-half years in October as orders dropped for the first time since late-2014. As per final data from IHS Markit, the manufacturing purchasing managers' index, or PMI, dropped to 52.2 from 53.7 in September. Asian markets were trading in red, amid trade concerns after White House economic adviser Larry Kudlow downplayed the potential for a quick trade deal between the US and China. Adding some more worries, China's private sector expanded at the weakest pace in more than two years in October with both services and manufacturing noting weaker performances. The survey results from IHS Markit showed that the Caixin composite output index fell to a 28-month low of 50.5 in October from 52.1 in September.

The BSE Sensex is currently trading at 34900.33, down by 111.32 points or 0.32% after trading in a range of 34811.60 and 35123.41. There were 10 stocks advancing against 20 stocks declining, while 1 stock remained unchanged on the index.

The broader indices were trading in red; the BSE Mid cap index fell by 0.60%, while Small cap index was down by 0.33%.

The top gaining sectoral indices on the BSE were Realty up by 0.72%, Basic Materials up by 0.30%, Energy up by 0.26% and IT up by 0.08%, while Power down by 1.86%, Oil & Gas down by 1.36%, Utilities down by 1.36%, Healthcare down by 1.06% and PSU down by 0.81% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 2.22%, SBI up by 1.59%, Reliance Industries up by 1.37%, Wipro up by 1.22% and Coal India up by 0.94%. On the flip side, NTPC down by 2.94%, Indusind Bank down by 2.93%, Power Grid Corporation down by 2.42%, Hero MotoCorp down by 1.99% and Tata Motors - DVR down by 1.95% were the top losers.

Meanwhile, after easing in the previous two months, India’s services sector activity signaled a solid and stronger improvement in business conditions in the month of October, aided by accelerating new work along with easing inflationary pressures. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index rose to 52.2 in October from 50.9 in September. Further, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services -- too improved to 53.0 in October from 51.6 in September.

The survey report found that new business at services firms displayed the strongest upturn since July, on the back of favourable market conditions, greater client bases and fruitful advertising. Besides, Indian service providers continued to add to their payrolls. The increase in employment was the fourteenth in as many months and the second fastest since March 2011. But, job creation in the manufacturing sector was weaker than recorded in its service counterpart.

On the price front, service providers’ expenses rose in October but moderately from September’s ten-month high and were below its long-run average. Similarly, charge inflation at service providers cooled during the reported period. The report also noted that although services firms retained an optimistic view towards growth prospects, confidence waned in October. Positive sentiment was supported by expectations of greater inbound tourism, marketing efforts and investment plans, while political uncertainty hampered confidence. The degree of optimism was at a 20-month low.

The CNX Nifty is currently trading at 10500.30, down by 52.70 points or 0.50% after trading in a range of 10477.00 and 10558.80. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 2.15%, SBI up by 1.63%, Reliance Industries up by 1.41%, Wipro up by 1.33% and HCL Tech. up by 1.33%. On the flip side, Cipla down by 6.87%, Indian Oil Corporation down by 5.46%, Indiabulls Housing Finance down by 5.44%, HPCL down by 3.37% and BPCL down by 3.19% were the top losers.

Asian markets were trading mostly in red; Shanghai Composite lost 11.05 points or 0.41% to 2,665.43, Taiwan Weighted decreased 16.78 points or 0.17% to 9,889.81, Straits Times dipped 58.16 points or 1.9% to 3,058.23, Hang Seng declined 551.96 points or 2.13% to 25,934.39, Nikkei 225 plunged 344.67 points or 1.57% to 21,898.99 and KOSPI fell 19.08 points or 0.92% to 2,076.92. On the flip side, Jakarta Composite was up by 1.13 points or 0.02% to 5,907.42.

European markets were trading mixed; France’s CAC rose 4.25 points or 0.08% to 5,106.38 and Germany’s DAX surged 1.75 points or 0.02% to 11,520.74. On the flip side, UK’s FTSE 100 was down by 7.70 points or 0.11% to 7,086.42.