Equity markets shift gear to trade in green

In the range-bound session of trade, Indian equity markets have reversed gears to trade in green, as investors seem to be cherry picking select blue chip available at lucrative prices. Markets after amassing gains for three consecutive sessions appeared initially in consolidation mode, awaiting significant positive triggers, after the appointment of new Finance Minister P. Chidambaram. However, the gains at Dalal Street remain curbed, with the release of manufacturing activity data, which grew at a slower clip in July. According to the HSBC purchasing managers’ index (PMI), a headline index designed to measure the overall health of the manufacturing sector, expanded at the slowest pace in the past eight months to 52.9 in July, 2012 as against 55.0 in the previous month of 2012.

On the global front, Asian shares are exhibiting mixed trend, after four successive sessions of gains, as soft Chinese manufacturing data further undermined investor confidence and also, as hopes of stimulus action this week by the US Federal Reserve and the European Central Bank faded. Meanwhile, European shares, providing the required fillip to the bourses, have got off to an optimistic start.

Closer home, stocks from Realty, Health Care and Capital Goods counters are supporting the uptrend of the bourses, while those belonging to the Metal, Technology and Information Technology counters were limiting the gains of Indian equity markets. In stock Specific action, drug maker, Cipla was trading in jubilant mood post reporting stellar Q1FY13 numbers. The company has reported a surge of 58.19% in its net profit at Rs 400.76 crore for the quarter, as compared to Rs 253.34 crore for the same quarter in the previous year. The overall market breadth on BSE was in the favour of advances which piped declines in the ratio of 1516:911, while 125 shares remained unchanged.

The BSE Sensex is currently trading at 17,249.01 up by 12.83 points or 0.07% after touching a high of 17281.76 and a low of 17189.16. There were 15 stocks advancing against 15 declines on the index.

The broader indices gained some additional traction; the BSE Mid cap index was up 0.75%, while Small cap index shot higher by 0.94%.

The top gainers on the BSE sectoral space were, Realty up by 1.31%, HC up by 0.95%, CG up by 0.92%, Power up by 0.60% and FMCG up by 0.48% while Metal down by 0.63%, TECk down by 0.56%, IT down by 0.54%, PSU down by 0.29% and Oil & Gas down by 0.04% were top losers on the BSE sectoral space.

Cipla up by 4.12%, BHEL up by 1.53%, Tata Power up by 1.22%, HDFC up by 1.14% and SBI up by 0.95% were major gainers on the Sensex, while Coal India down by 3.40%, Hero MotoCorp down by 1.28%, Bharti Airtel down by 1.22%, Maruti Suzuki down by 1.15% and TCS down by 0.93% were the major losers in the index.

Meanwhile, with clear signs that weak global economic conditions were dragging down export orders, manufacturing activity grew at a slower clip in July on the back of power outages and a moderation in new order inflows, which continued to rise but at the weakest rate since last November as new export orders fell for the first time since October 2011. Dollar appreciation could be mentioned as a driver behind falling export business. But the impact of unusual severe blackouts of the last two days of July, which hit grids in a dozen northern states, home to around 670 million people, was not included in the survey.

According to the HSBC purchasing managers’ index (PMI), a headline index designed to measure the overall health of the manufacturing sector, expanded at the slowest pace in the past eight months to 52.9 in July, 2012 as against 55.0 in the previous month of 2012. However, a figure above 50 signals increase in production while, a number below 50 indicates contraction.

Underscoring the global effect of the current downturn caused by the euro zone's 2-1/2 year old sovereign debt crisis, the new export orders sub-index fell to 49.7 from 52.3 in June, its first sub-50 reading in nine months. Further, manufacturing firms in India signaled rising charges during July. Although the output price inflation persisted in the sector for 35 successive months, but the rate of increase during July slowed from the reading in the previous month. Meanwhile, quantity of purchases in the Indian manufacturing sector increased moderately, with the pace of increase being the slowest since September 2011.

Since, manufacturing accounts for around 15 percent of India's gross domestic product, so a slowdown would not augur well for Asia's third-largest economy, already struggling with its weakest growth in almost a decade. Further, reasoning deficient monsoon, deceleration of industrial growth, RBI, in its first quarter monetary policy review 2012-13, revised downward the GDP forecast for the current financial year to 6.5 per cent from 7.3 per cent.

The S&P CNX Nifty is currently trading at 5,234.35, up by 5.35 points or 0.10% after touching a high of 5240.45 and a low of 5212.65. There were 28 stocks advancing against 22 declining one’s on the index.

The major gainers on the Nifty were Cipla up by 4.46%, Kotak Bank up by 3.31%, Reliance Infra up by 2.76%, Ambuja Cement up by 2.49% and JP Associates by 2.32%. While, Coal India down by 3.30%, BPCL down by 1.91%, Sesa Goa down by 1.29%, Hero MotoCorp down by 1.25% and Bharti Airtel down by 1.22% were the major losers on the index.

Asian indices were trading on mixed note ; Nikkei 225 declined 0.61%, Taiwan Weighted lost  0.03%,  Kospi Composite Index slid  0.11%  and  Jakarta Composite  skid  by 0.57%  while Hang Seng index added 0.15%, Straits Times rose 0.06%,  KLSE Composite added 0.11%, and Shanghai Composite shot higher by 0.68%.

European markets got off to an optimistic start; France’s CAC40 was trading higher by 0.46%, Germany’s DAX shot up by 0.10% and UK’s FTSE100 added