Indian equities trim losses; trade continues in subdued note

Indian equities trimmed losses gyrating near neutral line in the late afternoon session on account of buying in front line counters. The markets traded in green from the morning but selling crept in and the pressure got intensified on HSBC purchasing managers’ index (PMI) reports, a headline index designed to measure the overall health of the manufacturing sector, which expanded at the slowest pace in the nine months to 52.8 in August, 2012. However, supportive clues from European counterparts and buying at lower levels supported the market to pare off most losses.  Besides, the Markit Economics will unveil HSBC India Services PMI for August 2012, on September 05, 2012. Traders were seen piling up position in Consumer Durables, Power and Auto sector while selling was witnessed in Oil & Gas, Metal and Realty sector. In the scrip specific development, public sector undertakings oil marketing companies BPCL, IOC and HPCL were trading under pressure on concerns about high under-recovery. Zee Entertainment was trading in red after BNP Paribas downgraded the company to ‘hold’ from ‘buy’ citing limited upside. Everest Kanto Cylinder, a manufacturer of high pressure gas cylinders, was trading firm in green as the company is considering various options to restructure its obligations under the outstanding bonds.

On the global front, the Asian markets were trading in green barring Straits Times and Nikkei 225 while the European markets were trading on optimistic note. On September 06, 2012, the European Central Bank (ECB) will hold its monthly policy meeting on euro area interest rates. The ECB had slashed its interest rates to an all-time low in July and investors are expecting to continue this easing cycle, probably as soon as in September, in order to help the economic recovery of recession- and crisis-ridden members of the euro zone. On the home turf, the NSE Nifty and BSE Sensex were trading above their psychological 5,250 and 17,400 levels respectively. The market breadth on BSE was positive in the ratio of 1378:1235 while 121 scrips remain unchanged.

The BSE Sensex is currently trading at 17,401.68, down by 27.88 points or 0.16% after touching a high of 17,509.99 and low of 17,349.57.

The broader indices were trading in green; the BSE Mid cap index was sustaining with gains of 0.28% while Small cap index was trading in green by 0.08%.

The top gainers on the BSE sectoral space were, Consumer Durables up by 0.66%, Power up by 0.39%, Auto up by 0.32% and Capital Goods up by 0.30%. On the flip side, Oil & Gas down by 0.72%, Metal down by 0.60%, Realty down by 0.60%, Bankex down by 0.37% and Health Care (HC) down by 0.16% were top losers on the index.

The top gainers on the Sensex were Bajaj Auto up by 2.60%, Cipla up by 1.75%, NTPC up by 1.73%, Maruti Suzuki up by 1.62%, and BHEL up by 1.05%. On the flip side, Tata Power down by 1.51%, Jindal Steel down by 1.18%, Wipro down by 1.02%, Dr. Reddy’s Lab down by 0.99% and Tata Steel down by 0.92% were the top losers on the Sensex.

Meanwhile, opening up about 5 million tonnes production of iron-ore a year again, the Supreme Court has lifted the ban on iron ore mining from 18 Category ‘A’ mines in Karnataka, the country's second-largest supplier, after a suspension of over a year on environment concerns. However, the court has permitted mining subject to statutory compliance, as the legal clearances in respect of some A category mines would be coming to an end in October.

Citing environmental violations, the apex court in 2011, banned iron ore mining in Bellary, Chitradurga and Tumkur districts of Karnataka and asked a federal government body to carry out an environmental impact assessment.

In an attempt to boost iron-ore production, the apex court allowed 18 mines to resume iron ore mining in Karnataka, as clamp down on illegal mining combined the nation's capital desire to keep supplies for domestic steel mills, had began to eat into the iron-ore production.

Asia’s third largest economy used to produce about 200 million tonnes a year of iron ore, with exactly half of that being exported. However, the potential increase in output from Karnataka is unlikely to affect flagging global iron ore prices unless the state allows exporters to ship the raw material overseas. Furthermore, the order is unlikely to mean further exports as the steel making ingredient is deficit domestically and with 30 percent export tax and excessive freight rates, not making shipments a feasible option. However, the output from the re-started mines will be in addition to state-run NMDC's 1 million tonnes per month, which was permitted by the Supreme Court for production from August 6, 2011.

The S&P CNX Nifty is currently trading at 5262.65, up by 4.15 points or 0.08% after trading in a range of 5,295.80 and 5243.15. There were 23 stocks advancing against 27 declines on the index.

The top gainers of the Nifty were Ranbaxy up by 2.59%, Bajaj-Auto up by 2.54%, Cipla up by 2.23%, Power Grid up by 1.84% and Hero MotoCorp up by 1.83%. On the flip side, Ambuja Cements down by 2.05%, SAIL down by 1.60%, Tata Power down by 1.56%, Siemens down by 1.53% and Jindal Steel down by 1.18% were the major losers on the index.

Most of the Asian indices were trading in green; Hang Seng index added 0.39%, Shanghai Composite up by 0.57%, Jakarta Composite advanced 1.15%, Kospi Composite Index rose 0.40%, Taiwan Weighted gained 0.72% and KLSE Composite jumped by 0.46%, while Straits Times declined 0.15% and Nikkei 225 slid 0.63% were the only losers.

The European markets were trading in green with, France’s CAC 40 ascending 0.33%, Germany’s DAX added 0.46% and the United Kingdom’s FTSE 100 gained 0.53%.