Post session - Quick review

After taking a breather in the previous trading session, Indian equity markets resumed their southbound journey to conclude deeper into the red zone. Absence of positive trigger, both from domestic and international front, mainly made investors reluctant of putting their money into risky equities. Further, even cautious undertone of globe made market-men square off their positions ahead of ECB’s Thursday meeting. 30 share barometer index of Bombay Stock Exchange (BSE), Sensex, offloading over a massive 125 points, ended a little above 17300 level, while the widely followed index of National Stock Exchange (NSE), Nifty, too pared over 50 points, to shut shop below 5250 crucial mark. However, broader indices, suffered lesser torment as compared to frontline benchmark equity indices, as both Midcap and Smallcap index went home with loss of over 0.25%.

On the global front, most of European markets were trading in green as concerns over global growth were tempered by continued expectation of bold action from the European Central Bank to ease the region’s debt crisis. Conversely, Asian shares slid to near six-week lows as investors turned edgy ahead of a pivotal European Central Bank meeting on Thursday and US payroll data on Friday.

Closer home, sectorally, all groups of stocks traded lower, barring FMCG stocks, which are considered defensive bets in a falling market. Metals, Capital goods and Bankex stocks traded with the deepest cuts. Meanwhile, the reports which got PSU OMC’s in winning situation, proved to be dampener for Auto stocks. Oil Marketing companies, viz, HPCL and IOC held the fort upright on Kelkar committee reports that suggested the likelihood of petrol, diesel and LPG prices going up in next week after Finance Ministry told the Petroleum Ministry that it has no funds left to subsidise fuels. The increase could result in petrol turning costlier by Rs 4 a litre, diesel by Rs 5 and LPG by Rs 50 a cylinder. Additionally, retail stocks too showcased resilience in wake of reports suggested that Government besides ruling out easing sourcing norms for single brand retail has urged the companies to procure 30 percent of their merchandise requirement from domestic small industries. Shopper’s Stop, Pantaloon Retail, Trent surged in the range of 0.50-1.50%.

In stock specific action, private sector lender Axis Bank tanked over 3% after the research firm Morgan Stanley downgraded the stock to underweight from equal weight and cut its target price to Rs 800 from Rs 900. Meanwhile, lot of limelight was hogged by UB group stocks, namely United Breweries, Kingfisher shares, United Spirits; United Breweries Holdings ahead of consortium of lenders to beleaguered Kingfisher Airlines meet today to discuss ways forward with their exposure to the Vijay Mallya-promoted carrier. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1233:1557 while 139 scrips remained unchanged. (Provisional)

The BSE Sensex lost 135.04 points or 0.77% and settled at 17,305.83. The index touched a high and a low of 17,411.67 and 17,250.80 respectively. 9 stocks were seen advancing against 21 declining ones on the index (Provisional)

The BSE Mid-cap index lost 0.36% while Small-cap index was down 0.41%. (Provisional)

On the BSE Sectoral front, FMCG was up 0.49% and TECk up 0.31% were the only gainers, while Metal down 2.90%, Capital Goods down 2.62%, Bankex down 1.77%, Power down 1.31% and Auto down 1.03% were the top losers in the space.

The top gainers on the Sensex were Bharti Airtel up 3.04%, HUL up 1.63%, TCS up by 1.41%, ONGC up 1.12% and ITC up 0.45% while, Jindal Steel down 5.34%, BHEL down 5.09%, Tata Steel down 3.69%, ICICI Bank down 3.56% and Sterlite Industries down 3.48% were the top losers in the index. (Provisional)

Meanwhile, service sector activity in India expanded at the fastest pace in six months in August, driven by the strongest growth in new business since February and increasing optimism about the future. The service sector, which includes government service like railway transport, make up nearly 60 percent of India's economic output, extended its growth momentum for the tenth straight month.

According to the seasonally adjusted HSBC Business Activity Index, the service sector activity soared to 55.00 in August, as against 54.2 in the previous month. A figure above 50 signals increase in production while, a number below 50 indicates contraction. However, manufacturing companies signaled pace of production at the slowest since November 2011 as short supply of power negatively affected production.

Meanwhile, new orders at private sector companies in India rose steeply in August. The volume of new total business expanded faster since February, as power shortage continued to impact negatively on manufacturers. Additionally, staffing levels were increased in the Indian private sector in August. Although the pace of expansion was modest at services firms, but job creation at manufacturers was the fastest in the series history.

Extending the current inflationary period to 39 months, the composite data posted a further increase in output cost, but the rate of increase was the slowest since March. Manufacturing and service companies both signaled higher charges with the rate of inflation faster in the manufacturing sector. Meanwhile, even input cost inflation persisted in the Indian private sector in August. Although steep, the rate of increase in input cost inflation eased to the slowest since June 2010 and was below its long-run average.

Thus, HSBC Composite Index, which covers the manufacturing and service sectors, although remain unchanged at 54.3 in August from 54.4 seen in July 2012, the rate of increase marked was the slowest in four months. However, the HSBC survey further indicated that though the inflation readings eased, but remain firm on the back of rising wage costs and solid demand. Thus, with inflation risks still lingering despite the slowdown and policy action out of Delhi so far insufficient, the RBI has little room to manoeuvre.

Indian central bank although left key interest rates unchanged in its recent monetary policy review meet on July 31, but did slash the Statutory Liquidity Ratio (SLR) of scheduled commercial banks from 24% to 23% of their NDTL with effect from the fortnight beginning August 11, 2012. Further, this stronger performance of service sector could further dash already receding expectations for more interest rate cuts from the Reserve Bank of India, which is now widely expected to leave them on hold in their upcoming mid-quarterly monetary policy review on September 17.

India VIX, a gauge for markets short term expectation of volatility gained 2.53% at 17.01 from its previous close of 16.59 on Tuesday. (Provisional)

The S&P CNX Nifty lost 50.95 points or 0.97% to settle at 5,223.05. The index touched high and low of 5,259.50 and 5,215.70 respectively. 9 stocks advanced against 41 declining ones on the index. (Provisional)

The top gainers on the Nifty were Bharti Airtel up 2.76%, HUL up 2.04%, TCS up 1.80%, ONGC up 1.10% and ITC was up 0.54%. On the other hand, Jindal Steel down 5.82%, BHEL down 5.32%, Axis Bank down 4.75%, Tata Steel down 4.10% and Sesa Goa down 3.80% were the top losers. (Provisional)

The European markets were trading in green with, France’s CAC 40 up 0.26%, Germany’s DAX up 0.63% and the United Kingdom’s FTSE 100 up 0.01%.

Asian markets extended losses and ended lower on Wednesday tracking losses in Europe and on Wall Street after a third straight monthly contraction in US manufacturing activity. Meanwhile, poor numbers on factory activity from Asia and Europe also pressurized the market but investors still hopeful towards a European Central Bank meeting, for new measures to fight the lingering debt crisis. However, China, a major global growth driver, saw its manufacturing activity fall to its lowest level in more than three years in August.