Indian equity markets dip to intra-day low; report on GAAR eyed

Persistent profit-booking at Dalal Street, which has pushed 50 share index, Nifty into the red zone and left Sensex hanging around its previous close, is mainly on account of trader’s anxiety ahead of submission of Shome’ panel final report on GAAR, today. However, substantial downside of the bourses stay limited on account of recovery of European shares, which after opening flat have now gained some ground. Thus, after kick-starting the fresh month on a quiet note, 30 share index of BSE, Sensex, despite dipping to its intra-day low, is above the 18700 mark, with 50 share index of NSE, too sailing past 5700 psychological level. Degree of outperformance is been staged from broader indices, which at the moment, are trading with gains of over 0.50% (Midcap index) and 0.75% (Smallcap index) respectively.

On the global front, European stocks started the final quarter of 2012 largely unchanged on account of investor’s nervousness against the threat of a sovereign downgrade for Spain. Moody's Investors Service is expected to deliver its decision on Spain's credit rating on Monday, which is likely to be a cut to junk status, a move which could lead to the country asking for a full bailout from European partners.

Closer home, stocks from Information Technology, Auto and Healthcare counters mainly toppled the buying list, while stocks from Metal, Realty and bankex emerging to be laggards, have added to the underlying weakness of bourses. Auto shares have rallied mainly on reporting good September sales number. So far, Maruti Suzuki, M&M and TVS, are among the companies which have reported their monthly numbers. The overall market breadth on BSE is in the favour of advances which have thumped declines in the ratio of 1548:1052, while 129 shares remained unchanged

The BSE Sensex is currently trading at 18768.52, up by 5.78 points or 0.03% after trading in a range of 18822.15 and 18759.19. There were 13 stocks advancing against 17 declines on the index.

The broader indices continued to gain momentum; the BSE Mid cap index and Small cap indices were trading higher by 0.66% and 0.98% respectively.

On the BSE sectoral space, IT up by 1.24%, TECk up by 1.04%, Auto up by 0.52%, HC up by 0.29% and FMCG up by 0.23% were the top gainers. While, Metal down by 0.56%, Realty down by 0.52%, Bankex down by 0.44%, CG down by 0.13% and  CD down by 0.11% were the top losers.

The top gainers on the Sensex were Infosys up by 1.97%, Tata Motors up by 1.51%, BHEL up by 1.28%, Maruti Suzuki up by 0.87% and Gail India up by 0.77%. On the other hand, Tata Steel down by 1.35%, HDFC Bank down by 1.15%, Tata Power and Bajaj Auto were down by 1.12% and Sterlite Industries down by 0.91% were top losers on the Sensex.

 Meanwhile, supported by faster output growth and rising export orders, India’s manufacturing activity growth in September held steady compared with August. Measures by the US Federal Reserve and the European Central Bank to revive their economies mainly pushed foreign demand for Indian goods higher. At the same time, order book volumes increased for the forty-second successive month on stronger demand, good product quality and increasing marketing. However, the report cautioned the chances of rise in inventories dampening the output growth in coming months.

According to the HSBC purchasing managers’ index (PMI), a headline index designed to measure the overall health of the manufacturing sector, expanded at steady space of 52.8 in September, unchanged from August reading. A PMI reading above 50 indicates expansion in the sector, while one below suggests decline. In a sign of relief, the new export orders sub-index, an indicator of prospective overseas business, jumped to 53.8 from 49.2 in August, thereby positing biggest rise in almost two years.

Additionally seventh successive month of growth was recorded for employment in the month of September, with payroll numbers increasing to meet stronger demand, thereby signaling expansions in marketing departments. The inflation picture, on the other hand, was a bit mixed. While input prices rose at a faster clip on the back of higher raw material and diesel prices, output prices rose somewhat less, thereby adding to the Reserve Bank of India's dilemma of boosting growth while trying to rein in stubbornly high inflation.

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, which is already languishing near its slowest pace of growth in a decade for Q1. Poor showing by the manufacturing sector pulled down the GDP growth to 5.5% in the first quarter, the decade's worst Q1 performance, against the growth figure of 8% in the corresponding period in the last fiscal. The survey, although estimates the growth in the manufacturing sector to remain subdued, but at the same has underscored the implementation of recently announced reforms to help facilitate a gradual recovery during the second half of the fiscal year.

The S&P CNX Nifty is currently trading at 5,698.45, down by 4.85 points or 0.09% after trading in a range of 5,715.60 and 5694.00. There were 23 stocks advancing against 27 declines on the index.

The top gainers of the Nifty were Ambuja Cement up by 3.24%, JP Associates up by 2.01%, Infosys up by 1.95%, Tata Motors up by 1.51% and Ultra Cement up by 1.46%. While, DLF down by 2.47%, Tata Steel down by 1.53%,  Bank of Baroda down by 1.45%, IDFC down by 1.42% and Kotak Bank down by 1.39%% were top losers on the index.

Most of the Asian equity indices were trading in the red; Jakarta Composite declined 0.85%, Nikkei 225 descended 0.82%, Straits Times lost 0.36% and Taiwan Weighted edged lower by 0.51 %. On the flip side, KLSE Composite was up by 0.76% was the sole gainer amongst Asian pack. Meanwhile, Markets in China, Hong Kong and South Korea are closed today for holidays.

European markets were trading optimistic; with CAC 40 gaining 0.46%, DAX rising by 0.44% and FTSE 100 adding 0.19%.