Benchmark equity indices slip into red territory

Indian equity markets have now slip into negative territory as profit-booking in Auto, Metal and Power counters have dragged benchmark indices lower. 30 share index, Sensex, trading lower by quarter percent, has went sub 18750 mark, while 50 share index, Nifty, too edging lower is hovering below the 5700 psychological level. Broader indices, meanwhile, are showcasing mixed trend. Negative global cues mainly have weighed on the sentiment. Asian shares were trading lower tracking US markets which ended an unusual storm-shortened trading week with a selloff on Friday, and major indexes erased early gains sparked by a stronger-than-expected payrolls report. 

Closer home, Service sector activity in India, which expanded at the slowest pace in six months in October, too added to the pessimistic environment. According to the seasonally adjusted HSBC Business Activity Index, the service sector activity slowed to 53.5 in October, against September's seven-month high of 55.8.

The BSE Sensex is currently trading at 18,727.96 down by 27.49 points or 0.15% after trading in a range of 18,794.63 and 18,721.36. There were 11 stocks advancing against 19 declines on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.08% while, Small cap index was up by 0.04%.

The few gaining sectoral indices on the BSE were, HC up by 0.63%, FMCG up by 0.63% and CD up by 0.21%. While, Auto down by 0.66%, Metal down by 0.50%, Power down by 0.48%, Realty down by 0.33% and Oil and Gas down by 0.34% were the few losers on the index.

The top gainers on the Sensex were Dr Reddy up by 1.43%, ITC up by 1.11%, BHEL up by 1.09%, Coal India up by 1.01%, and Cipla up by 0.89%.

On the flip side, Hindalco was down by 2.46%, Bajaj Auto was down by 1.90%, Tata Steel was down by 1.26%, Jindal Steel was down by 1.13% and GAIL India was down by 0.98% were the top losers on the Sensex.

Meanwhile, in signs that economic slump is not over yet, Service sector activity in India expanded at the slowest pace in six months in October, as weakness in the United States (US) and Europe hurt orders and forced firms to hire fewer workers. The services sector, which makes up nearly 60 percent of India's economic output, snapped its eleven consecutive month’s growth momentum.

According to the seasonally adjusted HSBC Business Activity Index, the service sector activity slowed to 53.5 in October, against September's seven-month high of 55.8. However, a figure above 50 signals increase in production while, a number below 50 indicates contraction.

Meanwhile, new orders at private sector companies in India expanded at a sharp rate.  Services companies signaled higher new business, citing strengthening demand, maintained brand reputation and good quality of services. Order book -volumes at manufacturing companies also expanded.

Additionally, job creation was recorded at private sector firms in India. However, the pace of growth was only slight and the slowest in three months. Meanwhile, workforces increased at both manufacturers and service firms, with the rate of expansion faster at manufacturing companies.

Extending the current inflationary period to 41 months, the composite data posted a further increase in output cost, but the rate of expansion was solid, but the slowest since April. Meanwhile, input cost inflation in the Indian private sector persisted during October, marking a 43-month sequence of rising costs. The rate of inflation in the service sector was sharp, and the quickest in four months.

The services sector slowed in October, but remained firmly in expansionary territory. Further, with inflation readings continuing to tick up, with higher raw material costs and solid demand keeping inflation pressures firm, the latter explains why the RBI remains hesitant about easing monetary policy.

The S&P CNX Nifty is currently trading at 5,692.00, down by 5.70 points or 0.10% after trading in a range of 5,709.20 and 5,689.35. There were 20 stocks advancing against 30 declines on the index.

The top gainers of the Nifty were ACC up by 1.68%, Dr Reddy up by 1.34%, Kotak Bank up by 1.31%, ITC up by 1.25% and Ambuja Cement up by 1.18%.

On the flip side, Hindalco down by 2.55%, Bajaj Auto down by 1.95%, Tata Steel down by 1.45%, Cairn down by 1.42% and DLF down by 1.39%, were the major losers on the index.

All the Asian equity indices were trading in the red; Kospi Composite was down by 0.55%, Taiwan Weighted down by 0.35%, Jakarta Composite down by 0.88%, Straits Times was down by 0.26%, KLSE Composite down by 0.19%, Hang Seng was down by 0.40%, Shanghai Composite was down by 0.23% and Nikkei 225 down by 0.48%.