Equity markets trade near neutral line with negative bias

Indian equity markets traded near neutral line with negative bias in late afternoon session. Traders were seen piling up positions in Realty, Power and Utilities sectors while selling was witnessed in Metal, IT and TECK sectors' stocks. Traders remain concerned after private report stated that Asia’s factory activity lost momentum in August as a resurgence in coronavirus cases disrupted supply chains across the region, raising concerns faltering manufacturing will add to economic woes caused by slumping consumption. Growth in India’s factory sector activity also slowed as persistent pandemic-related weakness weighed on demand and output, forcing firms to cut jobs again following a brief recovery in July. Sector wise, power sector remained in focus, as India’s power consumption grew 18.6 per cent in August to 129.51 billion units (BU) and remained higher than the pre-COVID level due to improved economic activities amid easing of lockdown curbs by states.

On the global front, Asian markets were trading mostly in green as investors tried to assess whether the global recovery will be resilient enough to withstand the fast-spreading Delta Covid variant. European markets were trading higher as fresh signs of weakness in Asian economies were offset by hopes for more stimulus, while investors shook off concerns about rising inflation.

The broader indices were trading in green; the BSE Mid cap index gained 0.94%, while Small cap index was up by 0.42%.

The top gaining sectoral indices on the BSE were Realty up by 5.10%, Power up by 1.95%, Utilities up by 1.57%, Capital Goods up by 1.31% and Consumer Durables was up by 1.27%, while Metal down by 1.24%, IT down by 1.24%, TECK down by 1.06%, Basic Materials down by 0.57% and Auto was down by 0.17% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 3.42%, Axis Bank up by 2.23%, Nestle up by 1.78%, Dr. Reddy's Lab up by 1.56% and SBI up by 1.27%. On the flip side, Mahindra & Mahindra down by 2.96%, Tata Steel down by 2.10%, Bajaj Finserv down by 1.77%, HDFC down by 1.74% and TCS down by 1.73% were the top losers.

Meanwhile, Indian manufacturing activity eased in the month of August, impacted by the pandemic and rising input costs. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - fell to 52.3 in August as against 55.3 in July.

The report further said that manufacturing production increased for the second straight month in August amid reports of improved sales and demand. However, growth was curbed by the pandemic and elevated price pressures. The overall rate of expansion was modest and below its long-run average.

On the price front, a softer but still sharp rise in input costs underpinned a quicker increase in charges. Manufactures passed part of the additional cost burden on to clients by lifting their fees. The rate of inflation quickened to a three-month high, but was below that seen for input costs.

Besides, employment levels were broadly stagnant in August as companies reportedly had sufficient workforces to cope with current requirements and confidence remained subdued. Although output was predicted to increase in the year ahead, the overall degree of optimism weakened from July.

The CNX Nifty is currently trading at 17118.40, down by 13.80 points or 0.08% after trading in a range of 17075.55 and 17225.75. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Asian Paints up by 3.39%, Axis Bank up by 2.30%, Nestle up by 1.81%, Tata Motors up by 1.67% and Dr. Reddy's Lab up by 1.55%. On the flip side, Mahindra & Mahindra down by 2.99%, Cipla down by 2.14%, Tata Steel down by 2.11%, Bajaj Finserv down by 1.81% and TCS down by 1.75% were the top losers.

Asian markets were trading mostly in green, Nikkei 225 surged 361.48 points or 1.29% to 28,451.02, Hang Seng increased 149.30 points or 0.58% to 26,028.29, Straits Times advanced 34.67 points or 1.13% to 3,089.72, Shanghai Composite gained 23.16 points or 0.65% to 3,567.10 and KOSPI was up by 7.75 points or 0.24% to 3,207.02. On the flip side, Taiwan Weighted dropped 16.30 points or 0.09% to 17,473.99 and Jakarta Composite was down by 59.37 points or 0.97% to 6,090.93.

European markets were trading higher, UK’s FTSE 100 increased 62.26 points or 0.87% to 7,181.96, France’s CAC increased 89.37 points or 1.34% to 6,769.55 and Germany’s DAX was up by 116.47 points or 0.74% to 15,951.56.