Markets remain in consolidation mood; last hour spurt gives modest gain

Mood of consolidation extended to the third straight day on the Indian markets, despite some early leads markets remained range-bound throughout the session with traders remaining cautious ahead of the vote on government’s decision to allow foreign direct investment in multi-brand retail. There was not much activity on the street with some disappointments from the economic front adding to the woes. India's services sector growth declined in November, HSBC services Purchasing Managers' Index (PMI), fell to 52.1 in November from October’s 53.8, registering a 13-month low and suggesting an economy limping towards its slowest growth for the year in a decade. The HSBC India Composite Output Index posted 53.2 in November, slightly down from 53.5 in October.

Back on street, early trade supported by firm Asian peers showed that the markets will come out of the consolidation phase, as the government looked confident in sailing through the vote on FDI in retail, though the scathing attack by the opposition and some of the government allies made the investors cautious. Though, Parliamentary Affairs Minister Kamal Nath said that the government is confident of winning the retail FDI vote even as the Opposition alleges that the entire process is a farce and the vote has been fixed. The government however has to get the amendments to the Foreign Exchange Management Act (FEMA) regulations cleared which is necessary for effecting its decision to permit 51 per cent FDI in multi-brand retail and 100 per cent in single-brand retail.

The global cues were more or less supportive, though the US markets ended marginally lower overnight but the Asian markets showed good enthusiasm supported by a bounce back in the Chinese markets, which surged to their three months high after the government allowed insurers to invest more in banks and on expectation of rise in profits at construction and cement companies. The European markets too made a strong start on Chinese signal of wider policy support for the economic recovery. Though, on economic front the final data were likely to show that manufacturing in the euro-area slowed last month, while retail sales weakened in October.

Back home, the major indices once again moved in a tight band, though the broader indices showed a steady trade throughout the day but the front liners kept flickering and a couple of times profit booking too was witnessed. Realty index was on a continuous bull run and added another about 3% for the day, while the metal stocks too remained in demand and the index on the BSE gained about 2%. Oil & Gas and banking were the other prominent gainers. On the other hand, IT sector suffered sharp profit booking and emerged as the laggard of the day on concern that Cognizant Technology Solutions Corp issuing lower revenue growth guidance for 2013 based on compensation targets for top executives. Cognizant, in a filing to the US market regulator Securities and Exchange Commission (SEC) said that its top executives will receive 100 percent of their performance-linked shares if the company achieves revenue of $8.5 billion next year, a 16 percent rise over its projected 2012 revenue. However, Indian IT industry demand is likely stable and not falling off by any means but the concern kept the investors in tizzy. One non sectoral gauge, Aviation remained in limelight after civil aviation minister Ajit Singh said that the government has no plans to regulate airfares; he said that the government just intends to make the pricing mechanism more transparent. While, Kingfisher Airlines and Jet Air India gained over 2.5%, SpiceJet zoomed by over 12% for the day. Broader indices too ended with gains of around half a percent after a steady trade.

Finally, the BSE Sensex gained 43.74 points or 0.23% to settle at 19,391.86, while the S&P CNX Nifty rose by 11.25 points or 0.19% to end at 5,900.50.

The BSE Sensex touched a high and a low of 19,463.25 and 19,371.01, respectively. The BSE Mid-cap index was up by 0.46% and Small-cap index gained 0.52%.

Sterlite Industries up 5.37%, Hindalco up 3.38%, Tata Steel up 2.13%, SBI up 1.38% and Tata Motors up by 1.33% were the major gainers on the Sensex, while Tata Power down 3.67%, Infosys down 1.93%, Wipro down 1.83%, Bajaj Auto down 1.51% and M&M down 0.94% were major losers on the index.

The few gainers on the BSE sectoral space were Realty up 2.81%, Metal up 1.61%, Oil & Gas up 0.74%, Bankex up 0.67% and PSU up 0.51%, while IT down 1.22%, TECk down 0.93% and Power down 0.46% were top losers on the BSE sectoral space.

Meanwhile, coming in sharp contrast to the manufacturing PMI, India’s services sector logged a growth that is at its weakest pace in over a year during November. The HSBC services Purchasing Managers' Index (PMI), fell to 52.1 in November from October’s 53.8, registering a 13-month low and suggesting an economy limping towards its slowest growth for the year in a decade.  The HSBC India Composite Output Index posted 53.2 in November, slightly down from 53.5 in October.

The report pointed out that though, manufacturing and services firms both signaled higher employment, the overall rate of job creation was only minor and the payroll numbers were increased just to meet production requirements. Manufacturing and services companies both recorded increases, although power shortages hampered manufacturing production. Services firms linked growth in new orders to rising demand, increased marketing and maintained quality of services.

November data signaled persistent inflationary pressure in the Indian private sector as input and output prices both increased. However, optimism which stood at three months high was signaled in the Indian service sector during November.

The S&P CNX Nifty touched a high and a low of 5,917.80 and 5,891.35 respectively.

The top gainers on the Nifty were Sesa Goa up 5.27%, DLF up 4.46%, Hindalco up 3.37%, PNB up 3.07% and BPCL up by 2.32%.

The top losers on the index were Tata Power down 3.36%, Infosys down 2.02%, Wipro down 1.71%, HCL Tech down 1.41% and Ultra Cement down 1.34%.

European markets were trading in green. France’s CAC 40 up 0.27%, Germany’s DAX up 0.25% and Britain’s FTSE 100 was up by 0.28%.

Asian markets ended higher on Wednesday, led by gains in Chinese equities, on the back of new Communist Party chief Xi Jinping’s statement that the government aimed to stabilize exports and make policies more targeted and effective. However, concerns over whether US lawmakers can resolve a budget impasse before year-end to avert a possible economic slump, restricted more gains. Japan’s Nikkei went home with green mark in somewhat light trading, while Kospi ended up after touching its highest level since October 18.