Bears continue to rule in early noon deals; Nifty hovers sub 6000 mark

In absence of significant positive trigger, bulls are finding it difficult to make some headway amidst sluggish trade at D-street, as market-participants seems to have adopted a cautious approach on the last trading session of the week. Shrugging of positive macro-economic indicators, which suggests India’s services sector logging a growth at its strongest pace in three months during December, markets are trading downbeat on negative global cues.

The HSBC's Services Purchasing Managers Index (PMI) for December stood at 55.6, up from 52.1 in the previous month, signaling a sharp expansion in activity. Additionally, all the state-run oil marketing companies (OMCs), which are staging splendid rally early trade on Friday on reports that the oil ministry proposes to increase fuel prices, particularly diesel, by less than a rupee per month, too are capping the losses of the bourses to some extent.

However, at this point of time, 30 share barometer index, Sensex, on Bombay Stock Exchange (BSE), Sensex, and 50 share index, Nifty, although not enticing significant losses, are trading below their respective 19750 and 6000 psychological marks. Meanwhile, broader indices although paring losses have managed to keep their head above water.

On the global front, Asian shares are trading on somber note on Friday, as investors booked profits from a recent sharp climb after senior Federal Reserve officials expressed concerns about continuing to expand stimulative bond buying. Minutes from the Fed's December policy meeting released on Thursday sparked concerns among some members of the Federal Open Markets Committee about the potential risks of the Fed's asset purchases on financial markets, even if it looked set to continue an open-ended stimulus program for now.

Closer home, stocks from Metal, Realty and Fast Moving Consumer Goods have emerged as the major losers behind the down trend of the markets. The metal shares were trading lower on sluggish macro-economic data from the world’s top metal consumer, China. China's service activity expanded in December, but at a slower pace than in the previous month, according to the HSBC Services Purchasing Managers’ Index released Friday. The Services PMI, a measure of nationwide service activity, was 51.7 in December, down from 52.1 in November but still in positive territory.

The BSE Sensex is currently trading at 19727.79, down by 36.99 points or 0.19% after trading in a range of 19790.58 and 19686.34. There were 14 stocks advancing against 16 declines on the index.

The broader indices although paring losses continued to keep their head above water; the BSE Mid cap and Small cap index were up by 0.21% and 0.29% respectively.

The top gaining sectoral indices on the BSE were, PSU up by 0.95%, Oil & Gas up by 0.95%, IT up by 0.61%, TECk up by 0.51% and Health Care up by 0.23% while, Metal down by 1.38%, Realty down by 0.83%, FMCG down by 0.72%, Auto down by 0.45% and Bankex down by 0.36% were the top losers on the index.

The top gainers on the Sensex were ONGC up by 2.61%, Wipro up by 1.52%, BHEL up by 1.07%, Gail India and TCS were up by 0.92%.

On the flip side, Sterlite Industries down by 2.67%, Jindal Steel down by 2.01%, Hindalco Industries down by 1.90%, Tata Steel down by 1.83% and HDFC was down by 1.37% were the top losers on the Sensex.

Meanwhile, India’s services sector logged a growth at its strongest pace in three months during December, after company’s order books filled at the quickest rate since last February. The seasonally adjusted HSBC Services Business Activity Index posted 55.6 in December, up from 52.1 in the previous month. The 50 mark separates growth from contraction and the index has held above that level for over a year now.

As has been the case since May 2009, the volume of incoming new work in the Indian private sector rose during December. With manufacturing and services companies both registering sharp growth, the overall rate of expansion was steep and the fastest in ten months. The HSBC India Composite Output Index posted 56.3 in December, up from 53.2 in November. Meanwhile, the activity in the Indian private sector improved during December for the forty-fourth successive month. Both, manufacturers and service providers signaled increase in output, with rates of growth quickening in both sectors.

Additionally, the report pointed out that though, manufacturing and services firms both signaled higher staffing, the overall rate of job creation was only minor, with the employment in the private sector rising at the slowest rate in the current 10-month sequence of job creation. Meanwhile, the volume of work-in-hand (but not yet completed) at private sector companies in India rose in December. The pace of accumulation was solid and the fastest in 30 months.

Further, December data signaled eased inflation reading even as input prices continuing the trend that started in April 2009, rose during December. Although sharp, the pace of inflation eased to a 30-month low. Furthermore, optimism was signaled by service providers in India during December, with approximately 46% of monitored companies expecting an overall activity to increase in the upcoming year, given the anticipated rise in demand, the launch of new projects and increased advertising.

Led by a sharp rise in new business, the service sector provided some holiday cheer with full recovery of activity after two months of deceleration. Meanwhile, the new business sub-index jumped to 57.1 in December from 54.9 in the previous month. Further, the additional work load also led to a rise in outstanding business.

Thus, with growth showing signs of recovery and inflation still being elevated, the case for a policy rate cut is not yet convincing. However, the RBI has clearly indicated for rate cut in January-March. The central bank has held interest rates steady since April, citing high price pressures, even as financial markets and the government have clamored for rate cuts.

The S&P CNX Nifty is currently trading at 5,993.05, down by 16.45 points or 0.27% after trading in a range of 6,011.95 and 5,982.70. There were 23 stocks advancing against 26 declines, while 1 stock remained unchanged on the index.

The top gainers of the Nifty were BPCL up by 2.66%, ONGC up by 7.25%, Wipro up by 1.51%, HCL Technologies up by 1.27% and PNB up by 1.19%.

On the flip side, Jindal Steel down by 2.45%, Sesa Goa down by 2.35%, Hindalco Industries down by 2.08%, Tata Steel down by 2.08% and DLF down by 1.86% were the major losers on the index.

Most of the Asian equity indices were trading in the red; Hang Seng declined 0.59%, KLSE Composite slipped 0.24%, Straits Times declined 0.08%, KOSPI Composite contracted 0.37%, Taiwan Weighted was down by 0.39% and Jakarta Composite too edged lower by 0.02%. On the flip side, Shanghai Composite advanced 0.34% and Nikkei 225 was up by 2.82%.