Benchmarks pare gains post the release of 16 months low manufacturing data

After starting FY’14 on promising note, benchmark equity indices have now pared part of their early gains as murky manufacturing data deterring sentiment at D-street, has led to some profit-booking. Expanding at its slowest pace since November 2011, the seasonally adjusted HSBC Purchasing Managers’ Index, a composite indicator of operating conditions in the manufacturing economy slowed to 52 in March against its previous reading of 54.2 in February.  However, the overall sentiment at Indian equity markets continue to remain optimistic despite the record high Current Account Deficit gap reported on the last trading session of previous financial year. Benchmark 30 share index, Sensex trading with gains of over 50 points is hovering above 18900 mark, while Nifty too sccoping up gains of over 20 points is hovering above 5700 mark. Broader indices, outperforming the globe, are trading with gains of over a percent. Sectorally, Realty, Capital Goods and Health Care counters are the best performers, while Auto and Metal counters are the top laggards. The overall market breadth on BSE is in the favour of advances which thumped declines in the ratio of 1507: 661, while 88 shares remained unchanged.

The BSE Sensex is currently trading at 18902.07, up by 66.30 points or 0.35% after trading in a range of 18959.48 and 18869.90. There were 17 stocks advancing against 13 declines on the index and one remained unchanged.

The broader indices were trading in green; the BSE Mid cap and Small cap index were trading up by 1.18% and 1.96% respectively.

The top gaining sectoral indices on the BSE were Realty up by 3.24%, Capital Goods up by 1.90%, Health Care up by 1.33%, Power up by 1.31% and Consumer Durables up by 1.17%, while Auto down by 0.70% and Metal down by 0.63% were the top losers on the BSE. 

The top gainers on the Sensex were BHEL up by 2.85%, Dr Reddys Lab up by 2.40%, L&T up by 2.21%, Cipla up by 2.17% and NTPC up by 1.76%.

On the flip side, Sterlite Industries down by 3.41%, Tata Motors down by 2.27%,  Jindal Steel down by 1.05%, Wipro was down by 0.88% and  Hero MotoCorp down by 0.70% were the top losers on the Sensex.

Meanwhile, expanding at its slowest pace since November 2011, the seasonally adjusted HSBC Purchasing Managers’ Index, a composite indicator of operating conditions in the manufacturing economy slowed to 52 in March against its previous reading of 54.2 in February, thereby underscoring shrinking domestic and foreign demand.

Deceleration in new orders and power outages mainly slowed the growth momentum in the manufacturing sector, with the March headline reading showing the biggest month-on-month drop since September 2011. Despite that, Indian goods-producing sector has shown output growth advancement for the forty-eight consecutive month. The PMI index has now stayed above the 50 mark that separates growth from contraction for almost four years.

Further, although March data signaled higher volumes of incoming new work in the Indian goods-producing sector, the growth in total new orders was the slowest in 16 months. The new orders sub-index in the survey, a reliable gauge of future output, slipped from 56.3 in February to 52.8, the weakest pace of growth since November 2011, with overall output growing at its weakest pace in more than a year. Export orders too rose slightly, however, the rate of expansion eased.

Meanwhile, input prices increased in March, but the rate of cost inflation eased to the slowest in 32 months. Input prices in the Indian manufacturing sector rose for the forty-eight consecutive month, suggesting the increased prices of raw materials and unfavorable exchange rates.

However, even as the survey suggests inflation rate easing over coming months, it also hints at the limited room for rates cut that Reserve Bank of India (RBI) has given the sharp uptick in headline inflation numbers and record-high current account deficit that country is dealing with. The RBI in its mid-quarter monetary policy review on March 18 reduced the repo rate by 25 basis points from 7.75 to 7.50 per cent. Further, India's current account deficit hit a record 6.7 per cent of GDP in December quarter to $32 billion

The CNX Nifty is currently trading at 5,705.20, up by 22.65 points or 0.40% after trading in a range of 5,720.95 and 5,688.10. There were 32 stocks advancing against 18 declines on the index.

The top gainers of the Nifty were DLF up by 3.77%, Reliance Infrastructure up by 3.31%, Cairn up by 3.23%, BHEL up by 2.82% and JP Associate up by 2.75%.

On the flip side, Tata Motors down by 2.17%, Sesa Goa down by 1.96%, Jindal Steel & Power down by 1.06%, IDFC down by 0.94% and Hero MotoCorp down by 0.88% were the major losers on the index.

Most of the Asian equity indices were trading in red; KLSE Composite slipped 4.63 points or 0.28% to 1,667.00 and Nikkei 225 was down by 216.61 points or 1.75% to 12,181.30, Jakarta Composite was down by 2.62 points or 0.05% to 4,938.37.

On the flip side, Straits Times rose 2.02 points or 0.06% to 3,310.12.

Stock market in Hong Kong, South Korea, Taiwan and China remained closed for the trade today.