Benchmarks continue weak trade; Nifty below 4,900 mark

Indian equity indices pare off some losses but still are trading weak on negative note in absence of buying among investors amid domestic concerns and due to euro debt crisis. The manufacturing PMI data showed that India’s manufacturing activity expanded at the slowest pace in two and a half years in the month of September as the non-stop rate hike by Indian central bank since March 2010 hit the growth of new orders. Market participants were seen selling in Realty, Metal and Bankex sector. Stocks like Rama Paper, Hindoostan Mills, JSL Industries, Sharp Trading, Tilak Finance, Agarwal Holdings and PFL Infotech hit new high while stocks like MTNL, Infomedia 18, Dishman Pharma, Prithvi Info, Punj Lloyd, BL Kashyap, Kingfisher Airlines, Great Offshore, Tanla Solutions, IndiaBulls Real Estate, DB Corp, DB Realty, Nitesh Estate, Career Point, MOIL, Punjab & Sind Bank, PTC India Finance, Sanghvi Forgings, Welspun Global and Brooks Laboratories hit new low. Maruti Suzuki India is in green after the month-long standoff between the company's management and agitating Manesar plant workers ended on Saturday, 1 October 2011. Shares of aviation companies like Jet Airways (India), SpiceJet  and Kingfisher Airlines are trading in red after state-owned oil marketing companies hiked jet fuel price by 1.5% as falling rupee made oil imports costlier. JSW Steel tumbled on reports that the Central Bureau of Investigation has raided the company's offices in Bellary at Karnataka in connection with illegal mining. ADA Group's stocks like Reliance Communications, Reliance Capital, Reliance Power and Reliance Infrastructure climbed higher on reports that CBI has given a clean chit to ADAG group chief Anil Ambani on charges that they held shares in firms linked to Swan Telecom. On the global front, Asian markets were trading in red while the European markets were too trading in red on pessimistic note. Greece is likely to default on its debt. Reports suggested that Greece failed to meet this year's deficit target of 7.8 percent, due to a deeper than expected recession and its deficit for 2011-2012 is expected to reach 8.5% of GDP, or $25.2 billion. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 4,900 and 16,200 levels, respectively. The market breadth on the BSE was negative in the ratio of 769:1874 while, 91 scrips remained unchanged.

The BSE Sensex is currently trading at 16,165.49 down by 288.27 points or 1.75% after trading as high as 16,255.97 and as low as 16,056.33. There were 3 stocks advancing against 27 declines on the index.

The broader indices were trading on a somber note; the BSE Mid cap index sank 1.65% while Small cap shed 1.30%.

On the BSE sectoral space, there were no gainers while Realty down 3.69%, Metal down 3.20%, Bankex down 2.76%, Capital Goods down 2.36% and Consumer Durables down 1.62% were the major losers in the space.

Coal India up 0.59%, M&M up 0.55% and TCS up 0.35% were the only gainers on the Sensex, while DLF down 5.21%, Jindal Steel down 4.79%, Hindalco down 4.23%, Tata Steel down 4.11% and Wipro down 3.52% were the major losers on the index.

Meanwhile, manufacturing sector activity in India expanded at the slowest pace in two and half a year, in the month of September as the non-stop rate hike by Indian central bank since March 2010 has hit the growth of new orders. The HSBC Purchasing Managers' Index declined to 50.4 in September, from 52.6 in August. A number above 50 on the index signals expansion in the sector.

Leif Eskesen, economist at HSBC said, ‘growth momentum in India's manufacturing sector eased further in September. This was driven by weaker orders, with export orders still contracting due to the weaker global economic conditions. While the persistent inflation pressures support RBI's tightening bias, the slowdown in manufacturing growth suggests that the end to the tightening cycle is at least now in sight, he added.

September’s readings were the lowest for domestic manufacturing sector since March 2009. The growth rate in new orders in September slowed for the sixth consecutive month as deteriorating economic conditions on both sides of the Atlantic led to contraction in export orders.  With developed economies worryingly inching nearer to yet another recession, emerging markets like India and China which have been touted as the global growth engines are also facing the crunch.

Domestically, the input price inflation rate moderated since August to an 11-month low while charges increased at a marked rate that was broadly unchanged from the prior period. The inflationary pressures in the manufacturing sector continues to remain substantial despite the Reserve Bank of India's sustained monetary tightening measures to tame the rate of price rise. The central bank has raised its key lending rates 12 times since March 2010 and experts are of the belief that possibly only one or two rate hikes are left in RBI’s arsenal.

The S&P CNX Nifty is currently trading at 4,856.00, lower by 87.25 points or 1.77% after trading as high as 4,879.15and as low as 4,823.90. There were 13 stocks advancing against 37 declines on the index.

The top gainers on the Nifty were BPCL up 3.50%, Reliance Capital up 2.08%, Reliance Infra up 1.98%, Reliance Power up 1.56% and Reliance Communications up 1.32%.

DLF down 5.66%, Jindal Steel down 5.00%, Hindalco down 4.64%, Tata Steel down 4.27% and Wipro down 3.71%, were the major losers on the index.

Asian markets traded on a pessimistic note, Hang Seng got pulverized by 4.38%, Jakarta Composite got dragged by6.01%, KLSE Composite plummeted 1.55%, Nikkei 225 plunged 1.78%, Straits Times sank 2.04% and Taiwan Weighted slumped 2.93%.

Stock markets in China remained closed on Monday in observance of a public holiday and the country's markets will be shut throughout the week for holidays. Also South Korea's markets were closed on account of a national holiday.

The European markets were trading on a weak note in red with, France’s CAC 40 plunged 2.20%, Germany's DAX sank 2.35% and Britain’s FTSE 100 descended 1.97%.