Sensex, Nifty continue to trade in red

The benchmarks witnessed a choppy session with negative bias in the late morning session in absence of supportive cues from global peers and as rupee continued to slip against the US dollar. The market is likely to consolidate with negative bias in the near term and take cues from rupee movement and global cues for direction. On the global front, Asian markets too were trading mostly in red at this point of time with Japanese Nikkei leading the pack, declining over two and a half percent as capital spending by Japanese companies fell by 3.9 per cent followed an 8.7 per cent annual decline in the final quarter of last year, which was the first decline in five quarters.

Back home, the traders were seen piling up positions in IT, Teck and Health Care while selling was seen in Auto, Power and Oil & Gas sector. In scrip specific developments, public sector oil marketing companies viz. IOC, BPCL and HPCL edged higher after a hike in retail selling prices of petrol and diesel with effect from June 1, 2013

In scrip specific actions, Shares of Infosys rallied after the country's second largest software services major re-appointed N R Narayana Murthy as its executive chairman with immediate effect to put the company back on high growth path. National Aluminium (Nalco), surged after the company has raised aluminium prices by Rs 4,500 ($80.01) per tonne in the domestic market. Ashok Leyland tanked after the Hinduja Group company has reported 16 per cent year-on-year decline in sales at 7,267 units in May, 2013. Tata Motors slipped after the global auto giant reported 23.37 per cent decline in total vehicle sales at 49,304 units in May 2013.Maruti Suzuki dropped after the company reported 13 per cent decline in domestic sales at 77,821 units as compared to 89,478 units in May last year. Tulip Telecom slumped after the company reported a consolidated net loss of Rs 656.59 crore for the quarter ended March 31, 2013, sending its shares lower by over 4.8 per cent. Reliance Communications plummeted after the Anil Ambani-owned company plans to shift more than 5,500 employees from its call centre functions for post paid, enterprise, international calling and Reliance India back offices to third-party business process outsourcing companies. Meanwhile, the NSE Nifty and BSE Sensex were trading just above their psychological 5,950 and 19,000 levels respectively. The market breadth on BSE was showing negative trend with advances to declines in ratio of 723: 904.

The BSE Sensex is currently trading at 19684.00, down by 76.30 points or 0.39% after trading in a range of 19860.19 and 19679.42. There were 9 stocks advancing against 21 declines on the index. The broader indices were trading in red; the BSE Mid cap index was down by 0.01% and Small cap index was down by 0.03%.

The top gaining sectoral indices on the BSE were, IT up by 1.60%, Teck up by 1.36%, and Health Care up by 0.16% while, Auto down by 1.39%, Power down by 1.38%, Oil & Gas down by 0.96%, Realty down by 0.90% and Consumer Durables down by 0.87% were the top losers on the BSE.

The top gainers on the Sensex were Infosys up by 4.46%, Bharti Airtel up by 1.88%, Dr Reddys Lab up by 0.98%, Gail India up by 0.77% and Cipla up by 0.53%. On the flip side, Bajaj Auto was down by 3.50%, Maruti Suzuki was down by 2.86%, Hero MotoCorp was down by 2.46%, Sun Pharma was down by 2.15%, and Tata Power was down by 1.62% were the top losers on the Sensex.

Meanwhile, shrinking for the first time in over four years, the seasonally adjusted HSBC Purchasing Managers’ Index, a composite indicator of operating conditions in the manufacturing economy slowed to 50.1 in May against its previous reading of 51.1 in April, registering its third monthly decline.

Production at Indian factories was the lowest since March 2009, mainly on account of softer domestic orders and persistent power shortages. Nevertheless, the PMI index, which gauges business activity in Indian factories but not its utilities, has held above the watershed 50 level that divides growth from contraction for over four years.

Further, although May data signaled rise in order book volumes for the fiftieth month, the overall rate of expansion was marginal and the slowest in that sequence. The factory production sub-index, showed output contracted in May from a month earlier as new orders growth slowed to a trickle. The output sub-index fell to 48.6 in May from 50.2 in April.

Although, input prices increased modestly during the month, but the rate of increase was the lowest in the current 50 months inflationary period. Meanwhile, output prices faced by manufacturers decreased for the first time in four years. Also, manufacturing companies signaled higher staffing levels during May, taking the current sequence of job creation to 15 months. One bright spot in the PMI survey showed orders from abroad came in at a faster pace than in April which might help the sector avoid a downturn this month.

Thus, the survey, which comes hard on the heels of data released on Friday that confirmed Asia’s third largest economy grew at its slowest pace in a decade in the fiscal year that ended in March, suggests with the output prices slowing and inflation receding, the RBI is likely to fire another salvo at its June policy meeting.  The Reserve Bank of India, so far, has slashed its key lending rate thrice this year by 25 basis points each time, lowering the rate to 7.25% to spur economic recovery.

The central bank is scheduled to announce its mid-quarter policy review on June 17. In its last review, the RBI had cut the key interest rates by 0.25 percent.

The CNX Nifty is currently trading at 5,954.90 down by 31.05 points or 0.52% after trading in a range of 6,011.00 and 5,953.45. There were 13 stocks advancing against 37 declines on the index.

The top gainers of the Nifty were Infosys up by 4.66%, Lupin up by 2.26%, Bharti Airtel up by 1.47%, Bank of Baroda up by 1.32%, and Gail up by 1.13%. On the flip side, Bajaj-Auto down by 3.58%, Maruti Suzuki down by 2.82%, Grasim down by 2.79%, Hero MotoCorp down by 2.78% and Ranbaxy down by 2.09%were the major losers on the index.

Most of the Asian equity indices were trading in red; Jakarta Composite declined 54.05points or 1.07% to 5,014.58, Nikkei 225 tumbled 424.35 points or 3.08% to 13,346.42, Straits Times slipped 16.02points or 0.48% to 3,294.29, KOSPI Composite decreased 5.15 points or 0.26% to 1,995.85 and Taiwan Weighted was down by 42.75 points or 0.52% to 8,212.05.

On the flip side, Shanghai Composite strengthened 5.91 points or 0.26% to 2,306.51, Hang Seng added 62.97 points or 0.28% to 22,455.13 and KLSE Composite was up by 2.37 points or 0.13% to 1,771.59.