Selling intensifies across the street; PMI data weighs

Indian equity markets added losses to continue their weak trend hovering near the lowest point of the day in the late afternoon session on account of selling in front line blue chip counters and taking cues from European counterparts. The selling pressure got intensified on reports that the country’s manufacturing growth nearly stalled in May as factory output shrank for the first time in over four years. The overall HSBC Manufacturing Purchasing Managers’ Index (PMI), which gauges business activity in Indian factories but not its utilities, sank to 50.1 in May from 51.0 in April and was the third straight monthly fall. Traders were seen piling position in TECK and IT stocks while selling was witnessed in Oil & Gas, Consumer Durables and Power sector stocks. In the scrip specific development, CRISIL was locked in upper circuit limit after McGraw Hill Financial Inc, which owns Standard & Poor's rating agency, stated that it would make a voluntary open offer to raise its stake in the rating agency to 75% in a deal worth about $340 million. Infosys was trading firm as investors bet that return of founder and former chairman N.R. Narayana Murthy as executive chairman would improve the IT services outlook.

On the global front, the Asian markets were trading in red while the European markets were too trading on a pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,950 and 19,600 levels respectively. The market breadth on BSE was negative in the ratio of 867:1285, while 121 scrips remain unchanged.

The BSE Sensex is currently trading at 19,552.66, down by 207.64 points or 1.05% after trading in a range of 19,860.19 and 19,543.72. There were 10 stocks advancing against 20 declines on the index.

The broader indices were too trading in red; the BSE Mid cap and Small cap index were trading down by 0.07% and 0.22% respectively.

The top gaining sectoral indices on the BSE were, TECK up by 0.74% and IT up by 0.68%, while Oil & Gas down by 1.89%, Consumer Durables down by 1.86%, Power down by 1.49%, Capital Goods down by 1.21% and Bankex down by 1.07% were the top losers on the BSE.

The top gainers on the Sensex were Infosys up by 4.31%, Jindal Steel up by 1.92%, Mahindra & Mahindra up by 1.31%, Gail India up by 0.99% and Bharti Airtel up by 0.91%. On the flip side, Sun Pharma down by 4.58%, Bajaj Auto was down by 4.11%, Hero MotoCorp down by 4.03%, Maruti Suzuki was down by 3.03% and TCS was down by 2.50% were the top losers on the Sensex.

Meanwhile, the government has approved eight Foreign Direct Investment (FDI) proposals worth Rs 696 crore. Among the cleared proposals, ACME Solar Energy is the major one and is expected to bring in foreign investment worth Rs 275 crore, followed by GETIT Infoservices and France's GeoPost S.A.'s with investment wroth Rs 216 crore and Rs 179 crore.  

The Foreign Investment Promotion Board (FIPB) has also cleared the proposal of McKinsey & Company Inc to set up a limited liability partnership (LLP) for providing management consultancy services, entailing foreign investment of Rs 99 lakh. The other proposals cleared by the board include courier company - DPD Continental, Pilot Ventures Media and US-based AWS True power. On the other hand, the proposal of Bangalore-based Tata Advanced Materials Ltd, engaged in the manufacturing of defence related products, was not found to be within the purview of FIPB.

India has allowed FDI in most of the sectors through automatic route, but for certain sensitive sectors, FIPB clearance is required. Foreign investment is considered crucial for economic development of a country. However, in FY13 the FDI inflows for the fiscal 2012-13 recorded a decline of 38% to $22.42 billion compared to the $35.12 billion inflow in the previous year. The government has been liberalizing the foreign investment policy to attract maximum FDI into the country. Recently, the finance minister had visited several major financial markets like Canada, Hong Kong, Germany, Singapore, Canada, and the UK to attract foreign investors.

The CNX Nifty is currently trading at 5,921.25, down by 64.70 points or 1.08% after trading in a range of 6,011.00 and 5,916.40. There were 15 stocks advancing against 35 declines on the index.

The top gainers of the Nifty were Infosys up by 4.14%, Jindal Steel up by 1.85%, Lupin up by 1.67%, Gail India up by 1.36% and M&M up by 1.29%. On the flip side, Sun Pharma down by 4.62%, Hero MotoCorp down by 4.43%, Bajaj-Auto down by 4.09%, Ranbaxy Laboratories down by 3.42% and Maruti Suzuki down by 3.01% were the major losers on the index.

Most of the Asian equity indices were trading in red; Jakarta Composite declined 1.92%, Hang Seng dropped 0.49%, Nikkei 225 tumbled 3.72%, KLSE Composite slipped 0.07%, Straits Times slipped 0.52%, Shanghai Composite slid 0.06%, KOSPI Composite decreased 0.57% and Taiwan Weighted was down by 0.65%.

The European markets were trading in red; France’s CAC 40 was down 1.19%, Germany’s DAX lost 1.27% and the United Kingdom’s FTSE 100 dropped by 1.91%.