Markets recover after brief set-back; Sensex trades past 19350 mark

After briefly slipping into negative territory, Indian equity markets have bounced back in green, albeit with slender gains on account of bottom-fishing by select investors amidst mostly positive global set-up. Sentiments took a hit after HSBC July manufacturing PMI neared contraction, suggesting July manufacturing PMI close to contraction, however recovery soon followed. Bouncing off day’s low, benchmark 30 and 50 share indices, Sensex and Nifty, were now trading above 19350 and 5,700 marks respectively. However, broader indices trading indifferently were down and out with cut of over half a percent.

On the global front, Asian pacific shares rose after China's official manufacturing activity data came in better than expected, easing some concerns of a sharp slowdown in the world's second-largest economy, US future indices too were showing an uptick on the screen trade.

Closer home, stocks from Fast Moving Consumer Goods, Information Technology were the top gainers, while those from Realty, Public Sector Undertaking and Oil & Gas counters were the top laggards. The market breadth on BSE was negative in the ratio of 666: 927, while 97 scrips remain unchanged. 

The BSE Sensex is currently trading at 19356.75 up by 11.05 points or 0.06% after trading in a range of 19569.20 and 19280.55. There were 13 stocks advancing against 16 declines, while one stock remains unchanged on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.37% and Small cap index lost 0.41%.

The top gaining sectoral indices on the BSE were, FMCG up by 0.91% and IT up by 0.19%, while Realty down by 2.88%, PSU down by 1.70%, Oil & Gas down by 1.69%, Consumer Durables down by 1.32% and Metal down by 1.20% were the top losers on the BSE.

The top gainers on the Sensex were HDFC up by 2.08%, Hindustan Unilever up by 1.75%, HDFC Bank up by 1.65%, Sun Pharmaup by 1.57% and TCS up by 0.56%. On the flip side, BHEL was down by 3.32%, ONGC was down by 3.11%, Hindalco Industries was down by 3.10%, Tata Steel was down by 2.85% and SBI was down by 2.32% were the top losers on the Sensex.

Meanwhile, Indicating a broad stagnation in manufacturing operating conditions in India, slowdown in factory activity deepened in July as order books shrank by the most in over four years. The HSBC Manufacturing Purchasing Managers’ Index (PMI), compiled by Markit, edged down to 50.1 in July from 50.3 in June. However, the index, which gauges business activity in Indian factories but not its utilities, has been running close to the 50 mark that separates growth from contraction since May and has held above it for over four years now.

Meanwhile, output fell for the third consecutive month in July, amid evidence of falling new orders, tough economic conditions and raw material shortages. The rate of decline, however, was fractional and eased since June.

Lackluster demand conditions had resulted in a further contraction of incoming new work, with sector data highlighting declines in the intermediate and investment goods sectors. The new orders sub-index, an overall indicator of firms' order books, fell to 49.5 in July from 49.7 in June, as growth in export orders, while still positive, slowed sharply in July. New export orders rose during July, taking the current expansionary sequence to 11 months.

July data highlighted a further expansion of employment levels in the Indian manufacturing sector. However, the rate of job creation remained slow. Payroll numbers rose in the consumer goods sector, while stagnated at intermediate goods producers and fell at investment goods firms. On the price front, inflationary pressures persisted in July, while output prices rose at the fastest rate since February, as firms attempted to pass on increased cost burdens, the overall input prices rose sharply in July, and at the strongest rate in ten months.

The current data suggests that the RBI will likely have to keep policy rates on hold for a while given lingering inflation risks and the recently introduced currency stabilization measures may not be lifted anytime soon. India’s apex bank, in a bid to curb Rupee’s slide, kept rates on hold in July monetary policy, besides measures including capping allocation of funds under LAF for each individual bank to 0.50% of its own NDTL, increasing marginal standing facility (MSF) rate and bank rate by 200 bps each to 10.25% and mopping up some liquidity through open market operations (OMO) sales and stipulating banks to maintain a minimum daily CRR balance of 99% of the average fortnightly requirement.

The CNX Nifty is currently trading at 5,731.70 down by 10.30 points or 0.18% after trading in a range of 5,808.50 and 5,710.05. There were 19 stocks advancing against 31 declines on the index.

The top gainers of the Nifty were Hindustan Unilever up by 2.44%, HDFC up by 1.87%, HDFC Bank up by 1.63%, Sun Pharma up by 1.15%, and Cairn up by 1.03%. On the flip side, JP Associate down by 12.72%, IDFC down by 5.98%, DLF down by 5.51%, Ranbaxy down by 5.27% and PNB down by 4.06% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite rose 0.57%, Hang Seng increased 0.61%, Jakarta Composite up by 0.66%, Nikkei 225 surged 0.89%, and Seoul Composite was up by 0.22%.

On the flip side, KLSE Composite down by 0.61%, Straits Times down by 1.77% and Taiwan Weighted was down by 0.34%.