Benchmarks snap eight days losing streak; ekes out small gain

Snapping eight days of continuous fall, Indian equity benchmarks witnessed some respite albeit modest and both the benchmarks managed a close in green on Monday. Markets kick started the session in the positive terrain as some support came in from FICCI’s survey that India’s manufacturing sector is likely to witness a ‘slight upturn’ in the second quarter on the back of government’s efforts to remove bottlenecks by clearing large projects and a better export outlook. Sentiments also got some boost from report that the Finance Ministry is likely to finalize Rs 14,000-crore capital infusion for public sector banks by the end of this month to meet their global capital requirement norms, Basel III. Sentiments were further boosted with report that foreign institutional investors (FIIs) bought shares worth a net Rs 283.79 crore on August 2, 2013.

Firm opening in European markets too supported the sentiments with all major indices CAC, DAX and FTSE trading in the green, extending gains for the sixth straight session on Monday, with several firms on the rise after broker upgrades and investors welcoming a rise in euro-zone PMI data. The Asian equity indices too ended mostly in the green with Shanghai Composite leading the pack, garnering a gain of over a percentage points.

Back home, indices pared most of their initial gains after India’s services PMI contracted first time in 20 months to 47.9 points in July from 51.7 points in the previous month. A reading above 50 points indicates growth, while that below 50 signifies a contraction in the sector. Moreover, last week, Manufacturing PMI managed to stay afloat the growth line as it fell to 50.1 points in July from 50.3 points in June. Consequently, the Composite PMI - considering both manufacturing and services - also contracted to 48.4 points in July from 50.9 points in June this year. Market-men also remained concerned over political developments with the start of the Monsoon session, covering key reform Bills like opening up the insurance and pension sector and adjournment amid uproar over Telangana and Bodoland issues. Sentiments also remained dampened as selling was witnessed in capital goods segment, led by state-owned Bharat Heavy Electricals (BHEL), which crashed over 19 percent on the BSE as it reported a dismal performance on every parameter as the first quarter standalone net profit halved to Rs 465.4 crore from Rs 920.9 crore in a year ago period. However, buying in metal and mining counter supported the sentiments with stocks like Jindal Steel, Sesa Goa, Sterlite Industries and Tata Steel all surging after China’s service industries showed the first pick-up in growth since March.

The NSE’s 50-share broadly followed index Nifty rose by just seven points to end above the psychological 5,650 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex increased by about twenty points to finish above the psychological 19,150 mark.

Moreover, broader markets after a sluggish start witnessed decent traction to end into the green terrain. The market breadth remained in favour of decliners, as there were 1,077 shares on the gaining side against 1,128 shares on the losing side, while 132 shares remained unchanged.

Finally, the BSE Sensex gained 18.24 points or 0.10% to settle at 19,182.26, while the CNX Nifty rose by 7.50 points or 0.13% to end at 5,685.40.

The BSE Sensex touched a high and a low of 19,306.51 and 19,141.68, respectively. The BSE Mid cap index was up by 0.27% and Small cap index was up by 0.30%.

The top gainers on the Sensex were, Jindal Steel up by 7.73%, Sterlite Industries up by 4.15%, NTPC up by 3.81%, Coal India up by 3.36% and Hero MotoCorp up by 3.16%, while, BHEL down by 19.08%, Bharti Airtel down by 2.05%, Tata Motors down by 2.01%, L&T down by 1.98% and Bajaj Auto down by 1.76% were the top losers in the index.

The top gainers on the BSE Sectoral space were, Metal up by 2.67%, Bankex up by 0.97%, IT up by 0.90%, PSU up 0.61% and FMCG up by 0.58%, while Capital Goods down by 3.58%, Power down by 1.02%, Consumer Durables down by 0.72%, Health Care down by 0.48% and Auto down by 0.45% were the top losers on the sectoral space.

Meanwhile, diminishing hopes for a growth recovery in Asia’s third largest economy, services sector, which make up nearly 60% of country’ economics output, fell dramatically during July on account of decline in new businesses amid subdued economic backdrop. The HSBC services Purchasing Managers’ Index (PMI), based on a survey of around 400 companies fell to 47.9 in July from 51.7 in the previous month. It is first time since October 2011, the service PMI slid below the 50 mark that divides growth from contraction and the lowest since April 2009. The survey indicated that the Transport & Storage and Renting & Business Activities sub-sectors were the main drivers of the overall decline.   

Slowdown in service sector activity on account of decline in new business orders also made services firms less optimistic about the year ahead. A sub-index for the Indian PMI that measures new business fell to 47.8 in July from 51.9 in June amid reports of an increasingly fragile economy. Similarly, the HSBC India Composite Output Index, which measures activity in both the manufacturing and services sector, also came down to 48.4 from 50.9 in June, indicating moderate contraction overall.

Further, July data signaled broadly a steady inflation reading even as input prices continuing the trend that started in April 2009, rose during July. Subsequently, services companies increased their selling prices. However, the rate of increase in average selling prices were slower at service providers in the current 33-month inflationary sequence.

The CNX Nifty touched a high and low of 5,721.00 and 5,661.50 respectively. 

The top gainers on the Nifty were Jindal Steel up by 8.48%, JP Associates up by 5.56%, Ambuja Cement up by 5.05%, Sesa Goa up by 4.92% and Reliance Infra up by 4.23%. On the other hand, BHEL down by 19.65%, Asian Paints down by 4.86%, BPCL down by 2.71%, Bharti Airtel down by 2.40% and Bajaj Auto down by 2.11% were the top losers.

The European markets were trading mixed; Germany’s DAX up by 0.15% and the United Kingdom’s FTSE 100 down by 0.31%, while France’s CAC 40 up by 0.08%.

The Asian markets concluded the Monday’s trade mostly in green; Japanese stocks retreated as several financial and technology firms pulled back from strong recent advances, while mainland Chinese shares edged higher after data showed an improvement in services-sector activity in the country. A privately compiled gauge of China’s services sector remained unchanged in July, showing modest growth. The HSBC China Services Business Activity Index printed at 51.3 for the second month in a row, above the 50 mark signaling growth though at a level HSBC called historically weak. Besides, China Federation of Logistics and Purchasing reported that China’s official non-manufacturing Purchasing Managers’ Index, a gauge of business activity in the service sector, rose in July to 54.1 from 53.9 in June. The upbeat data came after figures released earlier indicating a surprising expansion in manufacturing activity, adding to signs that growth in the world’s second-largest economy is stabilizing.

Indonesia’s economy in the second quarter expanded at the slowest pace in almost three years, compounding concerns on the Southeast Asian nation as investments ease, inflation accelerates and the currency slumps. Gross domestic product rose 5.81% in the April-June period from a year earlier, the Central Statistics Agency (BPS) reported. GDP hasn’t been that slow since the 5.8% expansion rate in the third quarter of 2010. Private consumption growth slowed slightly to 5.06%, which was lower than the first quarter’s 5.17%.

South Korea’s worst property-market slowdown since 2004 threatens to limit the economy’s rebound, as the government’s stop-go policies to stimulate the housing market fail to secure any sustained revival. Indonesia's Jakarta Composite is closed for a week till August 9 on account of Public Holiday 'Id-ul-Fitr'.