Feeble global cues drag benchmarks lower in early deals

Pressurized by feeble global cues, Indian equity indices have made a gap-down opening with frontline gauges tumbling below their crucial 19,000 (Sensex) and 5,650 (Nifty) levels. Sentiments across the globe remained down-beat on speculation that the Federal Reserve may soon reduce economic stimulus after US economy showed signs of recovery. Overnight, the US markets ended mostly lower in last session, though there was a report that activity in the US service sector grew at a faster rate in the month of July. Asian markets too were trading lower at this point of time with Hang Seng shedding over one and a half percent on the back of disappointing first-half earnings from HSBC.

Back home, sentiments also got clobbered out of shape after industry body CII has said that India needs to get back to 8-9 percent economic growth by attracting investments that have been choked by the high interest regime. Depreciation in rupee too dampening the sentiments, the rupee opened lower against the US dollar on back of fresh buying of the greenback by banks and exporters on Tuesday. Sentiments also got hurt after textile related stocks like, Alok Industries, Grasim Industries, Vardhman Textile and Arvind edged lower as the India’s export of textiles and clothing remained almost the same year-on-year, in the first three months of the fiscal to $7.79 billion compared to $7.76 billion in last fiscal.

On the sectoral front, software remained the lone gainer, while realty, metal and consumer durables remained the top losers on the BSE sectoral space. The broader indices too were struggling to get some traction, while the market breadth on the BSE was negative; there were 315 shares on the gaining side against 900 shares on the losing side while 47 shares remain unchanged.

The BSE Sensex opened at 19127.10; about 55 points lower compared to its previous closing of 19182.26, and has touched a high and a low of 19131.92 and 18977.43 respectively. The index is currently trading at 18998.49, down by 183.77 points or 0.96%. There were 6 stocks advancing against 24 declines on the index.

The overall market breadth has made a weak start with 24.96% stocks advancing against 71.32% declines. The broader indices too were trading in red; the BSE Mid cap and Small cap indices were down by 1.50% and 0.84% respectively. 

The only gaining sectoral index on the BSE were, IT up by 0.25%, while Realty down by 3.13%, Metal down by 2.51%, Consumer Durables down by 2.31%, Bankex down by 2.20% and Capital Goods down by 2.19% were the top losers on the sectoral index.

The top gainers on the Sensex were Wipro up by 2.50%, Hero MotoCorp up by 1.09%, TCS up by 0.50%, Tata Motors up by 0.44% and Dr Reddys Lab up by 0.22%. On the flip side, Sterlite Industries was down by 4.38%, BHEL was down by 4.43%, Tata Steel was down by 3.03%, Tata Power was down by 2.93% and HDFC Bank was down by 2.85% were the top losers on the Sensex.

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 opened at 5,664.90; about 20 points lower as compared to its previous closing of 5,685.40, and has touched a high and a low of 5,664.90 and 5,613.50 respectively.

The index is currently trading at 5,622.75, down by 62.65 points or 1.10 %. There were 6 stocks advancing against 44 declines on the index.

The top gainers of the Nifty were Ambuja Cements up by 1.52%, Hero MotoCorp up by 0.83%, HCL Technologie up by 0.57%, TCS up by 0.51% and Tata Motors up by 0.47%. On the flip side, JP Associate down by 5.89%, DLF down by 5.26%, Sesa Goa down by 3.96%, Asian Paints down by 3.83% and BHEL down by 3.68% were the major losers on the index.

The Asian equity indices were trading in red; Shanghai Composite slipped 3.37 points or 0.16% to 2,047.11, Hang Seng tumbled 344.81 points or 1.55% to 21,877.20, KLSE Composite dipped 4.78 points or 0.27% to 1,780.36, Nikkei 225 dropped 66.99 points or 0.47% to 14,191.05, Straits Times shed 25.16 points or 0.78% to 3,216.63, Seoul Composite decreased 12.62 points or 0.66% to 1,903.60 and Taiwan Weighted was down by 90.18 points or 1.11% to 8,048.45.