Firm trade continues in markets, metal stocks rally

Indian equity markets continued their firm trade in the late morning session on back of buying witnessed in metal and mining stocks after China’s robust manufacturing data. After a two-quarter slowdown, China’s economy is strengthening, with a manufacturing gauge rising to a 16-month high in August. Further, investors’ sentiments also boosted by the various governments’ initiatives like proposals to shut petrol pumps in the night in order to check the rising fuel demand and to cut the massive oil import bill. Commerce minister's statement that the recent pick-up in domestic exports will continue through the rest of the financial year despite the global slowdown also added to the optimistic sentiments. Moreover, buying was also witnessed in banking, information technology and healthcare stocks. On stock specific movement, Tata steel, ITC, Jindal steel and Hero Moto Corp were trading 2 percent higher. On global front, Asian Markets were trading mixed and Shanghai Composite up by 0.17% as Chinese manufacturing expanded. Back home, the market breadth was positive. Out of 1,888 stocks traded, 1,158 stocks advanced while 624 stocks declined on the BSE.

The BSE Sensex is currently trading at 18,783.82 up by 164.10 points or 0.88% after trading in a range of 18,827.99 and 18,678.93. There were only 21 stocks advancing against 9 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.04%, while Small cap index also up by 0.98%.

All sectoral indices were trading higher on BSE with FMCG up by 2.32%, Metal up by 2.01%, Consumer Durables up by 1.44% and Bankex up by 1.11%.

The top gainers on the Sensex were, Tata Steel up by 2.73%, ITC up by 2.66%, Jindal Steel up by 2.50%, Hero Moto Corp up by 2.25% and ICICI Bank up by 1.96%. On the flip side, Mahindra and Mahindra down by 2.38%, Tata Power down by 1.58%, NTPC down by 1.45%, HDFC Bank down by 0.90% and ONGC down by 0.52% were the top losers on the Sensex.

Meanwhile, adding to the country’s deepening economic glum, the Indian manufacturing activity shrank for the first time in more than four years in August. The HSBC Manufacturing Purchasing Managers’ Index (PMI), compiled by Markit, which gauges business activity in Indian factories but not its utilities, fell from 50.1 to 48.5 in August. The index had been running close to the 50 mark that separates growth from contraction since May, 2013, however this time around it breached the 50 mark, a reading which was the lowest since May 2009.

Decline in new orders, especially export orders, led to the contraction of Indian manufacturing activity during August. In a sign that domestic demand is also faltering, new orders, which include domestic orders, shrank at a faster pace. The index fell for the sixth straight month to 47.5 in August, its lowest since February 2009.  Meanwhile, new export orders shrank for the first time in a year. Consequently, Indian manufacturers reduced their production volumes for the fourth consecutive month in August and at the fastest rate in four-and-a-half years.

Encouragingly, August data highlighted a further expansion of employment levels in the Indian manufacturing sector. However, the rate of job creation remained slight. Additionally, input and output price inflation slowed despite the weakening of the currency, which likely reflects the softening demand conditions and, therefore, declining pricing power.

The bleak Purchasing Managers' Index (PMI) comes close on the heels of data on Friday that showed Asia's third-largest economy growing at its lowest quarterly rate in the three months to June since the global financial crisis, suggesting more pain ahead. 

Further, reports suggested RBI of likely keeping its liquidity tightening measures in place for a while to help contain the depreciation of the currency, besides warning that the heightened macroeconomic uncertainty will continue weighing on growth in coming months.

The CNX Nifty is currently trading at 5,516.40 up by 44.60 points or 0.82% after trading in a range of 5,528.30 and 5,478.85. There were 36 stocks advancing against 14 declines on the index.

The top gainers of the Nifty were JP Associates up by 4.83%, Ranbaxy up by 3.63%, Indusin Bank up by 3.63%, Bank of Baroda up by 3.45% and Tata Steel up by 3.18%. On the flip side, M&M down by 2.65%, Tata Power down by 1.91%, NTPC down by 1.53%, ACC down by 1.17% and Ambuja Cement down by 0.87% were the major losers on the index.

The Asian equity indices were trading mixed; Straits Times up by 0.58%, Taiwan Weighted up by 0.21%, Shanghai Composite up by 0.17%, Hang Seng up by 1.81% and Nikkei 225 was up by 1.34%. While, KLSE Composite down by 0.54%, Seoul Composite down by 0.08% and Jakarta Composite down by 2.13%.