Benchmarks end on quiet note after a volatile trade

Indian equity benchmarks snapped the extremely volatile day of trade on an absolute flat note on Friday, as investors remained on sidelines ahead of start of the result session next week. During the session, the psychological 20,000 (Sensex) and 5,950 (Nifty) levels proved as stern resistances for frontline gauges, as despite couple of attempts the key indices could not clear those levels and ended flat. Earlier, benchmarks made a positive opening with foreign institutional investors (FIIs) turning big buyers in Indian equities amid easing concerns over funding India’s current account deficit and waning fears of Fed tapering. Some support also came in from appreciation in Indian rupee against dollar. But, markets gave up all their initial gains after getting a dismal Services PMI data. The services sector, which occupies the largest share in the Indian economy, contracted at the steepest pace since March 2009, according to the widely-tracked HSBC Purchasing Managers’ Index (PMI) report. The services PMI continued to contract for third time in a row in September and stood at 44.6 points from 47.6 points in August, when it was the lowest since March 2009.

Global cues too remained sluggish with the US markets continuing their tepid run overnight, while most of the Asian equity benchmarks ended the session in the red with investors offloading their holdings in risky assets, amid concern that the US political impasse could lead to the government defaulting on its debt, sparking a recession. Moreover, European markets too traded choppy in early deals amid growing fears that the US budget stalemate will continue for some time, potentially hindering efforts to raise the US government’s borrowing limit.

Back home, markets once again gained strength and recaptured their positive terrain supported by buying in shares of automobiles companies which traded jubilantly for third day in row after reporting a better-than-expected monthly sales numbers in September and expectation of near term improvement in volume trajectory led by festive season. Moreover, stocks related to consumer durables sector too traded gracefully after the government said public sector lenders will offer cheaper loans to stimulate demand for struggling sectors. Additionally, shares of three public sector oil marketing companies viz. BPCL, HPCL and IOC edged higher as a strong rebound in rupee against the dollar eased concerns of higher cost of crude oil imports. However, benchmarks for a second time pared all their gains as some profit booking at higher level was witnessed in late trade, as investors’ opted wait and watch approach ahead of result session next week.

The NSE’s 50-share broadly followed index Nifty declined marginally to hold the psychological 5,900 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by over ten points to close above the psychological 19,900 mark.

Broader markets, however, outperformed benchmarks and ended the session with gain of around half a percent. The market breadth remained in favour of advances, as there were 1,226 shares on the gaining side against 1,137 shares on the losing side, while 135 shares remained unchanged.

Finally, the BSE Sensex added 13.88 points or 0.07%, to settle at 19915.95, while the CNX Nifty declined by 2.40 points or 0.04% to settle at 5,907.30.

The BSE Sensex touched a high and a low of 20052.00 and 19833.17, respectively. The BSE Mid cap index was up by 0.27% and Small cap index gained 0.49%.

The top gainers on the Sensex were Coal India up 2.46%, Hindalco Inds up 2.08%, Tata Motors up 1.44%, Bharti Airtel up 1.20% and Maruti Suzuki up 1.10%, on the flip side, Dr Reddys Lab down 2.49%, Jindal Steel down 1.77%, L&T down by 0.97%, NTPC down by 0.94%, and ICICI Bank down by 0.79%, were the top losers on the index. 

On the BSE Sectoral front, Realty up by 1.65%, Auto up by 0.94%, Metal up by 0.63%, Oil & Gas up by 0.46%, and Consumer Durables up by 0.35%, were the top gainers, while Power down by 0.49%, Capital Goods down by 0.49%, Bankex down by 0.25%, IT down by 0.15%, and Teck down by 0.13%, were the top losers on the sectoral front.

Meanwhile, industry body Assocham said that Indian economy is likely grow at 5.8 percent in the current fiscal on back of strong agricultural output, leading to robust rural demand and its multiplier effect on services and manufacturing sectors. Indian agriculture sector will likely get a boost from a strong monsoon and will grow at 5.5 percent in the current fiscal as against 1.7 percent in the previous fiscal.

By adding further, Assocham report said that although the share of agriculture in the country's gross domestic product (GDP) has gone down substantially to less than 14 percent over the years, however, it would put multiplier effect on economy through pushing expansion of activities in manufacturing and services. Establishing relationship between agriculture and industry, the industry body reported that each 1 percent additional growth in agriculture would result in 0.4 percent to 0.6 percent additional growth in industry.

At present, domestic economy is struggling with slowdown as its growth slowed down to four-year low at 4.4 percent in Q1 FY14. Further, country’s macro-economic indicators have also deteriorated with the current account deficit (CAD) widening to a record high of 4.9 percent of GDP in the first quarter of current fiscal. High CAD also remained main cause for the rupee depreciation, which had recently depreciated to a record low of over 68.50 against the US dollar in August.

The CNX Nifty touched a high and low of 5,950.45 and 5,885.00 respectively.

The top gainers on the Nifty were Hindalco Industries up by 2.47%, Coal India up by 2.30%, Lupin up by 2.18%, BPCL up by 2.00% and Tata Motors up by 1.46%. On the other hand, Dr. Reddy's Laboratories down by 2.47%, Power Grid Corporation of India down by 2.00%, Jindal Steel & Power down by 1.89%, IDFC down by 1.32%, and Larsen & Toubro down by 1.29%, were the top losers.

The European markets were trading in green, France’s CAC 40 was up by 0.54%, Germany’s DAX was up by 0.03%, and United Kingdom’s FTSE 100 was up by 0.08%.

Most of the Asian markets barring KLSE Composite and Taiwan Weighted concluded Friday’s trade in red amid partial government shutdown in US. The standoff comes just weeks before a crucial deadline to raise the nation’s borrowing limit - a measure which also must be approved by lawmakers. Shanghai Stock Market was close down on account of National Day and will open for trading on October 8. The Bank of Japan kept its monetary policy unchanged following its meeting, and stated that the economy is recovering moderately. This suggested that no additional monetary policy measures are needed to counter the pain from next year’s sales tax hike. In terms of the inflation outlook, the central bank noted that consumer prices excluding fresh food are in the range of 0.5% to 1%, and that inflation expectations appear to be rising on the whole. The Bank of Japan has set a 2% inflation target, which it aims to reach by 2015.

Malaysia’s trade balance rose more-than-expected last month. The Department of Statistics Malaysia stated that Malaysian Trade Balance rose to 7.10B, from 2.90B in the preceding month. Consumer price inflation in the Philippines rose more-than-expected in the last quarter. The Philippines CPI rose to a seasonally adjusted annual rate of 0.6%, from 0.2% in the preceding quarter. South Korea’s foreign reserves hit another record high last month as the depreciation of the US dollar raised the conversion value of non-dollar assets. Foreign reserves reached a record high of $336.92 billion as of the end of September, up $5.83 billion from a month earlier, according to the Bank of Korea. The reserves posted the largest monthly rise since October 2011 when the figure increased by $7.59 billion.