Benchmarks pair early gains in afternoon session

Indian equity benchmarks pared early morning gains in the afternoon session on account of selling pressure witnessed in power, capital good and banking stocks. Investors’ sentiments got a hit after country’s services sector, which occupies the largest share in the Indian economy, shrank at the fastest pace in more than four years in September. The HSBC services PMI contracted for the third time in a row and stood at 44.6 points in September from 47.6 points in August. Sentiments were also dented as global rating agency Fitch warned India that fiscal slippage could have negative impact on India's sovereign rating. Meanwhile, the market losses remain capped on the back of buying witnessed in the Auto and Consumer durables sectors stocks as the government has agreed to provide additional funds to the PSU banks to enable them financing of products from select sectors such as two-wheelers and consumer durables. Further, gain in rupee value against the dollar also provided some support to investors’ sentiments.

On the global front, most of the Asian markets were trading in red as global investors remain worried on US budget impasse that has shut down the federal government. Back home, the NSE Nifty and BSE Sensex were trading near their psychological 5,900 and 19,900 levels respectively. The market breadth on BSE was negative, out of 2,011 stocks traded, 928 stocks advanced, while 975 stocks declined on the BSE. 

The BSE Sensex is currently trading at 19,905.85 up by 3.78 points or 0.02% after trading in a range of 20,034.76 and 19,833.17. There were only 13 stocks advancing against 17 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was trading flat, while Small cap index up by 0.35%.

The gaining sectoral indices on the BSE were Auto up by 1.88%, Consumer Durables up by 1.68%, IT up by 0.46%, Realty up by 0.40% and Teck up by 0.40%. While, Power down by 0.55%, Capital Goods down by 0.51%, Bankex down by 0.39%, Metal down by 0.38% and FMCG down by 0.28% were remained the only losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 4.34%, Bharti Airtel up by 1.62%, TCS up by 1.39%, Cipla up by 1.16% and M&M up by 1.15%. On the flip side, Tata Power down by 1.42%, Jindal Steel down by 1.37%, Dr. Reddy Lab down by 1.28%, Sesa Goa down by 1.22% and Gail India down by 1.22% were the only losers on the Sensex.

Meanwhile, underscoring the prolonged period of slowdown in Asia's third-largest economy, the activity in services sector, which makes up of nearly 60% of country’s economic output shrank at the fastest pace in more than four years in September. The HSBC Services Purchasing Managers' Index (PMI), compiled by Markit, slipped from 47.6 in August to 44.6 in September, it’s weakest since April 2009. The latest figures, which mark the straight third reading below 50, the threshold between growth and contraction, is consistent with a sharp contraction in business activity and one that was the fastest since March 2009.

The survey indicated that all six monitored sub-categories, recorded lower output. Third consecutive drop in new order levels explains the underlying fall of the private sector output. Incoming new work contracted sharply and at the quickest pace since February 2009 mainly driven by weaker order flows in renting & business activities, hotels and restaurants and financial intermediation.

Meanwhile on employment front, private sector in response to lower volumes of incoming new work reduced their workforce numbers. However, the marginal fall in employment was broad-based, with both manufacturers and service providers reporting job shedding for the first time in 19 months. 

Thus, the PMI, which has clocked the worst quarter for the Indian services sector in turn has ignited fears that growth in the three months to September will be weaker than April through June. Further, September data also points to a weaker degree of positive sentiment in the Indian service sector, with the index measuring business sentiment dropping to its lowest mark since February 2009. Meanwhile, the survey supports the RBI’s stepped up efforts to better anchor inflation expectations, given the inflation reading hold steady even in the backdrop of weak growth.

The CNX Nifty is currently trading at 5,909.60 up by 14.55 points or 4.21% after trading in a range of 5,949.15 and 5,885.00. There were 19 stocks advancing against 31 declines on the index.

The top gainers of the Nifty were Tata Motors up by 4.21%, Lupin up by 2.86%, BPCL up by 2.61%, Ultra-tech Cement up by 2.17% and Bharti Airtel up by 1.73%. On the flip side, JP Associate down by 2.93%, Jindal Steel down by 1.76%, Bank of Baroda down by 1.60%, Tata Power down by 1.48% and Power Grid down by 1.35% were the major losers on the index.

The Asian equity indices were trading in red; Jakarta Composite down by 0.77%, Seoul Composite down by 0.12, Hang Seng down by 0.60%, Straits Times down by 0.16% and Nikki 225 down by 0.94% While, KLSE Composite up by 0.17%, Taiwan Weighted up by 0.07%.