Benchmarks add gains; Sensex surpasses 20,000 mark

Indian equities added gains hovering near the highest point of the day in the late afternoon session on account of buying in front line counters. The sentiments turned positive after dipping into red territory on reports that 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 rally in two-wheeler manufacturers and consumer durable makers helped pull the market in positive zone after the government stated that public sector lenders will offer cheaper loans to stimulate demand for struggling sectors. The decision to ask banks to offer cheaper loans is aimed to stimulate consumer durable demand ahead of the festival season. Traders were seen piling positions in Realty, Auto and Consumer Durables stocks, while selling was witnessed in Power sector stocks. In scrip specific development, Tata Motors was trading in green after foreign brokerage firm Deutsche Bank upgraded the company to buy from neutral and raised its target price citing an improving global economy. Jet Airways was trading firm on receiving final nod from the cabinet committee on economic affairs (CCEA) for the deal with Etihad Airways. Zee Media Corporation was trading in green after the company received approval to acquire film maker Prakash Jha’s regional news and current affairs channel ‘Maurya TV’.

On the global front, the Asian markets were trading in red barring KLSE Composite and Taiwan Weighted while the European markets were trading on mixed note. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,900 and 20,000 levels respectively. The market breadth on BSE was positive in the ratio of 1118:1023 while 135 scrips remained unchanged. 

The BSE Sensex is currently trading at 20015.92 up by 113.85 points or 0.57% after trading in a range of 20034.76 and 19833.17. There were only 19 stocks advancing against 11 declines on the index.

The broader indices too clinched additional ground; the BSE Mid cap and Small cap indices were trading up by 0.46% and 0.64% respectively.

The gaining sectoral indices on the BSE were Realty up by 2.76%, Auto up by 1.65%, Consumer Durables up by 1.62%, Metal up by 1.62% and Oil & Gas up by 0.75%. While, Power down by 0.09% remained the only losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 3.25%, Hindalco Industries up by 2.82%, Tata Steel up by 2.55%, Sesa Goa up by 2.39% and Bharti Airtel up by 1.59%. On the flip side, Dr. Reddy’s Lab down by 1.61%, Gail India down by 0.81%, Infosys down by 0.72%, Jindal Steel down by 0.66% and Tata Power down by 0.55% were the top 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 5,936.20 up by 26.50 points or 0.45% after trading in a range of 5,949.15 and 5,885.00. There were 29 stocks advancing against 20 declines on the index.

The top gainers of the Nifty were Tata Motors up by 3.02%, Hindalco Industries up by 2.90%, Lupin up by 2.44%, Tata Steel up by 2.41% and BPCL up by 2.34%. On the flip side, Dr Reddy’s Lab down by 1.66%, Power Grid down by 1.25%, Jindal Steel down by 0.91%, GAIL India down by 0.87% and Bank of Baroda down by 0.82% were the major losers on the index.

Most of Asian equity indices were trading in red; Jakarta Composite down by 0.92%, Seoul Composite down by 0.12%, Hang Seng down by 0.33%, Straits Times down by 0.29% and Nikki 225 down by 0.94% While, KLSE Composite up by 0.26% and Taiwan Weighted up by 0.07%.

Shanghai Stock Market was close down on account of National Day and will open for trading on October 8.

The European markets were trading on a mixed note; France’s CAC 40 was up 0.35%, Germany’s DAX lost 0.18% and UK’s FTSE 100 was down 0.19%.