Benchmarks trade lower tracking weak Asian markets

Indian equity benchmarks have made a weak start and are trading with a cut of around a percentage point tracking weak Asian markets. Most of the Asia-Pacific indices were trading in the red at this point of time with investors choosing to trim down positions on account of U.S. lawmakers’ wrangle over the debt limit and partial government shutdown. The US markets closed mostly lower for the week, although edged higher on Friday, as optimism grew that lawmakers would reach a deal to end America’s budget standoff.

Back home, investors also remained on sidelines ahead of the Infosys' quarterly results later this week that will kick start the earnings season for July-September quarter. Some cautiousness also came in after study by CII Ascon has shown that industrial growth in the three months ended 30 September remained dismal despite the government introducing a number of reform measures to boost the economy. Weakness in Indian rupee against dollar too was dampening the sentiments. The partially convertible rupee was trading at 61.63 per dollar against the previous close of 61.44 on the Interbank Foreign Exchange.

On the sectoral front, healthcare witnessed the maximum gain in trade followed by software and technology, while banking, oil and gas and public sector undertakings remained the top losers on the BSE sectoral space. The broader indices, however, were managing to keep their head above water, while the market breadth on the BSE was positive; there were 596 shares on the gaining side against 532 shares on the losing side while 53 shares remain unchanged.

The BSE Sensex opened at 19880.94; about 35 points lower compared to its previous closing of 19915.95, and has touched a high and a low of 19888.41 and 19693.64 respectively.

The index is currently trading at 19724.78, down by 191.17 points or 0.96%. There were 12 stocks advancing against 18 declines on the index.

The overall market breadth has made a strong start with 50.47% stocks advancing against 45.05% declines. The broader indices were trading in green; the BSE Mid cap index up by 0.03% and Small cap index up 0.14%. 

The few gaining sectoral indices on the BSE were, Health Care up by 0.60%, IT up by 0.58%, Teck up by 0.36% and Metal up by 0.03%, while Bankex down by 2.35%, Oil & Gas down by 1.21%, PSU down by 1.03%, FMCG down by 0.84% and Realty down by 0.50% were the only losers on the sectoral index.

The top gainers on the Sensex were Jindal Steel up by 1.64%, Tata Steel up by 1.37%, BHEL up by 1.35%, Mahindra & Mahindra up by 1.03% and Sesa Sterlite up by 0.67%. On the flip side, ICICI Bank was down by 3.32%, HDFC Bank was down by 2.25%, HDFC was down by 2.24%, Coal India was down by 2.21% and Bharti Airtel was down by 1.87% 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 opened at 5,889.05; about 18 point lower as compared to its previous closing of 5,907.30, and has touched a high and a low of 5,895.25 and 5,835.10 respectively.

The index is currently trading at 5,848.20, down by 59.10 points or 1.00 %. There were 15 stocks advancing against 34 declines on the index.

The top gainers of the Nifty were HCL Tech up by 1.97%, Jindal Steel up by 1.63%, BHEL up by 1.08%, Tata Steel up by 1.06% and Ranbaxy up by 0.89%. On the flip side, ICICI Bank down by 3.30%, Axis Bank down by 2.66%, HDFC Bank down by 2.49%, NMDC down by 2.46% and Coal India down by 2.27% were the major losers on the index.

Most of the Asian equity indices were trading in red; Hang Seng declined 169.16 points or 0.73% to 22,969.38, Jakarta Composite dipped 6.17 points or 0.14% to 4,383.17, KLSE Composite slipped 0.55 points or 0.03% to 1,776.01, Nikkei 225 dropped 123.31 points or 0.88% to 13,901.00, Seoul Composite shed 3.23 points or 0.16% to 1,993.75 and Taiwan Weighted was down by 20.79 points or 0.25% to 8,343.76.

On the flip side, Straits Times was up by 0.22 points or 0.01% to 3,138.30.