Benchmarks make a flat closing after hitting all-time highs

Indian equity benchmarks ended the Friday’s session on flat note due to profit booking seen at higher levels in late trades after the Sensex hit its all-time highs in intra-day trade. Sentiments remained up-beat since beginning after core sector industries recorded 8 percent growth in September, highest in the past 11 months. The growth in the eight infrastructure industries was mainly due to expansion in crude oil, steel and electricity production. Sentiments also got some boost after Department of Economic Affairs Secretary Arvind Mayaram said that the government will meet the fiscal deficit target of 4.8 percent of GDP for the current financial year.

However, investors booked some profit off the table after Indian manufacturing activity stuck to its declining trajectory for third consecutive month in October as order books shrank at quicker space. The HSBC Purchasing Managers’ Index (PMI), a headline index designed to measure the overall health of the manufacturing sector, stood unchanged at September’s 49.6 points. Meanwhile the inflation based on consumer price index for industrial workers (CPI-IW) in the month of September surged to 10.7 percent on y-o-y basis as against 9.14 percent in same month last year and 10.75 percent for the previous month, mainly owing to the rise in price of food items, fuel and electricity charges.

Global cues too remained sluggish with European counters making a weak start ahead of manufacturing data from both the UK and the US. Moreover, Asian benchmarks ended mixed with investors remaining cautious, despite some fairly encouraging economic data out of China. Chinese Shanghai ended with gain of around half a percent after the nation’s manufacturing sector grew at the fastest pace in 18 months in October. The official Purchasing Managers’ Index (PMI) stood at 51.4 last month, up from September’s 51.1.

Back home, domestic benchmarks managed to hold green terrain as some support came in from report that foreign direct investment (FDI) in India increased by about 35 percent to $13.6 billion during the first half of 2013 with merger and acquisitions accounting for the bulk of inflows. Meanwhile, buying in metal counter too aided the sentiments. Stocks like Tata Steel, JSW Steel, Bhushan Steel, Hindalco, Hindustan Zinc etc. edged higher as Chinese manufacturing gauge rose to an 18-month high in October. Meanwhile, public sector banks such as State Bank of India, Punjab National Bank, Bank of Baroda, Bank of India, Union Bank of India etc, remained on buyers’ radar for second day in a row on hopes of stabilizing asset quality and valuations.

The NSE’s 50-share broadly followed index Nifty rose by around ten points to end above its psychological 6,300 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by over thirty points to end near the psychological 21,200 mark.

Broader markets traded with traction and ended the session with a gain of around a percentage point. The market breadth remained in favour of advances, as there were 1,405 shares on the gaining side against 1,047 shares on the losing side, while 168 shares remained unchanged.

Finally, the BSE Sensex gained 32.29 points or 0.15%, to settle at 21196.81, while the CNX Nifty added 8.05 points or 0.13% to settle at 6,307.20.

The BSE Sensex touched a high and a low of 21293.88 and 21141.32, respectively. The BSE Mid cap index gained 1.15% and Small cap index was up by 0.74%.

The top gainers on the Sensex were SBI up 4.67%, Mahindra & Mahindra up 4.12%, Jindal Steel up 3.46%, SSLT up 2.30% and BHEL up 1.77%, on the flip side ONGC down 1.88%, NTPC down 1.71%, ITC down 1.66%, Infosys down 0.90%, and Gail India down 0.71%, were the top losers on the index. 

On the BSE Sectoral front, Realty up by 2.61%, Bankex up by 1.45%, Metal up by 1.41%, Auto up by 1.29%, and Capital Goods up by 1.23%, were the top gainers, while FMCG down by 0.92%, Consumer Durables down by 0.73%, Oil & Gas down by 0.51%, IT down by 0.48%, and Teck down by 0.23%, were the top losers on the sectoral front.

Meanwhile, amid rising concerns over the fiscal deficit number touching around 76 percent of the budget estimate in the first half of current fiscal, Economic Affairs Secretary Arvind Mayaram said that the government will meet the fiscal deficit target of 4.8 percent of GDP for the current financial year. During the first six month of current fiscal, fiscal deficit of the country has touched Rs 4.12 lakh crore, or 76 percent of the budget estimate of Rs 5.42 lakh crore. Net tax receipts of the country touched Rs 3.08 trillion in the first half of the current fiscal year, while, the total expenditure stood at Rs 8.09 trillion during the reported period.

Meanwhile, the government has been taking a number of measures in order to contain the country's fiscal deficit within target limit. Recently, it has announced a slew of austerity measures including banning government departments for holding meetings in 5-star hotels among others to cut government spending in non-critical areas. In the previous fiscal, the government was able to contain the fiscal deficit at 4.9 percent of GDP in FY13, against the budgeted target of 5.1 percent of GDP mainly on the back of austerity measures announced in November 2012.

Further in order to enhance the government revenue, the government has sought higher dividend payments from state-owned companies in sectors such as steel, coal, mines and power. Moreover, the finance ministry has recently said that the government is committed to the path of fiscal consolidation and will take difficult decisions soon to check country’s widening fiscal deficit.

The CNX Nifty touched a high and low of 6,332.60 and 6,286.95 respectively.

The top gainers on the Nifty were IDFC up by 6.48%, PNB up by 4.79%, Bank of Baroda up by 4.59%, State Bank of India up by 4.35% and Mahindra & Mahindra up by 4.30%. On the other hand, Power Grid Corporation of India down by 3.41%, ONGC down by 2.01%, NTPC down by 1.95%, ITC down by 1.85%, and Infosys down by 1.15%, were the top losers.

The European markets were trading in red, France’s CAC 40 was down by 0.53%, Germany’s DAX was down by 0.17%, and United Kingdom’s FTSE 100 was down by 0.14%.

The Asian markets concluded Friday’s trade on a mixed note despite an official gauge of Chinese factory activity last month showed encouraging sign. Pressure is rising on China to show it can maintain a recent stabilization of economic growth after a worrying slowdown in the first half of the year. The HSBC China Manufacturing Purchasing Managers’ Index, a gauge of nationwide manufacturing activity rose to a final reading of 50.9 in October, a seven-month high, from 50.2 in September. A reading below 50 indicates a contraction in manufacturing activity from the previous month, whereas a reading above indicates expansion. Output at manufacturing plants in China increased for the third consecutive month in October, and at the quickest pace since April. The expansion of output reflected stronger demand both at home and abroad, with new orders and new export orders rising at faster rates in October.

South Korea’s exports rose sharply in October due to a jump in overseas demand, after shrinking in the preceding month. Exports in October rose a much better-than-expected 7.3% from a year earlier to $50.511 billion, following a 1.5% decline in September. Imports gained 5.1% on year to $45.612 billion in October. The October trade surplus of $4.899 billion surpassed the projection of a $4.32 billion surplus. The trade balance has been in the black since February 2012. Indonesia’s trade deficit narrowed in the third quarter as imports fell back due to slowing domestic demand and a weakening rupiah. The country posted a trade deficit of $2.9 billion in Q3, less than the $3.1 billion posted in the April to June period. Inflation eased slightly in October as food and clothing prices edged down. The consumer price index advanced by 8.3 percent last month, after climbing 8.4 percent a month earlier. This was the second month inflation had fallen back after peaking at 8.8 percent in August following the cut in the government’s fuel subsidy.