Post Session: Quick Review

Snapping five consecutive sessions’ gaining streak, benchmark equity indices succumbed to selling pressure on relentless profit-booking by traders after markets scaled an all time high level during the special Mahurat trading session held on occasion of ‘Diwali’.But reversing the euphoria altogether on Tuesday, in the lackluster session of trade, benchmarks for once did not break-out in green and kept languishing in red terrain for the entire trading session. Although, bit of momentum was witnessed in early afternoon deals, that too receded soon. Absence of significant positive triggers at home front combined with gloomy global set-up, led to Sensex and Nifty, settle sub psychological 21,000 and 6,250 levels respectively, with a cut of over a percent. Meanwhile, broader indices outperformed larger peers with fat margins and ended with gains of over a percent. On the macro-front, although HSBC India Services PMI recovered from four years low level touched in September, it remained below the 50.0 no-change mark for the fourth successive month in October, indicating a further contraction.

On the global front, Asian shares sagged on Tuesday after hawkish comments from China's premier ahead of a key Communist Party meeting, though expectations that the US Federal Reserve will maintain its stimulus for a while, limited losses. Premier Li Keqiang in a speech published in late on Monday said that adding extra stimulus would be more difficult since printing new money would cause inflation. Meanwhile, European shares too edged lower as mixed results from blue chips and uncertainty in the run-up to an ECB policy meeting kept investor enthusiasm for equities in check.

Closer home, sentiment failed to get fillip even as global investment bank, Goldman Sachs,  raised India’s economy to ‘Market-weight’ and raised Nifty index target to 6900, for 2014-end which implies nearly 9 per cent potential upside from current levels. Sectorally, Fast Moving Consumer Goods, Health Care and Information Technology counters were the weak spot of trade, while only Realty counter performed.  Auto stocks, which rode higher on back on Tata Motors in the early trade, too ran out of steam by close. However, Tata Motors scaled a new high level in the intra-day trade on reporting sale of reporting sells 51,638 vehicles in October.  The market breadth on the BSE ended in green; advances and declining stocks were in a ratio of 1259: 1125, while 137 scrips remained unchanged. (Provisional)

The BSE Sensex lost 287.65 points or 1.35% to settle at 20951.71. The index touched a high and a low of 21158.56 and 20951.71 respectively. Among the 30-share Sensex, 8 stocks gained, while 22 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended higher by 0.88% and 0.57% respectively. (Provisional)

On the BSE Sectoral front, FMCG down by 2.51%, Health Care down by 1.59%, IT down by 1.40%, Teck down by 1.37% and Consumer Durables down by 1.22% were the top losers, while Realty up by 0.14% was the only gainer in the space. (Provisional)

The top gainers on the Sensex were Tata Motors up by 1.09%, Hindalco Industries up by 1.08%, Coal India up by 0.98%, HDFC up by 0.49% and Cipla up by 0.32%, while, ITC down by 3.42%,  ICICI Bank down by 3.33%, Sun Pharma down by 2.95%, Dr Reddys Lab down by 2.88% and SSLT down by 2.70% were the top losers in the index. (Provisional)

Meanwhile, after slumping to over four years low level in September, the activity in services sector, which makes up of nearly 60% of country’s economic output, rose from 46.1 to 47.5 in October. Nonetheless, HSBC India Composite Output Index posted below the 50.0 no-change mark for the fourth successive month in October, indicating a further contraction.

Sector data indicated a fall in business activity in five out of the six categories monitored by the survey, with the sharpest decline noted at Hotels & Restaurants. Further, the lower levels of private sector output mirrored a further decrease in new business flows. Although the PMI's new business index edged up to 48.0 in October from 45.0 in September, it was the fourth month running that demand has declined. While, the incoming new work contracted at slower pace in services, it quickened for manufacturing.

On the employment front, four of the six monitored service categories posted job shedding, the exceptions being Renting & Business Activities and ‘Other Services. Meanwhile, Inflation rates in the Indian private sector rose during October, with input prices increasing at the quickest pace in 16 months and the rate of charge inflation climbing to a seven-month high.

However, in a positive sign, robust optimism regarding output growth in the coming year was sustained during October. Launch of new services, planned increases in marketing budgets and forecasts of better economic conditions are indicated to support demand growth in the year ahead as per the survey.

Nevertheless, continued contraction in service sector activity is testament to the dampening effects of the heightened macroeconomic uncertainty, which is making businesses and consumers more cautious about spending. Worryingly, the survey also underscores that Reserve Bank of India would have to keep up its inflation guards up to address the lingering inflation pressures. These view echoes with the view of manufacturing PMI data, which also asserted that India’s Apex Bank will have to continue its staring contest with inflation.

India VIX, a gauge for markets short term expectation of volatility gained 2.30% at 19.94  from its previous close of 19.49 on Friday. (Provisional)

The CNX Nifty lost 71.90 points or 1.14% to settle at 6,245.45. The index touched high and low of 6,304.75 and 6,244.30 respectively. Out of the 50 stocks on the Nifty, 18 ended in the green, while 32 ended in the red.

The major gainers of the Nifty were BPCL up 2.47%, NMDC up by 2.34%, DLF up by 2.10%, Asian Paints up by 2.02% and JP Associate up by 1.64%. The key losers were ITC down by 3.51%, ICICI Bank down by 3.29%, Power Grid down by 3.20%, Dr. Reddy's Laboratories down by 3.03% and Sun Pharmaceuticals down by 2.81%. (Provisional)

Most of the European markets were trading in red with, France’s CAC 40 down by 0.48%, Germany’s DAX down by 0.43% and the United Kingdom’s FTSE 100 down by 0.59%.

The Asian markets concluded Tuesday’s trade mostly in red as investors await the release of US jobs and growth data later in the week. Jakarta Composite was closed on account of ‘Muharram/Islamic New Year’ holiday. On Friday, China’s Communist Party will start the Third Plenum, a meeting during which it is expected to provide details of economic policy for the next decade. China’s service sector expanded in October at the fastest pace in 12 months, confirming that the Chinese economy is on a path to stability. The non-manufacturing Purchasing Managers’ Index rose to 56.3 in October from 55.4 in September, the official National Bureau of Statistics and China Federation of Logistics and Purchasing stated. A reading above 50 indicates expansion.

China’s central bank has signaled a further opening of the country’s fast growing debt market by allowing more participation in the onshore interbank bond market. Indonesia’s rupiah fell to the lowest level in three weeks on concern an unexpected trade deficit in September will weigh on the nation’s current account. Consumer price inflation in the Philippines rose to a seasonally adjusted annual rate of 0.1%, from 0.6% in the preceding quarter. National Statistics Taiwan stated that Taiwanese CPI fell to a seasonally adjusted annual rate of 0.64%, from 0.83% in the preceding quarter.