Benchmarks trade flat with negative bias on profit booking

A day after a strong rally triggered by a coordinated central bank action to cut the cost of funds in money markets, domestic benchmarks have stalled their rally and dipped marginally into the red as investors opted to book profits. Globally, the US markets after staging their best one day performance in last more than two years, consolidated on Thursday and made a mixed closing while, most of the Asian equity indices were trading in the negative terrain at this point of time. Back home, the domestic indices were edged lower in early trade on weak Asian stocks. Gains in software, banks and consumer durables sectors were offset by losses in metals, oil & gas and realty space. Meanwhile, auto stocks were up on the back of strong sales in November. Maruti was up by over a percent, despite a decline in sales for the sixth straight month while, Tata Motors rose over one and a half percent on the back of strong JLR sales. The broader indices were trading marginally in the positive. The market breadth on the BSE was evenly divided; there were 754 shares on the gaining side against 726 shares on the losing side while 76 shares remained unchanged.

The BSE Sensex opened at 16,493.98; about 10 points higher compared to its previous closing of 16,483.45, and has touched a high and a low of 16,506.10 and 16,428.66 respectively.

The index is currently trading at 16,464.51, down by 18.94 points or 0.11%. There were 10 stocks advancing against just 20 declines on the index.

The overall market breadth has been evenly divided with 48.46% stocks advancing against 46.66% declines. The broader indices were trading marginally in the green; the BSE Mid cap and Small cap indices rose 0.11% and 0.03% respectively.

The top gaining sectoral indices on the BSE were, IT up by 0.42%, Bankex up by 0.32%, CD up by 0.24%, TECk up by 0.19% and FMCG was up by 0.14%. While, Metal down by 0.70%, Oil and Gas down by 0.67%, Realty down by 0.43%, CG down by 0.33% and PSU down by 0.19% were the top losers on the index.

The top gainers on the Sensex were Tata Motors up by 1.50%, Maruti Suzuki up by 1.29%, HUL up by 0.97%, ICICI Bank up by 0.60% and Infosys was up by 0.39%.

On the flip side, Jindal Steel was down by 1.28%, Bharti Airtel was down by 1.23%, Sterlite Industries was down by 1.19%, ONGC was down by 1.17% and Bajaj Auto was down by 1.16% were the top losers on the Sensex.

Meanwhile, India’s factory output slowed in the month of November. The manufacturing sector grew at its slowest pace in nearly three years though export demand is likely to provide some cheer for factories. However, there is an enhancement in business conditions in the Indian manufacturing sector; the rate of growth was marginal and weak. Production was mainly hindered by weaker rise in new business and delays caused by power cuts. Employment declined for the fourth successive month.

The HSBC Markit India Manufacturing Purchasing Managers’ Index PMI fell to 51.0 from 52.0 in October, but has stayed above the 50 mark that divides growth from contraction for 32 months. The PMI was 50.4 in September. Whereas, the factory output index declined to a near 3-year low of 50.5, the new orders index, an indicator of future output, fell after a surge in October indicating the sector is close to stalling.

As per the survey, Indian manufacturers reported a 32 successive increase in new business received during November. However, the rate of expansion slowed from October and was second weakest in the current sequences of growth. On the other hand, new export orders showed marginal increase. However, this reflected an improvement on contractions recorded over the previous four survey periods.

Although the slowdown in output growth was more remarkable than the new business, the weaker increase in output was due to production delays caused by power cuts, along with the slower increase in new orders, which highlights the backlogs of work increased solidly. In November, purchasing activities also increased. However, the input prices faced by manufactures increased substantially in November. Higher raw material prices were the main reason for the surge in cost. 

Commenting on the India Manufacturing PMI survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said 'Economic activity in the manufacturing sector continues to grow at a slower clip led by a deceleration in domestic orders. Despite this, manufacturers still struggle to keep up with new orders and inflation pressures are not abating. This suggests that the RBI will have to keep monetary conditions tight for an extended period.'

Since March 2010, the Reserve Bank of India (RBI) has raised its lending rate 13 times, but inflation has remained uncomfortably high at more than 9% for 11 consecutive months. This 13 rate hike in RBI’s repo and reverse repo rates has adversely affected the economic activities and investment rates. India’s economy, in July-September 2011 grew by 6.9% compared to 7.7% in April-June 2011. This decline in economic growth was due to fall in manufacturing sector, which accounts for 16% of India’s GDP, it grew by 2.7%  in second quarter of 2011-12 compared to 7.2% in the same quarter of last year. 

The S&P CNX Nifty opened at 4,940.85; about 4 points higher compared to its previous closing of 4,936.85, and has touched a high and a low of 4,943.10 and 4,918.40 respectively.

The index is currently trading at 4,932.15, lower by 4.70 points or 0.10%. There were 21 stocks advancing against 29 declines on the index.

The top gainers of the Nifty were Ambuja Cement up by 1.91%, Tata Motors up by 1.69%, IDFC up by 1.41%, Maruti Suzuki up by 1.30% and HUL up by 1.11%.

On the flip side, ONGC down by 1.28%, Ranbaxy down by 1.20%, BHEL down by 1.18%, Sterlite Industry down by 1.18% and Bharti Airtel down by 1.17%, were the major losers on the index.

Most of the Asian equity indices were trading in the red; Shanghai Composite was down 34.34 points or 1.44% to 2,352.52, Hang Seng was down 93.19 points or 0.49% to 18,909.07, Jakarta Composite was down 14.45 points or 0.38% to 3,766.65, Straits Times was down 19.73 points or 0.71% to 2,742.15, Seoul Composite was down 3.15 points or 0.16% to 1,913.03 and Taiwan Weighted was down 57.01 points or 0.79% to 7,121.68.

On the flip side, KLSE Composite was up 2.01 points or 0.14% to 1,487.27 and Nikkei 225 was up by 21.74 points or 0.25% to 8,619.12.