Benchmark equity indices continue to languish in red terrain; Nifty gyrates below 6,200 level

Benchmark equity indices continue to languish in red terrain, waiting for fresh cues from European markets. Overall, the mood continues to remain downbeat on account of negative regional counterparts and also on dismal macro-economic report at domestic front. Marking sixth consecutive monthly drop in output levels, activity in India's services sector shrank at a faster pace in December as new orders dwindled, surprisingly, despite this firms hired at their fastest pace in five months. The HSBC Services Purchasing Managers' Index (PMI), compiled by Markit, fell to 46.7 in December from 47.2 in November. Thus, with no recovery in sight, while Sensex is holding above the crucial 20,800, Nifty is trading below the psychological 6200 mark, with loss of close to quarter of a percent. On the flip side, broader indices continue to outperform larger peers, with gains in the range of 0.25%-1%.

On the global front, Asian shares fell to a two-week low on Monday after growth in China's services sector slowed sharply last month, raising concerns about the pace of recovery in the world's second-largest economy. Meanwhile, US stock futures indicate a mixed start of US markets, on the screen trade.

Closer home, stocks from Banking, Information Technology and Power are the main culprits behind the slide of equity markets. However, strength in Healthcare, Consumer Durables and Auto counters, are restricting further slide of bourses. All the Power stocks, Tata power and Reliance Infrastructure, collapsed in trade on media reports that the state government in Maharashtra is planning to cut power tariffs. As per reports, Narayan Rane, the State Industries Minister, said a decision would be announced in eight days and the group of ministers set up by the government under Rane recommended that electricity tariff be cut by around 15 per cent. On the flip side, public sector oil marketing companies (OMCs), viz, BPCL, HPCL and IOC are hogging limelight as petrol prices were hiked by 75 paise a litre, while diesel by 50 paise. The overall market breadth on BSE is in the favour of advances which have outnumbered declines in the ratio of 1319:868, while 128 shares remained unchanged.

The BSE Sensex is currently trading at 20800.79, down by 50.54 points or 0.24% after trading in a range of 20913.79 and 20740.63. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.24%, while Small cap index surged by 1.04%.

The gaining sectoral indices on the BSE were Heathcare up by 0.67%, Consumer Durables and Auto up by 0.52% each, FMCG up by 0.44% and Capital Goods up by 0.19%. While, Bankex down by 0.96%, IT down by 0.57%, Power down by 0.29%, Realty down by 0.33% and Teck down by 0.21% were the top losing indices. 

The top gainers on the Sensex were ONGC up by 2.57%, Tata Motors up by 2.00%, Sun Pharma up by 1.65%, Wipro up by 0.87% and Gail India up by 0.70%. On the flip side, Tata Powers down by 1.84%, ICICI Bank down by 1.56%, SBI down by 1.23%, Hero Motocorp down by 1.04% and Coal India down by 1.03%.

Meanwhile, marking sixth consecutive monthly drop in output levels, activity in India's services sector shrank at a faster pace in December as new orders dwindled, surprisingly, despite this firms hired at their fastest pace in five months. The HSBC Services Purchasing Managers' Index (PMI), compiled by Markit, fell to 46.7 in December from 47.2 in November. Further while, the December reading is the lowest in three months, the index has now stayed below the 50 mark that divides growth and contraction for the sixth straight month. Underpinning the fall in services, output was a solid decrease in incoming new work, which contracted at the quickest pace since September, with panelists reporting an increasingly fragile economy and competitive pressures. The new orders index fell to 47.3 last month from 48.2 in November, and has also remained below the 50 mark for six months. Further, the survey also blamed the upcoming general elections behind the drop of new orders.

Four of the six broad areas of the service economy registered lower output volumes, while new business contracted in five categories. Nevertheless, sharpest decline in new orders was noted at Hotels & Restaurants, while Post & Telecommunication sub-sector remained resilient, with growth of both business activity and new orders recorded. In some positive, PMI suggested pickup in the pace of hiring for private sector. The latest increase in payroll numbers were broad-based, with both manufacturers and service providers posting job creation. The December employment sub-index rose to its highest since July, after four months of showing a stagnant labour market.

Additionally, in yet another positive development, the rate of cost inflation was only moderate and the weakest since July as, input price inflation in the private sector as a whole eased to a six-month low. Furthermore, Indian service providers remained upbeat about the prospects for business activity in 2014, with the degree of confidence being the strongest in five months. Positive sentiment was linked by companies to forecasts of better economic conditions and hopes of higher demand.

Thus, the latest reading continues to raise doubts about the speed at which the economy will recover from its decade-low pace of growth as concerns over the headwinds being faced by the service sector prevail, with weakening new business dragging down activity. On the positive side, the survey also highlights the easing inflation pressures and the rising optimism of firms about the coming year.

The CNX Nifty is currently trading at 6,195.25, down by 15.90 points or 0.26% after trading in a range of 6,224.70 and 6,176.15. There were 16 stocks advancing against 34 declining on the index.

The top gainers of the Nifty were ONGC up by 2.52%, Ranbaxy up by 2.06%, Tata Motors up by 2.01%, Sun Pharma up by 1.72% and Jindal Steel up by 1.23%. On the flip side, Tata Power down by 2.02%, ICICI Bank down by 1.69%, SBI down by 1.45%, BoB and PNB were down by 1.37% each, were the major losers on the index.

Most of the Asian equity indices were trading in red; Hang Seng down by 0.55%, Straits Times down by 0.16%, Taiwan Weighted down by 0.54%, Jakarta Composite down by 1.10%, Shanghai Composite down by 1.84% While, Seoul Composite up by 0.37% and KLSE Composite up by 0.01%.