Post Session: Quick Review

‘Profit-booking’ remained the theme for Indian equity markets for the fourth consecutive session on Monday, mainly due to pessimistic global set-up, which on being combined with negative domestic cues prompted traders to unwind their long positions. Dismal macro-economic data, which continued to raise doubts about the speed at which the economy will recover from its decade-low pace of growth, mainly deterred sentiments. 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. The HSBC Services Purchasing Managers' Index (PMI), compiled by Markit, fell to 46.7 in December from 47.2 in November.

However, before that negative regional counterparts spelled pessimism across local equity markets. Asian pacific shares fell to a three-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. Nevertheless, local bourses failed to recoup some lost ground despite positive European markets, which after opening soft, quickly regained ground to trade in positive territory ahead to data on the region's services sector after comparable numbers from China pointed to a sharp slowdown in growth there.

Although, some recovery crept in the last hour of the trade, but that failed to reverse the negative trend of local equity markets, which for fourth straight session on Monday ended in negative terrain, with loss of over quarter of a percent, below the crucial 20,800 (Sensex) and 6,200 (Nifty) levels respectively. Meanwhile, broader indices outperformed larger peers for yet another session and captured gains in the range of 0.25%-0.95%.

Sectorally, much of the pressure was exerted from stocks belonging to Banking, Realty and Power counters, while those from Healthcare, Fast Moving Consumer Goods and Auto counters restricted the further downside of the bourses. Shares of power producers like Tata Power and Reliance Infrastructure slipped on reports that Maharashtra is planning to cut tariffs by around 15 per cent. However, public sector Oil marketing companies (OMCs) flew higher after hiking petrol and diesel prices by 75 paise and 50 paise a litre, respectively. Petrol price, which was last hiked by 41 paise excluding VAT on December 21 as government hiked the commission to be paid to petrol pump dealers, will now cost Rs 72.43 a litre inDelhi, up 91 paise from Rs 71.52 current. Meanwhile, the price of diesel will be hiked by 56 paise, including tax, to Rs 5 4.34 per litre in Delhi and will cost Rs 61.42 a litre in Mumbai as against Rs 60.80 currently.The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1475: 1042, while 155 scrips remained unchanged. (Provisional)

The BSE Sensex lost 58.81 points or 0.28% to settle at 20792.52. The index touched a high and a low of 20913.79 and 20721.98 respectively. Among the 30-share Sensex, 11 stocks gained, while 19 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended higher by 0.42% and 1.01% respectively. (Provisional)

On the BSE Sectoral front, FMCG up by 0.62%, Healthcare up by 0.53%, Auto up by 0.33%, Capital Goods up by 0.06% and Consumer Durables up by 0.04% were the top gainers, while Bankex down by 1.13%, Realty down by 0.83%, IT down by 0.63%, Teck down by 0.51% and Power down by 0.48% were the only losers in the space. (Provisional)

The top gainers on the Sensex were ONGC up by 1.89%,  Sun Pharma up by 1.54%, Tata Motors up by 1.27%, TCS up by 0.80% and HDFC up by 0.76%, while, Tata Power down by 2.97%, ICICI Bank down by 2.29%,  SBI down by 1.96%, Infosys down by 1.64% and Hero MotoCorp down by 1.45% were the top losers in the index. (Provisional)

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.

India VIX, a gauge for markets short term expectation of volatility gained 3.96% at 16.50 from its previous close of 15.87 on Friday. (Provisional)

The CNX Nifty lost 19.35 points or 0.31% to settle at 6,191.80. The index touched high and low of 6,224.70 and 6,170.25 respectively. Out of the 50 stocks on the Nifty, 14 ended in the green, while 36 ended in the red.

The major gainers of the Nifty were ONGC up 1.92%, Sun Pharmaceuticals up by 1.44%, Jindal Steel & Power up by 1.43%, Tata Motors up by 1.21% and Lupin up by 0.60%. The key losers were Tata Power down by 2.74%, Bank of Baroda down by 2.10%, SBI down by 2.09%, ICICI Bank down by 2.02% and Hero MotoCorp down by 1.58%. (Provisional)

Most of the European markets were trading in red with, France’s CAC 40 was down 0.10% and UK’s FTSE 100 down 0.13%, while Germany’s DAX was up 0.12%.

The Asian markets barring Seoul Composite concluded Monday’s trade in red, with Japanese stocks falling sharply on their first day of trading in 2014. Chinese stocks were also weaker, as the impact of a reopened initial-public-offering market continued to weigh on local sentiment. A year-long moratorium on new listing was lifted earlier in the year, reviving fears that too many new stocks could hit the market. HSBC’s China services Purchasing Managers’ Index also weighed on sentiment. The gauge of expansion intentions in the services sector fell to 50.9 in December from 52.5 in November. This followed numbers released last week that showed a deceleration in both China manufacturing and services sectors.

Indonesia’s Finance Minister stated that economy contracted by 1.4 to 2.0 percent in the fourth quarter from the previous three months, though full-year growth was 5.7 percent. The minister also added that current-account deficit, which has been a major worry for investors, will be 3.5-3.7 percent of gross domestic product (GDP) in 2013 and decline to 2.7-3.2 percent in 2014. Indonesia’s consumers grew more optimistic in December, indicating an improvement in wages and domestic consumption. The consumer confidence index rose to 116.5 in December, compared with 114.3 in November