Indian equities continue lackadaisical trade; Metal, CD and Realty drags market down

Indian equities continued its lackadaisical trade though it managed to inch up higher above neutral line but failed on to hold gains drifting lower trading in red in the late afternoon session. In the fight between bulls and bears to gain control over the market, bulls have steadily managed to outpace bears but failed to mark its victory with bears pouching back on bulls and taking control over the market. Traders were seen piling up position in Capital Goods, Power and IT sector while selling was witnessed in Metal, Consumer Durables (CD) and Realty sector. Tata Steel, SAIL, Sterlite and Jindal Steel from Metal pack were trading in red exerting pressures on the market. Industry heavyweight RIL was too trading in red pulling the markets down. ITC and HUL from FMCG space were trading in red helping markets drift lower. Bajaj Auto, Hero MotoCorp and Tata Motors from Auto pack were trading in red driving the markets down. BHEL and L&T from Capital Goods space were trading firm in green pulling the markets up.  Infosys and TCS from IT pack were in green giving the much needed support for the market. Axis Bank, PNB and SBI from banking counters were firm giving the much needed push.

In the script specific development, Praj Industries rose after the company's board of directors approved buyback of equity shares from the open market. Amtek India was trading firm in green after the company said its board will meet on December 09, 2011 to consider raising funds. Shares of organised retailers Pantaloon Retail India, Provogue (India), Trent, Koutons Retail, Shoppers Stop and Vishal Retail were trading weak in red after a tussle between ruling party United Progressive Alliance (UPA) and other parties over approval to the foreign direct investment (FDI) in retail sector. On the global front, all Asian markets were seen trading on a mix note while the European markets were trading in green on optimistic note. Italian Prime Minister Mario Monti announced 30 billion euros of austerity and growth measures yesterday. German Chancellor Angela Merkel meet French President Nicolas Sarkozy to advance a plan for stricter enforcement of the region's deficit rules that will be presented to European leaders at a summit to be held this month. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,050 and 16,800 levels, respectively. The market breadth on the BSE was in favour of declines in the ratio of 1263:1301 while 122 scrips remained unchanged.

The BSE Sensex is currently trading at 16,795.83 down by 51.00 points or 0.30% after trading as high as 16,863.10 and as low as 16,691.21. There were 10 stocks advancing against 19 declines while 1 stock remained unchanged on the index.

The broader indices were trading on a mix note; the BSE Mid cap index eased 0.07% while Small cap rose 0.11%.

On the BSE sectoral space, Capital Goods up 0.71%, Power up 0.66%, IT up 0.11%, PSU up 0.08% and TECk up 0.02% were the major gainers while Metal down 0.80%, Consumer Durables down 0.77%, Realty down 0.64%, FMCG down 0.50% and Oil & Gas down 0.37% were the top losers in the space.

BHEL up 1.68%, JP Associates up 1.56%, NTPC up 1.28%, Maruti up 0.60% and TCS up 0.47% were the major gainers on the Sensex, while Tata Steel down 1.80%, Sun Pharma down 1.53%, HDFC down 1.33%, Sterlite down 1.32% and ITC down 1.16% were the major losers in the index.

Meanwhile, after two successive months of contraction, India’s service sector recovered in November on the back of surge in new business received by Indian private sector companies despite persistent inflationary pressures.

The seasonally adjusted HSBC Markit Business Activity Index, which is based on a survey of 400 firms stood at 53.2 in November above the 50 mark, which separates growth from contraction. During October, it had declined to 49.1 and in September it had fallen to 49.8, which was the first contraction in more than two years.

Commenting on the India Services PMI survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said, ‘the service sector demonstrated resilience, with both activity and new business on the rise. Unfortunately inflation continues to tick up as well, calling for the RBI to maintain tight monetary conditions for an extended period.’

According to HSBC survey, the input prices faced by both service providers and manufacturers saw surge in November, the overall rate of cost inflation was at a three-month high, which confirm that increasing raw material costs and higher wage and fuel bills had been main drivers of surge in input prices. As a result, price charged by service providers and manufacturers also increased, which indicates that the inflation in Indian economy is expected to remain at its current level.

The headline inflation measured by Wholesale Price Index (WPI) for the month of October stood at 9.73%, for the 11th month in row when headline inflation was above 9% mark. The Reserve Bank of India (RBI) is scheduled to meet for mid-term policy review on December 16, and it is expected to maintain a pause in its anti-inflationary stance, since March 2010, in order to control the RBI has hiked its key policy rates 13 times.

However, despite of high inflation and tight monetary condition, the HSBC India Composite Index that covers the manufacturing and service sectors for November surged to 52.3 from 50.3 in October. This three-month high growth in Composite Index is because of stronger expansion in new work received by the service providers offset a weaker rise in the manufacturing sector.

As per the survey, the Indian service providers were optimistic in November that activity would increase in coming 12-months. The marketing firms are expected to boost new business and therefore output. However, in November, the degree of positive sentiment declined to 33-month low. This record fall in positive sentiments suggest that the uncertainty in global economy may hurt export-oriented sectors in the future. 

The S&P CNX Nifty is currently trading at 5,037.40, lower by 12.75 points or 0.25% after trading as high as 5,055.40 and as low as 5,002.55. There were 21 stocks advancing against 29 declines on the index.

The top gainers on the Nifty were Axis Bank up 2.03%, JP associates up 1.93%, BHEL up 1.77%, NTPC up 1.45% and RCOM up 1.10%.

Reliance Power down 2.77%, HCL Tech down 2.02%, Tata Steel down 1.78%, Sun Pharma down 1.62% and Ranbaxy down 1.54% were the major losers on the index.

Asian markets traded on a mixed note, Shanghai Composite declined 1.16%, KLSE Composite eased 0.01%, Straits Times dropped 0.29%, and Taiwan Weighted dipped 0.60%. On the flipside, Hang Seng gained 0.73%, Jakarta Composite rose 0.09%, Nikkei 225 advanced 0.60% and Seoul Composite climbed 0.36%.

The European markets were trading in green with, France’s CAC 40 jumped 0.69%, Germany’s DAX surged 0.49% and Britain’s FTSE 100 ascended 0.21%.