Post Session: Quick Review

First trading session of new month turned out to be disappointing one for the Indian equity markets, which after getting a gap-down start went on losing ground and settled near day’s low point, below the crucial 21,000 (Sensex) and 6,250 (Nifty) psychological levels respectively, with a cut of over 3/4 of a percent. Global risk-aversion and dismal GDP data mainly kept investors on the edge. Sentiment at Dalal Street took a hit after industrial output and an investment slowdown dragged India's economic growth to a worse-than-expected 4.7 percent in the three months to December, thereby recording Sub 5% growth for fifth consecutive quarter. In across the board selling pressure, while Midcap index too ended lower with loss of over quarter of a percent, Small-cap index managed to showcase resilience and ended in green, albeit with slender gains. Meanwhile, NSE's volatility index, or the domestic equivalent of the VIX fear gauge, logged its biggest single day rise since January 27 as rising tensions in Ukraine casted a shadow over emerging markets.

On the global front, Asian markets ended in red on Monday as growing fears of a conflict between Ukraine and Russia sent traders scurrying for safer assets, with the yen surging and oil prices also seeing big gains. The downbeat atmosphere was compounded in some markets by another disappointing set of manufacturing figures from China that added to concerns about growth in the world’s number two economy.  Additionally, European shares too tumbled in early trade on Monday as escalating tensions in Ukraine weighed on the sentiment.

Closer home, although, benchmark drawing some respite from strong factory PMI data, did make efforts of recovery in the early morning deals, but those were soon dribbled away by the benchmarks which once again resuming losing streak, went on losing ground and only halted at day’s low level. On the macro-front, Indian manufacturing activity and new orders showed their strongest growth in a year in February, according to a survey released on Monday that suggested that the worst is over for Indian factories struggling through an economic slowdown.

Sectorally, Healthcare, Information Technology and Auto counters were the worst performers of the session, which were beaten blue in trade.  Auto stocks sulked in trade after automobile manufacturers reported sluggish sales in February due to a slowing economy that is plagued by high fuel and interest costs. While, Information Technology stocks too ebbed despite rupee’s depreciation past the perilous 62/$ level. Additionally, Shares of Sahara Group's listed companies, namely, Sahara Housingfina Corporation and Sahara One Media and Entertainment slipped for second consecutive session after head of Sahara conglomerate, Subrata Roy, surrendered himself in to police on Friday. On the flip side, stocks from Consumer Durables, Realty, Oil & Gas counters were the only gainers among 13 sectoral indices on BSE.  Besides, shares of Kalindee Rail, Titagarh Wagons and Texmaco Rail and Engineering, among others sped up in trade on Monday after Commerce and Industry Minister Anand Sharma said that cabinet note on FDI in railways was cleared. The Department of Industrial Policy and Promotion (DIPP) had proposed a 100 percent FDI through automatic route in the railways sector. However, FDI is not meant for areas related to train operations and safety. DIPP has been batting for 100 percent FDI only in railway infrastructure such as elevated rail corridor projects, freight terminals, suburban corridors, dedicated freight lines and high-speed train systems. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1,207: 1,476, while 121 scrips remained unchanged. (Provisional)

The BSE Sensex lost 194.90 points or 0.92% to settle at 20,925.22. The index touched a high and a low of 21,140.00 and 20,920.98 respectively. Among the 30-share Sensex, 4 stocks gained, while 26 stocks declined. (Provisional)

The BSE Mid cap index ended lower by 0.30% and Small cap index ended higher by 0.05%. (Provisional)On the BSE Sectoral front, Consumer Durables up by 1.71% and Oil & Gas up by 0.24% were the top gainers, while Healthcare down by 1.68%, IT down by 1.48%, Auto down by 1.39%, Power down by 1.27% and Teck down by 1.22% were the top losers in the space. (Provisional)

The top gainers on the Sensex were Hindalco up by 0.71%, RIL up by 0.59%, Coal India up by 0.37% and ITC up by 0.18%, while, Dr Reddys Lab down by 3.21%, BHEL down by 2.81%, Sun Pharma down by 2.75%,  Mahindra & Mahindra down by 2.29% and Cipla down by 2.17% were the top losers in the index. (Provisional)

Meanwhile, signaling a solid and stronger improvement in business conditions across the country’s goods-producing sector, the Indian manufacturing economy strengthened further in February, with faster increases in output and new orders bolstering the PMI to reach a one-year peak. The HSBC Purchasing Managers’ Index (PMI), a headline index designed to measure the overall health of the manufacturing sector, rose to 52.5 in the month of February as against 51.4 in January.

Notably, the pace of output expansion was solid and the quickest in one year on account of higher demand from both domestic and export clients. Indeed new work from abroad rose in the latest month, with the growth rate climbing to the highest since June last year, while new orders increased for the fourth month running and at the most pronounced rate since February 2013.

Sectorally, Consumer goods was again the best performing subsector of the manufacturing economy in February, leading the rises in both output and new orders. Further, February data indicated that manufacturing employment increased, stretching the current period of job creation to five months. On the inflation front, while input cost inflation quickened to its highest in four months during February, the rate of charge inflation was slight and the weakest in five months.

Although, the manufacturing activity has picked up in February on the back of improvement in external demand and the reduction in macroeconomic uncertainty since last summer, the recovery in activity is still likely to prove protracted given the lingering structural constraints. Moreover, underlying inflation pressures, which remains potent and was evident enough from the jump in the input price component of the PMI survey, would keep RBI’s policy tone hawkish and likely propel it to raise rates a bit further this year.

India VIX, a gauge for markets short term expectation of volatility gained 7.79% at 15.28 from its previous close of 14.18 on Friday. (Provisional)

The CNX Nifty lost 59.40 points or 0.95% to settle at 6,217.55. The index touched high and low of 6,277.75 and 6,212.25 respectively. Out of the 50 stocks on the Nifty, 10 ended in the green, while 40 ended in the red.

The major gainers of the Nifty were NMDC up 1.18%, IDFC up by 1.17%, Jindal Steel & Power up by 1.09%, Cairn up by 1.02% and Reliance Industries up by 0.54%. The key losers were HCL Tech down by 4.55%, JP Associate down by 3.70%, BHEL down by 3.07%, Sun Pharma down by 3.06% and Dr. Reddy's Laboratories down by 2.69%. (Provisional)

The European markets were trading in red; France’s CAC 40 was down 1.74%, Germany’s DAX was down 2.29% and UK’s FTSE 100 was down 1.15%.

The Asian markets barring Shanghai Composite concluded Monday’s trade in red, triggered by geopolitical worries over Ukraine and after both the official and HSBC versions of China’s monthly manufacturing survey showed the sector weaker last month than it was in January. The recent reversal in China’s currency has caught many off guard as it appears to be policy-led moves to curb an extended yuan carry trade. The National Bureau of Statistics and China Federation of Logistics and Purchasing stated that Chinese Manufacturing PMI fell to an eight-month low of 50.2 in February from 50.5 in the preceding month. The PMI for February came in at 48.5, up slightly from the earlier flash reading of 48.3, and down from January’s 49.5 reading. Japanese capital spending rose to an annual rate of 4.0%, from 1.5% in the preceding quarter while Indonesian Inflation fell to a seasonally adjusted 7.75%, from 8.22% in the preceding month.