Benchmarks slip near day’s low on global risk aversion and dismal GDP data

Reeling under pressure, local equity markets have now slipped to day’s low level, with both Sensex and Nifty trading lower with a cut of close to half a percent, below the crucial 21,050 and 6,250 levels respectively. Global risk aversion and dismal macro-economic data at home front mainly have kept investors on the edge. Sentiment got a hit after contracting 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. In the wave of selling pressure, broader indices too have trimmed their gains nevertheless continue to outperform larger peers with gains of over half a percent.

On the global front, Asian stock were mostly down the drain on Monday, as brewing instability over Ukraine and weak official purchasing managers' index (PMI) figures from China sparked risk aversion. Ukraine mobilized for war on Sunday, calling up its reserves after Russian President Vladimir Putin threatened to invade in the biggest confrontation between Moscow and the West since the Cold War, Reuters reported on Sunday.

Closer home, most of the sectoral indices were trading in red, stocks from Consumer Durables, Oil & Gas and Fast Moving Consumer Goods counters outperformed, while those  from IT, Capital Goods and Healthcare counters were so far the worst performers of the session. Consumer Durables was the top gainer after factory PMI data showed that sector was the best performing subsector of the manufacturing economy in February, leading the rises in both output and new orders. However, some respite, albeit temporary came to D-street after 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. Meanwhile, Stocks of companies associated with the railways were trading higher by up to 17% in noon deals after reports suggested of cabinet clearing FDI in railways.  The overall market breadth on BSE was in the favour of advances which outnumbered declines in the ratio of 999:794; while 52 shares remained unchanged.

The BSE Sensex is currently trading at 21023.09, down by 97.03 points or 0.46% after trading in a range of 21,140.00 and 21019.13. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices to pared some gains; the BSE Mid cap index was up by 0.53%, while Small cap index up by 0.62%.

The gaining sectoral indices on the BSE were Consumer Durables up by 1.86%, Oil and Gas up by 0.36%, Realty and FMCG up by 0.33% each and Metal up by 0.14%. While, IT down by 1.12%, Capital Goods down by 0.95%, Healthcare down by 0.85%, Teck down by 0.83%  and Auto down by 0.68%, were the top losing indices on BSE.   

The top gainers on the Sensex were Tata Steel up by 1.13%, SBI up by 0.93%, Gail India up by 0.85%, ITC up by 0.82% and ITC up by 0.82%. On the flip side, Dr Reddy’s Lab down by 1.85%, Tata Motors down by 1.53%, BHEL and Bajaj Auto down by 1.32% each and Sun Pharma down by 1.30% were the top losers on the BSE.

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. 

The CNX Nifty is currently trading at 6,243.05, down by 33.90 points or 0.54% after trading in a range of 6,277.75 and 6,242.25. There were 18 stocks advancing against 30 declining on the index, while 2 stocks remained unchanged.

The top gainers of the Nifty were Jindal Steel up by 2.49%, Bank of Baroda up by 1.42%, NMDC up by 1.33%, Cairn India up by 1.05% and ITC up by 0.76%. On the flip side, JP Associate down by 4.30%, HCL Tech down by 4.09%, BHEL down by 2.00%, Sun Pharma down 1.97% and Dr Reddy down by 1.74% were the major losers on the index.

The Asian equity indices were trading in red; Nikkei plunged by 1.27%, Straits Times dropped 0.82%, Hang Seng shaved off 0.99%, Jakarta Composite plumetted 1.00%, KLSE Composite declined 0.69%, Taiwan Weighted down by 0.44% and Seoul Composite was trading lower by 0.77%. While, Shanghai Composite up by 0.58% was the only gainer amongst Asian pack.