Benchmarks add slender gains; Sensex re-conquers 18,800 levels

Benchmark equity indices, after trading cautiously, managed to end the session slightly in the green holding their crucial 5,700 (Nifty) and 18,800 (Sensex) levels supported by buying in last leg of trade amid firm European cues. However, the gauges stuck in a tight range in trades as investors remained on the sideline awaiting the Parthasarthi Shome panel’s final report on GAAR and also its recommendations on retrospective amendments. Shome is likely to submit the report to Finance Minister P Chidambaram today. Separately, the much awaited Kelkar Committee report was made public on Sept 28. The panel in its report has said that fiscal deficit can be reined in at 5.2% of GDP for the current financial year - but only if subsidies are cut.

The cautiousness prevailed for most part of the day’s trade and gauges traded near their pre-close level after India’s merchandise exports fell by nearly 10% in August to $22.3 billion while imports fell by 5% to $38 billion.  The trade deficit for the month stands at $15.6 billion. India’s goods exports have fallen in four out of the past five months amid weak demand in major export destinations like the United States and Europe.

India’s purchasing managers’ index (PMI) too was unable to give any boost to the bourses as manufacturing activity remained more or less steady in September compared to the previous month, though export orders and output saw healthy gains, a business survey showed today. The HSBC manufacturing purchasing managers’ index (PMI) stood at 52.8 in September, unchanged from August, which was a nine-month low.

Asian peers too remained unsupportive with most of the Asian equity indices snapping the session in the red. The fall came after official data, which showed manufacturing activity in China, the world’s second-biggest economy, contracted for a second straight month in September. The government’s purchasing managers' index (PMI) stood at 49.8, falling short of expectations. However, European counters gave some strength to the Indian markets, exhibiting strong traction in the early deals as investors increased their exposure to cyclical sectors such as banks and miners. The investors also welcomed the results of stress test on the Spanish banking sector as it matched the street expectations.

Back home, the sentiments also got some support after India’s insurance regulator supported the insurance industry’s demand to increase the limit on foreign direct investment (FDI) in insurance joint ventures to 49% from 26%. Moreover, appreciation in rupee too aided the sentiments. Indian rupee rose by 30 paise to 52.55 against the US dollar.

The domestic indices also gained some strength from renewed buying in software pack as scrips like Infosys, TCS, Wipro, HCL Technologies and MphasiS edged higher after recent declines. The sentiments also got some support after cement shares extended their recent rally triggered by hopes that construction activity will pick up pace since the southwest monsoon has already started withdrawing from the country. ACC and Shree Cement hit record high. However, gains remain capped after metal stocks declined as China’s manufacturing shrank for the second month in a row in September 2012 as per a Chinese government survey. Meanwhile, shares of organized retailers edged lower on concerns of increased competition following reports that US retail giant Wal-Mart Stores Inc. will apply in the next 45-60 days for the Indian government's permission to set up stores in the country.

The NSE’s 50-share broadly followed index Nifty, rose by fifteen points to settle comfortably over the psychological 5,700 support level moreover, Bombay Stock Exchange’s Sensitive Index -Sensex- up by over sixty points to finish comfortable above the psychological 18,800 mark. Moreover, the broader markets traded with strong traction through the session, outperforming benchmarks and ended with a gain of about a percentage point. Moreover, the market breadth remained in favor of advances as there were 1,810 shares on the gaining side against 1,101 shares on the losing side while 126 shares remained unchanged.

The BSE Sensex gained 61.17 points or 0.33% to settle at 18823.91, while the S&P CNX Nifty rose by 15.50 points or 0.27% to close at 5,718.80.

The BSE Sensex touched a high and a low of 18,838.54 and 18,745.28 respectively. The BSE Mid cap index was up by 0.89% and Small cap index gained 1.42%. 

Infosys up by 2.96%, Tata Motors up by 2.65%, Jindal Steel up by 1.93%, BHEL up by 1.86% and Hindalco up by 1.83% were top gainers on the Sensex, while Bajaj Auto down 1.11%, Tats Power down 0.94%, HDFC Bank down 0.87%, ONGC down 0.84% and ICICI Bank down 0.63% were top losers on the index.

The major gainers on the BSE sectoral space were, IT up 1.88%, TECk up 1.51%, Capital Goods (CG) up 0.67%, Auto up 0.65% and Power up 0.56%, while Oil & Gas down 0.26% and Bankex down 0.16% were top losers on the BSE sectoral space.  

Meanwhile, supported by faster output growth and rising export orders, India’s manufacturing activity growth in September held steady compared with August. Measures by the US Federal Reserve and the European Central Bank to revive their economies mainly pushed foreign demand for Indian goods higher. At the same time, order book volumes increased for the forty-second successive month on stronger demand, good product quality and increasing marketing. However, the report cautioned the chances of rise in inventories dampening the output growth in coming months.

According to the HSBC purchasing managers’ index (PMI), a headline index designed to measure the overall health of the manufacturing sector, expanded at steady space of 52.8 in September, unchanged from August reading. A PMI reading above 50 indicates expansion in the sector, while one below suggests decline. In a sign of relief, the new export orders sub-index, an indicator of prospective overseas business, jumped to 53.8 from 49.2 in August, thereby positing biggest rise in almost two years.

Additionally seventh successive month of growth was recorded for employment in the month of September, with payroll numbers increasing to meet stronger demand, thereby signaling expansions in marketing departments. The inflation picture, on the other hand, was a bit mixed. While input prices rose at a faster clip on the back of higher raw material and diesel prices, output prices rose somewhat less, thereby adding to the Reserve Bank of India's dilemma of boosting growth while trying to rein in stubbornly high inflation.

Since manufacturing accounts for around 15 percent of India's gross domestic product, so a slowdown would not augur well for Asia's third-largest economy, which is already languishing near its slowest pace of growth in a decade for Q1. Poor showing by the manufacturing sector pulled down the GDP growth to 5.5% in the first quarter, the decade's worst Q1 performance, against the growth figure of 8% in the corresponding period in the last fiscal. The survey, although estimates the growth in the manufacturing sector to remain subdued, but at the same has underscored the implementation of recently announced reforms to help facilitate a gradual recovery during the second half of the fiscal year.

The S&P CNX Nifty touched a high and low of 5,722.95 and 5,694.00 respectively.

The top gainers on the Nifty were JP Associates up by 4.92%, Ambuja Cement up by 4.21%, Reliance Infra up by 2.97%, Infosys up by 2.90% and Grasim up by 2.85%. On the flip side, DLF down by 1.86%, Bank of Baroda down 1.62%, Bajaj Auto down 1.12%, HDFC Bank down 1.11% and PNB down 1.11% were top losers.

The European markets were trading in green, France's CAC 40 up by 1.49%, Germany's DAX up by 1.25% and United Kingdom’s FTSE 100 up by 1.05%.

Asian shares ended mostly lower on Monday as weak manufacturing data from China and continued concerns over debt-ridden Spain. Investor sentiments were shattered with the unimpressive result of the quarterly Tankan survey, at the beginning of a new quarter. Japan’s stocks ended at a three-week low after key data from Japan. Trading volumes were weak than usual with stock markets as China, Hong Kong and South Korea were closed today for holiday.