Markets See Erosion Of Gains, End Flat

The Indian markets opened mildly positive today, and gradually moved higher to the day’s high of 17972.54 on the Sensex. The Sensex was seen inching towards the 18000 level, hovering above 17900 for all of the first half and a bit of the second. The markets then erased all the gains they had witnessed over the day and ended the day flat. The Sensex gained 3.36 points to close at 17850.22, up by 0.02%, while Nifty closed up by 2.50 points or 0.05% at 5415.35. This sudden downfall happened as European markets shed their early gains and moderated some time into their trades.

The FTSE, DAX and CAC opened higher by 06%, 0.8% and 0.8% respectively. This was soon seen cutting off on the release of the Purchasing Managers’ Data for manufacturing and services for the Euro area by HSBC and London based Markit Economics. Not surprisingly, the area witnessed a contraction in both manufacturing and services for the 7th consecutive month. The Flash Eurozone PMI Composite Output index rose to 46.6 in August from 46.5 in July. For services it stood at 47.5, lower from the 47.9 in July and for manufacturing at 44.6, up from 43.4 in July. Regardless of the increase or decrease, the data is below the 50 mark, which distinguishes expansion from contraction (any reading above 50 indicates expansion), thus doing no good to anyone. With this, the FTSE, DAX and CAC are now trading at 0.49%, 0.30% and 0.36% respectively.

The Asian indices however ignored the non-impressive Chinese PMI data. Instead, settled into hoping for reforms, thus gaining on all fronts. The Hang Seng, Nikkei and Shanghai Composite ended trade higher by 1.23%, 0.51% and 0.25% respectively. Yet, the markets were positive on the back of hopes from quantitative easing by the US.

Oil, however, crossed the 166 level and is trading at USD 116.15 per barrel on the back of lower supplies in the US and hopes for stimulus, overpowering the lower manufacturing from China and the Eurozone.

Among the sectors, the day ended with gains erasing from most of the sectors. Only 5 of the 13 sectors ended positive, which is a reversal of situation as compared to earlier in the day. Among the top losers were Oil & Gas, Auto and Capital Goods. Of top gainers were IT, Teck and FMCG gaining 1.80%, 1.36% and 0.88% respectively. Among IT companies TCS and Wipro were the highest gainers rising by 2.25% and 2.61% respectively. The rise in the FMCG index was supported by the 1.45% rise in HUL and 2.51% in Nestle.

Among individual stocks, Ranbaxy gained 2.74% on account of the withdrawal of 27 drugs from the US market. Cairn believes that production from its prolific Rajasthan block can reach 300,000 bpd or 15 million tons per annum. According to media reports, the company has made an application to the government, seeking permission to explore within the 3,111 square kilometer mining lease covering 25 oil and gas finds. The scrip gained a hefty 3.07%.