Stocks In The Red On Global Equity Blues

Markets worldwide are trading negative today over various reasons ranging from political drama to lower manufacturing output (flash). The Indian markets haven’t moved one bit from where they were a few minutes from opening. Moving in a tight range, the Sensex is currently trading lower by 107.05 points or 0.58% at 18388.96 and Nifty is trading lower by 36.20 points or 0.65% at 5563.85.

The Asian markets today have been trading significantly lower, largely disappointed by data from Japan and China. Japanese trade indicated a widened deficit in Aug 2012 as compared to the previous month, and the figure has increased from JPY 517.4 billion in July to JPY 754.1 billion in Aug. The data also indicated a fall of 10.30% in exports to China, Japan’s largest trading partner. Though this reflects issues faced by Japan, it also is indicative of the slowdown in China, which investors have been critically worried about.

China's concerns deepened with the release of data by Markit Economics and HSBC on the preliminary reading of the country’s manufacturing Purchasing Managers’ Index (PMI) for Aug 2012, which came in at 47.8. Though this marks a slight improvement from the figure of 47.6 in July, it is important to remember that any reading below 50 indicates contraction. With nothing to be glad about, the Asian markets have been trading lower. The Hang Seng, Nikkei and Shanghai Composite are trading lower by 1.12%, 1.57% and 2.02% respectively.

The European markets too opened negative today over the data from Asia and due to falling oil prices. Oil fell by as much as 3.5% on Wednesday over rising supplies in the US and comments from an unnamed Saudi Arabian official. Hit by the far from impressive data from China, oil went further down, affecting the markets. The FTSE, DAX and CAC opened lower by 0.7%, 0.9% and 0.8% respectively.

On the domestic front, selling can be seen across the board. The Sensex, midcap and smallcap indices are currently down by 0.58%, 0.62% and 0.54% respectively.

4 of the 13 sectoral indices are trading higher. IT, Teck, FMCG and Auto are up in the range of 0.04% and 1.18%. Top gainers include technology majors MphasiS, TCS, Wipro and Infosys, among others. On the other hand, Capital Goods, Metal and Power are among the top losers.

Among individual stocks, Tata Motors is higher by over 1% on winning an order for 1314 trucks from Surat-based Siddhi Vinayak Logistics, estimated at a value of Rs 225 crore.

Media reports suggest that Dabur has filed a case against Amar Remedies for violating intellectual property rights of its Meswak toothpaste. The stock price of Amar Remedies has declined by more than 3%.

We expect the markets to continue its tight-rope walk on the back of lacklustre trading as also, a lack of stimuli to effect drastic moves.