Both indices are down nearly 9 per cent from their all-time highs in mid-January. A sharp reversal seems difficult this time as the peak impact of the virus is yet to play out.
Meanwhile, outlook for global emerging markets remained relatively weak in September.
The 30- Share BSE Sensex ended 19924 up 22 points or 0.11 per cent, while the broader 50-share NSE Nifty closed down by 2 points or 0.01 pct at 5907.
Bumper liquidity as a result of global central bank stimulus measures should prevent a sharper downturn.
The latest PMI showed inflation pressures ebbed further last month with both costs of raw material and prices charged rising at a slower pace than March.
A reading below 50 means contraction in the sector.
'Retail investors have been selling since the Budget and Foreign Portfolio Investors started selling.' 'Thus far, domestic institutions have picked up the slack, buying enough to keep the major indices from falling off a cliff.' 'However, there has been carnage in smaller stocks and the financial sector has been hit much harder than the major market indices,' points out Devangshu Datta.
Recent reform measures announced by the government expected to boost the sector.
August witnessed the fastest pace of growth in new business orders since February.
India's manufacturing sector growth improved in November, registering the fastest pace in five months, driven by a strong pick up in new orders and improved purchasing activity, an HSBC survey said on Monday.
The index, however has remained above the 50 mark - below which it indicates contraction - for more than three years now.
Bumper liquidity as a result of global central bank stimulus measures should prevent a sharper downturn.
Input prices rose at their fastest rate in 14 months but manufacturers absorbed much of the increase
India's manufacturing sector witnessed a slowdown in July - the weakest growth rate since November - because of moderation in domestic and export orders amid sagging global economy, an HSBC survey said.
Private sector output in India expanded for the first time in 8 months in February as slump in the services sector moderated and manufacturing grew at a stronger pace, an HSBC survey said.
The pace of activity in China's vast manufacturing sector quickened for the first time in 13 months in November, a survey of private factory managers found, adding to evidence that the economy is reviving after seven quarters of slowing growth.
Finance Minister Nirmala Sitharaman on Thursday announced a new job creation scheme by giving subsidy to those establishments that make new hires. The subsidy would be to cover for retirement fund contributions by employees as well as employers for two years, she said. Employees contribution (12 per cent of wages) and employer's contribution (12 per cent of wages) totalling 24 per cent of wages would be given to establishments for two years, she said. Under the Aatmanirbhar Bharat Rozgar Yojana, every Employees' Provident Fund Organisation (EPFO)-registered establishment taking new employees would get this subsidy.
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It was the second straight week of gains for the benchmarks.
The HSBC India Manufacturing Purchasing Managers' Index (PMI) - a measure of factory production - improved slightly to 55 in June, from 54.8 in May.
A reading above 50 means the sector is expanding, while a reading below 50 means contraction.
According to HSBC, the RBI will keep the policy rate on hold next week, although it is likely to cut the CRR by 0.25 per cent to address the lingering liquidity tightness.
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The subdued labour market is likely to recover.
The wider NSE Nifty too fell by 20.15 points or 0.19 per cent to end at 10,749.75.
Tata Motors was the top Sensex gainer, up nearly 5%.
India's manufacturing sector growth slowed marginally in February, although strong domestic orders were likely to support output expansion in the coming months, an HSBC survey has said.
The HSBC Emerging Markets Index, a monthly indicator derived from Purchasing Managers' Index surveys, inched up to 50.6 in May from 50.4 in April, indicating weak output growth across global emerging markets.
The NSE Nifty, however, ended a shade higher by 6.65 points or 0.06 per cent at 10,442.20
India's services sector growth rate saw a slight fall in July but remained in the positive terrain for the ninth month in a row, amid rise in new orders and employment levels holding up, an HSBC survey says.
Amid decelerating economic growth and falling industrial output, India's services sector has shown signs of promise in May recording the fastest pace of growth in the past three months, says an HSBC survey.
Manufacturing of consumer goods, like food and liquor continued to improve in September.
The HSBC India Manufacturing Purchasing Managers' Index for the manufacturing industry climbed from 49.6 in October to 51.3 in November on the back of a rebound in new orders and output.
Losses largely came from the metal index, followed by power, infrastructure, realty, PSU, oil and gas, capital goods, FMCG, healthcare, auto and banking.
Other major laggards were IndusInd Bank, SBI, Bharti Airtel, ONGC, Tata Steel and Reliance Industries -- falling as much as 6.30 per cent.
UN economists announced a likely USD 50 billion drop in the worldwide manufacturing exports in February alone as the extent of the damage to the global economy caused by the novel coronavirus (COVID-19) moved further into focus. Citing the China Manufacturing Purchasing Manager's Index (PMI), Pamela Coke-Hamilton, who heads UNCTAD's Division on International Trade and Commodities, said that it had fallen to 37.5 -- a drop of about 20 points -- the lowest reading since 2004. "This also correlates directly to exports and also implies a two per cent drop in overall exports," she said, with a resulting "ripple effect" worldwide "to the tune of a USD 50 billion fall in exports."
In the United States, economic data is likely to take a back seat next week.
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The rupee was last at 62.05/06 after gaining to as high 61.9650 against the dollar, its highest since Nov 19. It had closed at 62.44/45 on Friday.
The biggest losers in the Sensex pack were Vedanta, Tata Steel, M&M, Tata Motors, Maruti, Hero MotoCorp, PowerGrid, Bharti Airtel, SBI and Coal India -- falling up to 4.48 per cent.
The GST rate for the sector has not yet been finalised by the government.
