Sentiments turned somewhat weak towards the middle of the session as profit-booking emerged as investors turned cautious on disappointing quarterly earnings by some bluechip companies
The seasonally adjusted India Services Business Activity Index rose from 45.4 in July to 56.7 in August, as the reopening of several establishments and increased consumer footfall boosted sales. The services sector witnessed the first expansion in output in four months and a rebound in business confidence.
Firms said subdued demand conditions, unfair pricing among competitors and economic woes affected the sector.
n the broader market, both the BSE Midcap and Smallcap indices, were up 1.2% and 0.7% each.
India's services sector activity expanded at the strongest pace in ten-and-a-half years in October, driven by a substantial upturn in business activity amid favourable demand conditions, a monthly survey said on Wednesday. Companies indicated that a notable pick-up in new business led to the fastest expansion in output in over a decade and as a result more jobs were created, even though business confidence remained subdued due to growing inflationary concerns. The seasonally adjusted India Services Business Activity Index rose from 55.2 in September to 58.4 in October, signalling the strongest rate of growth in ten-and-a-half years.
Services companies reported an increase in new work intakes, which they attributed to successful marketing efforts and strengthening demand.
TCS was the top gainer in the Sensex pack, rising around 2 per cent, followed by ONGC, SBI, L&T, Infosys, HCL Tech, ICICI Bank and Axis Bank. The broader NSE Nifty surged hit a record high of 14,109.40.
The headline seasonally adjusted Nikkei India Composite PMI Output Index, that maps both the manufacturing and services sectors, rose from 53.3 in June to 54.1 in July.
India's services sector activities contracted further in June as the intensification of the COVID-19 crisis and reintroduction of containment measures restricted demand, a monthly survey said on Monday. The seasonally adjusted India Services Business Activity Index fell from 46.4 in May to 41.2 in June, as new work intakes and output contracted at the fastest rates since July 2020, which prompted companies to reduce employment again. Subdued demand conditions resulted in a second successive monthly drop in new business received by services firms.
Indian service sector output broadly stabilised in September but remained in the contraction zone as incoming new business fell moderately due to the damaging impact of the pandemic on demand, leading to more job losses.
However, IT stocks fell on weak growth forecast by Gartner
The seasonally adjusted Nikkei India Services Business Activity Index fell to 50.2 in May, from 51.0 in April, pointing to the slowest growth rate in the current 12-month stretch of expansion.
Foreign portfolio investors (FPIs) turned net buyers in October after being net sellers in the previous month. In October, FPIs bought shares worth nearly Rs 8,430 crore ($1 billion) against net selling of Rs 13,405 crore ($1.6 billion) in September. Positive flows during three of the previous four months have pushed the domestic markets towards fresh all-time highs. At present, the Sensex and Nifty are less than 2 per cent shy of breaching record highs logged in October 2021. A rally in equity markets in the US and Europe is in hopes that the Federal Reserve may go soft on rate hikes after its November meeting.
Of the BRIC (Brazil, Russia, India and China) economies, China, Russia and Brazil posted sharper increases in activity, but India registered a fourth successive decline in output.
Meanwhile, outlook for global emerging markets remained relatively weak in September.
India's services sector activities eased to a three-month low in April, as the rise in business activity was constrained by the pandemic and sentiment towards growth prospects faded, a monthly survey said on Wednesday. The seasonally adjusted India Services Business Activity Index fell to 54 in April from 54.6 in March, the slowest increase in output in three months. In PMI parlance, a print above 50 means expansion while a score below 50 denotes contraction.
Forex traders said a stronger dollar also dragged the rupee down.
Trading in the domestic stock market would be influenced by trends in the global equities, macroeconomic data and foreign fund movement in a holiday-shortened week, analysts said. Markets may face volatile trends on Monday after Federal Reserve Chair Jerome Powell's speech at the Fed's annual economic symposium in Jackson Hole on Friday.
Investors watch out for cues from the on-going winter session of the Parliament.
The survey showed firms passed on a greater cost burden to consumers. Prices charged rose at their fastest pace since October.
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.
The benchmark BSE Sensex ended down 2.23 per cent. The Bank Nifty fell 3.59 per cent.
Broadly stagnant sales causes the first drop in business activity in over a year.
However, predictions that economic conditions will normalise after the elections underpinned optimism regarding the outlook and supported a stronger upturn in employment.
India was already in the midst of a protracted economic slowdown before the virus hit due to a festering crisis among shadow lenders and declining consumer demand and private investment. Service sector activity in India is still effectively on hold.
Market sentiment suffered a jolt after other Asian markets closed with widespread losses and European markets dropped in early trade
Participants are keenly awaiting the rollovers to the next series ahead of the expiry of June F&O.
India's inflation trajectory in the coming months will be influenced more by the geo-political situation due to the war in Europe and its impact on supply chains and commodity prices. However, the country is better placed than most to "weather the storm" and achieve growth of close to 8 per cent in the current fiscal year, the finance ministry said in its latest monthly economic report on Thursday. "Through the channel of imports, elevated global crude and edible oil prices now have a significant impact on India's inflation outlook. "Government measures to keep the prices of these commodities in check, along with the recent hike in policy rates by the RBI, are expected to temper inflationary pressures in the economy," the monthly economic report for April, drafted by the finance ministry's economic division, said.
On the job front, Indian service providers continued to add to their payrolls and the sector witnessed the second-strongest increase in employment since March 2011.
The HSBC Emerging Markets Index, a monthly indicator derived from the PMI surveys, remained only just above the neutral threshold of 50.0 in September, signalling muted output growth in emerging markets.
Investors indulged in buying beaten down blue chips at lower and attractive levels.
The broader NSE Nifty closed below the 10,600 mark by plunging 98.15 points, or 0.84 per cent, to 11,582.35 after shuttling between 11,567.40 and 11,751.80.
ICICI Bank was the top laggard in the Sensex pack, sinking over 10 per cent, followed by Bajaj Finance, HDFC, IndusInd Bank, Axis Bank and Maruti. Bharti Airtel and Sun Pharma were the gainers in the BSE index. NSE Nifty suffered a heavy loss of 566.40 points, or 5.74 per cent, to settle at 9,293.50.
Losses largely came from the metal index, followed by power, infrastructure, realty, PSU, oil and gas, capital goods, FMCG, healthcare, auto and banking.
The trade impact of the coronavirus epidemic for India is estimated to be about 348 million dollars (approximately Rs 25 billion) and the country figures among the top 15 economies most affected as slowdown of manufacturing in China disrupts world trade, according to a UN report. Estimates published by United Nations Conference on Trade and Development on Wednesday said that the slowdown of manufacturing in China due to the coronavirus (COVID-19) outbreak is disrupting world trade and could result in a 50 billion dollar decrease in exports across global value chains.
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The HSBC Emerging Markets Index, a monthly indicator derived from the PMI surveys, continued its upward trajectory in November on the back of faster manufacturing growth.
The seasonally adjusted India Services Business Activity Index rose sharply from 34.2 in July to 41.8 in August, the highest since March, before the escalation of the pandemic.
Currency scarcity weighed on manufacturing performance where growth of new work flows slowed
The optimism in global markets could help India as the rebound in GDP is expected to continue and get more broad-based.
The Sensex ended down 134 points at 28,559 and the Nifty ended 35 points lower at 8,554
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