Sensex slips on global woes…Metals, Banks sink

The Indian stock markets ended in the red on Wednesday, as bulls were unable to add to gains from the previous session. Market participants continued to tread cautiously amid overnight losses in the US and Asian markets in the wake of disappointing economic reports. Today’s decline was seen despite the HSBC services PMI for August rising to a six month high. The Purchasing Managers' Index (PMI) for services rose to 55 from 54.2 in July, HSBC Holdings Plc and Markit Economics said in a statement today. A number above 50 indicates growth. Services, including government services, account for ~60% of India's GDP. The Indian economy grew by 5.5% in the April to June quarter from last year, government data showed last week. That was slightly better than expected and above the previous quarter's nine-year low of 5.3%. The ongoing row over the alleged scam in coal block allocation continues to act as a major overhang. A weaker rupee also weighed on the sentiment for the Indian shares. Crude oil prices remain elevated in the international market, stoking worries about the swelling fuel subsidies and its impact on fiscal deficit. The BSE Sensex ended at 17,313, down by 127 points or 0.7% over the previous close. It had earlier touched a day’s high of 17,411 and a day’s low of 17,250. It opened at 17,359. The NSE Nifty settled at 5,226, down 48 points or 0.9% over the previous close. It touched a day’s low of 5,215 and a day’s high of 5,259. Jindal Steel, BHEL, Axis Bank, Tata Steel, Sesa Goa, Sterlite Industries, ICICI Bank, Ranbaxy and L&T were among the notable losers in the Sensex and the Nifty. Bharti Airtel, HUL, TCS, ONGC, ITC, HDFC, Maruti and HDFC Bank were the top gainers in the Sensex and the Nifty. Losses on the broader markets were relatively capped, with the BSE Mid-Cap index down 0.3% and the BSE Small-Cap index down 0.5%. Among the sectoral indices, the defensive FMCG index and the Teck index were the only gainers, up 0.7% and ~0.4% respectively. The IT index was subdued. Leading the pack of losing indices were Metals and Capital Goods, down 2.6% and 2.5% respectively. Bankex, Power, PSU, Auto and Realty were the other sectoral laggards. The INDIA VIX on NSE ended higher by 2.5% at 17.01. It hit a day’s high of 17.15 and a day’s low of 16.19. The market breadth on the BSE was negative, with 1558 stocks ending lower and 1235 stocks closing higher. "The undertone is cautious as the Government struggles to implement promised reforms amid stiff resistance from allies and opposition parties. In addition, the highly controversial CAG report on coal block allocations has paralyzed the Parliament during the monsoon session. While the FII inflows have been strong of late, and valuations still compelling from the long-term perspective, considerable macro-economic headwinds still remain in place," says Amar Ambani, Head of Research, IIFL. Asian stocks ended in the negative terrain, as global investors awaited policy intervention by the world's leading central banks in the next few days amid no sign of relief from the worldwide economic gloom. Federal Reserve Chairman Ben S. Bernanke and ECB President Mario Draghi's recent speeches have generated quite a bit hope on further policy easing. The ECB policymakers are due to meet on Sept. 6 while the FOMC will hold a two-day meeting next week. Draghi skipped the Federal Reserve organised Jackson Hole event last week, sparking speculation of an impending announcement of sovereign bond buying by the ECB in the near term. The China services Purchasing Managers' Index (PMI) fell to 52.0 for the month from 53.1 in July. The 50-point line separates expansion from contraction. HSBC economist Hongbin Qu said that the Chinese economy is clearly deteriorating and that authorities need to do more to counterbalance the external shock. Japan's Nikkei Average dropped by 1.1% while the Shanghai Composite index fell ~0.3%. The Hang Seng lost ~1.5%, while the Australia S&P/ASX 200 was down ~0.6%. The Kospi in South Korea was down 1.7% while the Straits Times in Singapore fell 0.5% and the Taiex in Taiwan was down ~1.1%. European markets too opened lower before recovering a wee bit. The Stoxx Europe 600 index inched 0.1% higher but seesawed between small gains and losses. The latest round of economic data from Australia, China and Europe indicated further deepening of global gloom. The DAX in Germany was up 0.5% while the CAC in France rose 0.1% and the FTSE 100 in the UK was flat. The downturn in private-sector activity in the 17-nation euro zone deepened in August, the Markit euro-zone composite purchasing-managers' index, or PMI, for the region indicated Wednesday. The PMI fell to 46.3 from 46.5 in July and was down from a preliminary reading of 46.6.