Market ends flat, Sep PMI weighs

Market ended flat, amid a volatile trading session, as September services PMI which contracted at its steepest pace in four years weighed on investor sentiment.

The 30- Share BSE Sensex ended 19924 up 22 points or 0.11 percent, while the broader 50-share NSE Nifty closed down by 2 points or 0.01 pct at 5907.

In a major setback, the services sector, which occupies the largest share in the Indian economy, contracted at the steepest pace since March 2009, according to the widely-tracked HSBC Purchasing Managers' Index (PMI) released today.

The services PMI continued to contract for third time in a row in September and stood at 44.6 points from 47.6 points in August, when it was the lowest since March 2009. In that month, the PMI services had stood at 43.7 points. The services PMI has been deteriorating since July this year.

August industrial production data and September trade data, scheduled to be released on October 10, could now act as potential triggers. In addition, Q2 results season will kick off with IT bellwether Infosys coming out with its second quarter earning numbers on 11 October.

Hadrien Mendonca, Technical Analyst at IIFL said, "Nifty is likely to witness some profit booking as in the past the index has failed to survive above 6,000 levels on a sustained basis and hence more confirmation is needed with breakout above the psychological levels in order to add fresh longs."

India VIX, a key indicator of volatility in the market surged 3.8% to close at 26.13.

"IndiaVIX has seen gradually reducing since it made a high in August end. I do expect volatility to remain high since we have a lot of risk factors, both domestic and global, impacting us," said Sahaj Agrawal, Deputy Vice-President (Derivative Research), Kotak Securities.

There were jitters on the international front too on account of the ongoing US government shutdown. Ending the week on an ominous note, Bank of Japan (BOJ) said that a prolonged US budget standoff would hit global markets adversely. Japan central bank said it was ready to increase its already massive stimulus if the recovery underway in the world's third-largest economy was threatened.

"If this continues for a long time, this could destabilise financial markets and worsen sentiment," BOJ Governor Haruhiko Kuroda told reporters after a two-day policy review meeting, adding that the BOJ was ready to respond to any sudden shocks. He declined to comment on the possibility of a US debt default, but said the consequences of a prolonged standoff on global markets would be "severe."

Asian markets were led lower by a near 1% drop on Tokyo's Nikkei while Europe was up marginally after a weak start.

World stocks overall were down 0.15% on the day and head for a second weekly loss in a row of 0.7%, but analysts saw that as of minor significance considering their recent strength.

The rupee recovered to trade strong on weak global dollar and uptick in stock market sentiment. It was trading at 61.54 against US dollar.

Top gainers on the Sensex were Hindalco up 2.4%, Coal India up 2.3 pct, Tata Motors up 1.7 pct, Maruti Suzuki rises 1.12 pct while top losers were Dr. Reddy's, Jindal Steel, L&T, NTPC and ICICI Bank which ended 0.8-2.5% down.

Among sectors, BSE realty index added 1.9 pct, auto index was up 1 pct, metals up 0.7 pct, capital goods index down 0.6 pct.

Broader markets outperformed the benchmark indices marginally; BSE Small-cap ended 0.5% higher while mid-caps were up 0.2%.

Overall breath of the market remained marginally positive; 1233 stocks advanced while 1139 declined.