Barometers trade near day's high; broader market underperforms

Domestic equity indices were trading with strong gains in morning trade. The Nifty hovered below the 17,150 level. Auto, IT and bank stocks were in demand while pharma and healthcare shares declined.

At 10:26 IST, the barometer index, the S&P BSE Sensex, jumped 485.68 points or 0.85% at 57,550.79. The Nifty 50 index added 145.80 points or 0.86% at 17,129.75.

The broader market underperformed. The S&P BSE Mid-Cap index rose 0.14% while the S&P BSE Small-Cap index fell 0.16%.

The market breadth was strong. On the BSE, 1656 shares rose and 1,287 shares fell. A total of 136 shares were unchanged.

Manufacturing PMI:

The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI) increased to 57.6 in November from 55.9 in October, signalling the strongest improvement in the health of the sector for ten months. Moreover, the headline figure was well above its long-run average of 53.6.

Commenting on the latest survey results, Pollyanna De Lima, Economics Associate Director at IHS Markit, said: "The Indian manufacturing industry continued to expand in November, with growth gathering pace and forward-looking indices generally pointing to further improvements in the months to come.

The fact that firms purchased additional inputs at a stronger rate amid efforts to restock, combined with recurring declines in inventories of finished goods and tentative signs of a pick-up in hiring activity, indicate that production volumes will likely expand further in the near-term.

"The key threat to the outlook, in addition to potential new waves of COVID-19, is inflationary pressures. For now, companies are absorbing most of the additional cost burdens and lifting output charges only moderately. Should raw material scarcity and shipping issues continue to feed through to purchasing prices, substantial increases in output charges could be seen and demand resilience would be tested.

"Businesses were indeed worried that inflationary pressures could hamper demand and production in the year ahead, as signalled by confidence weakening to the lowest in almost a year-and-a-half."

Economy:

India's Gross domestic product (GDP) for the second quarter of the current fiscal logged fastest growth among major economies in the world. According to the government data released yesterday, GDP of the country grew by 8.4% from a year ago. As per the National Statistics Office (NSO) data, manufacturing output increased 5.5% during the period while construction segment grew 7.5% in the second quarter.

The NSO data suggest that household consumption rose in the second quarter, July-September, of FY22 despite the second wave of the COVID-19 pandemic, boosting hopes of a quicker recovery in consumer demand in the months ahead. Economy of the country has gained momentum during the quarter as demand in the economy gradually came back to normalcy after coronavirus related disruptions. The economy had contracted 7.5% in the same period last year.

The combined Index of Eight Core Industries stood at 136.2 in October 2021, which increased by 7.5% (provisional) as compared to the Index of October 2020.

Final growth rate of Index of Eight Core Industries for July 2021 is revised to 9.9% from its provisional level 9.4%.

Buzzing Index:

The Nifty IT index gained 1.13% to 35,441. The index has added 2.4% in three days.

Mphasis (up 3%), Tech Mahindra (up 2.5%), HCL Technologies (up 1.72%), TCS (up 1.23%), Infosys (up 0.94%) and Mindtree (up 0.67%) were top gainers in IT space.

Stocks in Spotlight:

MOIL fell 0.38%. The PSU company reduced the prices of manganese ore with effect from Wednesday, 1 December 2021. The prices for the month of December 2021 for all chemical grades of manganese ore have been reduced by 5% on the prices prevailing since 1 November 2021 w.e.f. midnight of 30 November 2021/ 1 December 2021. However, the prices for the month of December 2021 for all ferro grades, SMGR grades (Mn-30% & Mn-25%) and fines have been continued as prevailing since 1 November 2021 w.e.f. midnight of 30 November 2021/ 1 December 2021.

NMDC rose 0.53%. The state-owned mining company on Tuesday slashed prices of lump ore by Rs 750 a tonne and fines Rs 200 per tonne, with immediate effect. NMDC fixed prices for lump iron ore (65.5%, 6-40mm) at Rs 5200 per ton and iron fines (64% - 10mm) at Rs 4,560 per ton with effect from 30 November 2021.

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