Slower manufacturing activity dents markets; Sensex trades flat

Subdued after key economic data showed a slowdown in manufacturing activity for the last month, a barometer of the Indian equity markets traded flat during the late-afternoon session on Thursday.

The barometer 30-scrip sensitive index (S&P Sensex) of the Bombay Stock Exchange on Wednesday closed with gains of 376 points or 1.46 percent.

Initially on Thursday, the markets made healthy gains and continued their upward trajectory on the back of Tuesday's monetary easing by the Reserve Bank of India (RBI), supportive Asian markets and strengthening rupee value.

However, the upward momentum lost its steam as the latest Nikkei India Manufacturing PMI (Purchasing Manufacturers Index) for the last month showed a contraction.

The PMI was at a seven-month low of 51.2 in September.

The wider 50-scrip Nifty of the National Stock Exchange (NSE) was also trading flat during the late-afternoon trade session. It was marginally down by 13.40 points or 0.17 percent at 7,935.50 points.

The S&P BSE Sensex which opened at 26,344.19 points, was trading at 26,169.88 points (2.30 p.m.) -- 15.05 points or 0.06 percent up from the previous day's close at 26,154.83 points.

The Sensex touched a high of 26,431.80 points and a low of 26,169.52 points in the intra-day trade so far.

Analysts said the less-than-expected PMI had impacted sentiments and erased the gains made during the day's trade as profit booking was also witnessed.

"The rally that had continued on the back of the more-than-expected monetary easing by the RBI, strengthening rupee value and positive Asian markets halted as a negative PMI data impacted sentiments," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.

Nonetheless, an appreciating rupee and positive Asian markets are expected to support the markets.

The rupee continued to gain strength on Thursday. It touched a day's low of 65.48 against a US dollar from its previous close of 65.58 against a greenback. It was trading at 65.57 around 2.10 p.m.

"There is an expectation of a stimulus package announcement in Japan. This is driving the upward trend in the Asian markets and concurrently supporting our indices here," James said.

The positive Asian markets have supported sentiments here. Japan's Nikkei index was higher by 1.92 percent. The Chinese markets -- Hong Kong's Hang Seng index and Shanghai Composite Index -- will remain closed till October 7, Wednesday, on account of the Chinese national day.

Sector-wise, healthcare, capital goods and consumer durables witnessed healthy buying support. On the other hand, banking, automobile and information technology (IT) index came under heavy selling pressure.

The S&P BSE healthcare index zoomed by 270 points, capital goods index increased by 92.65 points and consumer durables index was higher by 36.44 points.

However, the S&P BSE banking index receded by 99.69 points, automobile index declined by 53.75 points and IT index was lower by 53.47 points.