Benchmarks witness consolidation; end modestly in red

Continuing their last four days fall, Indian equity benchmarks ended a choppy day of trade on a flat note, with a negative bias, amid profit taking in software major Infosys post its first quarter earnings last week. Sentiments also remained dampened on report that foreign institutional investors sold Indian shares worth 7.23 billion rupees ($120.60 million) on July 11. Traders remained on sidelines ahead of consumer price index (CPI) to be released later in the day. The consumer price inflation probably would have eased to 7.95% last month, down from May’s 8.28%. However, positive global cues and four-month low June WPI data capped the losses.

The wholesale price index (WPI) softened to four months low of 5.43% for the month of June as compared to 6.01% in the previous month and 5.16% during the corresponding month of the previous year. The figure was much lower than the expectation of over 5.5%. However, in a negative surprise, April inflation figures were revised upwards to 5.55% from 5.20% earlier. Moreover, build up inflation rate in the financial year so far was 1.28% compared to a build up rate of 1.82% in the corresponding period of the previous year. Meanwhile, Index of Industrial Production (IIP) for the month of May came in at 4.7 percent versus 3.4 percent month-on-month. Growth in IIP numbers are good signs for capital goods sector and metal and mining sectors.

Global cues remained supportive with European markets trading in the green in early deals, boosted by M&A activity in the pharmaceutical sector and rallying from near two-month lows after their biggest weekly loss in four months. Asian markets too ended mostly in the positive terrain as investors put aside concern about euro zone banks and looked forward to corporate earnings and a raft of global economic events, including testimony from the head of the Federal Reserve.

Back home, consumer durables, software and technology counters were the top losing indices. Moreover, gems and jewellery stocks remained under pressure for third day in a row after the government kept gold import duty unchanged at a record 10% in the budget. On the flip side, shares in metal refiners rose with Hindalco Industries settling higher over 4 percent on optimism ahead of China GDP data due on Wednesday. According to estimates, China's economy probably steadied in the second quarter with annual growth holding firm at 7.4%. Additionally, oil marketing companies like BPCl and HPCL edged higher after Brent plunged near the lowest price in three months as Libya’s output persistently kept increasing.

The NSE’s 50-share broadly followed index Nifty slipped by just over five points but managed to hold to end below the psychological 7,450 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by around twenty points to finish tad above its psychological 25,000 mark. Broader markets too struggled to get any traction and ended the session slightly in the green. The market breadth remained in favor of decliners, as there were 1,126 shares on the gaining side against 1,690 shares on the losing side while 111 shares remain unchanged.

Finally, the BSE Sensex lost 17.37 points or 0.07%, to 25006.98, while the CNX Nifty declined by 5.45 points or 0.07%, to 7,454.15.

The BSE Sensex touched a high and a low of 25095.76 and 24892.00, respectively. The BSE Mid cap index was down by 0.02%, while Small cap index dropped 0.47%.

The top gainers on the Sensex were Hindalco up 4.15%, Tata Power up by 2.80%, Tata Steel up by 2.60%, Tata Motors up by 2.41% and Axis Bank up by 1.68%. On the flip side, the key losers were Infosys down by 2.97%, HUL down by 2.64%, Wipro down by 2.19%, SSLT down by 1.28% and NTPC down by 1.27%.

On the BSE sectoral front, Capital Goods up by 1.14%, Auto up by 0.99%, Metal up by 0.97%, Power up by 0.76% and Infrastructure up by 0.55% were the top gainers, while Consumer Durables down by 2.24%, IT down by 1.27%, TECk down by 0.99%, Realty down by 0.78% and Healthcare down by 0.53% were the top losers in the space.

Meanwhile, in an encouraging sign, India's main inflation gauge, based on monthly WPI, softened to four months low of 5.43% for the month of June as compared to 6.01% in the previous month and 5.16% during the corresponding month of the previous year. The figure was much lower than the expectation of over 5.5%. However, in a negative surprise, April inflation figures were revised upwards to 5.55% from 5.20% earlier. Meanwhile, build up inflation rate in the financial year so far was 1.28% compared to a build up rate of 1.82% in the corresponding period of the previous year.

The decline in headline inflation was mainly on account of meager growth in Manufacture Products index and Fuel & Power index. The index of Manufacture Products, which occupies the majority 64.97% weight in WPI index, rose by a meager 0.2% to 154.9 (provisional) from 154.6 (provisional) in May. However, manufactured products inflation increased marginally to 3.61% versus 3.55% month-on-month.

Meanwhile, Fuel & Power index, which occupies 14.91% weight in the overall index, rose by 0.1% to 212.3 (provisional) from 212.1  (provisional) for the previous month, due to higher price of high speed diesel and lignite (1% each). The price of aviation turbine fuel and bitumen (2% each) and kerosene (1%) declined.

However, Primary article index, which occupies 20.12% weight in the overall headline index, also rose 1.3% to 249.9 (provisional) from 246.8 (provisional) for the previous month. Out of the index, while the index for ‘Food Articles’ group rose by 2.2% to 249.7 (provisional) from 244.3 (provisional) for the previous month, index for ‘Non-Food Articles’  group declined by 1.1% to 216.4 (provisional) for the month under review from 218.8  (provisional) in May.

Besides, the higher revision of April month inflation figure, another matter of concern remains to core inflation, which continues to be sticky at 3.9% v/s 3.8% (M-o-M). Consequently, the Reserve Bank of India (RBI)  is expected to keep the interest rates on hold despite easing trend in inflation on account of growing risk of drought shriveling summer crops.

The CNX Nifty touched a high and low of 7,478.45 and 7,422.15 respectively.

The major gainers of the Nifty were Hindalco up 4.35%, Asian Paints up by 3.89%, PNB up by 3.72%, Tata Power up by 3.48% and Bank of Baroda up by 2.68%. On the flip side, the key losers were HCL Tech down by 3.29%, HUL down by 3.09%, Infosys down by 3.06%, Wipro down by 2.32% and ACC down by 1.87%. (Provisional)

European markets were trading in green; UK’s FTSE 100 up by 0.66%, Germany’s DAX up by 0.75% and France’s CAC 40 was up by 0.59%.

The Asian markets concluded Monday’s trade mostly in green their first gain in five days. China’s stocks rose the most in a month as automakers got a boost from the government’s pledge to buy more alternative-energy cars, while utilities and consumer-staples shares gained on speculation profit will beat estimates. Hong Kong stocks rose, with the benchmark index climbing after capping its biggest weekly drop since May. The Bank of Japan started a two-day policy meeting today with all 34 economists surveyed expecting the monetary authority will maintain the pace of its monthly bond-buying. Thirty-two percent of economists in a separate survey forecast the BOJ will expand stimulus on October 31. Japan’s industrial production rose to a seasonally adjusted 0.7%, from 0.5% in the preceding month.

Singapore’s economy unexpectedly contracted in the second quarter as higher labor costs and company moves to shift production overseas hurt manufacturing. Gross domestic product fell an annualized 0.8% in the three months through June from the previous quarter, when it expanded a revised 1.6%. Singaporean GDP fell to a seasonally adjusted 2.1%, from 4.7% in the preceding quarter whose figure was revised down from 4.9%.