Benchmarks pare some losses; still continue to trade in red

Recovering from day’s low, benchmark equity indices have gained momentum however were still trading marginally in red on persistent profit-booking by funds and retail investors, ahead of wholesale price index (WPI)-based inflation and consumer price index (CPI)-based inflation data due later in the day. Sentiment on the street weakened on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 723.48 crore on July 11, 2014. However, a firming trend at other Asian bourses and the better than expected industrial output data have restrained the market losses. 

The market movement is likely to be more downbeat this week as traders will turn their attention towards corporate earnings. Also, investors will resort to profit-booking as stocks had risen to unjustified levels in the pre-budget rally.

Meanwhile, shares of information technology (IT) companies were trading lower on profit booking after a rally in Friday’s session. In scrip specific development, shares of Tata Power gained after the company decided to pursue aggressive growth plans and has sought shareholders’ nod to raise up to Rs 7,000 crore through issue of non-convertible debentures. On the other hand,  shares of Unichem Laboratories has dipped  after reporting 16% year on year drop in standalone net profit at Rs 30.20 crore for the quarter ended June 30, 2014, due to higher expenditure and lower other income. On the global front, Asian markets edged higher as euro zone banking jitters faded, but investors remained cautious ahead of corporate earnings and a raft of global economic events including testimony from the head of the Federal Reserve.

Back home, stocks from Realty, Power and Auto counters were supporting the markets, while those from Consumer Durables, Information Technology (IT) and FMCG counters were adding to the underlying cautious undertone. The market breadth on BSE was negative, out of 2182 stocks traded, 966 stocks advanced, while 1122 stocks declined on the BSE.

The BSE Sensex is currently trading at 25010.06 down by 14.29 points or 0.06% after trading in a range of 25095.76 and 24915.93. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.14%, while Small cap index down by 0.02%. The gaining sectoral indices on the BSE were Realty up by 1.09%, Power up by 0.78%, Auto up by 0.69%, Oil & Gas up by 0.51% and Metal up by 0.11%. While, Consumer Durables down by 1.70%, IT down by 1.60%, Teck down by 1.37% and FMCG down by 0.51% were the losing indices on BSE.  

The top gainers on the Sensex were Hindalco up by 4.06%, Tata Power up by 1.72%, HDFC up by 1.39%, BHEL up by 1.16% and Axis Bank up by 1.11%. On the flip side, Infosys was down by 3.32%, Bharti Airtel was down by 2.21%, SSLT was down by 2.09%, Wipro was down by 1.87% and Hindustan Unilever was down by 1.41% were the top losers on the Sensex.

Meanwhile, India’s steel consumption increased by a mere 0.7 percent to 18.82 million tonnes during the first quarter of current fiscal as compared to 18.69 million tonnes in the same quarter of previous fiscal year. Domestic crude steel production grew by 1.5 percent at 21.86 million tonnes in Q1FY15 over the same period last year. The major steel producer such as Tata Steel, SAIL, RINL, Essar Steel, JSW and JSPL together produced 11.34 million tonnes in Q1FY15, registering a growth of around 2 percent. The production of mini and small steel firms rose by 0.3 percent during the period from a year earlier. Steel imports spurted by 11.8 percent to 1.49 million tonnes, whereas, exports increased by 18.5 percent to 1.34 million tonnes during the reported month.

India is the fourth largest steel maker in the world with 81 million tonnes of production in FY14. The performance of steel industry is highly correlated to overall economic growth as steel demand is derived from construction and automobile sectors. Construction sector accounts for around 60 percent of the country's total steel demand, while the automobile industry consumes 15 percent of demand. The steel industry contributes about 2 percent of the country's GDP and employs over six lakh people.

Over the past two financial years, Indian steel industry is struggling with slowdown due to the weak steel demand. India’s finished steel consumption grew at a four-year low rate of 0.6 percent to 73.93 million tonnes in FY14 mainly impacted by a prevailing economic slowdown and high interest rates. Along with weak demand, high input cost due to increased prices of raw material, such as iron ore has also become a main concern for domestic steel players, impacting their margins. Steel Ministry estimates that India's consumption may go up to 176 MT by 2025-26 if the economy grows by 6.5 percent during the period between 2014-15 and 2025-26.

The CNX Nifty is currently trading at 7,455.65 down by 3.95 points or 0.05% after trading in a range of 7,471.65 and 7,426.45. There were 32 stocks advancing against 19 declining on the index.

The top gainers of the Nifty were Hindalco up by 3.63%, BPCL up by 1.90%, Asian Paint up by 1.78%, PNB up by 1.76% and MCDOWELL-N up by 1.51%. On the flip side, Infosys down by 3.36%, HCL Tech down by 3.03%, Bharti Airtel down by 2.28%, Wipro down by 1.87% and Hindustan Unilever down by 1.67% were the major losers on the index.

Asian markets were trading mostly in the green; Nikkei 225 spurted by 0.90%, Hang Seng increased 0.50%, KOSPI Index soared 0.46%, Shanghai Composite gained by 0.40%, FTSE Bursa Malaysia KLCI strengthened by  0.03% and Taiwan Weighted was up by 0.35%.

On the flip side, Straits Times dropped 0.17% and Jakarta Composite was down by 0.14%.