Barometers take a sharp hit after release of June WPI data

Languishing near day’s low, barometer gauges took a turn for the worst as market-participants cashed out profit post the release of June WPI data, which though easing at four month low of 5.43%, showed a sharp revision in April inflation figures at 5.55% from 5.20% earlier. Both, Sensex and Nifty, nursing hefty losses of close to half a percent, were trading below the crucial 24,500 and 7,450 levels respectively. Meanwhile, broader indices too suffering a sharp set-back were trading with losses in the range of 0.55%-0.85%.  However, a positive global counterparts to some extent are restricting further slide of markets.

On the global front, while Asian pacific shares looked set for a positive close, European markets rose on Monday, boosted by M&A activity in the pharmaceutical sector and rallying from near two-month lows to kick off the week on a positive foot after its biggest weekly loss in four months.

Closer home, on BSE sectoral front, much of the drubbing was witnessed on stocks from Consumer Durables, Information Technology and Technology counters, while stocks from Oil & Gas, Auto and Infra counters were the top gainers of the session. Meanwhile, shares in metal refiners were gaining 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%. The overall market breadth on BSE was in the favour of declines which outnumbered advances in the ratio of 1125:760; while 25 shares remained unchanged.

The BSE Sensex is currently trading at 24907.30, down by 117.05 points or 0.47% after trading in a range of 24892.00 and 25095.76. There were 12 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.52%, while Small cap index was down by 0.87%.

The gaining sectoral indices on the BSE were Oil & Gas up by 0.06%, Auto up by 0.04%, INFRA up by 0.03% while, Consumer Durables down by 1.82%, IT down by 1.18%, TECK down by 1.09%, FMCG down by 0.68%, Realty down by 0.66% were the losing indices on BSE.

The top gainers on the Sensex were Hindalco up by 3.51%, TCS up by 1.25%, Tata Power up by 1.18%, Tata Steel up by 0.81% and Mahindra & Mahindra up by 0.79%. On the flip side, Sesa Sterlite down by 3.25%, Infosys down by 3.02%, Wipro down by 2.63%, Bharti Airtel down by 2.13% and NTPC down by 2.07% were the top losers.

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 7422.65, down by 36.95 points or 0.50% after trading in a range of 7422.25 and 7471.65. There were 16 stocks advancing against 34 stocks declining on the index.

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 is currently trading at 7422.65, down by 36.95 points or 0.50% after trading in a range of 7422.25 and 7471.65. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 3.42%, Asian Paints up by 2.36%, TCS up by 1.30%, United Spirits up by 1.15% and BPCL up by 1.03%. On the flip side, Infosys down by 3.18%, Sesa Sterlite down by 2.84%, Wipro down by 2.48%, Coal India down by 2.33% and NTPC down by 2.27% were the top losers.

Asian markets were set for green close; with FTSE Bursa Malaysia KLCI higher by 0.66 points or 0.04% to 1,883.81; Jakarta Composite rising by 2.79 points or 0.06% to 5,035.39; KOSPI Index adding 5.14 points or 0.26% to 1,993.88; Shanghai Composite adding 19.97 points or 0.98% to 2,066.93; Taiwan Weighted advancing by 24.46 points or 0.26% to 9,520.30;  Hang Seng gaining by 97.53 points or 0.42% to 23,330.98;  Nikkei 225 soaring by 132.78 points or 0.88% to 15,296.82. On the flip side, Straits Times was trading lower by 4.75 points or 0.14% to 3,288.98.

European markets got off to a positive start; with France’s CAC rising by 0.24%; UK’s FTSE 100 gaining by 0.26% and Germany’s DAX adding 45.01 points or 0.47%.