Benchmarks pare some early losses; still continue to trade in red

Recovering from day’s low, although benchmark equity indices gained momentum, were still trading below the neutral line on persistent profit-booking by funds and retail investors, ahead of monthly expiry of derivatives contracts on July 31, 2014. Besides, the lower-than-expected quarterly earnings by some companies including Larsen and Toubro also dampened the sentiment. However, gains in Consumer Durables, Oil & Gas and FMCG stocks have restrained the market to extend losses. Some support also came in from National Council of Applied Economic Research’s (NCAER’s) statement saying that India’s GDP will expand at 5.2-5.7 percent this fiscal, with manufacturing sector showing signs of nascent recovery.

In scrip specific development, DCM Shriram has soared as much as 19% after reporting a strong 33% year-on-year jump in consolidated net profit at Rs 203 crore for the quarter ended June 2014, on health growth recorded by its Bioseed and Chloro-Viny business. Furthermore, shares of Bharti Airtel were trading 4.80% higher after reporting 61% year-on-year jump in consolidated net profit at Rs 1,108 crore for the first quarter ended June 30 2014, backed by a 74% rise in mobile data revenue. On the other hand, Shares of Larsen and Toubro (L&T) slumped as much as 8% in early trade after the company's quarterly earnings did not meet market expectations.

On the global front, Asian stocks rose for a fourth day, with the regional benchmark index extending a six-year high, ahead of the Federal Reserve two-day monetary policy meeting that ends Wednesday and as the US and European Union strengthened sanctions against Russia. Back home, the rupee depreciated by 8 paise to 60.21 against the US dollar in early trade, extending losses for the fourth day at the Interbank Foreign Exchange market due to month-end demand for the American currency from importers. Meanwhile, the market breadth on BSE was negative, out of 2138 stocks traded, 933 stocks advanced, while 1101 stocks declined on the BSE.

The BSE Sensex is currently trading at 25963.42 down by 27.81 points or 0.11% after trading in a range of 26022.62 and 25929.83. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.19%, while Small cap index down by 0.33%.

The top gaining sectoral indices on the BSE were India Infrastructure Index up by 0.96%, Consumer Durables up by 0.83%, Oil & Gas up by 0.72%, FMCG up by 0.53% and Teck up by 0.45%, while Capital Goods down by 4.34%, Metal down by 0.69%, Auto down by 0.21% and IT down by 0.02%, were the losers on the sectoral index.

The top gainers on the Sensex were Bharti Airtel up by 4.80%, Gail India up by 2.15%, ONGC up by 1.48%, ITC up by 1.43% and Hero MotoCorp up by 1.40%. On the flip side, L&T was down by 6.58%, SSLT was down by 2.48%, Tata Motors was down by 2.10%, Tata Power was down by 1.43% and SBI was down by 0.89% were the top losers on the Sensex.

Meanwhile, National Council of Applied Economic Research (NCAER) has projected Indian economic growth rate at 5.2-5.7 percent for current fiscal. The economic think tank NCAER has stated that country’s manufacturing sector is showing signs of nascent recovery and if investment spending accelerates in coming future, the economic growth could increase to 5.7 percent in FY15.

NCAER further stated that the growth in agriculture sector is likely to be lower in FY15 due to poor monsoon. It expects fiscal deficit at 4.5 percent of GDP for 2014-15, higher than the finance ministry’s target at 4.1 percent of GDP. NCAER projected wholesale price based average inflation rate at 6.4 percent in the reported fiscal.

Macro-economic indicators have shown signs of nascent recovery over the past two months. The index of industrial production (IIP), the principal indicator for industrial activity grew by 3.4 percent and 4.7 percent in the months of April and May 2014. Manufacturing, which accounts for 75 percent of the index, grew at 2.5 percent and 4.8 percent in April and May respectively as against negative growth in the earlier months. The consumer price index (CPI)-based inflation eased to 29-month low at 7.31 percent y-o-y in June as compared to 8.28 percent in the previous month. However, India's economic growth stayed below 5 percent for the second year in a row at 4.7 percent during FY14. The factors like high interest rate and stubborn inflation, low investments and slow execution of infrastructure projects have impacted country’s economy’s growth.

The CNX Nifty is currently trading at 7,739.10 down by 9.60 points or 0.12% after trading in a range of 7,756.85 and 7,729.25. There were 26 stocks advancing against 24 declining on the index.

The top gainers of the Nifty were Bharti Airtel up by 4.96%, Gail up by 2.18%, Kotak Bank up by 1.84%, ONGC up by 1.60% and DLF up by 1.54%. On the flip side, L&T down by 6.57%, SSLT down by 2.52%, Tata Motors down by 2.24%, Tata Power down by 1.58% and Jindal Steel & Power down by 1.06% were the major losers on the index.

Asian markets were trading mostly in the green; Nikkei 225 gained by 0.15%, Hang Seng strengthened by 0.82%, KOSPI Index increased by 1%, FTSE Bursa Malaysia KLCI spurted by 0.09% and Taiwan Weighted was up by 0.52%. On the flip side, Straits Times dipped by 0.13%, Jakarta Composite dropped by 0.19% and Shanghai Composite was down by 0.40%.