Post session - Quick review

The Indian equity markets witnessed  a remarkable turnaround from a sharp cut of last session. The benchmarks recovered almost what they have lost a day ago. It was a wonderful come back where all the sectoral gauges performed tremendously. The markets got a gap-up opening taking cue from their regional counterparts, though the US markets closed marginally lower overnight but the Asian markets moved higher as Greek Prime Minister Lucas Papademos said major progress was made in debt-swap talks. Greece aims to complete debt-swap talks with bondholders by the end of this week; the country faces a 14.5 billion-euro bond payment ($19 billion) on March 20. Papademos said he is “strongly committed” to reaching a deal. Meanwhile, the European markets too came out of slumber as most countries in the region agreed to tighter budget controls, outweighing concern over a delay in Greek debt talks.

Back home, the domestic markets commenced their one way rally in the very beginning as the starting proved to be the lowest point for day’s trade. After some initial hiccups the indices started moving higher though there were not very supportive news from the domestic front as the overall growth of eight core industries dipped to almost half in December as compared to the same period in the last fiscal. According to the data released by the Commerce and Industry Ministry, the combined index for the month of December 2011 grew at the rate of 3.1% as compared to 6.3% growth in December 2010. Also, the government revised the economic growth rate for 2010-11 financial year to 8.4% from the earlier estimate of 8.5%, citing mainly the global uncertainties. But it was value picking and the support of the banking and commodity stocks that led the markets snap the best month since September 2010. The banking stocks rejoiced with top private sector lender ICICI Bank reporting a better than expected numbers, bank has posted a jump of 20.26% in its net profit of Rs 1,728.10 crore for the quarter ended December 31, 2011. There were other encouraging earnings reports like, Titan, Nerolac and Muthoot finance that too supported the markets upmove. The power sector stocks moved higher after Coal India, under fire from industrial users rolled back an increase in prices under a new pricing policy, but the company will review the system after assessing its Jan-Mar quarter performance. Above all, the spurt in rate sensitives was mainly due to RBI’s indication that it could go in for another cut in the Cash Reserve Ratio (CRR) to unlock banking funds in view of persistent pressure on the liquidity situation.

The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1693:1121 while 132 scrips remained unchanged. (Provisional)

The BSE Sensex gained 336.30 points or 1.99% and settled at 17,199.60. The index touched a high and a low of 17,238.99 and 16,965.58 respectively. 25 stocks advanced against 5 declining ones on the index (Provisional)

The BSE Mid-cap index gained 2.01% while Small-cap index was up by 1.48%. (Provisional)

On the BSE Sectoral front, Bankex up 3.96%, Realty up 3.51%, Metal up 2.70%, Auto up 2.44% and TECk up 1.84% were the top gainers while there were no losers.

The top gainers on the Sensex were Hindalco Industries up 7.89%, DLF up 5.97%, ICICI Bank up 5.85% Tata Motors up 4.25% and Bajaj Auto up 3.52%.

On the flip side, Coal India down 2.38%, Maruti Suzuki down 1.10%, HUL down 0.78%, NTPC down 0.58% and ONGC down 0.11% were the top losers in the index. (Provisional)

Reflecting slowness in industrial activity, the overall growth of eight core industries has dipped to almost half in December as compared to the same period in the last fiscal. According to the data released by the Commerce and Industry Ministry, the combined index for the month of December 2011 grew at the rate of 3.1% as compared to 6.3% growth in December 2010. 

During April-December 2011-12, the cumulative growth rate of the core industries was 4.4% as against their growth at 5.7% during the corresponding period in 2010-11. The eight core industries namely coal, steel, cement, refinery products, electricity, natural gas, fertilizers and crude oil have a combined weight of 37.90% in the Index of Industrial Production (IIP), and are considered fair indicators of the growth of infrastructure and factory output in the economy. The lack of demand due to the global slowdown and the high interest rate regime seemed to have hit investments in the core industries, bringing down their growth rates.

The most drastic dips came in the growth of crude oil, petroleum refinery products and steel. These three products also happen to be the heaviest in the index. Crude Oil production (weight: 5.22%) registered a growth of (-) 5.6% in December 2011, a drastic fall as compared to its growth at 15.8% in December 2010. Cumulatively crude oil production registered a growth of a meager 1.9% during April-December 2011-12, compared to its growth at 12.0% during the same period of 2010-11.

Petroleum refinery production (weight: 5.94%) had a growth of 0.8% in December 2011, down substantially from its growth of 8.3% in December 2010. In cumulative terms petroleum refinery production registered a growth of 4.1% during April-December 2011-12, compared to its 1.7% growth during the same period of 2010-11. Steel production (weight: 6.68%) had a growth rate of 2.2% in December 2011 against its 9.4% growth in December 2010. Cumulatively steel production had a 7.5% growth during April-December 2011-12 compared to its 8.3% growth during the same period of 2010-11.

The sectors that saw a positive growth were cement, electricity and coal. Cement production registered a growth of 13.3% in December 2011 against its (-) 2.2% growth in December 2010. The cumulative growth of cement production was 5.3% during April-December 2011-12 compared to its 4.4% growth during the same period of 2010-11.

Electricity generation had an 8% growth in December 2011 compared to its 5% growth in December 2010. Electricity generation on the other hand had a cumulative growth of 9.2% during April-December 2011-12 as against its 4.7% growth during the same period of 2010-11. Moreover, coal production had a growth of 5.6% in December 2011 compared to its growth at 3.8% in December 2010. However, in cumulative terms coal production had a negative growth of (-) 2.7% during April-December 2011-12 compared to its growth at 0.8% during the same period of 2010-11. 

India VIX, a gauge for market’s short term expectation of volatility lost 3.41% at 22.66 from its previous close of 23.46 on Monday. (Provisional)

The S&P CNX Nifty gained 116.45 points or 2.29% to settle at 5,203.75. The index touched high and low of 5,215.40 and 5,120.15 respectively. 43 stocks advanced against 7 declining ones on the index. (Provisional)

The top gainers on the Nifty were Hindalco up 8.07%, Reliance Communications up 7.31%, Sesa Goa up 7.12%, IDFC up 6.39% and Axis Bank up 6.02%.

On the other hand, Coal India down 2.31%, Siemens down 1.86%, PNB down 1.19%, Cairn India down 1.08% and Maruti down 0.98% were the top losers. (Provisional)

The European markets were trading in green, with France's CAC 40 up 1.17%, Germany's DAX up 0.90% and Britain’s FTSE 100 up 0.59%.

Sentiments remained buoyed in the Asian region with all the major index in the region ended the trade with good gains on Tuesday after European leaders agreed on a treaty aimed at ending huge deficits, but traders remained cautious as Greece continued talks to slash its debt mountain. Leaders of 25 European Union governments agreed on Monday night to move to closer fiscal union and to sign off on the details of a $660 billion permanent bailout fund for the euro zone. In addition, Greek Prime Minister Lucas Papademos said his country has made significant progress in talks with private-sector creditors. Still, some investors remain on edge as a deal remains elusive.

Moreover, stronger-than-expected Japanese industrial-production data supported the Tokyo market, though the yen’s strength continued to hobble exporter stocks. Industrial production rose 4% on month in December, above expectations for a 2.9% rise. The data indicated the effects of Japan’s March 11 earthquake and Thailand’s floods are wearing off.