Indian equities trim gains to trade in red; CG, Power and Realty drag markets

Indian equities, after exhibiting range bound trends for most part off the session, have trimmed all the gains to trade below neutral line. The trade continued in red as investors chose to take some profits off the table after the recent sharp rally in equities.  Traders were seen piling up the positions in Oil & Gas, Consumer Durables and Bankex sector while selling was witnessed in Capital Goods (CG), Power and Realty sector. BHEL and L&T from Capital Goods space was seen trading in red pulling the markets lower. Reliance Power and Power Grid from Power space were in red pushing the markets down. DLF and JP Associates from Realty sector were too trading in red exerting pressure on the markets. Industry heavyweight RIL was trading in green with gain of around more than one percent pulling the markets higher. Also, Cairn India and ONGC from Oil & Gas sector were seen trading in green giving the much needed support. Kotak Bank, PNB, ICICI Bank and HDFC Bank from Banking space was seen trading in green pushing the markets higher. In the scrip specific movement, telecom stocks Bharti Airtel, Idea Cellular, Tata Teleservices (Maharashtra), Reliance Communications and MTNL edged lower after telecom regulator indicated that it may have to intervene if telecom operators decide to increase tariffs. Meanwhile, stocks from Aviation pocket including Kingfisher Airlines, Jet Airways and SpiceJet skyrocketed in the session after the empowered group of ministers gave their green signal to the decision to allow airlines to directly import Air Turbine Fuel from abroad.

On the global front, the Asian markets were trading on a mix note while the European markets were too trading on a mix note. The French President and German Chancellor cautioned Greece that it was running out of time to reach a consensus on the bailout loan package aimed at preventing the eurozone member nation from defaulting on its debts. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,350 and 17,600 levels respectively. The market breadth on BSE was in favor of declines in the ratio of 1239:1510 while 123 scrips remained unchanged.

The BSE Sensex is currently trading at 17,664.08 down by 43.23 points or 0.24% after trading as high as 17,832.04 and as low as 17,664.08. There were 13 stocks advancing against 17 declines on the index.

The broader indices were trading on a negative note; the BSE Mid cap index shed 0.39% while Small cap dropped 0.05%.

On the BSE sectoral space, Oil & Gas up 0.72%, Consumer Durables up 0.54%, Bankex up 0.48% and FMCG up 0.11% were the only gainers while Capital Goods down 1.59%, Power down 1.40%, Realty down 1.06%, Metal down 0.80% and TECk down 0.59% were the top losers in the space.

Jindal Steel up 1.59%, RIL up 1.40%, ICICI Bank up 1.26%, HDFC Bank up 1.12% and Hero MotoCorp up 1.10% were the major gainers on the Sensex, while BHEL down 2.52%, Bharti Airtel down 2.38%, Tata Steel down 2.23%, GAIL India down 2.13% and HUL down 1.50% were the major losers in the index.

Meanwhile, India’s gross domestic product (GDP) likely to grow by 6.9% in the fiscal year 2011-2012 according to advance estimates released by the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation. The GDP growth numbers are a tad less than the widely expected figure of around 7%.

The ‘agriculture, forestry and fishing’ sector has grown by a meager 2.5 % registering a sharp decline from the 7% registered in the corresponding period last year. Production of foodgrains is expected to grow by 2.3% as compared to 12.2% growth in the previous agriculture year. The  production of cotton  and sugarcane  is also expected to rise by 3.3% and 1.6%, respectively, in 2011-12. The number has come as a slight surprise given that India has had two consecutive years of good rains and bumper production of rice, wheat and cotton. These figures could impact future inflation numbers leaving little room for monetary intervention by RBI. 

The manufacturing sector is likely to grow at a slow rate of 3.9% during 2011-12 sharply down from its  growth of 7.6% during 2010-11. The major dampener has come from the mining sector which is likely to show a negative growth of  2.2% in 2011-12 as against growth of 5% during 2010-11. The construction sector is likely grow at a rate of 4.8% during 2011-12 as against growth of 8% in the previous year. Furthermore, the finance, insurance, real estate and business services sectors are likely to grow by 9.1% this fiscal, against 10.4% last fiscal. These numbers have been pretty much in line with expectations. A sharp decline in the manufacturing can be attributed to the ban on mining in some states and slowdown in the global economy.

The services sector comprising of trade, hotels, transport and communication is expected to grow at  11.2% during  2011-12 as against growth of 11.1% in the previous year. The per capita income in real terms (at 2004-05 prices) during 2011-12 is likely to attain a level of Rs. 38,005 as compared to the Quick Estimate for the year 2010-11 of Rs. 35,993. The growth rate in per capita income is estimated at 5.6% during 2011-12, as against the previous year's estimate of 6.4%. Population during this period has grown from 1.8 billion to 2 billion.

Private final consumption expenditure (PFCE), regarded as the driver for growth, grew by 6.4% as compared to 8.1% in 2010-11. It is estimated at Rs. 32,70,368  crore  in 2011-12 as against Rs. 30,72,115 crore in 2010-11.

Gross fixed capital formation (GFCF), an indicator of investment, grew at an estimated 5.6% in 2011-12 as compared to 7.5% in 2011-2010. A slowdown in GFCF could be attributed to the tightening of the monetary policy by RBI, policy paralysis on the government’s front and the euro zone crisis. Government final consumption expenditure (GFCE), is likely to grow by 2.8% in 2011-2012 as compared to 7.9% in 2010-2011.

The S&P CNX Nifty is currently trading at 5,352.50, lower by 9.15 points or 0.17% after trading as high as 5,413.35 and as low as 5,347.00. There were 21 stocks advancing against 29 declines on the index.

The top gainers on the Nifty were Cairn up 2.94%, Kotak Bank up 2.48%, ACC up 1.93%, Ranbaxy up 1.36% and Reliance Industries up 1.34%.

BHEL down 2.98%, JP Associates down 2.97%, Tata Steel down 2.70% Bharti Airtel down 2.53% and Reliance Communications down 2.38% were the major losers on the index.

In the Asian space, Shanghai Composite plunged 1.68%, Hang Seng eased 0.05%, Jakarta Composite declined by 0.80% and Nikkei 225 slipped 0.13%. On the flipside, Straits Times ascended 0.54%, Seoul Composite rose 0.43% and Taiwan Weighted garnered 0.25%.

The European markets were trading on a mixed note with, France’s CAC 40 ascended 0.14%, Germany’s DAX dropped 0.23% and Britain’s FTSE 100 shed 0.01%.