Indian equities pare gains; trade continues in green

Indian equities, after exhibiting strong trend for most part off the session, have trimmed the gains to trade near neutral line in the late afternoon session. Traders were seen piling up the positions in Realty, Consumer Durables and IT sector while selling was witnessed in Bankex, FMCG and HealthCare sector. DLF and JP Associates from Realty counters were seen trading in green with gain of around more than two percent pulling the markets higher. TCS, Wipro, Infosys and HCL Tech from IT pack were trading in green pushing the markets higher. Industry heavyweight RIL is trading in green with gains of more than one percent giving the much needed support. ICICI Bank, Kotak Bank and PNB from Banking counter was down putting pressure on the market. In scrip specific movement, sugar stocks like Shree Renuka, Bajaj Hindusthan along with rice stocks like Kohinoor Foods rallied in the session after EGoM approved export of one million tonnes of sugar. It also okayed further export of non-basmati rice up to 4 million tonnes and reduction of MEP (minimum export price) of basmati rice to $700 a tonne from $900 a tonne. Besides, the telecom major Bharti Airtel plummeted after announcing weaker than expected numbers in third quarter. On the global front, the Asian markets were trading on a positive note while the European markets were too trading in green terrain. Greek Prime Minister Lucas Papademos held a meeting yesterday with the European Commission, the European Central Bank and the International Monetary Fund, to put the final touches on terms required for a 130 billion-euro aid package. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,300 and 17,600 levels respectively. The market breadth on BSE was in favor of advances in the ratio of 1697:1084 while 96 scrips remained unchanged.

The BSE Sensex is currently trading at 17,632.55 up by 10.10 points or 0.06% after trading as high as 17,809.21 and as low as 17,623.59. There were 21 stocks advancing against 9 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index soared 0.83% while Small cap climbed 0.85%.

On the BSE sectoral space, Realty up 2.01%, Consumer Durables up 1.43%, IT up 1.35%, Power up 0.81%, and Metal up 0.70% were the major gainers while Bankex down 0.64%, FMCG down 0.13% and Health Care down 0.10% were the only loser in the space.

DLF up 2.78%, Hindalco up 2.48%, GAIL India up 2.43%, Coal India up 2.20% and Maruti Suzuki up 1.75% were the major gainers on the Sensex, while Bharti Airtel down 6.08%, ICICI Bank down 2.34%, ONGC down 1.62%, Tata Steel down 0.91% and ITC down 0.71% were the top losers in the index.

Meanwhile, passenger cars have recorded a growth 7.2% in January 2012 as compared to the same month last year. Commercial vehicles grew by 13.52% and the growth figures for two wheelers stood at 13.63% in January 2012 as compared to January 2011. Three wheelers however, registered de-growth at (-) 3.49% in January, as per the data released by Society of Indian Automobile Manufacturers (SIAM).

Passenger cars saw the third consecutive monthly rise in this fiscal. Car sales had been registering a decline in sales since July 2011 after registering a 30% growth in the year ending March 2011. However, the growth in November-January is unlikely to make up for the losses suffered earlier unless sales grow in February-March at 10-12%. Since this is unlikely to happen, the auto industry will miss the sales projection for FY12. The industry had forecasted an increase in sales by 0-2% in FY12.

The overall sales growth rate recorded for April-January 2012 was 12.51%. Passenger vehicles segment recovered marginally at 1.45% during April-January 2012 over same period last year. Passenger cars recorded de-growth of (-) 1.19%, Utility Vehicles grew by 13.03% and Vans grew by 8.40% in this period. And growth in overall passenger vehicles was at 8.86% in the month of January 2012.

Indian car sales are mainly driven by a rapidly expanding middle class that is typically reliant on loans for purchases. This makes the car industry too sensitive to interest rates. Since interest rates are unlikely to come down in the near future, the car industry is not optimistic of meeting its forecasted growth. SIAM, however, expects vehicle sales to increase by 11-13% in the fiscal year starting on April 1, if the Reserve Bank of India begins to ease interest rates soon. The central bank had raised interest rates 13 times since March 2010 in its battle against stubborn inflation.

Growth in sales of commercial vehicles, seen as an indicator of economic activity, stood at 13.52% in January 2012 as compared to January 2011. The overall commercial vehicles segment registered growth of 18.63% during April-January 2012 as compared to the same period last year. Motorcycle sales, which have remained strong over the past year, rose by 10.51% last month. The increase is less than SIAM's growth rate forecast of 13-15% for the current fiscal year. During April-January 2012, motorcycles grew by 13.66%.

The cumulative production data for April-January 2012 shows overall production growth of 14.56% over same period last year. Production in January 2012 registered growth of 11.25% as compared to January 2011. On the export front, overall automobile exports registered a growth rate of 28.36% during April-January 2012. Passenger Vehicles registered growth at 20.64% in this period. Two Wheelers, Commercial Vehicles and Three Wheelers segments recorded growth of 28.52%, 27.60% and 39.70% respectively during April-January 2012. In January 2012 compared to January 2011, overall automobile exports registered a growth of 22.93%.

The S&P CNX Nifty is currently trading at 5,348.65, higher by 13.50 points or 0.25% after trading as high as 5,396.90 and as low as 5,335.75. There were 35 stocks advancing against 15 declines on the index.

The top gainers on the Nifty were Reliance Infrastructure up 3.79%, GAIL up 2.39%, DLF up 2.36%, JP Associates up 2.35% and Hindalco up 2.28%.

Bharti Airtel down 6.60%, ICICI Bank down 2.04%, ONGC down 1.31%, Tata Steel down 1.17% and Kotak Bank down 0.92% were the major losers on the index.

In the Asian space, Shanghai Composite surged 2.43%, Hang Seng soared 1.54%, Jakarta Composite climbed 0.55%, Nikkei 225 jumped 1.10%, Straits Times ascended 0.83%, Seoul Composite garnered 1.12% and Taiwan Weighted spurted 2.11%.

The European markets were trading in green with, France’s CAC 40 ascended 0.48%, Germany’s DAX added 0.76% and Britain’s FTSE 100 jumped 0.27%.