Post session - Quick review

Domestic benchmarks have snapped the day’s trade in the negative terrain on Friday after lower-than-expected industrial production for December 2011 with index heavyweights Reliance Industries, Infosys and banks leading the decline. Moreover, weak European cues too dampened the sentiments. On the sectoral front bank stocks edged lower on profit taking after recent strong gains. IT stocks also fell as the main industry body -- the National Association of Software and Services Companies (NASSCOM) on February 8, 2012, said that the pace of revenue growth of the sector will likely moderate next fiscal year amid continued global economic uncertainty.

On the global front, all the Asian equity indices barring Shanghai Composite snapped the day’s trade in the negative terrain on last trading day of the week. Moreover, data showing a sharp drop in Chinese imports added another layer of caution to markets already confronting a dour earnings season. Imports plunged 15.3 percent, leaving China with a trade surplus of $27.3 billion on the month. Meanwhile, all the European counters were trading in the red at this point of time as concerns over Greek debt default persisted after finance ministers of the euro zone set more conditions for Greece to secure a second bailout following a deal by Greek leaders on reforms.

Back home, after opening with moderate losses amid volatility, Indian equity indices immediately turned positive and hit highest level in more than 27 weeks on sustained buying by funds and retail investors. The sentiment was also boosted after; ACC hit record high after strong Q4 results. HPCL also surged after strong Q3 results. Tata Steel gained as the company issued an encouraging future outlook after reporting third quarter net loss after trading hours on February 9, 2012. But, in the late morning trade once Indian industrial production (IIP) numbers started coming out market began its southbound journey as IIP disappointed street. Industrial production grew by just 1.8% year-on-year in December 2011 due to contraction in mining and capital goods sectors and a lower manufacturing sector growth. Afterwards, markets extended losses and breached their crucial 17,700 (Sensex) and 5,350 (Nifty) mark in mid noon trade following weak opening in European counters. In the last leg of trade indices pared some of their losses as short-covering witnessed in some blue-chip stocks but ended the choppy session with a cut of over half a percent. Broader indices too tried to get some traction and ended flat. Metal remained the lone gaining sector on the index while, realty, oil and gas and healthcare remained the major dragger on the index.

On the earnings front, Tata Steel has reported a net loss of 603 crore for the quarter ended December 2011, as compared to a net profit of 1,003 crore in the previous corresponding period. While, Apollo Hospitals Enterprise has posted a rise of 41.13% in its net profit to Rs 64.65 crore for the quarter under review as compared to Rs 45.81 crore for the same quarter in the previous year. Moreover, Tata Chemicals has posted a surge of 35.98% in its consolidated net profit at Rs 223.78 crore for the quarter ended December 31, 2011 as compared to Rs 164.57 crore for the same quarter in the previous year.

The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1412:1523 while 112 scrips remained unchanged. (Provisional)

The BSE Sensex lost 109.02 points or 0.61% and settled at 17,721.73. The index touched a high and a low of 17,890.11 and 17,627.14 respectively. 6 stocks advanced against 24 declining ones on the index (Provisional)

The BSE Mid-cap index gained 0.02% while Small-cap index was down by 0.14%. (Provisional)

On the BSE Sectoral front, Metal up 0.38% was the only gainer while Realty down 1.19%, Bankex down 0.88%, Health Care down 0.82%, Oil & Gas down 0.75% and IT down 0.57% were the top losers.

The top gainers on the Sensex were Tata Steel up 5.72%, Bajaj Auto up 2.01%, Wipro up 0.80%, ONGC up 0.55% and ITC up 0.22%.

On the flip side, Hindalco Industries down 4.13%, Maruti Suzuki down 2.55%, Hero MotoCorp down 1.51%, M&M down 1.43% and Tata Power down 1.43% were the top losers in the index. (Provisional)

Meanwhile, decreased capital inflows and lower revenue collections have increased government’s public debt by 3.2% in the third quarter of FY’12 as compared to its second quarter. However, this was lower than the 4.7% increase seen in the previous quarter. Public debt stood at Rs 33,82,645 crore in the October-December quarter, up from Rs 32,76,368 crore in the last quarter. The increase in debt can be attributed to the increase in government borrowings due to decreased capital inflows and lower tax revenue collections.

Internal debt during October-December this fiscal constituted 89.9% of public debt as compared with 89.6% at the end of the second quarter, the outstanding internal debt of the government stood at Rs 30,41,895 crore constituted 33.9% of GDP compared with 32.7% at end-September 2011. The government's market borrowings through dated securities went up by Rs 52,872 crore as against the budget estimates during the second half of the fiscal, following a shortfall in other modes of financing. Also, on review of the government's overall funding requirements, another Rs 40,000 crore was picked up from the market to take the total increase to Rs 92,872 crore during the fiscal year.

The need for higher borrowings was owing to the fact that inflows in terms of foreign direct investment (FDI) and portfolio investment by foreign institutional investors (FIIs) remained subdued during October-November 2011 as in the second quarter of 2011-12. As a result, there was a net outflow of capital in October and only a marginal inflow in November.

Marketable securities, consisting of rupee denominated dated securities and treasury bills/cash management bills, accounted for 79.1% of total public debt during the period ending December compared with 78.4% at end-September 2011. As at end of December 2011, the proportion of debt maturing in less than one year declined to 3.7% from 4.3% a quarter ago, while debt maturing within 1-5 years came down to 25.3% from 26.7% at end-September 2011. The 10-year bond yield increased from 8.44% at end-September 2011 to 8.54% at end-December 2011. The yields went up sharply during the quarter due to policy rate hike of 25 bps by the Reserve Bank on October 25 as well as supply concerns.

Further, gross tax collections during the period at 63.5% of Budget Estimates (BE) were lower than 70.7% a year ago. Non-tax revenue at 62.2% of BE was lower than previous year mainly reflecting the impact of telecom receipts in 2010-11. However, total expenditure as percent of BE at 71.3% during April-December 2011 was broadly similar to 71.0% year-on-year. Thus, revenue deficit and gross fiscal deficit during April-December 2011 at 93.1% and 92.3% of BE, were higher, mainly reflecting the impact of large refunds under directs taxes early this year and higher telecom receipts in the previous year.

The report on quarterly data on ‘Public Debt Management' recently released by the Finance Ministry has noted that the fiscal outcome during April-December of FY’12 indicates that all the key deficit indicators as percentage of budget estimates for 2011-12 were higher than their levels during the corresponding period of the previous year because of lower revenue collections both from tax and non-tax sources.

India VIX, a gauge for market’s short term expectation of volatility gained 2.27% at 23.83 from its previous close of 23.30 on Thursday. (Provisional)

The S&P CNX Nifty lost 41.95 points or 0.78% to settle at 5,370.40. The index touched high and low of 5,427.75 and 5,341.05 respectively. 9 stocks advanced against 41 declining ones on the index. (Provisional)

The top gainers on the Nifty were Tata Steel up 5.12%, SAIL up 3.72%, Bajaj Auto up 2.25%, Sesa Goa up 2.05% and HCL Tech up 1.19%.

 On the other hand, Hindalco Industries down 4.34%, Ambuja Cement down 4.04%, Reliance Infrastructure down 3.97%, ACC down 3.66% and IDFC down 3.19% were the top losers. (Provisional)

The European markets were trading in red, with France's CAC 40 down 0.63%, Germany's DAX down 0.74% and Britain’s FTSE 100 down 0.24%.

All the Asian equity indices barring Shanghai Composite snapped the day’s trade in the negative terrain on last trading day of the week as traders grew nervous over Greece’s chances of avoiding a default after euro-zone chiefs withheld a new bailout. Moreover, data showing a sharp drop in Chinese imports added another layer of caution to markets already confronting a dour earnings season. Imports plunged 15.3 percent, leaving China with a trade surplus of $27.3 billion on the month. However, the numbers were significantly distorted by China's New Year holiday last month, which brought the country's businesses to a standstill for a full week.

Tokyo shares closed down 0.61 percent on Friday, after the euro sagged against the yen because of the lack of finality on Greek debt. Moreover, Seoul Composite slid 1.04 percent lower to close at 1,993.71 points on Friday, still good enough to post a sixth-straight winning week. However, China shares ended marginally up in see-saw trade after weaker than expected economic data, but strength in the property sector lent support.