Dismal IIP numbers, global leads weigh on Dalal Street; benchmarks shed 0.50%

Friday’s session turned out to be a subdued one for the Indian stocks markets, which declined around half a percentage points and failed to extend the gaining momentum for the third straight session. Frontline indices tested the psychological 5,400 (Nifty) and 17,900 (Sensex) levels in the session but faced severe resistance around those levels after the gloomy industrial production spooked sentiments. However, the markets did not witness sharp sell-off in the session as despite the weaker than expected 1.8% industrial output growth in December, investors remained hopeful that the figures would show improvement in the coming months. Hefty selling pressure was evident in high beta Realty counter, which plunged around a percent while investors `were also seen squaring off positions from Oil & Gas and defensive Healthcare counters. Index heavyweight Reliance Industries too exerted pressure on the key gauges by drifting over a percent lower. On the earnings front, financial major IDFC got pounded heavily after announcing third quarter results, which were below street’s expectations while ADA group stocks like R Com and R Capital settled on a somber note ahead of announcing their third quarter earnings later in the session. On the global front, Asian markets exhibited pessimistic trends as investors remain nervous after European finance ministers demanded more steps overnight along with Greek parliament’s approval before releasing the aid. The European stock counterparts too trade on a negative note as EU delayed approval of Greek accord.

Earlier on the Dalal Street, the benchmark got off to a cautious opening as investors largely remained influenced by the pessimistic sentiments prevailing in Asian markets. After the subdued opening, the equity indices crawled into positive terrain and touched the highest point in session in late morning trades. However, post the release of gloomy IIP numbers the markets drifted lower. The bourses got some support around the crucial 5,350 (Nifty) and 17,600 (Sensex) levels and recovered a great deal from the low point of the day and settled with moderate cuts. The NSE’s 50-share broadly followed index Nifty, slipped about half a percent to settle below the crucial 5,400 support level while Bombay Stock Exchange’s Sensitive Index or Sensex shed under a hundred points and ended below the psychological 17,750 mark. Moreover, the broader markets, which showed some resilience in morning trades, retreated by the end and settled on a flat note but outperformed their larger peers. On the BSE sectoral space, Metal counter remained the only gainer in the space with gains of over half a percent while the high beta Realty sector along with Oil & Gas pocket remained top laggards in the session. The markets receded on strong volumes of over Rs 1.75 lakh core while the turnover for NSE F&O segment remained on the higher side as compared to that on Thursday at over Rs 1.37 lakh crore. The market breadth turned weak by the end as there were 1,435 shares on the gaining side against 1,506 shares on the losing side while 106 shares remained unchanged.

Finally, the BSE Sensex lost 82.06 points or 0.46% to settle at 17,748.69, while the S&P CNX Nifty declined by 30.75 points or 0.57% to close at 5,381.60.

The BSE Sensex touched a high and a low of 17,890.11 and 17,627.14 respectively. The BSE Mid cap index up by 0.11% and Small cap index was down by 0.02%.

The major gainers on the Sensex were Tata Steel up 5.30%, Bajaj Auto up 2.10%, Wipro up 0.80%, TCS up 0.29% and ITC up 0.17%. While, Hindalco down 3.62%, Maruti Suzuki down 1.99%, Mahindra & Mahindra down 1.36%, RIL down 1.23% and ICICI Bank down 1.21%, were the major losers on the index.

The only gainer on the BSE sectoral space was Metal up 0.58%, while Realty down 0.93%, Oil & Gas down 0.80%, Health Care (HC) down 0.71%, Bankex down 0.68% and Power down 0.41% were top losers on the sectoral space.

Meanwhile, in the wake of sanctions imposed by the US and Europe, India sees a huge scope for boosting exports to Iran. India has decided to take its association with Iran a step further and explore the opportunities  of trade that exist in areas affected by the sanctions imposed by other countries. Commerce Secretary Rahul Khullar has stated that India will be mounting a mission to Iran to promote its exports and a huge delegation will be visiting Iran at the end of the month. 

The announcement also came ahead of a planned visit to India by Herman Van Rompuy, the European Union president, who is intending to seek the Indian government’s help in pressing Iran to give up its nuclear program. Iran is currently facing sanctions over its ‘doubtful’ nuclear programme by the United Nations, US and EU countries.

However, India has refused to reduce its imports from Iran on the grounds that it will not be possible for India to substitute 110 million tonnes of Iranian crude per year from any other country. Also, India believes that the sanctions imposed by the US and EU - unlike those by the United Nations - are unilateral and, therefore, by giving a boost to trade with Iran, it is not violating any international norms. India however, honors the UN sanctions and has said that it will abide by those.

Further, Finance Minister Pranab Mukherjee, during his visit to the US recently, highlighted that India will not cut down its petroleum imports from Iran despite the sanctions by the US and Europe. He said, ‘it is not possible for India to take any decision to reduce the imports from Iran drastically, because among the countries, which can provide the requirement of the emerging economies, Iran is an important country amongst them.’

India is keen to widen its exports to Iran as it feels that there are number of items which can be exported by India to Iran, which are not covered by the UN sanctions (which India has agreed to abide by). It is believed that huge export opportunities are available in sectors like food that include tea, wheat and rice; pharmaceutical; iron and steel; mining, medium-density fiberboard and infrastructure projects, worth at least an $8-billion, and there is no reason for India to not avail of these.

Bilateral trade between India and Iran is around $13.6 billion, of which Indian export is merely $2.74 billion. The main item of trade is oil, which accounts for 12% of India's total oil imports from Iran. Oil constitutes over 90% of India’s imports from Iran, along with organic chemicals and ores. Major exports from India include cereals, inorganic and organic chemicals, iron, steel and their products and tea, coffee and spices.

The S&P CNX Nifty touched a high and low of 5,427.75 and 5,341.05 respectively.

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 flip side, Hindalco down 4.34%, Ambuja Cement down 4.04%, Reliance Infra down 3.97%, ACC down 3.66% and IDFC down 3.19% were the top losers on the index.

The European markets were trading in red as France's CAC 40 was down 0.60%, Britain’s FTSE 100 down 0.33% and Germany's DAX down by 0.89%.

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.