Post session - Quick review

Indian stock market staged consolidation after last session’s pullback as market men pocketed profits on sluggish macro economic data, which led to flattish end of the bourses at Dalal Street. The volatile market washed out significant portion of their morning gains, weighed down by nasty laceration in major blue chip stocks such as HDFC Bank, L&T, ICICI Bank and TCS, which sent the benchmark indices crackling below their crucial psychological level of 18000 level (Sensex) and 5450 (Nifty) respectively.

However, slender gains at Dalal Street were in light of positive global set up as demand for equities was underpinned on expectations the European Central Bank's long-term refinancing operation later in the day will attract a large take-up from euro area banks, which would in turn boost liquidity in the global financial system.

However, the demand for risky asset class diminished in comparison to early deals after the release of third quarter gross domestic product (GDP), which fell short of consensus estimates of a growth at 6.3%, grew at 6.1%. There was a contraction in sectoral growth. Farm, manufacturing and construction sector showed less growth as compared to same quarter of previous financial year. In fact, mining sector growth came in negative 3.1% versus 6.1% year-on-year after ban for mining in major areas of the country last year due to environmental issues and scam in Karnataka. Overall industry sector grew just at 2.6% versus 7.6% whereas services sector grew at 8.9% versus 7.7% year-on-year.

Reacting to these numbers, Capital Goods (CG), Banking and Fast Moving Consumer Goods (FMCG) counters surrendered most of their gains, only to end in red. Capital goods stocks declined by over a percentage points as the investment cycle indicated contraction. L&T, down over 2% was the top loser of Capital Goods space. Stocks of Siemens and Crompton Greaves followed the suit. L&T plunged over 2% as the company lost bids for NTPC boilers in a tender today.

Meanwhile, banking stocks too lost the sheen. A slowdown in economic growth typically affects the credit off take from banks hurting their profitability. Tottering under maximum selling pressure, were stocks of private sectors banks like HDFC Bank (-2.34%), Kotak Mahindra (-0.50%) and ICICI Bank (-0.47%).

On the global front, regional sentiment across the Asian pacific region received a boost from oil's continued retreat from nine-month highs and Wall Street's positive showing on Tuesday, where the Dow Jones Industrial Average closed above 13000 points for the first time in nearly four years. However, even the upbeat industrial production data, spurred gains. Meanwhile, European shares too were happy to oblige as hopes of a high take-up at the European Central Bank's latest cheap loan offered support to European shares on Wednesday.

Back on the home turf, second consecutive sessions of gains were led by stocks belonging to the Oil & Gas, Public Sector Undertaking and Metal counters. All the Oil & Gas and PSU stocks were up on the reports of government likely hiking prices of petrol, diesel and liquefied petroleum gas (LPG) cylinders before the start of the parliament session on March 12, given the volatile international crude oil prices, which has been exerting pressure on the oil companies’ balance sheets. However, Metal stocks too rose as LMEX, a gauge of six metals traded on the London Metal Exchange, gained 0.33% on Tuesday, 28 February 2012.

Thus the day of consolidation which managed to conclude in positive terrain, saw benchmark 30 share index –Sensex-ending sub 17600 level. Similarly, the wide-based National Stock Exchange index- Nifty-too ended below 5400 mark. The broader indices, however, enticed significant gains and concluded the session with profit of over 0.50% each. The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1578:1310 while 129 scrips remained unchanged. (Provisional)

The BSE Sensex gain 7.13 points or 0.04% and settled at 17,738.25. The index touched a high and a low of 18,001.35 and 17,677.97 respectively. 18 stocks advanced against 12 declining ones on the index (Provisional)

The BSE Mid-cap index gained 1.11% while Small-cap index was up by 0.69%. (Provisional)

On the BSE Sectoral front, Oil & Gas up 2.16%, PSU up 1.51%, Metal up 1.49%, Realty up 0.96% and TECk up 0.47% were the top gainers while Capital Goods down 1.79%, Bankex down 0.61% and FMCG down 0.53% were the only losers.

The top gainers on the Sensex were ONGC up 3.39%, Sterlite Industries up 3.14%, Tata Steel up 2.97%, Tata Power up 2.90% and Wipro up 2.81%.

On the flip side, L&T down 3.10%, HDFC Bank down 2.49%, Jindal Steel down 1.83%, Hero MotoCorp down 1.35% and HDFC down 1.34% were the top losers in the index. (Provisional)

India's pace of economic growth slowed to its weakest annual pace in almost 3 years in the October-December quarter at 6.1%, as high interest rates and rising input costs constrained investment and manufacturing. Growth in GDP at factor cost during Q3, 2011-12, at 2004-05 prices, is estimated at 6.1% as compared to the growth rate of 8.3% in Q3, 2010-11. The growth rate is lesser than the widely expected number of around 6.3-6.4%.

The growth in GDP at factor cost during Q3, 2011-12, at 2004-05 prices, is estimated at 2.7% in ‘agriculture, forestry and fishing’ sector, 2.6% in industry and 8.9% in services sector, year-on-year. Growth in mining and quarrying is expected to decline to (-) 3.1% whereas manufacturing is estimated to grow at a dismal 0.4% during Q3, 2011-12 as compared to the same quarter last year. The numbers in manufacturing have come as quite a shocker given the recent IIP numbers. The electricity sector is estimated to grow at 9% during Q3, 2011-12.

The all important gross fixed capital formation (GFCF), an indicator of the level of investment in the economy, is expected to contract to (-) 1.2% at constant prices in Q3. Private final consumption expenditure (PFCE), the driver of growth, is expected to grow by 6.2%. The GDP estimates for the third quarter have come in as a disappointment.

Given these numbers, the estimated growth of 7.1% for FY’12, looks difficult. The growth for the period April- December 2011 has been revised to 6.9% and maintaining the same for the fiscal could also be a challenge given the drop in investments. As per economists, the growth numbers per say may not be a big concern as is the composition of this growth. With investments declining and consumption expenditures on the rise, the economy could face inflationary pressures in coming times.

India VIX, a gauge for market’s short term expectation of volatility gain 4.17% at 26.93 from its previous close of 25.85 on Tuesday. (Provisional)

The S&P CNX Nifty gain 9.65 points or 0.18% to settle at 5,385.15. The index touched high and low of 5,458.80 and 5,352.25 respectively. 31 stocks advanced against 19 declining ones on the index. (Provisional)

The top gainers on the Nifty were SAIL up 3.76%, ONGC up 3.46%, Wipro up 3.18%, Sesa Goa up 3.12% and Tata Power up 2.99%.

 On the other hand, L&T down 3.28%, HDFC Bank down 2.81%, Siemens down 2.28%, Jindal Steel down 1.62% and Reliance Infrastructure down 1.50% were the top losers. (Provisional)

The European markets were trading on a mix note, with France's CAC 40 up 0.62%, Germany's DAX up 0.69% and Britain’s FTSE 100 down 0.06%.

Sentiments remained bullish across the Asian region and most of the Asian counterparts ended the session in the positive terrain on Wednesday on optimism ahead of another ECB refinancing operation while US stocks provided a strong cue after closing at a near four-year high. Meanwhile, Seoul Composite posted their highest close in seven months, up by over a percentage point on Wednesday, tracking overnight gains in Wall Street as large caps rallied across the board. In addition, Taiwan stocks closed up 2.04 percent at an almost seven-month closing high, with HTC Corp jumping after it announced a new line up of phones. While, Nikkei share average failed to hold above 9,800, paring gains to end flat as investors took profits ahead of an ECB liquidity operation. However, Chinese Shanghai Composite ended with a cut of about a percent, weighed down by a slump in property shares after Shanghai reaffirmed its commitment to real estate curbs.