Sensex convalesces from day’s lows; bucks global pessimism

Stock markets in India have recovered from the day’s lows hit in late morning trade after prospects of monetary easing by Indian central bank was dimmed by the astoundingly strong industrial growth numbers for the month of January 2012. The market participants exerted hefty selling pressure on the markets and dragged the frontline indices even below the previous closing levels but the key gauges have found some support around the psychological 17,500 (Sensex) and 5,300 (Nifty) levels and are showing signs of recovery in early noon trades. Meanwhile, sentiments got support from India’s President Pratibha Patil comments on Indian economy which she said will slow down to 7% this fiscal from 8.4% last fiscal but soon revert to the 8-9% growth trajectory on the back of strong fundamentals and favorable domestic factors. Buying interests were largely evident in the Capital Goods counter while rate sensitive Banking, Realty and Auto pockets too gained decent ground. Automobile shares remained in fine fettle after an industry body - SIAM data showed car sales in India rose an annual 13.1 percent in February, with automakers posting a fourth straight monthly increase as they continue to recover from record falls in late 2011. Sales of trucks and buses, a key indicator of economic activity, rose 18.7 percent in February from a year previous to 76,891 vehicles. However, selling was largely evident in Information technology pocket which plunged around a percent while the defensive FMCG and Healthcare counters too traded with marginal losses. In the meantime, Indian bourses despite the volatility managed to outperform their Asian counterparts which reeled under selling pressure after the worse than expected Chinese trade data highlighted that the nation’s trade deficit widened to the highest levels seen in at least a decade in February. While European stock futures too are indicating a lower opening for the markets there on fresh jitters of a slowdown in world’s second largest Chinese economy.

Moreover, the broader markets traded on a positive note with good gains of over half a percent and outperformed their larger peers. The bourses gained on good volumes while market breadth on BSE was in favor of advances in the ratio of 1411:1065 while 105 scrips remained unchanged.

The BSE Sensex is currently trading at 17,563.38 up by 60.14 points or 0.34% after trading as high as 17,772.10 and as low as 17,494.65. There were 15 stocks advancing against 15 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index climbed 0.75% and Small cap advanced 59%.

On the BSE sectoral space, Capital Goods up 2.55%, Consumer Durables up 1.49%, Bankex up 1.03%, Realty up 0.79% and Oil & Gas 0.78% were the major gainers, while IT down 1.21%, TECk down 0.84%, Healthcare down 0.22% and FMCG down 0.02 were the only losers in the space.

L&T up 3.81%, SBI up 3.50%, Bajaj Auto up 2.31%, BHEL up 2.24% and RIL up 1.86% were the major gainers on the Sensex, while Infosys down 2.34%, Cipla down 2.09%, M&M down 1.52%, NTPC down 1.50% and HDFC Bank down 0.83% were the major losers in the index.

Meanwhile, industrial output is estimated to have gone up by 6.8% in January 2012 as compared to the same month last year, as per data released by the government of India. The number is more in line with the HSBC Purchasing Manager's Index (PMI) which estimated an expansion to 57.7 in January with new orders touching a 10-month high. It is however much higher than the widely expected number of 2.1% by economists. The January figure compares with December's provisional increase of 1.8%.

The manufacturing and electricity sectors have expectedly grown by 8.5% and 3.2% respectively whereas mining has contracted by (-) 2.7%. Capital goods, an indicator of investment activity, has fallen by (-) 1.5% in January and Consumer durables also showed a decline of 6.8% whereas consumer non durables showed a growth of whopping 42.1%. Basic commodities grew by 1.6%.

For the period April-January 2011-12, IIP has shown a growth of 4% over the corresponding period last year whereas cumulative growth in Mining, Manufacturing and Electricity has been (-)2.6%, 4.4% and 8.8% respectively.

The IIP growth number for December has been revised to 2.5% from the estimated 1.8%.

As per Chairman of the Prime Minister’s Economic Advisory Council (PMEAC), C Rangarajan, the IIP number is encouraging but the composition of it is worrisome as the upswing has mainly come from the rise in consumer non durables. The RBI has already cut the Cash Reserve Ratio by 75 basis points on 9 March which is expected to spur investment activity by infusing Rs 4,800 crore of liquidity in the economy.

The S&P CNX Nifty is currently trading at 5,347.45, higher by 13.90 points or 0.29% after trading as high as 5,421.90 and as low as 5,327.30. There were 27 stocks advancing against 23 declines on the index.

The top gainers on the Nifty were L&T up 3.80%, SBI up 3.40%, Bajaj Auto up 2.25%, BHEL up 2.12% and R Power up 1.91%.

Infosys down 2.16%, Cipla down 2.06%, NTPC down 1.73%, M&M down 1.71% and Sesa Goa down 1.34% were the major losers on the index.

In the Asian space, Shanghai Composite slipped 0.16%, Hang Seng shed 0.32%, Jakarta Composite fell 0.40%, KLSE Composite sank 0.78%, Nikkei 225 declined 0.40%, Seoul Composite slumped 0.78% and Taiwan Weighted plunged 1.10%.

On the other hand only Straits Times inched up 0.01%.