Post session - Quick review

Indian equity markets staged gratifying moves at the start of the week as benchmark equity indices after dipping dangerously below their crucial bastions, managed to eke out modest gains of close to half a percentage points towards the end of the trade.  Although, the barometer gauges did not recoup all of their early profits, but staged considerable fervor to conclude above the psychological levels of 17500 (Sensex) and 5350 (Nifty) respectively. A sharp jump in January’s industrial output that reinforced expectation that RBI will wait until April before cutting interest rates outweighed the optimism prevailing on account of surprise CRR cut by Reserve Bank of India (RBI).In fact, a maximum of 50 bps CRR cut was being expected by the industry. However, a 75 bps cut came as a bit of pleasant surprise, that RBI announced post market hours on Friday.

India's industrial output in January grew at its fastest pace in 7 months, powered by a surge in manufacturing including consumer non-durables, a sign of strength in a sluggish economy. Production at India's factories, mines and utilities grew 6.8 percent from a year earlier, the notoriously volatile data registered highest growth since June 2011, way ahead of the median forecast of 2.1%.

However, besides the receding expectation of the likelihood of key policy rates cut, Greece also remained on the radar after the International Swaps and Derivatives Association, known as ISDA, declared on Friday that a “credit event”-essentially a default-occurred in Greece's debt, which will likely trigger a net $3.2 billion in payouts between buyers and sellers of credit default swaps on Greek sovereign credit.

Thus, in the light of gloomy global set up, benchmark equity indices staged stiffed resistance at the start of critical week, loaded with a lot of important events, which include review of monetary policy meeting of the Reserve Bank of India, Indian Economic Survey, Rail budget and, finally, the federal budget.

On the global front, the week's trading in Asian pacific region got off to a cautious start as investors digested a mixed bag of economic data, with a better-than-expected U.S. employment report on Friday being overshadowed by news over the weekend that China posted a massive $31.48 billion trade deficit for February after reporting a $27.28 billion surplus in January. Meanwhile, European stocks, halting a sharp three-day rally as last week’s, fell slightly on Monday. Investors bracing for Italy’s final fourth-quarter gross domestic product, pressed sales as they expected GDP to fall 0.7% on the quarter and 0.5% year-on-year, highlighting the dire state of parts of the euro zone economy.

Back on the home turf, stocks from Capital Goods, Consumer Durable and Realty counters pulled it well for the 30 share index of BSE-Sensex- which gathering over 75 points ended a sniffing distance of 17600 mark, after dipping to intra-day low of 17,494.65. However, the stocks from Information Technology, Technology and Health Care counters limited the up move of the bourses. The 50 share widely followed barometer index of National Stock Exchange (NSE)-Nifty-too amassed gains close to half a percent to end above the 5350 mark. The broader indices too participated in the rally and went home with a profit of over 0.75% each. The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1529:1303 while 133 scrips remained unchanged. (Provisional)

The BSE Sensex gained 74.64 points or 0.43% and settled at 17,577.88. The index touched a high and a low of 17,772.10 and 17,494.65 respectively. 17 stocks advanced against 13 declining ones on the index (Provisional)

The BSE Mid-cap index gain 1.05% while Small-cap index was up by 0.76%. (Provisional)

On the BSE Sectoral front, Capital Goods up 2.49%, Consumer Durables up 2.11%, Realty up 1.25%, Bankex up 1.16%, and Oil & Gas up 1.03% were the top gainers while IT down 1.11%, TECk down 0.81% and Health Care down 0.19% were the only losers.

The top gainers on the Sensex were SBI up 4.04%, L&T up 3.19%, Jindal Steel up 2.82%, RIL up 2.73% and BHEL up 2.33%.

On the flip side, Cipla down 2.00%, M&M down 1.96%, ONGC down 1.96%, Infosys down 1.57% and TCS down 1.38% were the top losers in the index. (Provisional)

Meanwhile, quick estimates data released by the government of India has shown that Index of Industrial Production (IIP) surged by 6.8% in January 2012 as compared to the same month last year and a meagre 1.8% (provisional) in the month of December. 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 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% and 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 the 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.

India VIX, a gauge for market’s short term expectation of volatility gain 3.14% at 26.27 from its previous close of 25.47 on Friday. (Provisional)

The S&P CNX Nifty gain 21.50 points or 0.40% to settle at 5,355.05. The index touched high and low of 5,421.90 and 5,327.30 respectively. 29 stocks advanced against 21 declining ones on the index. (Provisional)

The top gainers on the Nifty were SBI up 3.71%, L&T up 3.36%, RIL up 3.00%, Siemens up 2.77% and Reliance Power up 2.71%.On the other hand, M&M down 2.23%, ONGC down 2.16%, TCS down 1.73%, Cipla down 1.61% and HDFC down 1.57% were the top losers. (Provisional)

The European markets were trading in green, with France's CAC 40 up 0.06%, Germany's DAX up 0.36% and Britain’s FTSE 100 up 0.01%.