Post session - Quick review

New F&O’s series botched to gain traction as barometer gauges staged a lackadaisical close on Friday. Today’s session of trade was no different than the previous one as consolidation prolonged, leading to the flattish close of the market for second consecutive session. In the range bound session of trade, though barometer gauges in the dying hours gained flavor to negotiate a flat close, but the efforts proved futile to anything substantial. Meanwhile, in terms of volume turnover, trade of over 1 lac crore was done.

Upbeat earning from country’s biggest private lender ICICI Bank, limited the down side of the bourses. India's No. 2 lender, ICICI bank reported a better-than-expected 31.1 per cent rise in quarterly profit, bolstered by higher income from non-core operations and strong loan growth. However, expectation of good results from Axis bank, also aided Banking index to trade in green before final hour of trade, when profit booking finally turned it negative. Nevertheless, the surge of Consumer Durable, Information Technology and Technology counters provided cushion to the gains of the bourses. On the flip side, the drubbing of Public Sector Undertaking (PSU), Metal and Realty stocks counterbalanced it all.

Meanwhile, projection of normal rains in the June to September period from the Indian Metrological Department (IMD) also supported the markets.  However, volatility remained the constant companion of the bourses for today’s session, whereby, the 30 scrip sensitive index, practically unwinding entire session work, ended near its previous close, below the 17150 level. Similarly, widely followed index, Nifty, too wrapped up trade near its neutral line, below its 5200 bastion. The broader indices too closed in red terrain.

Mixed global leads failed to provide any guidance to the market as on one hand, Asian stock markets mostly edged lower as investors paused to reassess their positions amid a mixed bag of earnings reports and economic data, although the Tokyo market received a brief boost after the Bank of Japan introduced bigger-than-expected credit easing measures. The BOJ said its policy board voted unanimously at the end of a one-day meeting to boost the size of its asset purchase program--the main tool for credit easing amid near-zero interest rates--to Y70 trillion (about $860 billion), a net increase of Y5 trillion. The central bank also decided to extend the maturity of Japanese government bonds it buys under its asset purchase program to up to three years from two years.

Bout of strength in the local markets came as European shares, retreated after S&P's Spain downgrade. S&P, citing expectations Spain's finances will deteriorate even more than previously thought due to the recession and the country's ailing banking sector, downgraded Spain to BBB-plus with a negative outlook, saying the situation could deteriorate further unless strong measures were taken at a European level.

Back on the home turf, the BSE Sensex lost 3.76 points or 0.02% and settled at 17,126.91. The index touched a high and a low of 17,242.15 and 17,022.09 respectively. 18 stocks advanced against 12 declining ones on the index (Provisional)

The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1245:1530 while 120 scrips remained unchanged. (Provisional)

The BSE Mid-cap index lost 0.17% while Small-cap index was down 0.38%. (Provisional)

On the BSE Sectoral front, Consumer Durables was up 1.36%, IT up 1.11%, TECk up 0.51%, Health Care up 0.19% and Auto up 0.15% were the only gainers while PSU down 0.93%, Metal down 0.80%, Realty down 0.77%, FMCG down 0.61% and Oil & Gas down 0.54% were the top losers.

There top gainers on the Sensex were Hindalco Industries up 2.49%, ICICI Bank up 2.24%, GAIL India up 1.57%, Infosys up 1.56% and M&M up 1.00% while, Coal India down 2.34%, SBI down 1.91%, BHEL down 1.75%, Jindal Steel down 1.73% and Bajaj Auto down 1.54% were the top losers in the index. (Provisional)

Meanwhile, India could cut its trade deficit by a good 19% this year, as per Commerce Secretary Rahul Khullar. The trade deficit could come down provided oil prices stabilize, which have been the major drag on the import bill last year, and India too makes an effort to curb the imports of commodities like coal and fertilizers, which form a significant part of its imports. Exports on the other hand are not expected to rise by considerable amounts due to the ongoing recession abroad.

The main challenge that will face the Indian economy shall be capital inflows. Even after reducing the import bills, India will need capital inflows to the tune of $50 billion to $60 billion from overseas. This funding was traditionally provided by the European banks, which is now not possible given its economic troubles.  India will have to find other alternatives, such as accelerating foreign direct investment in key sectors to fund its capital flows.

India’s trade deficit stood at $185 billion in FY’12. As per Khullar, this can be brought down to $150 billion in FY’13. The current account deficit, which was about 4% of gross domestic product in the last fiscal year, could be narrowed to 3.5% this year.

FY’12 has been a relatively difficult year for India where trade deficit has jumped by a whopping 56% due to a steep rise in the prices of oil. As a result the rupee has gone down by a good 18% against the dollar. However it is hoped that this year will see a stabilization in the oil prices. Also imports of gold, which comprised of significant amount of imports last year, are expected to come down given the increase in the import duty of gold in the Budget and a relative stabilization of the economy.

Also, like stated earlier, efforts will have to be made to reduce coal imports, fertilizers and other commodities that from a significant part of the import bill. Coal imports have jumped by a whopping 80% in the last fiscal. 

As per Khullar, exports are expected to remain subdued in the next fiscal due to the ongoing recession. Infact export markets are looking even bleaker this year than last year. Hence given the situation, if lucky, India can expect a 15% export growth at max. 

India VIX, a gauge for market’s short term expectation of volatility lost 4.53% at 17.89 from its previous close of 18.74 on Thursday. (Provisional)

The S&P CNX Nifty lost 2.65 points or 0.05% to settle at 5,186.35. The index touched high and low of 5,223.05 and 5,154.30 respectively. 22 stocks advanced against 27 declining ones while 1 stock remain unchanged on the index. (Provisional)

The top gainers on the Nifty were Hindalco Industries up 2.67%, ICICI Bank up 2.25%, HCL Tech up 1.78%, GAIL India up 1.71% and Infosys up 1.65%.On the other hand, SAIL down 2.86%, Coal India down 2.42%, ACC down 2.33%, IDFC down 2.26% and SBI down 1.93% were the top losers. (Provisional)

The European markets were trading in green, with France's CAC 40 up 0.41%, Germany's DAX up 0.27% and Britain’s FTSE 100 up 0.34%.

Stock markets in the Asian region, after a jubilant start following US markets, ended the last trading day of the week in the negative territory. Initially, Asian markets traded jubilantly following firm US markets close, as pending home sales increased more than forecast and technology companies rallied on better-than-estimated earnings. But, the sentiments got hammered in the later half following weak cues from European counters. Moreover, Spain’s long-term credit rating has been downgraded from A to BBB+ by Standard and Poor’s, over fears the country’s budget problems are likely to get worse because of the weak economy too dampened the sentiments.

Meanwhile, Japanese Nikkei share average ended lower in choppy trade and closed out its worst April since 2005 on Friday, after the Bank of Japan’s (BOJ) move to boost its bond buying failed to ignite lasting confidence among investors over the fragile economy. The Chinese market too ended in the red after Bank of China, the country’s third-biggest lender by assets, reported that profit growth decelerated to 10 percent in the first quarter due to slowing economy that curtailed loan expansion and margins.