First day of new series ends flat after a volatile trade

Indian markets despite a positive start could not held up to their gains and lost momentum in the second half, though they managed to cover up in last hour and ended the Friday’s session with token gain. But at one point of time the benchmarks looked losing their important psychological levels of 17000 (Sensex) and 5150 (Nifty). Earlier the start of the day was flat but positive, the global cues were mixed, as while the US markets closed higher overnight, the Asian markets lost steam after a positive start. However, the European markets after a weak start showed sign of recovery and entered the green, helping the local markets to move up.

Initially the domestic investors were encouraged with Indian Meteorological Department statement that rains during the June-September season are likely to be 99 percent of the long-term average. Monsoon rains are vital for agricultural output and economic growth, irrigating about 60 percent of country’s farmland. And investors took it as a positive cue, as the normal monsoon will help curbing inflation. But the mixed earnings announcement kept the markets in tizzy and turned the trade volatile, while the ICICI Bank surprised the street with its better than expected numbers, the second largest lender of the country reported 31.1 percent rise in quarterly profit on the back of strong loan growth and higher treasury and fee income. On the same time, Hindustan Construction (HCC) came up with a dismal number, reporting greater than expected net loss for the final quarter, the company reported net loss of Rs 54.17 crore for the quarter.

On the sectoral front, the consumer durables (CD) emerged as the top gainer with stocks like Titan Inds and Rajesh Exports moving higher by over 2 percent each, while the Information Technology (IT) too witnessed value buying and snapped the session higher by over a percent. The one sector that despite buzzing throughout the day closed marginally lower was banking, weak performance by some private sector banks along with the sector heavy weight State Bank of India weighed on the overall performance. Axis bank ahead of its numbers remained in jubilant mood garnering gains of over a percent. The central cabinet has cleared banking laws (Amendment Bill 2011). It also approved increase of voting rights from 10% to 26% for private-sector banks.

The broader markets once again underperformed the benchmarks and closed with loss of about a quarter percent, investors lacked any solid triggers to go for broad based buying; even during the last hour recovery bluechips took the lead. The overall market breadth on Sensex remained in the favour of advances with 1053 stocks advancing against 1202 declines, while 640 stocks remained unchanged. The BSE Midcap was down by 0.11%, while the BSE Small cap lost 0.42%.

Markets are going to have a special session for live trading on Saturday, April 28, 2012 from 11:00 AM to 12:45 PM in Capital Market and F&O Segment both, as NSE is upgrading the capacity of Futures and Options trading system hardware and software to the next generation system to improve processing capability and handle increased activities in the market.

Finally, the BSE Sensex gained 3.58 points or 0.02% to settle at 17,134.25, while the S&P CNX Nifty rose by 1.60 points or 0.03% to close at 5,190.60.

The BSE Sensex touched a high and a low of 17,242.15 and 17,022.09 respectively. The BSE Mid cap and Small cap index were down by 0.11% and 0.42% respectively.

The major gainers on the Sensex were ICICI Bank up by 2.28%, Hindalco up by 2.15%, GAIL up by 1.53%, Infosys up by 1.36%, and M&M up by 1.21% while Coal India down by 2.81%, Jindal Steel down by 2.18%, Sterlite Industries down by 1.85%, SBI down by 1.82% and Tata Steel down by 1.55% were the major losers on the index.

The major gainers on the BSE sectoral space were Consumer Durables (CD) up by 1.44%, IT up by 1.20%, TECk up by 0.67%, Bankex up by 0.16% and Auto up by 0.13%, while PSU down by 0.84%, FMCG down by 0.84%, Metal down by 0.83%, Realty down by 0.83% and Capital Goods (CG) down by 0.34% were major losers on the BSE sectoral space.

Meanwhile, as per the Met Department, in all probability India will see a normal monsoon this year. In its first official forecast for the 2012 monsoon season, the Met has forecasted that this year between June and September rains will be around 99% of the Long Period Average (LPA).  However, there is a 24% probability of rains being below normal, while the chances of the country experiencing an above normal rainfall are 17%.

A monsoon is considered normal when rains are 96-104% of the LPA. The LPA is the average annual rainfall across the country in 50 years starting from 1941. It is estimated at 89 centimeters.

However there is also a chance that the El Nino could affect rainfall during the second half of the season. El Nino, an abnormal warming of waters in the equatorial tropical Pacific, is linked with poor rains or a drought-like situation in southeast Asia and Australia. In 2009, the El Nino weather pattern turned monsoon rains erratic, leading to the worst drought in nearly four decades.

Monsoon rains play a crucial role in India's farm output as 60% of the country's agricultural area depends on rainfall for irrigation. Agriculture accounts for about 15% of India’s GDP. A normal monsoon leads to the chances of a bumper crop and helps in controlling food inflation. India has of late been struggling with stubbornly high prices of food. Food inflation rose close to double digits in March from 6.07% in February and deflation in the previous month.

India is also the world’s second largest producer of rice, wheat and sugar and a bumper crop will lead to greater exports of these. It will also put some money in the hands of farmers and will help generate demand in the economy. The rural areas are today seen as major demand centres. Also when there is an increase in the incomes of people especially of the rural areas it leads to an increase in demand for gold and silver. Infact about 60-70% of gold demand comes from rural areas and a good harvest is expected to boost the appetite for the bullion.

A good monsoon also leads to a greater demand for seeds and fertilizers, benefitting companies producing these. Hence a good monsoon is not only important for agriculture but also for the economy at large.

The S&P CNX Nifty touched a high and low of 5,223.05 and 5,154.30 respectively.

The top gainers on the Nifty were Hindalco up by 2.67%, ICICI Bank up by 2.25%, HCL Tech up by 1.78%, GAIL up by 1.71% and Infosys up by 1.65%.

On the flip side, SAIL down by 2.86%, Coal India down by 2.42%, ACC down by 2.33%, IDFC down by 2.26%, and SBI down by 1.93% were the top losers on the index.

The European markets were trading in green, as France's CAC 40 up 0.30%, Britain’s FTSE 100 up 0.21%, while Germany's DAX was up by 0.05%.

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.