Post session - Quick review

Indian markets went through a pretty volatile day of trade, though managing to close with good gain, near the high points of the day after being butchered in last session. As expected the markets made a soft start, though the early cuts were not that sharp but the impacts of growth outlook downgrade by Fitch was clearly visible. The rating agency not only downgraded India's credit outlook to negative citing corruption and lack of reforms but also revised the outlooks on the Long-Term Issuer Default Ratings of seven Indian state-owned enterprises to ‘negative’ from ‘stable’, including NTPC, SAIL, GAIL, IOC. However, in a separate statement, Fitch said there is no immediate impact on Reliance Industries' Issuer Default Ratings (IDRs) following India's credit outlook revision and that helped the scrip of the company to be one of the top gainers of the day, up by around 3 percent.

Bucking the unsupportive global markets trend,  the domestic markets showed stiff resilience, in overnight trade the US markets closed mixed after cheers of pro-bailout party's victory in Greece faded up, on concern that New Democracy Party now faces the challenge of forming a viable coalition government, also news of rising borrowing costs for Spain kept a lid on investor enthusiasm. The start of the European markets too remained unenthusiastic but still the domestic markets moved of their own.

Back home, amid all uncertainty about the global and local economy stalling growth, the investors went for bottom fishing in the fundamentally strong bluechip stocks. Though, the broader markets remained a bit cautious in the beginning but as the session moved, they too participated in the rally. However, the day was of oil & gas which emerged as the top gaining sectoral index on the BSE. Further decline in international crude prices led the PSU oil marketing companies higher, while the rating affirmation of heavy weight RIL too supported the markets. FMCG sector too held up its gains throughout the session and added over one and half a percent for the day. The only laggard was the IT sector that despite some last hour recovery closed marginally in red. Government’s plan of disinvestment in 15 public sector companies like BHEL, Hindustan Copper, SAIL, NMDC, NHPC, MOIL and Engineers India in the current financial year boosted the PSU index and it too moved up by about 1 percent.

The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1362:1302 while 142 scrips remained unchanged. (Provisional)

The BSE Sensex gained 153.97 points or 0.92% and settled at 16,859.80. The index touched a high and a low of 16,890.00 and 16,681.89 respectively. 23 stocks were seen advancing against 7 declining ones on the index (Provisional)

The BSE Mid-cap index up 0.17% while Small-cap index was down 0.01% (Provisional)

On the BSE Sectoral front Oil & Gas up 2.14%, FMCG up 1.58%, Healthcare up 1.13%, PSU up 0.94%, and Capital Goods up 0.57% were the major gainers, while IT down 0.09% was only the loser.

The top gainers on the Sensex were Gail India up 3.15%, ITC up 2.74%,RIL up 2.53%, Bharti Airtel up 1.91 and Cipla up 1.46% while, Sterlite Industries down 1.56%, BHEL down 1.19%, Infosys down 1.15%, Tata Power down 0.87% and NTPC down 0.60% were the top losers in the index. (Provisional)

Meanwhile, refuting global rating agency Fitch’s recent downgrade of India’s sovereign rating to negative, India’s Union Finance Minister Pranab Mukherjee, who has emerged as the front runner in the race for becoming the next President of India, lashed out at the rating firm’s recent assessment stating that recent structural reforms in the economy including the strengthening of public finances were not taken in to account. Stating that there was no surprise in the Fitch’s recent announcement and it came on expected lines, however the finance minister underscored that Fitch has primarily relied on older data, and has ignored the recent positive trends in the Indian economy.

The finance minister’s reaction came in response to the rating agency’s press release on India’s sovereign credit rating in which Fitch reaffirmed India’s long-term foreign and local currency issuer default rating (IDR) at BBB(-) however, it revised Asia's third largest economy’s outlook to Negative from Stable. The credit rating firm cited concerns on India’s economic growth potential, inflationary pressures and weak public finances as the major challenges, which led to the downward revision in the sovereign rating outlook. Apart from this, the rating agency also downgraded the credit outlook of seven Public Sector Undertakings (PSUs) including NTPC, SAIL, IOC, PFC, GAIL, REC and NHPC.

Fitch’s revision in India’s outlook has come on the heels of another global rating agency Standard & Poor's recent note in which it has warned that India may become the first among the BRIC (Brazil, Russia, India and China) countries to lose its investment grade rating. Around two months ago, S&P’s had reviewed India’s sovereign debt rating and though they had reaffirmed the nation’s long-term rating but slashed the rating outlook to negative from stable citing weak GDP expansion prospects and the risk that its external liquidity and fiscal flexibility may wear down.

While Pranab Mukherjee stated that the government has already taken note of the concerns that the Fitch brought forward, however he voiced his dismay over the rating agency’s assessment of the Indian economy for not taking into account the recent positive developments. He elucidated that there were several positives for the economy viz. RBI’s stimulus measures like a cut of 50 basis points key interest rates in April 2012; core inflation declined significantly from 8.7% in May 2011 to less than 5% in May 2012; progress has been made on fuel linkage for coal based power projects; and the quarterly investment growth rate has become positive in the fourth quarter of 2011-12.

India VIX, a gauge for market’s short term expectation of volatility lost 5.17% at 21.43 from its previous close of 22.60 on Monday. (Provisional)

The S&P CNX Nifty gained 39.60 points or 0.78% to settle at 5,103.85. The index touched high and low of 5,113.60 and 5,048.10 respectively. 36 stocks advanced against 14 declining ones on the index. (Provisional)

The top gainers on the Nifty were Ambuja up 3.45%, GAIL up 3.24%, Siemens up2.64%, Reliance up 2.52% and ITC up 2.26%. On the other hand, Sesa Goa down 2.93%, Sterlite down 1.46%, Infosys down 1.26%, Cairn down 1.23%, and  PNB down 1.22%. were the top losers. (Provisional)

The European markets were trading mixed, with France's CAC 40 down 0.14%, Germany's DAX up 0.47% and Britain’s FTSE 100 up 0.83%.

After witnessing massive gains in previous two sessions, Asian counters snapped the day’s trade on a mixed note on Tuesday as investors remained on the sideline ahead of Federal Open Market Committee’s (FOMC's) two-day meeting which will start from today. Moreover, the relief from Greece’s election results has faded away amid concern that the financial crisis in the 17 nations that use the euro was far from over. Moreover, the investors shifted their attention back to Spain, whose borrowing costs surged Monday above the 7 percent level that had forced Greece, Portugal and Ireland to seek international help.  Meanwhile, Hong Kong benchmark Hang Seng and Japanese benchmark Nikkei dropped 0.27% and 0.75% respectively on renewed euro zone fears after Italian and Spanish bond yields spiked, with investors staying away from risky bets. Likewise, Shanghai too ended in the red due to loom surrounding the euro zone debt crisis which have been shifted to Spain after Sunday’s Greek election.