Sensex consolidates on a volatile Wednesday; Metal, Cap Goods shares rally

After climbing close to a percent in last session, Indian benchmark equity indices consolidated their position around the previous closing levels on Wednesday. The psychological 5,150 (Nifty) and 16,900 (Sensex) levels proved as stern resistances as the key gauges failed to surmount those levels by the end. The key gauges displayed listless performance through the day as the aimless benchmarks appeared exhausted and showed only sideways kind of movement in a narrow band, lacking any significant upside triggers.

The local markets failed to match the fervor that was evident in most Asian markets as market participants globally remained cautious ahead of the US FOMC outcome in which the central bank is expected to announce stimulus package. However, markets in Europe exhibited subdued trends as major markets there hardly budged after previous session’s close to two percent rally.

On the domestic front, cues from the money market remained sedate as the rupee, Asia’s worst performing currency, inched above the psychological 56 per dollar levels.

Meanwhile, shares of power equipment makers including heavyweights like L&T and BHEL rallied with fervor after the Prime Minister's office convened a meeting to discuss the contentious issue of imposing duties on foreign equipment imports. The power minister is expected to submit a new proposal for a potential import tax to a cabinet of ministers.

Besides, stocks from the cement sector, which traded on a somber note for most part of the day amid reports that Competition Commission of India (CCI) may soon impose steep penalties on them over alleged price cartelization, staged a sharp turnaround in the dying moments of trade as it became certain that the competition watchdog CCI was unlikely to give an order on cement cartel in the day.

On the BSE sectoral space, hefty buying was evident in the Metal counter, which surged over one and a quarter percent and remained the top gainer in the space followed by the Capital Goods and defensive Healthcare counter, which surged over a percent each and supported the benchmark indices. On the flipside, the fall in Information Technology and defensive FMCG sectors by around half a quarter percent capped the upside for the bourses.

On the global front, markets in Asia settled largely on a positive note as the G-20 leaders pledged to support global economic growth and also to overcome Europe’s debt crisis helping the markets in the region to move higher near to the highest close in a month.

On the other hand, the lukewarm enthusiasm in European markets that was evident in early trades got tempered down after another dose of data that provided more evidence of slowing euro zone economies. Jobless claims unexpectedly rose in May in United Kingdom, indicating that the labor-market recovery is running out of puff.

Back home, the NSE’s 50-share broadly followed index Nifty, advanced by one third of a percent to settle above the psychological 5,100 support level while Bombay Stock Exchange’s Sensitive Index - Sensex added thirty seven points to finish just below the crucial 16,900 mark. However, the broader markets staged a relatively strong performance as they went on to outperform all their larger peers by a fat margin.

The markets consolidated on good volumes of over Rs 1.79 lakh crore while the turnover for NSE F&O segment also remained on the lower side as compared to that on Tuesday at over Rs 1.18 lakh crore. The market breadth remained optimistic as there were 1,617 shares on the gaining side against 1,090 shares on the losing side while 146 shares remained unchanged.

Finally, the BSE Sensex gained 36.83 points or 0.22% to settle at 16,896.63, while the S&P CNX Nifty rose by 16.70 points or 0.33% to close at 5,120.55.

The BSE Sensex touched a high and a low of 16,962.49 and 16,840.10 respectively. The BSE Mid cap index was up by 0.83% and Small cap index down by 0.79%.

Sterlite Industries up 3.07%, Dr Reddy up 2.96%, Tata Motors up 2.83%, Jindal Steel up 2.62% and ONGC up 1.91% were the major gainers on the Sensex, while TCS down 1.71%, Coal India down 1.53%, Bharti Airtel down 1.29%, ITC down 1.14% and Maruti Suzuki down 1.14% were major losers on the index.

The top gainers on the BSE sectoral space were Metal up 1.28%, Capital Goods up 1.17%, Health Care up 1.16%, Power up 0.99% and Auto up 0.92%, while IT down 0.41%, TECk down 0.41%, FMCG down 0.20% and Realty down 0.07% were top losers on the BSE sectoral space. 

Meanwhile, with the gradual shift of consumers to diesel models due to huge difference between petrol and diesel prices, several manufacturers are forced to cut down production of petrol models. The automobile industry is reported to have piled up an inventory of more than 300,000 unsold cars of various types at the end of May. This had forced companies to give incentives and discounts to boost the sales of petrol cars. Top companies like Maruti Suzuki, General Motors and Toyota are slashing petrol car output to align themselves to the new market reality.

In the last fiscal, sales of petrol-run cars had fallen by 15%, while diesel variants grew by 35%. Car sales in India grew at the slowest pace in seven months during May with just 2.78% rise, as high interest rates and petrol prices hit the market. The sluggish demand has not only impacted passenger car makers but is also hitting commercial vehicle manufacturers.

The S&P CNX Nifty touched a high and low 5,141.70 and 5,100.70 respectively.

The top gainers on the Nifty were ACC up 4.34%, Sterlite Industries up 3.46%, HCL Tech up 3.19%, Tata Motors up 3.04% and Jindal Steel up 2.80%. On the flipside, TCS down 1.72%, Bharti Airtel down 1.41%, DLF down 1.38%, Coal India down 1.34% and Maruti Suzuki down 1.21% were the top losers on the index.

The European markets were trading mixed, as France's CAC 40 down 0.27%, Germany's DAX up 0.10% and United Kingdom’s FTSE 100 up 0.19%.

All the major Asian markets barring the Chinese Sanghai closed on a positive note on hopes that the Fed will go forward to stimulate the US economy. It could announce a new bond buying plan. Also the G-20 leaders pledged to support economic growth and help overcome Europe’s debt crisis helping the markets in the region to move higher near to the highest close in a month

The Nikkei closed at 96.44 points or 1.11 per cent to 8752.31, Hang Seng was up to 102.18 points or 0.53 percent to 19518.85, Jakarta Composite closed at 9.41 points or 1.63 percent to 3943.90, Singapore Strait Times closed at 13.27 point or 0.47 per cent to2855.68, Kospi Composite Index end at 12.35 point or 0.65 per cent to 1904.12, Taiwan weighted too closed at 61.50 point or 0.85 per cent to 7334.63.Although most of the Asian stocks end in a positive China’s Shanghai Composite closed down to 7.92 points or 0.34 per cent to 2292.88.

On the other hand China’s Shanghai Composite closed down by 7.92 points or 0.34 percent to 2292.88.