Sensex continues to consolidate; June F&O series expires with strong 4.5% gains

The June series futures and options contract expiry day largely turned out to be a quiet session for the stock markets in India as the session lacked the flavor of high volatility, which typically surfaces on a F&O contract expiry day.

Nevertheless, the frontline indices managed to extend the consolidation phase for the third session in a row and snapped the session with marginal gains. The key gauges tightly held on to the psychological 5,150 (Nifty) and 17,050 (Sensex) levels and settled a tad below those levels.

Sentiments were positive a day ahead of Market participants remained reluctant to open fresh positions ahead of the important Euro-Zone leaders' Summit since the pressure on Euro-zone leaders intensified amid speculations that Spain is sliding closer to a bailout as the region’s recession deepens and government faces unsustainable cost of debt refinancing.

Moreover, the encouraging US economic reports, which showed long-lasting US manufactured goods demand rebounded in May and a gauge of business spending plans increased went on to temper concerns that a European summit would do little to solve the region's debt crisis.

On the domestic front, sentiments were supported by India’s new Finance Minister and Prime Minister Manmohan Singh’s statement that he has directed urgent steps to reverse the climate of pessimism and revive the animal spirit. Moreover, cues from the money market remained supportive as the Indian rupee snapped its streak of depreciation against the dollar and strengthened to the 56.89 mark against the US dollar.

Shares of tyre manufacturers like Apollo Tyres, MRF and CEAT got pummeled in the range of 2-4% after reports indicated that Competition Commission of India’s probe on tyre companies was underway and an order was likely in the next 10 days.

On the BSE sectoral space, the defensive FMCG counter climbed close to a percent and remained the top gainer in the space followed by the Power and PSU pockets, which ended with gains of under half a percent. However, investors were seen booking mild profits in the Oil & Gas and rate sensitive Bankex counters, which slipped by one third of a percent and capped the upside chances for markets.

The NSE’s 50-share broadly followed index Nifty, added single digit gains to settle just below the psychological 5,150 support level while Bombay Stock Exchange’s Sensitive Index - Sensex rose twenty three points to close below the psychological 17,000 mark. The broader markets too failed to show resilience and settled with miniscule gains, performing largely in tandem with their larger peers.

The markets advanced on large volumes of over Rs 2.53 lakh core while the turnover for NSE F&O segment also remained on the higher side as compared to that on Wednesday at over Rs 2.13 lakh crore. The market breadth remained optimistic as there were 1,461 shares on the gaining side against 1,312 shares on the losing side while 127 shares remained unchanged.

On the F&O front, June series Nifty and Sensex staged a strong performance by surging close to 5% each, after plunging over 5% in May series. Moreover, the broader markets underperformed their larger peers by a fat margin as by the end of series the Mid Cap and Small Cap garnered around 4.4% and 3% respectively. Capital Goods, Bank Nifty and FMCG sectors remained top sectoral performers during the series. Among individual gainers, Rel Infra, JP Associates and Ambuja Cement garnered around 19.5%, 15% and 15% gains respectively.

From the expiry perspective, market wide rollover of 66.89% was observed, which was higher than the three month average of 61.44% while Nifty rollovers were at 52.37%, lower than three month average of 52.62%. Sectorally, Finance, Power and Capital Goods counters witnessed high rollovers while sectors like Cement, Pharma and Infrastructure pockets observed relatively low rolls. Among individual stocks, vast rollovers were witnessed in heavyweights including TCS (79%), HDFC 76%), Maruti (75%) and JSW Steel (76.42%) while low rollovers were seen in stocks like BPCL (43%), GAIL (51%), Dr Reddy’s (55%) and NMDC (37.99%).

Finally, the BSE Sensex gained 23.00 points or 0.14% to settle at 16,990.76, while the S&P CNX Nifty rose by 7.25 points or 0.14% to close at 5,149.15.

The BSE Sensex touched a high and a low of 17,033.85 and 16,918.87 respectively. The BSE Mid cap index was up by 0.07% and Small cap index up by 0.22%.

Tata Steel up 1.83%, Hero MotoCorp up 1.58%, NTPC up 1.48%, ITC up 1.47% and Coal India up 1.43% were the major gainers on the Sensex, while Gail India down 2.44%, Sterlite Industries down 1.86%, Hindalco Industries down 1.24%, Sun Pharma down 1.08% and SBI down 0.85% were major losers on the index.

The top gainers on the BSE sectoral space were FMCG up 0.82%, Power up 0.38%, PSU up 0.31%, IT up 0.22% and Metal up 0.17%, while Oil & Gas down 0.37%, Bankex down 0.32%, Consumer Durables down 0.30%, Capital Goods down 0.17% and Realty down 0.11% were top losers on the BSE sectoral space. 

Meanwhile, according to the recent data released by the Petroleum & Natural Gas Ministry, the production of crude oil in India registered a trivial increase of 0.5% in May to 3.25 million tonnes. May month’s crude oil output at 3.25 million metric tonnes, which is equal to 768,200 barrels a day, rose marginally from 3.23 million tonnes in the same month last year period, but failed to surpass the government’s forecast of 3.33 million tonnes.

Moreover, the production of natural gas in the country prolonged its receding trend in May for the 18th month in a row, underscoring the fact that India is struggling to keep up production at its ageing assets. In May, natural gas production plummeted by 10.8 percent to 3.70 billion cubic meters from last year’s May month figure of 4.14 billion cubic meters, largely on account of sharp decline in gas production by major Reliance Industries from the D6 block in the Krishna-Godavari Basin. However, the numbers managed to surpass the government’s forecast of 3.45 billion cubic meters.

The gap between India’s total domestic gas production of about 115 mmscmd and gas demand of about 165 mmscmd, is met through imports. Asia’s third largest India economy, which meets more than 75 percent of its energy needs through imports, has been taking serious efforts in order to boost domestic production as India’s rising import bill has adversely impacted the nation’s current account deficit and has also stocked inflationary pressures.

However, the declining potential of sedimentary basins and ageing and depleting fields have emerged as major roadblocks for the way of India’s aim to boost domestic energy production. India, the world's fourth largest oil importer, saw its dependence on crude oil and gas imports expand as domestic refiners imported 5.8 percent more crude oil in May year-on-year at 14.586 million tonnes from 13.784 million tonnes in the same period last a year earlier, taking the refining capacity of the country to nearly 215 million tonnes.

The S&P CNX Nifty touched a high and low 5,159.05 and 5,125.30 respectively.

The top gainers on the Nifty were JP Associates up 2.74%, Tata Steel up 1.49%, ACC up 1.49%, ITC up 1.31% and Tata Power up 1.23%. On the flipside, Sesa Goa down 3.13%, GAIL down 2.73%, IDFC down 2.55%, Sterlite Industries down 2.10% and Axis Bank down 2.09% were the top losers on the index.

The European markets were trading in red, as France's CAC 40 up 1.08%, Germany's DAX up 1.61% and United Kingdom’s FTSE 100 up 0.91%.

Most of Asian Indices ended day’s trade in red over the concerns that the European summit will not be able to solve problems of the euro zone. The German Chancellor Angela Merkel said that there was no easy solution and magic formula to end the problem of the euro crisis.

Nikkei was up by 1.7 percent to its highest close in six weeks due to short covering as the quarter end neared, as banking and insurance companies were largest gainers. The Hang Seng closed down to 0.8 percent as investor’s booked profit on recent outperforming stocks ahead of the euro zone summit. Shanghai Composite was down near to 1 percent as the cement companies were down followed by a warning from China Resource Cement holdings. KOSPI closed day’s trade on a flat note at 0.08 percent as investors were reluctant to take fresh long position ahead of Euro summit. Straits times was up by 0.22 percent as countries top traded stocks rose by both value and volume including the motor vehicle firm Tan Chong International after 158.6 million shares were transacted at S$2.60 in a block deal.