Listlessness continues on Dalal Street; Nifty holds 5,300 levels

It turned out to be yet another day of consolidation for stock markets in India on Wednesday with the benchmark equity indices moving only slightly higher from their previous closing levels as investors lacked conviction to open fresh positions amid a lot of uncertainties surrounding the global as well as domestic markets. The psychological 17,450 (Sensex) and 5,300 (Nifty) levels proved as strong support levels as the key indices despite repeated attempts settled above those levels. The frontline indices pruned most of their gains after hitting intraday highs in early morning session.

The key gauges even drifted into the negative terrain in afternoon trades but bounced back soon into the green zone after hitting the lowest point in the session and eventually settled on a flat note with gains of around a quarter percent. The key gauges gyrated in a tight range in positive territory for most part of the day.

Local markets underperformed largely in tandem with their Asian counterparts who settled on an optimistic note amid hopes that world’s major central banks including those in the Europe, the US and China would employ monetary easing measures to support their respective flagging economy. However, the European markets exhibited pessimistic cues with major equity indices in the region halting their gaining streak and trading with around half a percent cuts.

On the domestic front, cues from the money market remained lackluster as Indian rupee halted the fourth session appreciating run and depreciated to the 54.50 per dollar levels. Meanwhile, the HSBC services PMI survey, which indicated that India's services sector activity expanded in June for the eighth consecutive month although at a slower clip, did little to underpin sentiments.

The report highlighted that though rise in new orders are likely to hold up service sector activity in coming months, however falling demand from India's traditional overseas trading partners like the United States and the European Union could dampen future growth prospects of Indian companies.

On the BSE sectoral space, the Metal sector shares staged a strong rally of over two percent and remained the top gainer led by sharp moves in stocks like Sterlite Industries and Sesa Goa, which jumped around five percent after the Ministry of Mines directed the Indian Bureau of Mines (IBM) to expedite the process of surveying of iron ore mines in co-ordination with different agencies, including the state government.

The high beta Realty index also surged close to two percent in the session and capped the downside for the markets. On the other hand, some profit booking was evident in the Oil & Gas counter which dropped about half a percent and remained top laggard in the space followed by the defensive FMCG and IT pockets which slipped by under half a percent.

On the global front, barring the Chinese Shanghai Composite, all Asian equity benchmarks settled on an optimistic note with the benchmark in Indonesia climbing over half a percent and leading its regional peers. However, European markets traded on a weak note as they slipped back from the two month high levels they touched in the previous session ahead of meetings of European Central Bank and Bank of England policy makers scheduled on July 5, 2012.

Back home, the NSE’s 50-share broadly followed index Nifty, rose by about one third of a percent to settle just above the psychological 5,300 support level while Bombay Stock Exchange’s Sensitive Index - Sensex rose about thirty seven points to finish above the crucial 17,450 mark. Moreover, the broader markets too settled on a positive note with notable gains of close to a percent and outclassed their larger peers by a fat margin.

The markets rose on weak overall volumes of over Rs 1.07 lakh crore while the turnover for NSE F&O segment too remained on the lower side as compared to that on Tuesday at over Rs 0.71 lakh crore. The market breadth remained in favor of advances as there were 1,771 shares on the gaining side against 1,121 shares on the losing side while 123 shares remained unchanged.

The BSE Sensex gained 37.10 points or 0.21% to settle at 17,462.81, while the S&P CNX Nifty rose by 14.60 points or 0.28% to close at 5,302.55.

The BSE Sensex touched a high and a low of 17,523.77 and 17,372.45 respectively. The BSE Mid cap index was up by 0.87% and Small cap index up by 0.88%.

Sterlite Industries up 5.27%, Jindal Steel up 3.37%, Maruti Suzuki up 2.56%, Bharti Airtel up 2.19% and SBI up 1.85% were the major gainers on the Sensex, while ONGC down 1.68%, Dr Reddys Lab down 1.57%, Wipro down 1.47%, Hindustan Unilever down 0.98% and Coal India down 0.79% were top losers on the index.

The top gainers on the BSE sectoral space were Metal up 2.12%, Realty up 1.91%, Consumer Durables (CD) up 0.68%, Capital goods (CG) up 0.63% and Power up 0.61%, while Oil & Gas down 0.56%, FMCG down 0.47%, IT down 0.38% and Health Care (HC) down 0.08% were top losers on the BSE sectoral space. 

Meanwhile, government’s cabinet has given its green signal to the proposal to extend one percent interest subsidy scheme for housing loans of up to Rs 15 lakh where the cost of the house does not exceed Rs 25 lakh by one year. With this approval the Union cabinet also decided to amend the operational part of guidelines for release of funds.

Former Union Finance Minister, Pranab Mukherjee, who is considered by many as the frontrunner in the race of becoming President of India, had in his Union Budget 2012-13 proposed to extend the scheme of interest subvention of one percent on housing loans up to Rs 15 lakh by another year. The proposal was put forth keeping in view the shortage of housing for low income groups in major cities and towns.

The former finance minister had made a budgetary provision of Rs 400 crore for financial year 2012-13 for implementing the interest subvention scheme. Consequent upon the extension of scheme, the limit of subsidy for an individual borrower would be Rs 14,912 for a loan of Rs 15 lakh and Rs 9925 for a loan of Rs 10 lakh. The extended scheme will benefit all house loans availed in financial year 2012-13. National Housing Bank (NHB) is the nodal agency for implementing the scheme both for Scheduled Commercial Banks and Housing Finance Companies.

According to the proposal, borrowers can only avail benefit under the scheme if cost of the house does not exceed the limit of Rs 25 lakh. Previously the government used to give interest benefit on loans of up to Rs 10 lakh provided the cost of house does not exceed Rs 20 lakh, however in 2011-12, the government liberalized the scheme and increased the loan limit to Rs 15 lakh and the cost of house to Rs 25 lakh.

The S&P CNX Nifty touched a high and low 5,317.65 and 5,273.30 respectively.

The top gainers on the Nifty were Sterlite Industries up 5.45%, Sesa Goa up 3.92%, Jindal Steel up 3.69%, JP Associates up 3.27% and Bharti Airtel up 2.59%. On the flipside, ONGC down 2.24%, Asian Paint down 1.86%, Dr Reddy down 1.71%, Kotak Bank down 1.37% and Wipro down 1.35% were the top losers on the index.

The European markets were trading in red, as France's CAC 40 up 0.60%, Germany's DAX up 0.62% and United Kingdom’s FTSE 100 up 0.18%.

Most of the Asian markets continued to rally on Wednesday led by commodity stocks on hopes that the policymakers will take necessary steps to boost economic growth. Overnight, the US stock market closed in a higher short trading session on report of better than expected factory data. It is expected that there will a cut in interest rate by the European Central banks in the policy meeting tomorrow.

Nikkei closed at two month’s high on Wednesday led by energy and resource companies due to rise in oil prices and improved risk appetite of the investors. Hang Seng closed 0.13 % lower as a result of weakening in large cap financial companies. Shanghai Composite ended largely flat due to release of poor services PMI data which came worst in ten months. Kospi Composite Index rose to its highest level in two months as US data beat estimates.