Barometer gauges entice additional weakness; defensive FMCG counter outperforms

Indian equity markets added to the weakness in comparison to early deals as somber mood across the globe underpinned investor’s to book their profits. Expected lines rate cut by European Central Bank (ECB) and a surprise rate cut by The People's Bank of China (PBoC) yesterday failed to cheer globe which remained worried about growth in major parts (Europe and US) of the world. ECB slashed its refinancing rate by 25 basis points to a record low of 0.75%. While, PBoC cut lending rates by 31 bps with 30% flexibility below reference rate and cut one-year deposit rate by 25 bps.

Closer home, MET Department's report too dented the sentiment, which stated that monsoon rains were 49% below average in the week ended July 4. Stocks from Realty, Metal and Information Technology counters mainly were heaving the indices lower, while stocks from Fast Moving Consumer Goods and Auto, were limiting the downside. The 30 share index, Sensex, was languishing below the 17500 mark, while the widely followed index, Nifty slug to hold the 5300 bastion. The broader indices too depicted the underlying weakness. The overall market breadth on BSE supported declines which piped advances in the ratio of 1204:1030, while 102 shares remained unchanged.

The BSE Sensex is currently trading at 17,457.81, down by 80.86 points or 0.46%. The index has touched a high and low of 17,546.04 and 17,425.47 respectively. There were 8 stocks advancing against 22 declines on the index.

The broader indices too slipped further in the negative terrain; the BSE Mid cap and small cap indices dipped by 0.54% and 0.30% respectively.

The only gaining sectoral indices on the BSE were Fast Moving Consumer Goods (FMCG) up by 0.56% and Auto up by 0.14%. On the flip side, Realty down by 1.41%, Metal down by 1.33%, Information Technology down by 1.25%, Technology down by 1.04% and Capital Goods down by 0.92%.

The top gainers on the Sensex were Tata Motors up by 1.00%, M&M up by 0.93%, HUL up by 0.87%, Cipla up by 0.80% and HDFC up by 0.48%.

On the flip side, Jindal Steel down by 3.20%, Sterlite Industries down by 1.96%, Hindalco Industries down by 1.80%, Wipro down by 1.63% and Infosys down by 1.54% were the top losers on the Sensex.

Meanwhile, dismissing different sections’ allegations that the ruling government in India is suffering from ‘policy paralysis’, Union Home Minister P Chidambaram avowed that the nation would come out of the doldrums to the eight percent growth trajectory in this financial year 2012-13. The former finance minister exuding confidence in the capabilities of Indian Prime Minister Manmohan Singh, who now also holds the Finance portfolio, opined that the government has identified various causes of flagging economic momentum and Manmohan Singh will unveil measures to revive the rate of economic expansion to eight percent.

The incumbent Home Minister held the financial turmoil in European region responsible for the deteriorating domestic economic growth rate and stated that after clocking superior growth rates of over eight percent during the past few years, 2011-12 was a difficult year owing to the Euro-zone debt crisis as the growth rate drifted to 6.75%. However, highlighting that Indian economy has a high propensity for growth; he stated that addressing investors’ concerns and the reasons behind declining domestic savings rate, will help in improving investment environment in the country.

Claiming that the fundamentals of Indian economy are still strong, Chidambaram not only appreciated saving habit of Indians but also highlighted that business houses are sitting on piles of cash and the government is taking efforts to create suitable opportunities to bring out those cash for investment. He also believed that though there are some qualms over Indian markets however those would soon go away.

Moreover, the Union Human Resource Development Minister Kapil Sibal affirmed that owing to the underlying strength in Indian economy several concrete steps have been taken in various fields from Right to Information to Right to Education and a number of development schemes funded by the Central government are being implemented. He said no development scheme has been scrapped owing to the slower growth rate in the last fiscal.

The S&P CNX Nifty is currently trading at 5,301.25, lower by 26.05 points or 0.49%. The index has touched a high and low of 5326.95 and 5287.75 respectively. There were 11 stocks advancing against 39 declines on the index.

The top gainers of the Nifty were Cipla up by 1.36%, M&M up by 1.17%, HUL up by 1.15%, BPCL up by 1.13% and Tata Motors up by 0.98%.

On the flip side, Jindal Steel down by 3.27%, IDFC down by 1.93%, DLF and Hindalco Industries were down by 1.91% and Reliance Infra down by 1.84% were the major losers on the index.

All the Asian equity indices were trading in the red; Shanghai Composite declined by 0.44%, Nikkei dipped by 1.07%, Strait Times slipped 0.37%, Kospi Composite Index plunged 1.17%, Taiwan Weighted shed 0.64%, Hang Seng index fell 0.57% and Jakarta Composite lost 0.30%. On the flip side, KLSE Composite up by 0.01% was the lone gainer amongst the Asian pack.