Sell-off in final hour of trade drag benchmarks lower; June WPI eyed

Sell-off in last leg of trade dragged domestic benchmarks lower, though the markets traded in positive terrain for most part of the session. The bourses traded mostly above their crucial 5,250 (Nifty) and 17,300 (Sensex) on Friday’s trade supported by telecom stocks, which rose after the Empowered Group of Ministers (EGoM) on telecom allowed mobile phone companies to mortgage airwaves, a move that will help telcos to use spectrum as collateral and raise funds from banks for the upcoming auctions. However, investors largely remained on the sideline waiting for inflation data (which will decide the RBI’s move in its quarterly monetary policy review on July 31) that is scheduled for July 16.

The sentiments were also supported by better than expected TCS and HDFC bank’s Q1 FY13 numbers. HDFC Bank registered a jump of 30.64% in its net profit at Rs 1,417.39 crore for the first quarter ended June 30, 2012 while, total income of the bank increased by 34.36% at Rs 9,536.91 crore for Q1FY13 as compared Rs 7,098.00 crore for the corresponding quarter previous year. In addition, its gross non-performing assets (NPAs) too improved 0.97% in the April-June quarter as against 1.04% in the same quarter previous year.

But the turnaround witnessed in last leg of the day’s trade was mainly due to fall in metal space. Scrips like Hindalco, Jindal Steel, Sterlite Industries and Sesa Goa edged lower as China’s economy cooled to its weakest rate of growth in more than three years in Q2 June 2012. Moreover, the sentiments also got hammered after Realty stocks, which traded with traction in the first half, reversed their initial gains in the final hour as investors booked their profit.

However, global cues remained supportive as major Asian indices recovered today from session lows after China’s second-quarter GDP came in line with estimates. Also, investors are hoping for some more stimulus measures from the Chinese policy makers after Q2 GDP growth hit a three-year low. Moreover, European counters too traded firmly in the early trade, as in-line China growth data prompted some to expect it to lead to further growth stimulus measures.

Back home, Indian Rupee advanced versus the US dollar, in line with a jump in global risk assets after China's second quarter GDP landed in line with forecasts. On the macro front, India’s export, which is largely consumed by these developed economies, shrank 5.45 percent in June 2012 to $25.07 billion from $26.51 billion in the same month last year while, imports into the country for the month under review stood at $35.37 billion after declining by 13.46 percent, leaving a trade deficit of $10.3 billion. In addition, exports between April and June fell 1.7%, totaling $75.2 billion.

The markets fell on weak overall volumes of over Rs 1.31 lakh crore while the turnover for NSE F&O segment too remained on the lower side as compared to that on Thursday at over Rs 0.98 lakh crore. Moreover, broader markets too ended marginally in the red after trading in the positive terrain for most part of the day’s trade while, the market breadth remained in favor of declines as there were 1,304 shares on the gaining side against 1,474 shares on the losing side while 137 shares remained unchanged.

The BSE Sensex lost 18.85 points or 0.11% to settle at 17,213.70, while the S&P CNX Nifty declined by 8.00 points or 0.15% to close at 5,227.25.

The BSE Sensex touched a high and a low of 17,342.88 and 17,182.29 respectively. The BSE Mid cap index was down by 0.22% and Small cap index down by 0.11%.

Hero MotoCorp up 1.38%, HDFC Bank up 1.21%, TCS up 1.10%, ONGC up 0.92% and Cipla up 0.77% were the major gainers on the Sensex, while Jindal Steel down 3.24%, Hindalco down 2.11%, Tata Power down 2.08%, SBI down 1.65% and Infosys down 1.65% were top losers on the index.

The only gainers on the BSE sectoral space were FMCG up 0.22% and Oil & Gas up 0.01%, while Consumer Durables (CD) down 1.63%, Realty down 1.37%, Metal down 1.15%, Power down 0.68% and IT down 0.44% were top losers on the BSE sectoral space. 

Meanwhile, driven by the weak demand in traditional markets such as Europe and the US, India’s export, which is largely consumed by these developed economies, shrank 5.45 percent in June 2012 to $25.07 billion from $26.51 billion in the same month last year, according to the Director General of Foreign Trade, Anup Pujari. India's overseas sales between April and June tanked by 1.7 percent, totalling at $75.2 billion. India has set an export target of over $360 billion for the current fiscal 2012-13 after crossing the $300-billion mark last fiscal.

Imports into the country for the month under review stood at $35.37 billion after declining by 13.46 percent, leaving a trade deficit of $10.3 billion. Country’s imports for the first quarter also contracted by 6.10% at $ 115.26 billion. This notable decline in imports in July has resulted in narrowing of the nation’s trade deficit which of-late had shot up to highly uncomfortable levels. India’s trade deficit contracted to $10.3 billion, from $14.4 billion year-on-year, giving some degree of respite to policy makers.

The sectors which performed well during the period June 2012 were rice (104%), iron ore (40%), oil meal (38%) and spices (35%). Meanwhile, in absolute terms, during April-June 2012 quarter, petroleum registered a growth of 12.9 billion, engineering goods (14.6 billion), jems & jewellery (10 billion), drugs (2.1 billion) and readymade garments 3.2 billion. In percentage terms, during the similar quarter rice registered a growth of 73%, spices (32%), drugs (13.4%), oil meals (13.2%) and fruits & vegetable (9.53%).

As regards to imports during June 2012, the growth estimates on the sectors were Medicine (14.7 %), vegetable oil (8%), Iron & Steel (7.9%), professional equipments (8.5%), artificial raisin (5%). In terms of absolute value during the same period, petroleum registered a growth of 12.6 billion, gold & silver (1.9 billion), machinery parts (2.7 billion), pearls (1.8 billion) and electrical goods of 2.6 billion. During the April-June 2012, vegetable oil registered a growth of 49.8%, sulphur (37%), project goods (27%), transport equipments (21.6%), and artificial raisin (21.3%).

In absolute terms during the quarter period of April-June 2012, petroleum registered a growth of 41.5 billion, gold & silver (9.4 billion); machineries (8.5 billion); pearls (4.6 billion) and electrical goods (7.1 billion).

The S&P CNX Nifty touched a high and low 5,267.15 and 5,216.85 respectively.

The top gainers on the Nifty were Hero MotoCorp up 1.22%, TCS up 1.06%, HDFC Bank up 1.02%, ONGC up 0.88% and HCL Tech up 0.79%. On the flipside, Jindal Steel down 3.80%, Hindalco down 2.40%, Tata Power down 2.18%, SBI down 1.94% and Infosys down 1.83% were the top losers on the index. 

The European markets were trading in green, as France's CAC 40 up 0.55%, Germany's DAX up 1.17% and United Kingdom’s FTSE 100 up 0.72%.

Asian markets rose ending a six-day losing streak, despite China's Q2 GDP growth fell below 8 per cent for the first time since 2009, as data landed in line with forecasts. Both annualized industrial production and retail sales in China dropped by 10bp in June, to 9.5% and 13.7%, respectively. But market gains were limited as Moody's downgrade of Italy's credit rating to near-junk status just ahead of a bond auction threatens to intensify fears over Europe's debt crisis. Meanwhile, euro was under pressure after Italy's government bond rating.