Selloff in second half wipes the early leads of market

Domestic benchmarks, after a gap-up opening and trading in the green for most part of the day, snapped the session on a flat note. After touching their intraday high in the initial session barometer gauges started falling due to selling pressure after Duvvuri Subbarao commented that, India’s wholesale and consumer price inflation levels are way above the Reserve Bank of India’s comfort levels, diminishing hopes of a rate cut at the July 31 policy review. The marketmen also offloaded their positions as International Monetary Fund (IMF) pegged India’s economic growth projection lower by 0.7% at 6.1% for 2012, while global growth forecast for the same year too has been reduced to 3.5% from 3.6%. The global lender has shaved 2013 growth projection of India to 6.5%, while global growth projection was lowered to 3.9% from 4.1%.

The sentiments were also dampened, after Axis Bank posted its Q1 numbers and tumbled over 2% as its ratio of gross non-performing assets rose to 1.06% of gross advances on June 30, 2012, higher than 0.94% on March 31, 2012. Though, the bank’s net profit rose 22.41% to Rs 1153.52 crore while, its total income has increased by 29.24% at Rs 7818.37 crore for quarter under review. Moreover, index heavyweight Reliance Industries turned negative, after trading in green for most part of the session, on report that RIL and its partner BP told Government of India to approve FY13 capex to avoid shutdown and warned that gas output at KG-D6 may stop by 2015.

The investors also shrugged off positive global cues, Asian markets rallied on hopes that relentlessly bad data from China to the US will prompt policy makers to take some serious efforts to boost their economies. Moreover, the European shares traded firmly in early trade on report that Federal Reserve Chairman Ben Bernanke may signal more monetary stimulus in testimony to the US Congress later in the day. Although, all eyes are on the Federal Reserve chairman Ben S Bernanke, who is due to update the Congress on the state of the US economy on Tuesday as well as on Wednesday

Back home, the sell off intensified in the last leg of trade after outlook on inflation got worsened with monsoon being below average, it is expected that food prices may rise during the festival season and may stay at elevated levels for a while if monsoon fails to pick up. Moreover, the investors remained sideways waiting for Centre to introduce few pending reform initiatives in order to bolster sagging growth. Shine of market also got dampened a bit after shares of aviation companies such as Kingfisher Airlines, Spicejet and Jet Airways edged lower after the oil marketing companies (OMCs) hiked the air turbine fuel (ATF) prices. Prices of aviation turbine fuel (ATF) or jet fuel in national capital were hiked by Rs 1,039.10 per kilolitre (kl) to Rs 62,208.18. Moreover, Tata group stocks slipped for the second consecutive session. The country’s largest software services exporter TCS tanked about 2% and top commercial vehicle maker Tata Motors was down 1.5%, while Tata Steel and Tata Power went down 0.7% each.

The NSE’s 50-share broadly followed index Nifty, slipped marginally by four points to settle below the psychological 5,200 support level however, Bombay Stock Exchange’s Sensitive Index -Sensex- up marginally by two points to finish tad above the psychological 17,100 mark. However, the broader markets settled on a bleak note and ended with about a percent cut.

The overall volumes stood at over Rs 1.54 lakh crore while the turnover for NSE F&O segment remained on the higher side as compared to that on Monday at over Rs 1.08 lakh crore. Moreover, the market breadth remained in favor of declines as there were 1,044 shares on the gaining side against 1,763 shares on the losing side while 117 shares remained unchanged.

The BSE Sensex gained 1.99 points or 0.01% to settle at 17,105.30, while the S&P CNX Nifty declined by 4.40 points or 0.08% to close at 5,192.85.

The BSE Sensex touched a high and a low of 17,236.08 and 17,074.63 respectively. The BSE Mid cap index was down by 0.82% and Small cap index ended lower by 0.86%.

Wipro up 1.91%, Dr Reddys Lab up 1.67%, ITC up 1.37%, Bharti Airtel up 1.24% and Hindalco up 1.14% were the major gainers on the Sensex, while Bajaj Auto down 2.43%, TCS down 1.95%, Mahindra & Mahindra down 1.66%, BHEL down 1.63% and Tata Motors down 1.48% were top losers on the index.

The top gainers on the BSE sectoral space were FMCG up 0.96%, Health Care (HC) up 0.71% and Consumer Durables (CD) up 0.26%, while Auto down 1.28%, Realty down 1.24%, Power down 1.09%, Capital Goods (CG) down 0.79% and IT down 0.50% were top losers on the BSE sectoral space. 

Meanwhile, adding to the woes of looming global economic slowdown, International Monetary Fund (IMF) has pegged India’s economic growth projection lower by 0.7% at 6.1% for 2012, while global growth forecast for the same year has been reduced to 3.5% from 3.6%.It also warned that the outlook could dim further if policymakers in Europe do not act with enough force and speed to quell their region's debt crisis.

The global lender has also shaved 2013 growth projection of India to 6.5%, while global growth projections were lowered to 3.9% from 4.1%. It also estimates that the advanced economies would grow only by 1.4% this year and 1.9% in 2013, while that of developing economies would be by 5.6% in this year and 5.9% by 2013.

India's economic growth has fallen to a nine-year low of 6.5% in 2011-12 fiscal, the World Bank projected Indian economy to grow at 6.9% in the current fiscal, from the earlier 7%. The IMF expects the US economy to expand by 2 percent and 2.3 percent in 2012 and 2013, respectively.

The S&P CNX Nifty touched a high and low 5,236.70 and 5,181.70 respectively.

The top gainers on the Nifty were Wipro up 2.04%, Dr Reddy up 1.78%, ITC up 1.49%, Sun Pharma up 1.20% and Coal India up 1.10%. On the flipside, Reliance Infra down 3.49%, BPCL down 3.10%, Bajaj Auto down 2.72%, Axis Bank down 2.38% and BHEL down 2.00% were the top losers on the index. 

The European markets were trading mixed, as France's CAC 40 up 0.35%, Germany's DAX up 0.28% and United Kingdom’s FTSE 100 down 0.37%.

Asian markets ended in green for the third consecutive day on the back of investor’s hope that relentlessly bad data from China to the US will prompt policy makers to take some serious efforts to boost their economies. However,Gains in Japan were limited as exporters came under pressure after the yen rose to a one-month high against the U.S. dollar and hovered close to an 11-year high against the euro. Meanwhile Hang Seng rallied on expectations that the People’s Bank of China will cut its reserve requirement ratio for the nation’s banks in the near-term. Shares in Australia were higher after minutes of the Reserve Bank of Australia’s most recent policy-setting meeting reflected a more positive tone on the Australian economy.