Post session - Quick review

Friday’s session of trade was marred by sluggish global cues and the domestic political uncertainties after two senior leader of ruling coalition government resigned from their ministry. NCP leaders, Sharad Pawar and Praful Patel reportedly sent their resignation to the PM raising issues that the government needs to consider urgently. The party blamed the Congress for misreporting the facts of the current rift between the two allies.  Though, the rift are likely to get resolved but it put confusion among the investors relating to different reform measures the government is likely to take, as Sharad Pawar head lots of committees where reform is expected in coming days.

Meanwhile, the indices made a flat opening of the last trading session of the week, though the US markets closed higher overnight on some good earnings announcements but the Asian markets traded mixed on resurfaced concern from Europe. Domestic markets tried hard to hold up to their early levels on the back of decisions of Cabinet Committee on Economic Affairs meeting held on Thursday evening resulting in granting of approval to various pending issues. The cabinet apart from imposing 21% duty on imports of power equipment, approved the sale of 10.82% of its stake in Steel Authority of India (SAIL) and 17% hike in sugarcane price. It also approved demerger of VSNL’s surplus land by placing a separate SPV for the purpose.

Though, the markets lost their way in the mid morning session and slipped from the crucial levels of 17200 (Sensex) and 5220 (Nifty) that proved a strong resistance for the markets and they traded throughout the day in a tight band. There was some recovery effort seen around the noon but that got washed out with the soft start of the European markets ahead of the Euro-region finance ministers’ conference call to discuss the terms for the Spanish bank bailout today.

On the sectoral front the day was for the auto and metal stocks which remained firm throughout the session, though the gains were marginal but supported the markets to great extent from slipping further, on the same time banking stocks remained the laggard along with capital goods and power sector stocks. Banking sector was under pressure with repeated underperformance from the banks in the first quarter, while the power companies came under pressure after slapping of 21% duty on imports of power equipment, expressing their disappointment at the decision, power companies have said that the move would raise equipment prices and raise electricity tariffs. The sentiments remained mixed for the telecom stocks as EGoM on spectrum asked Cabinet to take final call on reserve price of spectrum auction. The broader indices despite their effort to recover, closed with loss of a quarter percent.

It was result heavy day with some major earnings announcement taking place, Tata Sponge registered a surge of 31.93% in its net profit at Rs 29.71 crore for the quarter ended June 30, 2012 and Indiabulls Financial Services group’s net profit from ordinary activities after tax, share of profit of associate and minority interest rose by 20.77% to Rs 265.12 crore for the Q1FY13.On the other hand JSW Energy on consolidated basis posted a fall of 97.50% in its net profit at Rs 3.41 crore for the quarter ended June 30, 2012.

The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1176:1644 while 124 scrips remained unchanged. (Provisional)

The BSE Sensex lost 117.97 points or 0.68% and settled at 17,160.88. The index touched a high and a low of 17,275.20 and 17,129.69 respectively. 5 stocks were seen advancing against 25 declining ones on the index (Provisional)

The BSE Mid-cap index lost 0.19% while Small-cap index was up 0.11%. (Provisional)

On the BSE Sectoral front, Auto up 0.34% and Metal up 0.09% were the only gainers, while Bankex down 1.17%, Capital goods down 1.17%, Realty down 1.05%, Power down 0.99% and Oil & Gas down 0.54% were the top losers.

The top gainers on the Sensex were Bajaj Auto up 2.63%, Maruti Suzuki up 2.45%, TCS up 1.84%, Coal India up 0.67% and Tata Steel up 0.08% while, BHEL down 2.75%, Dr. Reddy’s Lab down 2.69%, Cipla down 1.52%, Wipro down 1.52% and ICICI Bank down 1.48% were the top losers in the index. (Provisional)

For 2012-13 marketing year (October-September) period, the Cabinet Committee on Economic Affairs (CCEA) has approved the hike in the fair and remunerative price (FRP) of sugarcane by 17% to Rs 170 per quintal. The FRP is the minimum price that sugarcane farmers are legally guaranteed and for the ongoing marketing year it stands at Rs 145 per quintal.

The Government receives advice from a statutory body the Commission for Agricultural Costs and Prices (CACP) on farm pricing policy front. For the 2012-13 marketing year, CACP has recommended a 17.25% hike in the FRP on account of rising input production costs. CCEA took the decision on pursuant to Food Ministry accepting CACP’s recommendation for the same.

In the new season starting from October 01, sugar mills will have to pay farmers at least Rs 170 per quintal as the FRP for cane. However, farmers may be disappointed by this increase as this hike will fail to cover the entire increase in their costs which majorly factors labour and diesel costs. The farmers have started eyeing on the state advised price for cane that will be announced later by Uttar Pradesh, Punjab and Tamil Nadu, using the FRP as its base.

The FRP is the sugarcane price fixed by the Centre however some states like Uttar Pradesh and Tamil Nadu follow the policy of state advisory price (SAP), where they declare their own rate. Besides, the SAP is higher than the FRP. In Uttar Pradesh, compared to Centre's FRP of Rs 145 a quintal the SAP for the current year stands at Rs 250 per quintal. The FRP is linked to a basic recovery rate of 9.5%, subject to a premium of Rs 1.46 for every 0.1% point increase in recovery above 9.5%. The recovery rate is the quantity of sugar that is produced from the crushed cane. The Government by and large accepts the cane price recommended by the CACP.

Due to bumper production of sugarcane, India, the world's second largest sugar producer, is currently exporting the sweetener which stood at 357.66 million tonnes in 2011-12.

India VIX, a gauge for market’s short term expectation of volatility gained 3.11% at 16.89 from its previous close of 16.38 on Thursday. (Provisional)

The S&P CNX Nifty lost 34.65 points or 0.66% to settle at 5,208.05. The index touched high and low of 5,238.70 and 5,197.50 respectively. 10 stocks advanced against 40 declining ones on the index. (Provisional)

The top gainers on the Nifty were Bajaj Auto up 2.73%, Maruti Suzuki up 2.65%, Asian Paints up 2.23%, TCS up 1.83% and JP Associates up 1.04%. On the other hand, BHEL down 3.02%, Kotak Bank down 2.82%, Dr. Reddy’s Lab down 2.75%, IDFC down 1.89% and Ranbaxy Lab down 1.67% were the top losers. (Provisional)

The European markets were trading in red, with France's CAC 40 down 0.62%, Germany's DAX down 0.03% and Britain’s FTSE 100 down 0.40%.

After yesterday’s rally, most of the Asian shares fell on Friday on the back of profit-taking on last day of the week. However, Japan's Nikkei remained under strain after the yen strengthened in New York against the greenback while it continued to stay strong against the euro, while Shanghai was down amid reports that China has ordered local governments to strictly implement property control measures and rectify easing policies that have been introduced after a rebound in prices in June. Meanwhile, Spain is expecting a first slice of 30 billion euros by the end of the month and has in turn agreed to a raft of banking sector reforms and EU inspections to ensure the restructuring process is effective.