Post session - Quick review

Expiry day of July series futures and options (F&O) contract proved a bumpy ride for Indian equity markets, as bourses grinding lower for the entire day of trade, concluded near the day’s low.  Losses of over 2% were registered by the markets (both Nifty and Sensex) in the July F&O series, as traders were reluctant to roll-over their position to fresh month F&O contract, sensing lack of political reform even after vice-presidential polls on August 7. Trader’s also adapted a cautious approach ahead of crucial Reserve Bank of India’s mid-quarterly monetary policy review on July 31, wherein ‘status quo stance’ would not emerge as a bolt out of blue. On the expiry day of July month’s F&O series, trade of over Rs 2.50 lac crore was done in terms of volume turnover. Benchmark 30 share index, Sensex, offloaded over a percent, to conclude below the 16700 level. Similarly, the widely followed index, Nifty, descended over 50 points, to finish sub 5050 bastion. Additionally, sharp selling activity was witnessed in midcap counters on rumors that operators were dumping stocks after margins calls were triggered. These stocks included Tulip Telecom, Everonn Education, Parsvnath Developers, Radico Khaitan, Glodyne Techno, Pipavav Defence, SRS and Nitin Fire. Both Midcap and Small cap index, ended with nasty laceration of over two percent.

Global cues also failed to lend any support to the ailing equity markets. European shares, after getting a flattish start, edged lower on persistent worries about Spain and Greece, while disappointing company earnings too undermined investors' confidence. On the other hand, Asian pacific shares mostly ended in green, on bargain hunting after recent sharp drops and also on heightening hopes for more US stimulus to support growth and new European policy measures to keep the euro zone debt woes from deepening further.

Back on the home turf, profit-booking was widespread, as none of the sectoral space on BSE ended in green, however, stocks from Realty, Capital Goods, Public Sector Undertaking and Banking counters suffered the major brunt of profit booking. Meanwhile, Aviation stocks exhibited mixed trend ahead of Cabinet’s meet tentatively on July 27, to take on board, ‘FDI in Aviation’ proposal, stocks of Kingfisher Airline and Spicejet closed lower, while stocks of Jet Airways (India) showcased strength. Among stock-specific action, Monnet Ispat Energy, plummeted over 14% after the Supreme Court upheld the Jharkhand high court’s order regarding the cancellation of mining leases of six private mining companies, including that of Monnet Ispat.

On the result front, state-owned power equipment manufacturer, BHEL, took the markets by surprise on reporting a 13% jump in its Q1FY13 net profit at Rs 921 crore on Y-o-Y basis, which took the stock soaring higher over a percentage point. Additionally, top cement maker, Ambuja Cement, shot over two percent on reporting 35% jump in its net profit for second quarter ended June 30, 2012 at Rs 468.90 crore as compared to Rs 347.50 crore for the corresponding quarter of the previous year. On the flip side, Cigarette major ITC, lagging market forecasts, reported 20% jump in net profit at Rs 602.14 crore for the fiscal first quarter ended June 30, as compared to Rs 1,332.72 crore for the quarter ended June 30, 2011, which pushed the stocks lower over quarter of percent.

On the F&O front, July series Nifty and Sensex staged a sluggish performance by losing 2% each, after surging over 5% in June series. Moreover, the broader markets outperformed their larger peers by a fat margin as by the end of series the Mid Cap and Small Cap garnered around 1.9% and 0.5% respectively. Sectorally, the finance, metals and capital goods space witnessed good rollover, while automobile, infrastructure and oil & gas stocks observed relatively low rolls into the August series.

From the expiry perspective, market wide rollover of 62.96% was observed, which was lower than the three month average of 64.14% while Nifty rollovers were at 57.06%, higher than three month average of 52.74%. Sectorally, Finance, Power and Capital Goods counters witnessed high rollovers, while sectors like Cement, Pharma and Infrastructure pockets observed relatively low rolls. Among individual stocks, Dr Reddy’s (48%), Ambuja Cement (49%) and Ranbaxy (51%) witnessed low rolls while stocks like Sesa Goa (78%), BHEL (78%) and HDFC (75%) witnessed better rollover into the August series. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 876:1894, while 127 scrips remained unchanged. (Provisional)

The BSE Sensex lost 188.63 points or 1.12% and settled at 16,846.05. The index touched a high and a low of 16,899.77 and 16,598.48 respectively. 8 stocks were seen advancing against 22 declining ones on the index (Provisional)

The BSE Mid-cap index lost 2.14% while Small-cap index was down 2.06%. (Provisional)

On the BSE Sectoral front, there were no gainers, while Realty down 3.58%, Capital Goods down 2.06%, IT down 1.62%, Bankex down 1.53% and PSU down 1.53% were the top losers.

The top gainers on the Sensex were NTPC up 1.60%, Bajaj Auto up 0.85%, Sun Pharma up 0.84%, GAIL India up 0.77% and Dr. Reddy’s Lab up 0.30% while, Tata Motors down 3.12%, Tata Power down 2.70%, SBI down 2.50%, Wipro down 2.21% and Infosys down 2.16% were the top losers in the index. (Provisional)

Meanwhile, International Air Transportation Association’s (IATA) Director General and CEO, Tony Tyler has suggested an ‘India Inc.’ approach to address multi-faceted crisis in Indian aviation. The crippling issues of the sector are high operating costs, exorbitant taxes and insufficient infrastructure. He opined that the crisis can be resolved with coordinated public policies and aggregate plans by the government by keeping in view that Indian economy can be greatly complimented through a revenue generating sector like aviation.

While criticizing Airports Economic Regulatory Authority’s (AERA) move, which has increased airport charges by 346% at Delhi International Airport since May 2012, he pointed out that it will add over $400 million in operating costs for airlines providing connectivity to India through Delhi and will impact travel demand by 5-7%. He urged to expedite action in infrastructure upgrade by enhancing airline capacity in Mumbai, by building new airport.

He also pointed that the component of fuel cost in the total operational cost of Indian carriers is approximately 50 per cent, while the same is around 33 per cent in other markets. Though, the airlines cannot shift the entire escalating operational cost to the consumer in India, as these conditions will stifle demand. Hence he had asked the government to help the airlines to reduce the gap in the operational cost and operation revenue by reducing taxes and infrastructure costs.

Indian Aviation sector is supporting about 1.7 million jobs, 0.5% of GDP and 90% of international tourist arrivals.  India is a market of about 100 million passengers annually and has a projected potential of over 2 billion travelers. Albeit, Indian airline’s losses approached $2 billion for the year ended March 2012, after losing an estimated $3.5 billion over the three previous years.

India VIX, a gauge for market’s short term expectation of volatility lost 2.26% at 16.37 from its previous close of 16.75 on Wednesday. (Provisional)

The S&P CNX Nifty lost 62.70 points or 1.23% to settle at 5,046.90. The index touched high and low of 5,126.30 and 5,032.40 respectively. 13 stocks advanced against 37 declining ones on the index. (Provisional)

The top gainers on the Nifty were Ambuja Cement up 3.24%, NTPC up 1.23%, Bajaj Auto up 1.19%, Grasim Industries up 1.15% and Hindalco Industries up 0.74%. On the other hand, PNB down 4.44%, DLF down 4.10%, Tata Power down 3.53%, Tata Motors down 3.29% and SAIL down 3.27% were the top losers. (Provisional)

The European markets were trading in red, with France's CAC 40 down 0.13%, Germany's DAX down 1.07% and Britain’s FTSE 100 down 0.29%.

Most of the Asian markets went home in green on Thursday tracking upbeat earnings results in the region and the United States. However investors were hopeful that central banks around the world will take more action to push the global economy. Eurozone fears eased slightly on hopes over the funding of future bailouts, which also supported markets to recover lost grounds. However, in Hong Kong, Sands China fell 5.4% after the casino operator reported a 40% year-on-year decline in second quarter, attributing the decline to a $100 million impairment loss on two land parcels in Macau.