Post session - Quick review

Bourses showcased immense strength building over last session’s exuberance, as after remaining sluggish for the first half of the session, complete reversal of trend was witnessed, which led to the Indian equity markets back in green.  Already, factoring in the much delivered status quo stance of Reserve Bank of India, in its first quarter monetary policy review, markets today diverted their focus on optimistic global set up.  Sharp uptick was witnessed in Indian equity markets after opening of European counterparts. Garnering strength systemically domestic markets concluded near the high point of the day. 30 share barometer index, Sensex, shut shop above the 17200 level, after appearing at the verge of breaching its long held 17000 crucial mark. Similarly, the widely followed 50 share index, Nifty adding over half a percentage, too concluded above 5200 level. Midcap index outperforming its larger peers, accumulated gains of close to 3/ 4 of percent, while, Smallcap index, managed slender gains of just over 0.05%.

On the global front, European shares gained steam on Tuesday, centered on hopes that the European Central Bank would announce resumption of its bond buying program at a meeting on Thursday to force down rising Spanish and Italian borrowing costs. Meanwhile, Asian pacific shares protracted their gaining streak on continued hopes for policy easing from major global central banks and some positive earnings reports, with Japanese and Hong Kong stocks were among those, clinching a fourth straight day of gain.

Closer home, markets after getting a muted but positive start, drifted lower in a knee jerk reaction to RBI’s first quarterly monetary policy review, where the central bank leaving key policy rates unchanged, slashed Statutory Liquidity Ratio from 24% to 23%.  What really sent shivers across Dalal Street was lower projection of GDP forecast accompanied with higher estimation of inflation figure. Nevertheless, shrugging off the pessimistic tone investor’s indulged in lower level buying, which took the markets out of the blues. Sectorally, stocks from Oil & Gas, Realty and Information Technology enticed maximum traction, while stocks from Banking and Consumer Durable counters on BSE, emerged as the only laggards.  In stock-specific action, SUN TV amassed over a percent, on inking agreement with Tamil Nadu Arasu Cable TV Corporation, an undertaking owned by the Government of Tamil Nadu engaged in the business of providing signals to Cable Operators in the State of Tamil Nadu. Meanwhile, corporate earnings were a mixed bag. On the gaining side, JK Tyre accumulated over 3% after the company posted a net profit of Rs 24.71 crore for the first quarter ended June 30, 2012, over the same period of previous fiscal. Meanwhile, leading private sector bank, Karur Vysya Bank, shot higher over a percent on reporting 25.06% rise in Q1FY13 net profit at Rs 145.95 crore for the quarter ended June 30, 2012 as compared to Rs 116.70 crore in the same period last year. On the flip side, Petronet LNG slipped on reporting just in line expected numbers. On standalone basis, the company has posted a rise of 5.51% in its net profit at Rs 270.85 crore for the quarter ended June 30, 2012, as compared to Rs 256.71 crore for the same quarter in the previous year. The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1438:1293 while 135 scrips remained unchanged. (Provisional)

The BSE Sensex gained 89.80 points or 0.52% and settled at 17,233.48. The index touched a high and a low of 17,253.67 and 17,004.09 respectively. 17 stocks were seen advancing against 13 declining ones on the index (Provisional)

The BSE Mid-cap index gained 0.71% while Small-cap index was up 0.11%. (Provisional)

On the BSE Sectoral front, Oil & Gas up 1.89%, Realty up 1.24%, Health Care up 0.85%, Metal up 0.82% and PSU up 0.73% were the top gainers, while Consumer Durable down 1.72%, Bankex down 0.21% and Power down 0.17% were the only losers in the space.

The top gainers on the Sensex were ONGC up 3.67%, Sterlite Industries up 2.93%, Cipla up 1.98%, Tata Motors up 1.74% and HDFC up 1.67% while, Bharti Airtel down 2.66%, Hero MotoCorp down 1.25%, SBI down 1.18%, Jindal Steel down 0.98% and M&M down 0.91% were the only losers in the index. (Provisional)

Meanwhile, seeing high inflation as a bigger danger than the slowest growth in almost a decade, the Reserve Bank of India (RBI) in its much awaited first quarter monetary policy review, as expected left its policy rates unchanged at 8% (repo) and 7%( reverse repo) respectively. Also, cash reserve ratio (CRR) remained untouched at 4.75%. However, the world’s most aggressive central bank, in a surprise, did slash its Statutory Liquidity Ratio (SLR) of scheduled commercial banks from 24% to 23% of their NDTL with effect from the fortnight beginning August 11, 2012.  Meanwhile, the MSF rate determined with a spread of 100 basis points above the repo rate, along with the Bank rate remained unchanged at 9.0%

Furthering it’s over two-year-old anti-inflationary stance, RBI this time around also opted to battle out the inflation demon, as last seen in its Mid-quarterly policy review on June 18, 2012. However, in this monetary policy review, the central bank staged much hawkish stand, as besides lowering the growth forecast, it lifted its inflation outlook, on demand of deteriorating economic condition.

Reasoning newer risks to growth from slowing global trade, domestic supply bottlenecks of industrial inputs, coal and electricity and less than satisfactory monsoon, RBI lowered its GDP growth projection from 7.3% to 6.5%. On the other hand, keeping in view the recent trends in food inflation, global commodity prices and the likely demand scenario, the baseline projection for WPI inflation for March 2013 was raised from 6.5%, as set out in the April policy to 7%. India’s June headline inflation, as measured by the WPI, was at 7.25%, a figure that RBI Governor Duvurri Subbarao had earlier hailed as being way above the ‘threshold level.’

Further, in an indication that the RBI would hold the policy rate steady, RBI in its first quarter review of the macro economic and monetary developments warned that inflation is likely to remain sticky during 2012-13 and therefore a recovery should be supported through non-inflationary measure.

The RBI, with this monetary policy review, also has left the onus for the revival of domestic growth on the government through policy actions like removing constraints on foreign direct investment (FDI) and revamping the subsidy schemes. India VIX, a gauge for market’s short term expectation of volatility lost 3.55% at 16.01 from its previous close of 16.60 on Monday. (Provisional)

The S&P CNX Nifty gained 27.20 points or 0.52% to settle at 5,227.00. The index touched high and low of 5,234.55 and 5,154.05 respectively. 30 stocks advanced against 20 declining ones on the index. (Provisional)

The top gainers on the Nifty were Grasim Industries up 3.96%, ONGC up 3.83%, DLF up 3.62%, Sterlite Industries up 3.17% and ACC up 2.61%. On the other hand, Bharti Airtel down 2.70%, Bank of Baroda down 2.65%, Hero MotoCorp down 1.30%, Jindal Steel down 1.21% and Reliance Infrastructure down 1.18% were the top losers. (Provisional)

The European markets were trading mixed, with France's CAC 40 up 0.30%, Germany's DAX up 0.50% and Britain’s FTSE 100 down 0.20%.