Indian bourses snap four days gaining streak; ECB decision eyed

Indian equity indices went on to consolidate the gains and ended the range-bound session with moderate cuts. Though, the frontline indices failed to extend their gaining momentum and snapped the four sessions gaining streak, however the recovery in the second half minimized the extent of damage for the bourses. The psychological 5,200 (Nifty) and 17,200 (Sensex) levels proved as strong supports as the benchmarks rebounded after hitting intraday lows. Investors remained on the sidelines as investors nervously awaited the latest policy outcome from the European Central Bank (ECB). The sentiments got bashed by rate sensitive banking stocks. Scrips like SBI, HDFC Bank, PNB and Yes Bank all edged lower in the trade as the Reserve Bank of India (RBI) kept repo rate unchanged at its first quarter review of the Monetary Policy 2012-13 early this week. Moreover, sentiments also dampened after airline stocks like Kingfisher and Spice Jet fell after the state-owned oil companies, on August 1, 2012, raised jet fuel or ATF rates by a steep 4.5% on firming international crude oil prices. The hike comes on back of a 1.7% hike in rates effective from July 16, 2012.

The downside remain capped on news that the trade deficit narrowed to $40.05 billion from $46.23 billion in the corresponding period last year. The trade deficit for June too fell to $10.31 billion from $14.4 billion in June 2011. Exports fell 5.5% to $25 billion in June, compared with $26.5 billion in the corresponding month last year, while imports declined by 13.5% to $35.4 billion, compared with $40.9 billion in June 2011. The sentiments also got some support from news that Prime Minister Manmohan Singh has approved relaxation in the transfer policy for the government land for infrastructure projects. Much to the surprise, improving from a five percent below average in the previous week, India's monsoon rains were only four percent below average in the week to August 1, as rainfall revived in soybean and rice growing areas of India.

Globally, the US markets continued their declining streak for the third straight day overnight and all the major indices lost close to a quarter percent, as there were no significant monetary policy changes announced by Federal Reserve after its two days meeting. The Asian markets ended mostly in the negative ahead of ECB’s policy decision. However, firm opening in European counters encouraged traders' sentiments.

Back home, profits booking in index heavyweights like Tata Motors and Tata Power along with stocks like ONGC and Cipla exerted pressure on the frontline indices. Tata Motors bore the maximum brunt of selling pressure as it slumped about two percent on reporting lower than expected July auto sales numbers. The company registered 19% jump in its July auto sales numbers, which stood at 47059 units during July 2012 as against 39633 units during July 2011. However, NTPC helped the benchmarks to limit losses. The company posted a rise of 20.37% in its net profit at Rs 2498.67 crore for the quarter ended June 30, 2012 while, the total income has increased by 11.06% at Rs 16844.89 crore for quarter under review.

On the sectoral front, oil and gas sector remained the top loser led by RIL, which lost about a percentage point. Moreover, PSU oil marketing companies like BPCL, HPCL and IOC fell for the second day in a row on concerns of high under-recovery on domestic sale of diesel, kerosene and LPG at government controlled prices. PSU OMCs suffered under-recovery of Rs 138,541 crore for the year ended March 31, 2012, which was sharply higher than under-recovery of Rs 78,190 crore in the year ago period. Their under-recovery was Rs 47,811 crore during April-June 2012 period. However, the telecom stocks like Idea Cellular and Reliance Communication edged higher on report that telecom ministry has proposed the existing slab rate system of revenue sharing for spectrum usage charge to the cabinet, which if accepted, will help new entrants in the form of lower levy.

The NSE’s 50-share broadly followed index Nifty, dipped by just 12 points but, settled well above its psychological 5,200 support level moreover, Bombay Stock Exchange’s Sensitive Index -Sensex- dropped over thirty points but, managed to hold the psychological 17,200 mark. However, the broader indices out performed benchmarks and ended the session in the positive trajectory.

The overall volumes stood at over Rs 0.95 lakh crore, while the turnover for NSE F&O segment remained on the lower side as compared to that on Wednesday at over Rs 0.56 lakh crore. Moreover, the market breadth was remained in the favour of advances, as there were 1,507 shares on the gaining side against 1,180 shares on the losing side while 130 shares remained unchanged.

The BSE Sensex lost 33.02 points or 0.19% to settle at 17,224.36, while the S&P CNX Nifty declined by 12.75 points or 0.24% to close at 5,227.75.

The BSE Sensex touched a high and a low of 17246.01 and 17157.28 respectively. However, the BSE Mid cap and Small cap index ended up by 0.23% and 0.47% respectively.

NTPC up by 3.78%, BHEL up by 1.25%, Jindal Steel up by 1.06%, ITC up by 1%, Bajaj Auto up by 0.63% were the top gainers on the Sensex, while Tata Motors down by 1.80%, ONGC down by 1.25%, Cipla down by 1.13%, Sterlite Inds down by 1.09%, Tata Power down by 1.05% were the major losers on the index.

The top gainers on the BSE sectoral space were, CD up by 1.14%, Power and CG up by 0.69% each, FMCG up by 0.67%, TECk up by 0.05%, while Oil & Gas down by 0.96%, Bankex down by 0.36%, Metal down by 0.31%, Realty down by 0.26%, Auto down by 0.16% were top losers on the BSE sectoral space. 

Meanwhile, in a move that could fast track the pace of reforms, Prime Minister Manmohan Singh on Thursday has approved relaxations in the transfer policy for the government land for infrastructure projects. To ensure that there is no procedural delay in acquiring government-owned land for infrastructure projects; PMO besides allowing all land transfer from ministries to PSUs, also eliminated the need of Cabinet approval required for transfer of government-owned land for infrastructure use.

Early last year, a ban had been imposed on all transfer of government owned lands to any entity except in cases where land was to be transferred from one government department to another. This was resulting into long delays in awarding concessions for infrastructure projects, particularly PPP projects. In the meanwhile, the Department of Economic Affairs was to prepare a comprehensive land transfer policy for government owned land. In case any department had to implement a project which required alienation of land either through lease, license or rent, it had to seek specific approval of the Cabinet. All PPP infrastructure projects - roads, railways, ports, civil aviation and metros - have some element of land alienation as the project is often built on government owned land.

With today’s decision all cases of land transfer from Ministries to statutory authorities or PSUs will be allowed, subject to the requirements of normal Government of India Rules; All cases of land transfer on lease or rent or license to a concessionaire which have been appraised through the PPPAC route and approved by the Finance Minister or by the Ministers concerned or by the Cabinet, as the case may be, depending upon the value of the project; and all cases related to the development and use of railway land by Rail Land Development Authority (RLDA) as per provisions of Railways Amendment Act, 2005 will be permitted.

The S&P CNX Nifty touched a high and low 5,236.90 and 5,209.95 respectively.

The top gainers on the Nifty were NTPC up by 3.81%, BHEL up by 1.50%, Axis Bank up by 1.25%, SAIL up by 0.99%, Jindal Steel up by 0.93%. On the flip side, Cairn India down by 2.40%, Tata Motors down by 2.13%, BPCL down by 1.79%, Cipla down by 1.53%, IDFC down by 1.36%, were the major losers.

The European markets were trading in green, France's CAC 40 was up 0.46%, Germany's DAX was up 0.71% and United Kingdom’s FTSE 100 was up 0.47%.

Asian markets made a mixed closing on Thursday, there was cautiousness in the markets since morning after US Fed disappointed the global markets by not announcing any measure to stimulate economy and traders remained hopeful that the European Central Bank (ECB) will do more to contain the debt crisis; the ECB will announce a policy decision today. Japanese market despite paring most of its early gains closed marginally higher supported by rise in commodity prices. On the same time the Chinese market lost over half a percent on renewed concern that the government will issue more curbs to cool the real estate market after China’s Premier Wen Jiabao said the country will 'unswervingly' implement property controls and prevent home prices from rebounding. While, the Korean market ended lower following decline in largest exporter of consumer electronics, Samsung Electronics.

Meanwhile, the Taiwan Stock market remained closed due to Typhoon SAOLA.