Post session - Quick review

Bourses extended their losses to shut shop for the second consecutive session in the red zone. However, in the action packed week, Indian equity markets clocked gains of over two percent. The last trading session of the week could be termed as spectacular one, as bourses showed V-shaped recovery, despite that 30 share barometer index, Sensex, on BSE, offloaded over 25 points. The index made substantial recovery after appearing at a strikingly close of breaching the 17,000 psychological mark. Similarly, the widely followed Index, Nifty, on NSE, after consolidating for third straight session, slipped below the 5250 crucial mark again. The broader indices, however, settled with lesser losses for the session and higher gains for the week. For the week, both Midcap and Smallcap index went home with gains of over three percent each.

On the global front, taking aside ECB’s policy inaction, European markets traded with optimism, as investor’s temporarily shifted their focus to US nonfarm pay rolls data, later in the day. However, led by ECB disappointment, Asian markets mostly ended in red.

Closer home, official confirmation of draught like situation from the India Meteorological Department, coupled with reports stating the slower growth of service sector activity, spooked the sentiment earlier at Dalal Street. However, slender support, which emerged for the bourses at lower levels, as investor’s grabbed some select blue chips stocks available at attractive valuations, led to some recovery. According to the seasonally adjusted HSBC Business Activity Index, the service sector activity dipped to 54.2 in July, as against 54.3 in the previous month. Further, stocks belonging to the Information Technology, Oil & Gas and Health Care counters, too limited the downside of the markets, however, stocks from Metal, Auto and Banking counters emerged as big pocket of weakness.

On the result front, Jet Airways stocks highly impressed investors on staging turnaround post five quarter of losses. Jet Airways reported net profit of Rs 24.70 crore for first quarter ended June 30, 2012 as compared to a net loss of Rs 123.16 crore for the same quarter in the previous year. On the other hand, earnings of South based media company, Sun TV, was a complete disappointment, as company’s net profit rose by mere 3% quarter-on-quarter basis to Rs 164 crore in the first quarter of FY13. Additionally, FMCG major, Marico stocks too slipped by 5% after the company posted a consolidated net profit of Rs 125.78 crore for the first quarter ended June 30, as compared to Rs 86.51 crore during the same period of previous fiscal. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1262:1503 while 138 scrips remained unchanged. (Provisional)

The BSE Sensex lost 17.98 points or 0.10% and settled at 17,206.38. The index touched a high and a low of 17,208.36 and 17,026.97 respectively. 14 stocks were seen advancing against 16 declining ones on the index (Provisional)

The BSE Mid-cap index lost 0.17% while Small-cap index was down 0.05%. (Provisional)

On the BSE Sectoral front, IT up 0.80%, Oil & Gas up 0.56%, Health Care up 0.53%, TECk up 0.40% and Power up 0.22% were the top gainers, while Metal down 1.76%, Auto down 0.93%, Bankex down 0.70%, Realty down 0.66% and FMCG down 0.33% were the top losers in the space.

The top gainers on the Sensex were NTPC up 2.79%, Wipro up 1.97%, ONGC up 1.43%, Dr. Reddy’s Lab up 1.19% and HDFC Bank up 0.95% while, Sterlite Industries down 2.81%, Tata Steel down 2.50%, Jindal Steel down 2.41%, Hindalco Industries down 2.14% and ICICI Bank down 2.11% were the top losers in the index. (Provisional)

Meanwhile, service sector activity in India expanded in the month of July, but at a rate that was slightly lower than previous month levels. Though the sector extended its growth momentum for the ninth straight month, but grew at a steady place in July, with growth in new orders and employment holding up. The survey showed order books grew at the same clip as in June, prompting businesses to increase their workforces at a similar pace as in the previous month.

According to the seasonally adjusted HSBC Business Activity Index, the service sector activity dipped to 54.2 in July, as against 54.3 in the previous month. A figure above 50 signals increase in production while, a number below 50 indicates contraction. Besides, the lower growth in service sector in the month under review, the purchasing managers' index (PMI) reading, which measures the overall health of manufacturing sector, though increased at a marked pace, but the slowest since November 2011.

New orders at private sector companies in India rose steeply in July. However, the pace of increase slowed from that recorded in June, with the new orders Index plunging to the lowest since November 2011. Meanwhile, job creation was recorded at manufacturers and service providers during July. The pace of job creation increase was broadly similar across both sectors, resulting in a slight rise in workforces at Indian private sector firms.

Extending the current inflationary period to 40 months, the composite data posted a further increase in input costs, as the input prices rose sharply at manufacturers in India and at a faster pace than the rise recorded at service providers. But the rate of input cost inflation was at the slowest in 21 months, i.e. since October 2010. Meanwhile, service sector business expectations remained optimistic, although the level of optimism dipped to the lowest since March.

Thus, the subdued Manufacturing and Service sector PMI have dragged the HSBC Composite Index, which covers the manufacturing and service sectors, to 54.4 in July from 55.7 seen in June 2012, the lowest expansion pace past April 2012. However, the HSBC survey further indicated that though the inflation readings eased, but remain firm on the back of rising wage costs and solid demand. Thus, with inflation risks still lingering despite the slowdown and policy action out of Delhi so far insufficient, the RBI has little room to manoeuvre. Indian central bank although left key interest rates unchanged in its recent monetary policy review meet on July 31, but did slashed the Statutory Liquidity Ratio (SLR) of scheduled commercial banks from 24% to 23% of their NDTL with effect from the fortnight beginning August 11, 2012.

India VIX, a gauge for market’s short term expectation of volatility lost 3.87% at 16.12 from its previous close of 16.77 on Thursday. (Provisional)

The S&P CNX Nifty lost 13.25 points or 0.25% to settle at 5,214.50. The index touched high and low of 5,220.20 and 5,164.65 respectively. 17 stocks advanced against 33 declining ones on the index. (Provisional)

The top gainers on the Nifty were Asian Paint up 2.92%, Wipro up 1.97%, NTPC up 1.77%, ONGC up 1.50% and GAIL India up 1.46%. On the other hand, Sterlite Industries down 2.82%, Jindal Steel down 2.51%, Tata Steel down 2.48%, IDFC down 2.47% and JP Associates down 2.33% were the top losers. (Provisional)

The European markets were trading in green, with France's CAC 40 up 1.94%, Germany's DAX up 1.53% and Britain’s FTSE 100 up 1.05%.

The Asian markets made a mixed closing on the last trading day of week, while the Chinese market after making a green start strengthened further but some of the other indices made last hour recovery to close in green. There was a sense of disappointments among the regional shares after inaction by the European Central Bank and Federal Reserve. The Japanese market was worst impacted with yen strengthening against all other major currencies and weak earnings from some of the major corporate. Hong Kong shares too weakened below a key technical support level. Chinese market was the top performer for the day, gaining over a percent as country’s regulators, seeking to arrest a 14 percent slide in the nation’s stock market since this year’s high, reduced transaction fees on equities trading by huge 20 percent. However in a separate development People’s Bank of China said in a quarterly monetary-policy report said that China will conduct policy fine-tuning at an appropriate time and consumer inflation may rebound after August.