Indian equities sustain sanguine mood in noon trades; rate sensitives rally

Indian frontline equity indices are trading with a lot of enthusiasm in the afternoon trades as investors’ stepped in to buy beaten-down shares after the recent dramatic declines. Though the indices came off from their intraday highs amid reports of fresh geo-political tensions fuming between South Korea and North Korea, but marketmen are not showing any kind of kneejerk reaction to the reports and are only focusing on hunting undervalued but fundamentally strong bargains. Sentiments remained positive since the start of trade as Fed’s announcement overnight to keep the interest rates unchanged at ultra low levels through mid 2013 bode well for local investors. While, the Fed statement that it was reviewing available tools to boost the slowing US economy also supported investors’ morale as it indicates that policy makers will take steps to spur growth and restore investor confidence amid the global market turmoil. The optimistic opening of European markets too buttressed local sentiments. On the domestic front, the rate sensitive counters like Automobile and high beta Real Estate garnered maximum traction after being badly butchered in the recent past. Information Technology, another oversold pocket, bounced back on hefty short covering as the overnight surge in US and European markets helped improve sentiments. On the other hand, the FMCG counter remained the only chink in the armor as it declined by 0.21% after heavyweights like HUL and Nestle plummeted by over a percent. The downstream PSU oil companies like IOC, HPCL and BPCL also remained under tremendous selling pressure because of the spike in international crude oil prices.

Meanwhile, the broader markets too traded with conviction after the recent butchery and outclassed their larger peers. The bourses gained on good volumes while the market breadth on BSE was in favor of advances in the ratio of 2152:522 while 68 scrips remained unchanged.

The BSE Sensex is currently trading at 17,145.74 up by 287.83 points or 1.71% after trading as high as 17,256.46 and as low as 17,085.01. There were 25 stocks advancing against 5 declines on the index.

The broader indices were trading on an optimistic note; the BSE Mid cap index surged 2.12% and Small cap jumped 2.64% respectively. 

On the BSE sectoral space, Auto up 3.74%, Realty up 3.33%, IT up 2.62%, CD up 2.59% and Bankex up 2.48% were the major gainers while FMCG down 0.21% was the only loser on the index.

Tata Motors up 6.44%, Hindalco up 4.70%, M&M up 4.38%, DLF 4.21% and Maruti Suzuki up 3.92% were major gainers on the Sensex, while ONGC down by 1.75%, HUL down 1.08%, ITC down 0.35%, BHarti Airtel down 0.27% and Tata Power down 0.20% were the major losers on the index.

Meanwhile, the non-stop rate hike by the Reserve Bank of India has started showing its effect on the domestic passenger cars sales numbers, which during the month of July 2011 declined by 15.76% to 1, 33,747 units  as compared to 1, 58,767 units sold in July 2010. The overall growth in the passenger vehicle segment fell by 8.95% in July 2011. It fell to 13,48,753 units from  12,37,521 units in the July 2010.

According to figures released by the Society of Indian Automobile Manufacturers (SIAM), the overall domestic sales for April-July 2011 grew by 13.55%. However, in the month of July 2011 it registered moderation in growth rate and grew by 8.99%. During the April to July 2011 period, Passenger Vehicles segment grew at 4.03% over same period last year. Passenger Cars grew by 1.12 %, Utility Vehicles grew by 7.84 % and Vans sales grew by 25.42 % in this period.

The Commercial Vehicle segment registered healthy growth in July. It increased by 23.70% to 64,241 units in July 2011 from 51,934 units in July 2010.  During April to July 2011, the overall commercial vehicle segment showed growth of 16.56% as compared to the same period of last year. Whereas in April to July 2011, within the Commercial Vehicle segment, Medium & Heavy Commercial Vehicles (M&HCVs) registered growth of 6.40%, Light Commercial Vehicles grew at 25.64%.

The Two Wheelers sales recorded a growth of 12.61% to 10, 59,906 units from 9, 38514 units, whereas Three Wheelers sales registered decline of 3.13% in July 2011. During the April to July 2011, the Two Wheelers registered a growth of 15.79 % and Three Wheelers sales recorded a growth rate of 2.50% for the period under consideration.

The S&P CNX Nifty is currently trading at 5,160.05, higher by 87.20 points or 1.72% after trading as high as 5,197.95 and as low as 5,142.90. There were 39 stocks advancing against 11 declines on the index.

The top gainers of the Nifty were Tata Motors up 6.68%, M&M up by 4.67%, DLF up 4.41%, Axis Bank up 3.59% and Maruti up 3.49%.

ONGC down 1.38%, BPCL down 1.28%, HUL down 1.16%, GAIL down 0.88% and Siemens down 0.82% were the major losers on the index.

Asian markets traded on a positive note, Shanghai Composite added 0.89%, Hang Seng surged 2.74%, Jakarta Composite soared 2.85%, KLSE Composite rose 0.45%, Nikkei 225 gained 1.05%, Seoul Composite rose 0.27% and Taiwan Weighted rallied 3.25%.

On the other hand, Straits Times sank 1.08%.

The European markets traded on positive note as France’s CAC 40 added 1.17%, Germany's DAX gained 2.13% and London’s FTSE rose 1.35%.