Benchmarks continue to trade in green; June IIP registers negative growth of 1.8%

Indian equities gained strength to continue their firm trade in the late morning session. On the global front, Asian markets were trading in green after a drop in Chinese consumer inflation has created more room for further policy easing in the world’s second largest economy. Consumer prices rose 1.8 percent from a year earlier, while the producer prices fell 2.9 percent from a year earlier, the fifth straight drop. Meanwhile, India’s annual industrial output growth measured by index of industrial production (IIP) disappointed the street, by registering a negative growth of 1.8% at 168.3 for the month of June 2012 against the growth figure of 2.4% in May, which has been revised marginally to 2.5%. The cumulative growth for the period April-June 2012-13 recorded de-growth of 0.1% over the corresponding period of the previous year. The indices of industrial production for the Mining, Manufacturing and Electricity sectors for the month of June 2012 stood at 124.3, 178.1 and 157.0 respectively, with the corresponding growth rates of 0.6%, -3.2% and 8.8% as compared to June 2011. Traders were seen piling up position in Auto, FMCG and IT sector. In the scrip specific development, Power Finance Corporation jumped on reporting 42% in its net profit at Rs 971.88 crore for the quarter, as compared to Rs 686.19 crore for the same quarter in the previous year. Total income of the company has increased by 34.91% to Rs 3944.86 crore for the quarter under review as compared to Rs 2924.13 crore for the quarter ended June 30, 2011. Tata Power rose on reporting 11% rise in Q1 net profit. Strides Arcolab gained as its arm receives USFDA nod for Oxaliplatin Injection. M&M surged on reporting strong Q1 numbers. The NSE Nifty and BSE Sensex were managing to hold their psychological 5350 and 17600 levels respectively. The market breadth on BSE was positive in the ratio of 1095:843 while 124 scrips remained unchanged.

The BSE Sensex is currently trading at 17680.38 up by 79.82 points or 0.45 % after touching a high of 17702.98 and a low of 17610.14. There were 26 stocks advancing against 4 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index was up by 0.41%, while Small cap index was up by 0.35%.

On the BSE sectoral space, Auto up by 1.35%, FMCG up by 1.01%, IT up by 0.78%, Bankex up by 0.74% and PSU up by 0.53% were the gainers while there was no loser on the index.

Mahindra & Mahindra up by 3.26%, Coal India up by 1.79%, Hindustan Unilever up by 1.62%, Tata Motors up by 1.39%, Bajaj Auto up by 1.25% were the major gainers on the Sensex, while Bharti Airtel down by 4.01%, HDFC down by 2.10%, Tata Steel down by 0.89%, and Jindal Steel down by 0.01% were the major losers on the index.

Meanwhile, industry body, Federation of Indian Chambers of Commerce and Industry (FICCI) is not very confident about the manufacturing growth in the country. A survey released by it ahead of the release of the numbers for industrial production for the first quarter of 2012-13, states the lack of optimism among the respondents about high manufacturing growth in the second quarter, as against the previous round of survey.

According to the survey, which drew responses from 418 manufacturing units and associations, around 44% respondents felt that they expect growth to be higher in Q2 vis-a-vis last year as against 46% respondents saying so for previous quarter (Q1). Only 36%, 13% and 26% respondents in quarter four, three and two of 2011-12 respectively expected growth to be higher in manufacturing, as per previous surveys.

Also, over 67% respondents felt affected by the rupee depreciation in the last few months. The rupee depreciation has led to an increase in the cost of their imported raw materials and inputs by 5-25 per cent. As per the survey, demand conditions remained subdued in the economy for the manufacturing sector in Q2 as compared to previous quarters as only 31% respondents were having higher order books for July-September quarter.

On capacity utilization, the survey revealed that only 35% respondents reported higher utilization against 44% last year and 36% in previous quarter. This time only 28% respondents have reported plans for capacity addition against 38% desiring to do so during the last survey.

The employment prospects too remains weak as over 70% respondents did not report any plans for hiring new workforce in next three months, while only 30% reported that they are planning to increase their workforce in next 3 months.

Sectoral growth wise, in second quarter Chemicals, Food, Electronics, Textiles, Textiles Machinery, Paper and Capital Goods were having low expectation of growth, Steel & Metals and Automotive sectors were having moderate growth expectation, while Cement, Leather & footwear, Tyre and Machine Tools sector were expecting strong growth during second quarter.  

The S&P CNX Nifty is currently trading at 5,360.60, up by 22.60 points or 0.42% after trading in a range of 5,368.20 and 5,348.20. There were 38 stocks advancing against 12 declines on the index.

The top gainers on the Nifty were Mahindra & Mahindra up by 3.36%, Grasim up by 2.23%, Coal India up by 1.56%, Hindustan Unilever by 1.54% and Tata Motors up by 1.37%. While, Bharti Airtel down by 3.77%, Cairn down by 2.90%, HDFC down by 2.11%, Siemens down by 2.05% and BPCL by 1.46% were the top losers on the index.

All the Asian indices were trading in green; Kospi Composite Index up 2.15%, Nikkei 225 up 1.10%, Jakarta Composite up by 0.89%, KLSE Composite up by 0.17%, Taiwan Weighted up by 1.53%, Hang Seng index up by 1.11% and Shanghai Composite up by 0.42%. 

Straits Times remained closed on account of National Day holiday.