Post session - Quick review

The Indian markets went through one way slide on Thursday, once nearing to breach their crucial support levels of 17500 (Sensex) and 5300 (Nifty). Though, the start was marginally in green but the markets never looked in a comfortable position and the slide that started in last session’s final hour seemed extending today. The last hour recovery helped the markets near their previous level otherwise the damage could have been graver. The global cues remained sanguine with majority of Asian peers snapping the session in green and the European markets making a positive start but there were troubles on the domestic front with India’s index of industrial production (IIP), registering a negative growth of 1.8% in June 2012.

Last session the markets have fallen on reports of various agencies downgrading India’s growth outlook for the fiscal on drought worries and this manufacturing-led slump further clouded the sentiments. Manufacturing, which constitutes about 76 percent of industrial production, shrank an annual 3.2 percent from a year earlier. The major concern was de-growth in Capital goods sector, a key investment indicator that has shown growth only once in the past 10 months, slumped by 27.9 percent in June.

On the global front most of the Asian markets closed in green. The European markets too made a good start however they were seen loosing pace with telecommunications companies retreating on stimulus hopes and that too added fuel to the slide of the Indian markets.

Back home, traders were once seen digesting the dismal IIP numbers, hoping that it might prompt RBI to go for some policy easing. Planning Commission too reacted and expressed its disappointment over decline in industrial output and said that the steps announced by Finance Minister P Chidambaram would help in boosting growth. Still the frenzied investors resorted to profit booking. Sectorally, the defensive FMCG sector along with auto and metal tried their bit to hold the markets from losing pace, while the fall in oil & gas, technology and PSU stocks dragged the markets lower. Some of the market heavyweights like RIL, Bharti Airtel and SBI continued putting pressure on the markets. Cut on the broader indices was more than the benchmarks, however some bottom fishing in final hours helped recovery in the markets.

The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1187:1582 while 147 scrips remained unchanged. (Provisional)

The BSE Sensex lost 19.58 points or 0.11% and settled at 17,580.98. The index touched a high and a low of 17,702.98 and 17,516.99 respectively. 17 stocks were seen advancing against 13 declining ones on the index (Provisional)

The BSE Mid-cap index lost 0.18% while Small-cap index was down 0.30%. (Provisional)

On the BSE Sectoral front, FMCG up 1.37%, Auto up 0.69%, Metal up 0.64%, Capital Goods up 0.40% and Power up 0.30% were the top gainers, while Oil & Gas down 0.99%, TECk down 0.72%, PSU down 0.64%, Bankex down 0.49% and Consumer Durables down 0.27% were the top losers in the space. (Provisional)

The top gainers on the Sensex were Sterlite Industries up 3.31%, M&M up 2.95%, HUL up 2.74%, Tata Power up 2.70% and Coal India up 2.10% while, Bharti Airtel down 6.36%, SBI down 4.24%, HDFC down 3.76%, Wipro down 1.16% and RIL down 0.98% were the top losers in the index. (Provisional)

Meanwhile, putting up a pathetic show, India’s index of industrial production (IIP), a key measure of industrial output shockingly registered a negative growth of 1.8% in June 2012 at 168.3, from the same period in the past fiscal, as against the expectations of 1% and also lower than 2.4% growth figure for the month of May, which was later revised a tad to 2.5%. Moreover, the cumulative growth for the period April-June 2012-13 contracted by 0.1% over the corresponding period of the previous year.

The industrial output has remained fragile in the past few months as growth in all three sectors viz. mining, manufacturing and electricity got dampened. However, this time slump in the manufacturing output mainly triggered contraction of June industrial production, as Manufacturing, which constitutes about 76% of industrial production, shrank 3.2% in the month of June versus a growth of 2.5% in May. On the flip side, mining sector exhibited a growth of 0.6% versus a negative growth of 0.9% in May. Additionally, electricity sector too grew at a robust 8.8% versus 5.9% in May.

However, Capital goods output, a key investment indicator, clearly emerged as significant driver in terms of taking the growth in negative territory, as capital goods production, sharply contracted by 27.9% on y-o-y basis, highlighting that companies are still wary of making investments in high-interest and uncertain economic climate. Consumer goods, on the other hand, grew at 3.5%, driven by robust growth of 9.1% in consumer durables, despite a negative growth of 1% in non-durables.

India VIX, a gauge for market’s short term expectation of volatility lost 0.24% at 16.33 from its previous close of 16.37 on Wednesday. (Provisional)

The S&P CNX Nifty lost 7.10 points or 0.13% to settle at 5,330.90. The index touched high and low of 5,368.20 and 5,312.10 respectively. 26 stocks advanced against 24 declining ones on the index. (Provisional)

The top gainers on the Nifty were M&M up 3.09%, Sterlite Industries up 3.07%, HUL up 2.64%, Tata Power up 2.60% and Coal India up 2.27%. On the other hand, Bharti Airtel down 6.25%, SBI down 4.31%, HDFC down 4.08%, BPCL down 3.24% and Ranbaxy Laboratories down 2.51% were the top losers. (Provisional)

The European markets were trading on a mixed note, with France's CAC 40 down 0.06%, Germany's DAX down 0.10% and Britain’s FTSE 100 up 0.07%.

Asian markets went home with green mark on Thursday, as Chinese CPI inflation released overnight dropped to 1.8% y/y in July from 2.2% y/y in June, slightly higher than consensus expectations. But decline in inflation is likely to overlay the way for a cut in the reserve requirement soon. However, Bank of Japan ended its two-day meeting this morning as it decided to keep its asset-purchase programme unchanged at JPY45trl and its key interest rate between zero and 0.1%. Meanwhile, Bank of Korea, also left its key policy interest rate unchanged on Thursday, after a surprise cut last month. South Korea's financial watchdog announced that it will investigate whether the local units of HSBC Holdings PLC and Standard Chartered were involved in money laundering.