Post session - Quick review

Last leg of trade did a lot to turn a range-bound session of trade into fairly decent one at Dalal Street, which took the benchmarks soaring higher near their intra-day high level. In this liquidity driven rally, benchmarks after listlessly gyrating in the range-bound fashion, managed to entice some traction by the close of the trade as support emerged at lower levels. Unperturbed by the country's slow economic growth and weak monsoon, overseas investors pumped nearly Rs 4,800 crore into stock markets this month so far. 30 share barometer index, on Bombay Stock Exchange (BSE), Sensex, added over 3/4 of a percent to sneak past through the 17600 level by the close of trade, however 50 share widely followed barometer index on National Stock Exchange (NSE), Nifty, despite gaining over 1/2 a percent, just retracted from the high point, which was above the 5350 psychological mark. Meanwhile, the broader indices too gained traction, in a magnitude which was greater than the front line indices.

On the global front, weak Japanese economic data on Monday tempered European investors’ optimism about ECB plans to tackle the euro zone crisis. Asian shares ended down in dumps after Japanese data confirming fears of global slowdown, grew half as much as expected at 0.3% in April-June quarter, as Europe's debt crisis weighed on export demand and consumer spending.

Closer home, in absence of any positive upside trigger, benchmarks traded sideways up till the last leg of trade, as lack of policy inaction combined with the weak global set-up, prevented traders from putting their money into risky pockets. The sentiment at Dalal Street were mainly minced after Fitch Rating, which recently lowered India’s credit outlook to negative, averred that possibility of downgrading the country’s sovereign rating is more than 50% in the next 12-24 months. Further prevailing caution ahead of July month’s inflation figure, with crude oil trading near three month high level, also weighed on the sentiment. However, last minute cherry picking by chic investor’s acted as saving grace for the bourses. Additionally, gains of stocks belonging from Realty, Consumer Durable and Capital Goods counters also winded down a lot of bourses pressure, however Auto counter failed to come out of the blues.

In stocks specific action, shares of industrialist Vijay Mallya-promoted UB Group firms delivered smart performance, thanks to strong market speculations. Kingfisher Airlines shot up on 20% amid reports that the beleaguered airline could soon see fund infusion by a promoter. Another group firm, United Spirits, rose over 10% amid speculation that the firm is likely to sell stake to strategic investors to cut debt. Also, United Breweries jumped on reports the firm is looking to sell stake. Meanwhile, retail stocks also spurted on the reports which stated the likelihood of Government easing stern single-brand retail FDI norms. Hinged with optimism were Pantaloons Retail, Shoppers Stop, Provogue India, Brandhouse Retails.

On the result front, corporate earnings were mostly hits. Pfizer gained over 3% ground as the drug makers reported over seven fold jump in Q1 net profit at Rs 328.88 crore, while ONGC too spurred over half a percent on reporting better than expected net profit rise of 48.4% year-on-year and 7.68% quarter-on-quarter to Rs 6,077.7 crore in the quarter ended June 2012. Additionally, Godrej Industries too rallied over 3% despite reporting 42% drop in consolidated net profit for the first quarter ended June 30 at Rs 41.45 crore. The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1442:1295 while 137 scrips remained unchanged. (Provisional)

The BSE Sensex gained 75.71 points or 0.43% and settled at 17,633.45. The index touched a high and a low of 17,642.38 and 17,522.10 respectively. 18 stocks were seen advancing against 12 declining ones on the index (Provisional)

The BSE Mid-cap index gained 0.46% while Small-cap index was up 0.54%. (Provisional)

On the BSE Sectoral front, Realty up 2.40%, Consumer Durables up 1.71%, Capital Goods up 1.19%, Power up 1.03% and PSU up 0.67% were the top gainers, while Auto down 0.15% was the top loser in the space. (Provisional)

The top gainers on the Sensex were HDFC up 3.39%, Sterlite Industries up 2.61%, Wipro up 1.85%, BHEL up 1.79% and Bajaj Auto up 1.79% while, Hero MotoCorp down 1.79%, Hindalco Industries down 1.47%, Tata Motors down 1.40%, HUL down 1.34% and Tata Steel down 1.14% were the top losers in the index. (Provisional)

Meanwhile, one thing that could act as an embarrassment to the government and increase its woes is going to be the downgrade of country’s sovereign rating. After Moody’s slashed India’s growth estimates last week, Fitch Ratings, which recently lowered India’s credit outlook to negative, has said that possibility of downgrading the country’s sovereign rating is more than 50 per cent in the next 12-24 months.

Negative outlook suggests that there is a more than likely chance of Fitch revising rating downwards from BBB- to BB+ in the next 12 to 24 months. Downgrading sovereign rating could impact investor sentiments and could lead to higher borrowing costs. While, the downgrade of credit outlook indicated that the country’s medium-to long-term growth potential could gradually deteriorate if further structural reforms are not hastened to create a more positive operational environment for business and private investments.

Earlier, in June mid, Fitch scaled down India’s sovereign credit outlook to ‘negative’ from ‘stable’. The rating agency had then went on to point out that the revision in outlook reflected the “heightened risks” that India’s medium-to-long-term growth potential would gradually deteriorate if further structural reforms are not hastened, including measures to enhance the effectiveness of the government and create a more positive operational environment for business and private investments. However, that time India’s sovereign rating at ‘BBB-’, a notch above the speculative grade was retained.

Recently, there has been slew of downgrades of India’s economic growth forecast from domestic, as well as international agencies including, Banking giant Citi, CLSA and Crisil to around 5.5 per cent, even the Reserve Bank of India (RBI), in its quarterly policy review, had trimmed its growth forecast to 6.5 per cent from 7 per cent. 

India VIX, a gauge for market’s short term expectation of volatility lost 0.37% at 16.01 from its previous close of 16.07 on Friday. (Provisional)

The S&P CNX Nifty gained 28.40 points or 0.53% to settle at 5,348.80. The index touched high and low of 5,352.45 and 5,309.05 respectively. 35 stocks advanced against 15 declining ones on the index. (Provisional)

The top gainers on the Nifty were HDFC up 3.46%, DLF up 3.14%, Reliance Infrastructure up 3.05%, Sterlite Industries up 2.66% and Sesa Goa up 2.25%. On the other hand, Hindalco Industries down 1.50%, Tata Motors down 1.49%, Hero MotoCorp down 1.29%, HUL down 1.25% and Tata Steel down 1.15% were the top losers. (Provisional)

The European markets were trading mixed, with France's CAC 40 up 0.06%, Germany's DAX up 0.02% and Britain’s FTSE 100 down 0.16%.

Most of the Asian markets shut the shop in red Monday as slowdown in Japan's growth at annual rate of 1.4% in April-June quarter, increased worries about the health of the global economy. That was a sharp drop from a revised 5.5% in the previous quarter. Meanwhile, Hong Kong and Singapore both Asian financial centers reported weak second-quarter growth. Also the dismal report helped fuel speculation that China’s central bank was preparing to act with some type of measure to spur business activity.