Benchmarks end near pre-close level; CAG reports weighed on sentiments

The key Indian equity indices, after trading jubilantly in the first half, erased almost their day’s gains, snapping the session nearly unchanged. Though, the markets traded in the green terrain for most part of the day’s trade and touched their intraday high near their crucial 5,400 (Nifty) and 17,800 (Sensex) levels backed by firm global cues. But, the sentiments got bashed in the noon after the government tabled the controversial CAG reports on coal blocks, Delhi airport and UMPPs in the parliament. CAG report cited that the coal scam is bigger than 2G case. The report pointed out that the presumptive loss to government stands at Rs 1.86 lakh crore in scam, which is quite higher than the notional loss of Rs 1.75 lakh crore due to 2G scam.

Consequent to the CAG report, Power sector, after trading in the green, ended negative with a fall of over one and half a percent and private power producers like Tata Power, RPower, Adani Power, GMR Infra and Reliance Infrastructure topped the selling list with fall of over 3 percent on CAG report stating that the loss was due to allocation of coal mines to private players. Meanwhile, Aviation sector stocks like Spicejet, Jet Air India and Kingfisher Airlines all edged lower in the session after the CAG report.

The sentiments also got hammered after Prime Minister Manmohan Singh’s Economic Advisory Council forecasted that India’s economy will grow at 6.7 percent in the current fiscal year, less than an earlier estimate of 7.5-8.0 percent. However, this forecast is marginally better than the 6.5 percent pace at which India grew in 2011-12. The advisory council also raised inflation forecast to about 6.5-7 percent at the end of 2012/13, from earlier estimate of about 5-6 percent. Meanwhile, C Rangarajan, chairman of the PM’s economic advisory council said it has lowered the GDP forecast because taming inflation, containing fiscal deficit and current account deficit are policy challenges for the government. The government’s fiscal deficit overshot a target of 4.6 percent of GDP by 1.2 percentage points in 2011/12 and is expected to swell to 6 percent of GDP in the current year to March 2013.

However, markets held their head above the water supported by firm global cues as risk tolerance on the global front has improved after German chancellor Angela Merkel backed proposed measures by the ECB to contain the long-running sovereign debt crisis. US and European markets ended near session highs overnight while the Asian indices finished mixed today. The Chinese market was a little subdued though. European stock markets opened higher today, led by strength in banks.

Back home, some strength also came in from the PSU oil marketing companies as stocks like BPCL, HPCL and IOC all edged higher on the buzz that government is likely to increase diesel prices by Rs 5 per litre shortly after the Parliament session ends. Also, retail stocks like Pantaloon Retail, Brandhouse Retail and Trent provided positive sentiments to the markets after the Commerce and Industry Minister Anand Sharma indicated that the government may announce some decisions on FDI in multi-brand retail and civil aviation, saying all consultations are over and an announcement is likely soon.

The NSE’s 50-share broadly followed index Nifty, rose marginally by 3 points and managed to settle just above its psychological 5,300 support level moreover, Bombay Stock Exchange’s Sensitive Index -Sensex- surged by thirty points but, finished below the psychological 17,700 mark. The broader indices too were trading in-line with benchmarks to snap the session near their pre-close level. The market breadth was largely in favour of decline, as there were 1,344 shares on the gaining side against 1,498 shares on the losing side while 130 shares remained unchanged.

The BSE Sensex gained 33.87 points or 0.19% to settle at 17,691.08, while the S&P CNX Nifty rose by 3.35 points or 0.06% to close at 5,366.30.

The BSE Sensex touched a high and a low of 17,801.39 and 17,622.62 respectively. However, the BSE Mid cap index was up by 0.05% and Small cap index up by 0.02%.

Tata Motors up by 2.12%, Infosys up by 1.61%, Hindustan Unilever up by 1.53%, ITC up by 1.43% and Wipro up by 1.17% were top gainers on the Sensex, while Jindal Steel down by 4.02%, Tata Power down by 3.71%, Hindalco Industries down by 2.48%, GAIL India down by 1.72% and L&T down by 1.48% were top losers on the index.

The major gainers on the BSE sectoral space were, FMCG up by 1.26%, IT up by 1.15%, TECk up by 0.89%, Health Care up 0.67% and Auto up 0.62%, while Realty down by 1.71%, Power down 1.59%, Metal down by 1.49%, Capital goods down 0.85% and PSU down 0.73% were top losers on the BSE sectoral space.  

Meanwhile, in light of deteriorating global economic environment, Private Equity (PE) investments in India have dwindled by 35% to $1,616 million across 97 deals in the second quarter of 2012 over the same period a year ago. For the second quarter of the previous year, PE firms pumped in $2,477 million by way of 126 transactions.

A host of factors like slowing growth, depreciating currency, volatility in equity markets, elevated interest rates and a sense of 'policy paralysis' have clouded the economic sentiment domestically in the recent past. However, the prominent issue, which drew foreign investors’ flak, was the introduction of GAAR in Budget 2012 to check tax evasion, which was later deferred to April, next year.

Sector-wise, IT and IT-enabled Services (ITe’S) space took the lead during the quarter as the leader in both volume and value with 38 deals worth $ 321 million in the June quarter of this year. The space was closely followed by the energy sector, which attracted $290 million worth of investments in April-June 2012, while the healthcare sector too enticed an investment worth $243 million. Additionally, investments in the education sector recorded nearly 100 per cent growth to $71 million in April-June 2012, from $37 million in the second quarter of calendar year 2011.

The S&P CNX Nifty touched a high and low of 5,399.95 and 5,341.70 respectively.

The top gainers on the Nifty were Tata Motors up by 2.06%, HUL up by 1.75%, ITC up by 1.74%, Infosys up by 1.58% and Wipro up by 1.36%. On the flip side, Jindal Steel down by 4.29%, Tata Power down by 3.85%, Reliance Infra down by 3.22%, DLF down by 3.13% and Hindalco down by 2.78% were the major losers.

The European markets were trading in green, France's CAC 40 up by 0.02%, Germany's DAX was up by 0.25% and United Kingdom’s FTSE 100 was up by 0.22%.

Asian markets closed shutter on a mixed note on Friday amid German Chancellor Angela Merkel voiced support for the European Central Bank's efforts to contain the debt crisis in the euro zones. South Korea's Kospi was dropped by 0.5%, as foreign investors offloaded Samsung Electronics, on the back some disputes between the Korean electronics giant and Apple affected investor sentiment, while weaker yen supported Japan's Nikkei, which was up 0.8%. Meanwhile, Hong Kong shares were up on Friday, ended the week almost where they started, helped by broad strength in riskier sectors.

Jakarta Composite was not trading as Indonesian banks, the stock exchange and other financial institutions will be closed for five days, from Friday until Wednesday, due to public and Idul Fitri holidays.