Initial euphoria at Dalal Street fizzles out ahead of IIP data

Initial euphoria at Dalal Street has fizzled out on account of fresh round of selling by the market men ahead of industrial production (IIP) data for the month of June despite the firming trend in the overseas markets. Asian shares have bounced back from their low’s tracking the rally in the US markets. Overnight, a fall in the number of people seeking unemployment benefits triggered a 423 points surge on the Dow, helping the benchmark regain the 11,000 mark, which also marked the fourth consecutive day when the Dow swung over 400 points either ways. Meanwhile, sentiments improved on the Wall Street as European stocks gained on France's reaffirmation that it will not be downgraded. However, the US future indices were showing a downtick in the screen trade. Back on Dalal Street, the positive momentum of the bourses was led by stocks belonging to Consumer Durable, Metal and Healthcare counters, however, stocks of Information Technology and TECk counters were the only chink in armor. Additionally, comforting the markets were the gains of few blue chip stocks namely, ICICI Bank, ITC and Larsen & Toubro. The stocks of private sector lender- ICICI gained momentum on the reports stating the bank hiking its base rate by 50 bps to 10.00%. The bank has also increased its Benchmark Prime Lending Rate (BPLR) and its Floating Reference Rate (FRR) by 50 bps for consumer loans including home loans with effect from August 13, 2011. However, on the flip side, Tata Motors was toping the chart of the losers after the company reported 55% increase in its consolidated net profit at Rs 1999.82 crore for the quarter ended June 30, 2011 against Rs 1988.73 crore for the corresponding period a year ago. The company’s First-Quarter Profit missed estimate as the owner of Jaguar Land Rover reported sales of its passenger cars in India fell and Jaguar deliveries declined. Meanwhile, the stocks was also abandoned by the investor’s post CLSA downgraded India's Tata Motors stock to underperform from outperform on Friday. Meanwhile, India's annual industrial output grew 8.8% in June as compared to a nine-month low of 5.6% in May, much above the estimates as experts had indicated a growth of only 5.5%. Manufacturing growth for the month of June was at 10% as compared to 5.6% in May. The growth of basic goods was at 7.5% against 7.2% in May.

The BSE Sensex is currently trading at 17,071.74, up by 12.34 points or 0.07%. The index has touched a high and low of 17246.88 and 17043.32 respectively. There were 16 stocks advancing against 13 declining one’s on the index, while a stock remained unchanged.

The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices rose 0.61% and 1.00% respectively.

The top gaining sectoral indices on the BSE were, CD up by 1.02%, HC up by 0.47%, CG up by 0.44% and PSU up by 0.43%. While, IT down by 0.65% and TECk down by 0.51% remained the only losers on the index.

The top gainers on the Sensex were Jindal Steel up by 2.76%, ICICI bank up by 1.84%, Mahindra &Mahindra up by 1.71%, Hero Motors up by 1.53% and Coal India was up by 1.49%.

On the flip side, Tata Motors was down by 3.63%, Wipro down by 2.46%, HDFC bank down by 1.37%, Bharti Airtel was down by 1.10%  and Infosys was down by 1.10% were the top losers on the Sensex.

Meanwhile, accepting the challenging uncertain environment in the economy Finance Minister Pranab Mukherjee on August 11 informed lawmakers that it would be difficult to achieve fiscal target of 4.6% of the GDP in the current financial year. Finance Minister in his budget speech had announced the target of 4.6% fiscal deficit and a revenue deficit of 3.1% and government borrowing to be around Rs 3.4 trillion for the current financial year.

Mukherjee said “The Indian government aims to keep a tight leash on expenditure to meet its fiscal deficit target for the current financial year.” By adding further he said, ‘the government will try to spend as much possible in the initial months of this fiscal year so that it doesn't need parliament's approval for additional spending later, which may sway it from tight fiscal discipline.’

The government is aiming to reduce its fiscal deficit to 4.6% of Gross Domestic Product in the 2011-12, from 5.1% last year.

The S&P CNX Nifty is currently trading at 5139.55 higher by 1.25 points or 0.02%. The index has touched a high and low of 5194.45 and 5130.65 respectively. There were 25 stocks advancing against 23 declines on the index.

The top gainers of the Nifty were Jindal Steel up by 2.91%, ICICI bank up by 1.80%, M&M up by 1.60%, Hero Motors up by 1.54% and Cairn India up by 1.47%.

On the flip side, Tata Motors down by 3.94%, Wipro down by 1.96%, HDFC Bank down by 1.56%, PNB down by 1.47% and Hindalco down by 1.08% were the major losers on the index.

Most of the Asian markets were trading in the green; Shanghai Composite was up by 0.52%, Hang Seng was up by 1.11%, Jakarta Composite was up by 0.89%, KLSE Composite was up by 0.53% and Straits Times was up by 1.23%.

On the flip side, Nikkei 225 declined 0.31%, Seoul Composite was down by 0.64% and Taiwan Weighted was down by 0.62%.