Post session - Quick review

Start of new F&O series proved to be a bumpy ride for Indian equity markets on the last trading session of the week, as bourses besides squandering a positive start, lost substantial ground to shut shop in red. The session was a complete wash-out as better than anticipated GDP growth for the June quarter, which reignited hopes that India’s central bank would stick to its status-quo at its upcoming monetary policy review meet, gave investor’s a run for their money. Driven by higher-than-expected performance on the agriculture front, Indian economy grew 5.5 per cent in first quarter this fiscal, higher than 5.3 per cent GDP number recorded in the previous quarter of fiscal 2012 and consensus estimates of 5.2 per cent

Much of the obliteration came to the local equity markets in the last leg of the trade, with the sharp slide of Power, steel and infrastructure sector stocks amid long political impasse in Parliament over the issue of coal block allocation, which made investors now believe strongly that no major reform could be in store during the monsoon session of Parliament which ends on September 07, also added to the bout of pessimism at Dalal Street. However, Manmohan Singh refusal for resigning from Prime Minister’s post combined with his denial on CAG's observations , being dubbed 'misleading' and 'flawed', gave investor’s some sense of respite, leading market slender recovery by close. Thus, in the high volume session of trade, 30 share barometer index, Sensex, on BSE faltered close to percentage points to shut shop below the 17400 psychological level. Meanwhile, the widely followed index, Nifty, on NSE too tumbling over a percentage points settled sub 5300 crucial mark. For the week, benchmark equity indices went home with nasty laceration of over two percent. Although for the session, broader indices held in green, for the week, both Midcap and Smallcap index went home with loss of around two percent. Meanwhile, trade of over 1.20 lac core was done in terms of volume turnover.

Cautious global undertone also added to the investor’s reluctance of opening fresh position in home markets. Asian shares ended on mix note ahead of Federal Reserve Chairman Ben Bernanke's speech at Jackson Hole later in the day, as hopes whether Fed would hint at another asset buying programme or quantitative easing in his speech, made investor’s finicky of investing into risky equities. Meanwhile, Japanese stocks plunged to four week low after the release of weak industrial output data. On the flip side, European shares ticked higher ahead of Bernanke's speech, with few in the market expecting the Fed chief to signal anything major.

Closer home, only Health Care stocks exhibited a tough face of resilience in light of sluggish trade, while stocks from Metal, Power and Oil & Gas counters emerged as the major pocket of weakness. Capital goods stocks extended recent losses on worries slowdown in the economy could crimp new orders, while Auto stocks ran out of steam on concerns that sales growth in August would remain subdued on account of high interest on auto loans and rising fuel prices. However, shares of public sector banks briefly turned positive after April-June GDP data showed the farm sector grew more strongly than expected, easing worries of rural non-performing assets. Farm output rose 2.9 in the April-June quarter. State banks are seen particularly exposed to the farming sector. State Bank of India, Bank of India, while Union bank, Dena Bank, Karnataka Bank, and Andhra Bank all rose 0.5-1% before finally succumbing to selling pressure. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1351:1450 while 129 scrips remained unchanged. (Provisional)

The BSE Sensex lost 160.89 points or 0.92% and settled at 17,380.75. The index touched a high and a low of 17,557.62 and 17,337.61 respectively. 5 stocks were seen advancing against 25 declining ones on the index (Provisional)

The BSE Mid-cap index gained 0.05% while Small-cap index was up 0.07%. (Provisional)

On the BSE Sectoral front, Health Care up 0.01% was the sole gainer, while Metal down 1.39%, Power down by 1.33%, Oil & Gas down 1.31%, Realty down by 1.27% and Auto down by 1.23% were the top losers in the space.

The top gainers on the Sensex were Bharti Airtel up 1.38%, Cipla up 1.33%, ONGC up by 1.02%, HDFC up 0.71% and HDFC Bank up 0.13% while, Hero MotoCorp down 3.67%, BHEL down 2.95%, Coal India down 2.88%, HUL down 2.36% and RIL down 2.19% were the top losers in the index. (Provisional)

Meanwhile, driven by higher-than-expected performance on the agriculture front, Indian economy grew 5.5 per cent in first quarter this fiscal, higher than 5.3 per cent GDP number recorded in the previous quarter of fiscal 2012. The growth figure, which is better than consensus estimates of 5.2 per cent, is sharply lower from the robust 8 per cent growth in the same quarter of the last financial year.

As per official data released by the Central Statistics Organization (CSO), quarterly GDP at factor cost at constant (2004-2005) prices for Q1 of 2012-13 is estimated to be at Rs 1306,276 crore, as against Rs 12,38,738 crore in Q1 of 2011-12. Meanwhile, GDP at factor cost at current prices in Q1 of 2012-13, is estimated at Rs 2178778 crore, as against Rs 19,19,286 crore in Q1, 2011-12, showing an increase of 13.5 per cent.

Agriculture emerged as the only saving grace for the sagging economy, which has witnessed a near-stalling of industrial activity. Agriculture came in at better than expected at 2.9 per cent, as against major economists’ estimates at 2 percent. According to the government’s press release, the economic activities which registered significant growth in April-June of 2012-13 on year on year basis are construction at 10.9 percent, financing, insurance, real estate and business services at 10.8 percent and community, social and personal services at 7.9 percent.

On the flip side, services sector was the biggest disappointment, which grew at 6.9 per cent against 10.2 per cent in the year ago period. While, manufacturing saw tepid growth of 0.2 per cent for the quarter under review as against a contraction of 0.3 per cent in the previous quarter. Additionally, mining sector of the economy grew at 0.1 per cent versus 4.3 per cent quarter-on-quarter.

Meanwhile, the gross fixed capital formation (GFCF), a measure of investments, at current and constant (2004-05) prices during 2012-13 are estimated at 29.9 per cent and 32.8 per cent, respectively, as against the corresponding rates of 31.2 per cent and 33.9 per cent, respectively in Q1 of 2011-12. In terms of GDP at market prices, the rates of Private Final Consumption Expenditure (PFCE) at current and constant (2004-05) prices during Q1 of 2012-13 are estimated at 11.7 per cent and 11.1 per cent, respectively, as against the corresponding rate of 11.0 per cent and 10.6 per cent, respectively in Q1 of 2011-12.

However, this slight improvement in GDP growth for the June quarter may prompt the Reserve Bank of India to stand still at its upcoming monetary policy review meet on September 17, as the central bank has reiterated that the government’s fiscal policy action should precede any rate cut move. Further, the central bank also previously stated that investments, the fuel needed to put the economy back in the 8% trajectory, may not revive for more than a year even with lower interest rates, in light of adverse consumption and savings behaviour of individuals and companies.

India VIX, a gauge for markets short term expectation of volatility gained 3.77% at 17.30 from its previous close of 16.67 on Thursday. (Provisional)

The S&P CNX Nifty lost 59.40 points or 1.12% to settle at 5,255.65. The index touched high and low of 5,303.25 and 5,238.90 respectively. 9 stocks advanced against 41 declining ones on the index. (Provisional)

The top gainers on the Nifty were Bharti Airtel up 1.50%, Cipla up 1.13%, SAIL up 0.83%, HDFC up 0.66% and Ranbaxy Laboratories was up 0.64%. On the other hand, Hero MotoCorp down 3.88%, BPCL down 3.74%, Kotak Bank down 3.27%, IDFC down 3.00% and BHEL down 2.92% were the top losers. (Provisional)

The European markets were trading in green with, France’s CAC 40 up 0.59%, Germany’s DAX up 0.66% and the United Kingdom’s FTSE 100 up 0.31%.

Asian markets ended mixed on Friday after Wall Street declined on pessimism about fuel prices and stagnant job growth, ahead of speech by Fed Chairman Ben Bernanke hoping for possible signs of new U.S. stimulus. Hong Kong shares ended lower on a third consecutive day on Friday, sinking deeper into the red in August, after first half corporate earnings disappointed with little prospect of imminent recovery. Japan's Nikkei average fell to a four-week low as Japanese manufacturing activity contracted in August to the lowest level in 16 months.

KLSE Composite was closed today on account of Merdeka day holiday.