Post session - Quick review

Initial optimism at Dalal Street vanished by the end of the session on Tuesday as caution prevailed ahead of the talks between French and German leaders on possible further measures to contain Europe's debt crisis buoyed investor’s to place both large cap and mid cap stocks on sword.  In the opening deals, although benchmarks vigorously grabbed their key psychological levels  of 17 k (Sensex) and 5100 (Nifty) as investors welcomed the release of better-than-expected Japanese economic data and US retail sales  data which increased the most in four months, however the bourses squandered all their gains soon after. Meanwhile, the bang on expectation July WPI data did some good to the bourses if not much as it aided the benchmark’s to recover from their intra day’s low. India's headline annual rate of inflation, based on the monthly Wholesale Price Index (WPI), declined to 9.22 per cent for the month of July 2011 as compared to 9.44 per cent for the previous month and 9.98 per cent during the corresponding month of the previous year. However this cheer too was shot lived as investor’s qualm about the rate hike, spooking the sentiment. The Reserve Bank of India (RBI) so far has raised rates 11 times since March 2010 to combat high inflation, which is seen as dragging down growth from the government's projection of 8.5% for the current fiscal that ends in March 2012.

Also dictated the negative movements of the bourses were the negative opening of the European markets, which fell more than 1 percent after German gross domestic product growth slowed more than expected in the second quarter, weighed by a negative trade balance, flagging consumption and weak construction investment. Previous night on Wall Street, the Dow rose for the third straight day, adding 213 points to 11,482.90 as investors saw Google's offer for phone maker Motorola Mobility as an excuse to jump back into the market after weeks of sharp selling. Meanwhile, Asian stocks which rose following the longest series of weekly losses since June after US retail sales increased by the most in four months and Japan’s second-quarter gross domestic product beat economist estimates too surrendered all their gains by the end of the trade.

Back to Dalal Street, the heavy selling pressure that was witnessed especially approaching close to closing bell, saw 30 scrip sensitive index  Sensex-ending below the 17000 mark with a loss of over 100 points. Similarly, investor’s reluctance to build position saw 50 share broadly followed index- Nifty- ending below the 5100 mark away by 30 points from its previous close.  The broader indices narrating no different tale were down and out with a cut of over 1%. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 854:1984 while 92 scrips remained unchanged.

The BSE Sensex lost 69.96 points or 0.42% and settled at 16,769.67. The index touched a high and a low of 17,035.49 and 16,673.52 respectively. 10 stocks advanced against 20 declining ones on the index (Provisional)

The BSE Mid-cap index lost 1.76% while Small-cap index was down by 2.06%. (Provisional)

On the BSE Sectoral front, IT up 1.26%, TECk up 0.97% and FMCG up 0.40% were the only gainers.

On the flip side, Realty down 5.38%, Metal down 1.98%, Bankex down 0.97%, Oil & Gas down 0.83% and Power down 0.77% were the top losers.

The gainer on the Sensex was BHEL up 2.67%, TCS up 2.29%, Bharti Airtel up 1.85%, Infosys up 1.29% and ITC up 1.16%. (Provisional)

On the flip side, JP Associates down 7.51%, DLF down 5.97%, Hindalco down 5.07%, HDFC down 3.43% and Cipla down 2.81% were the top loser on the index. (Provisional)

Meanwhile, India’s Headline Inflation measured by Wholesale Price Index (WPI) rose to 9.22% in July, which is just below the June’s 9.44%. The plunge in inflation on monthly basis is due to moderation in food inflation, fuel and power inflation, however, the manicured products segment of WPI, surged to 7.49% in July from 7.43% in June. The government also revised upward the headline inflation data for the month of May to 9.56% from 9.06%. This was the second revision of inflation data in the current financial year. In its last revision the government had increased the inflation data for the April from 8.66% to 9.74%  

According to the data released by the ministry of commerce and industry, the Wholesale Price Index for 'All Commodities' (Base: 2004-05 = 100) for the month July, 2011 rose by 0.7% to 154.0 (Provisional) from 153.0 (Provisional) for the previous month. The annual rate of inflation, based on monthly WPI, stood at 9.22% (Provisional) for the month of July, 2011 (over July, 2010) as compared to 9.44% (Provisional) for the previous month and 9.98% during the corresponding month of the previous year. Build up inflation in the financial year so far was 3.01% compared to a buildup of 3.45% in the corresponding period of the previous year.

On monthly basis, the index for Primary Articles group rose by 0.2 percent to 197.9 (Provisional) from 197.5 (Provisional) for the previous month. The index for ‘Food Articles’ group rose by 1.4 percent to 192.8 (Provisional) from 190.1 (Provisional) for the previous month due to higher prices of coffee (15%), gram (8%), fish-inland (7%), ragi (6%), mutton (4%), fruits & vegetables (3%), barley, bajra and rice (2% each) and wheat (1%).  However, the prices of condiments & spices (3%), urad, egg and arhar (2% each) and poultry chicken, masur and tea (1%) declined.

The index for ‘Non-Food Articles’ group declined by 3.0% to 175.8 (Provisional) from 181.3 (Provisional) for the previous month due to lower prices of raw cotton (12%), flowers (7%),  raw rubber (6%), copra (4%), soyabean and mesta (3% each) and raw jute (2%). However, the prices of gaur seed (20%), niger seed (16%), linseed (11%), coir fibre (8%), sunflower (6%), gingelly seed (5%), safflower (4%), castor seed (3%) and rape & mustard seed, cotton seed, groundnut seed and raw silk (1% each) moved up.

The index for ‘Minerals’ group declined by 1.5% to 307.7 (Provisional) from 312.5 (Provisional) for the previous month due to lower prices of zinc concentrate (28%), limestone (7%), barytes (5%), steatite and iron ore (4% each) and sillimanite and crude petroleum (1% each).  However, the prices of bauxite (7%), magnesite (5%), chromite (4%) and copper ore (3%) moved up.

The index for the Fuel and Power rose by 2.5% to 165.6 (Provisional) from 161.6 (Provisional) for the previous month due to higher prices of kerosene (13%), LPG (11%) and high speed diesel (7%).  However, the prices of bitumen (6%), furnace oil (4%), naphtha and light diesel oil (3% each) and aviation turbine fuel (2%) declined.

The index for Manufactured Products rose marginally by 0.3% to 137.7 (Provisional) from 137.3 (Provisional) for the previous month. Under this major group, products such as ‘Food Products, ‘Beverages, Tobacco & Tobacco Products’, 'Wood & Wood Products', 'Transport, Equipment & Parts products,  'Rubber & Plastic Products’, and Paper & Paper Products' group, registered growth in prices for the month of June. However, products like 'Textiles' group and Machinery & Machine Tools’ showed decline in prices for June.

The surge in manufacturing inflation in July is alarming. It has been above 7.4% since May 2011. Which indicated that the Reserve Bank of India (RBI) is expected to maintain its anti inflationary monetary policy stance and it is most likely to go for 12th in row on 16 September. Since March 2010 RBI has increased it key policy rates 11 times. 

In the Independence Day speech Prime Minister Dr. Manmohan Singh had expressed his concern over the price scenario. Prime Minister said 'Our country is passing through a phase of sustained high inflation. Controlling rising prices is a primary responsibility of any government. By adding further Prime Minister said 'I wish to assure you today that we are continuously monitoring the situation to find out what new steps can be taken to arrest rising prices. Finding a solution to this problem will be our top-most priority in the coming months.'

India VIX, a gauge for market’s short term expectation of volatility lost 2.07% at 26.46 from its previous close of 27.02 on Friday. (Provisional)

The S&P CNX Nifty lost 12.00 points or 0.24% to settle at 5,060.95. The index touched high and low of 5,132.20 and 5,015.40 respectively. 19 stocks advanced against 31 declining ones on the index. (Provisional)

The top gainers on the Nifty were TCS up 3.15%, BHEL up 3.09%, HCL Tech up 2.27%, Bharti Airtel up 2.03% and ITC up 1.99. (Provisional)

On the other hand, JP Associates down 7.66%, RCOM down 7.59%, Reliance Power down 7.29%, Reliance Infra down 7.29% and Reliance Capital down 7.03% were the top losers. (Provisional)

The European markets are trading in red, with the France's CAC 40 down 1.48%, Germany's DAX down 2.38% and FTSE 100 down 0.82%.