Markets make another flat closing; Nifty sustains above 5,700 level

Equity markets in India extended their consolidation mood for yet another day; however, unlike most of their regional peers they managed to close marginally in green. The day remained range bound lacking any major supportive cues for the market, traders were cautiously waiting for the report from a high-level committee, headed by HDFC Chairman Deepak Parekh, scheduled to be submitted to Prime Minister Manmohan Singh on funding of infrastructure sector, the requirement of which has been estimated at close to $1 trillion during the 12th Plan period. Cement companies continued their rally on hopes for more infrastructure-related initiatives from the government and also on hopes for increased construction activity after the end of the monsoon season.

There was cautiousness in the market after Reserve Bank of India’s deputy governor Subir Gokarn said that inflation remains stubbornly high and is a barrier to economic growth. The somberness also strengthened after ADB cut its growth estimates for India and said that growth in India is expected to hit 5.6% and 6.7% in 2012 and 2013, weaker than previous forecasts of 7% and 7.5%. Not only India, the Manila-based bank has cut most of its 2012 and 2013 growth estimates for developing Asia and said that euro zone's unresolved sovereign debt crisis and US fiscal cliff remain the biggest risks to the growth outlook of the developing nations. Traders avoided building positions in the blue-chips and selective buying was seen in oil & gas, PSU and FMCG stocks. While the broader indices kept their momentum going throughout the day and outperformed the benchmarks.

On sectoral front, oil & gas remained the leader since morning, supported by gains in the market heavyweight RIL after it was reported that the company has sent a missive to the oil ministry that if government and Directorate General of Hydrocarbons don’t agree with the company’s 1.6 billion budgetary plan for FY12-13, it may lead to closure of the KG-D6 block in 2015-16. On the other hand Auto sector turned the laggard of the day and the monthly sales number was seen impacting the momentum of auto stocks. The major two wheeler companies Hero MotoCorp and Bajaj Auto, both declined by over one and half a percent. Bajaj Auto’s September sales declined by 14%, while Hero MotoCorp reported a drop of 26% in its September sales compared to corresponding previous month. On the same time largest passenger car maker Maruti Suzuki gained speed after announcing a hike in all models by up to Rs 5,250 with immediate effect to offset adverse impact of foreign exchange fluctuation and rising input costs. The telecom stocks too remained buzzing ahead of an EGoM to decide on the one-time spectrum fee issue.

In the non sectoral pack, the UB group stocks kept buzzing, while the Kingfisher Airlines languished in red, again trading at its lower circuit limit on growing labour unrest and being ordered to submit a revival plan before it can fly again. On the other hand, United Spirits and United Breweries Holdings were up on reports that Diageo deal is likely to be announced soon.

The market breadth remained in favor of advances; there were 1,759 shares advancing against 1,172 on the declining side, while 136 shares remain unchanged. Despite being the early days of the new F&O series the overall market turnover were good of over Rs 1.2 lakh crore.

The BSE Sensex gained 45.78 points or 0.24% to settle at 18869.69, while the S&P CNX Nifty rose by 12.45 points or 0.22% to close at 5,731.25.The BSE Sensex touched a high and a low of 18905.62 and 18816.57 respectively. The BSE Mid cap index was up by 0.58% and Small cap index gained 0.96%. 

Hindustan Unilever up by 2.37%, Dr Reddys Lab up by 2.21%, Coal India up by 1.98%, Hindalco up by 1.55% and TCS up by 1.46% were top gainers on the Sensex, while Jindal Steel down 4.58%, Hero MotoCorp down 1.66%, Bajaj Auto down 1.56%, Infosys down 1.17% and ITC down 1.15% were top losers on the index.

The major gainers on the BSE sectoral space were, Oil & Gas up 0.99%, PSU up 0.63%, Health Care (HC) up 0.55%, Metal up 0.46% and Capital Goods (CG) up 0.46%, while Auto down 0.36, Consumer Durables down 0.22%, IT down 0.16%, TECk down 0.14% and Bankex down 0.09% were top losers on the BSE sectoral space.  

Meanwhile, the twin factors-dwindling global demand and delayed monsoon that have exacerbated India’s recent economic slowdown, have now led to reduced growth forecasts by the Asian Development Bank (ADB) for fiscal years 2012 and 2013. In its  report “Asian Development Outlook 2012 Update”, ADB lowering its projection, has pegged India’s gross domestic product to grow by 5.6% in FY2012 (which ends March 2013) and 6.7% in FY2013, from earlier projections of 7.0% and 7.5%, respectively, for the two years. Besides this, the report has also raised projected inflation to 8.2% in FY2012 (from 7.0%) on the back of higher domestic food and fuel prices.

Additionally, the report has blamed tight monetary policy to counter persistently high inflation and a high deficit for having left little room for policy to stimulate growth. Further, the report has mainly highlighted ongoing sovereign debt crisis in the euro area and looming fiscal cliff in the US to have disastrous spillovers to the rest of the world, particularly developing Asia.

However, the Manila-based bank, in its reports, has suggested the region to start reversing this trend by improving investment climate and expediting reforms, which off lately seems to be a top priority for the government, has made some headway in addressing these challenges recently. In its latest reform drive, a long needed but politically controversial decision to permit foreign direct investment (FDI) in multi-brand retail stores has been cleared, diesel prices have been hiked by 12%, use of subsidized liquefied petroleum gas has been capped to contain the fiscal deficit and lastly a controversial proposal to review tax avoidance on foreign investments has been deferred by three years.

The S&P CNX Nifty touched a high and low of 5,743.25 and 5,715.80 respectively.

The top gainers on the Nifty were IDFC up by 4.49%, Siemens up by 3.69%, Ambuja Cement up by 3.20%, HUL up by 2.55% and Dr Reddy up by 2.52%. On the flip side, Jindal Steel down by 4.79%, Power Grid down 1.96%, Hero MotoCorp down 1.68%, Bajaj Auto down 1.63% and Axis Bank down 1.57% were top losers.

The European markets were trading mixed, France's CAC 40 down by 0.26%, Germany's DAX up by 0.04% and United Kingdom’s FTSE 100 up by 0.09%.

Asian Markets ended mostly lower on Wednesday on the back of continued worries over the timing of a bailout for Spain and downbeat data from China turned investors cautious.  However, Hong Kong’s market ended with some gains as resumed trading following a long weekend. Chinese telecom stocks gains also helped Hang Seng shares to hold gains.  Japanese stocks ended with red mark as the auto makers turned lower. Markets in China and Korea are closed today for holidays.