Post session - Quick review

Benchmark equity indices treaded water ahead of crucial RBI’s second quarterly monetary policy review meet, as trade turned listless by the closing bell. Squandering a positive start, benchmark equity indices gyrating lower ended in no man’s land since caution over whether RBI would cave in to growing clamor of rate cut in order to reciprocate to government recent reform drive for boosting economic growth demoralized investor’s from investing into risky equities. Meanwhile, Finance Minister’s unveiled five-year road map for fiscal consolidation too turned out to be a damp squib as nothing out of the blue was announced. In an effort to prevent the country's credit rating being downgraded to junk status, FM said that the government will work towards restricting fiscal deficit in the current financial year to 5.3 per cent of the gross domestic product (GDP), i.e, higher than the budgeted fiscal deficit for the current fiscal at 5.1 percent of GDP) and further trimming it down to 3 per cent by 2016-17.

Additionally, distressing state-owned power equipment maker’s BHEL earnings too added to the investor’s woes, leaving Consumer Durable widely lower. Further, absence of positive cues from global front too prevented the further upside of the Indian equity markets. Thus, in the highly volatile session of trade, 30 shares barometer index, Sensex, managing to gain a little over 10 points, ended above the psychological 18650 level. Similarly, widely followed index, Nifty, too gaining a tad above neutral line, settled above the 5650 crucial mark. However, the broader indices failed to collect any steam by end of the trade and went home with gain of over half a percent.

On the global front, Asian pacific shares ended mostly in red terrain as better-than-expected US growth data failed to offset concerns over corporate earnings as Honda issued a profit warning. Further, trader’s also turning nervous preferred to be on the sidelines at the start of a crucial week that will see a Bank of Japan policy meeting, the release of US jobs data and a series of talks in Europe on Greece's debt.

Closer home, early gains at Dalal Street was largely thanks to big cabinet rejig. In the biggest reshuffle of the Congress-led United Progressive Alliance Cabinet, Manmohan Singh inducted 17 new faces and a total of 22 ministers giving several new and young faces a chance to prove their mettle as his government try to remove the taint of scams and non-performance from its progress report. The biggest beneficiary of the rejig were the stocks of market bellwether Reliance Industries, which have scooped up gains on hopes of improved relationship with the government after the appointment of Veerappa Moily as the new Petroleum and Natural Gas Minister on Sunday. Nevertheless, caution ahead of RBI’s policy review, slew of disappointing Q2 earnings and much in line with expectation fiscal consolidation roadmap, sapped the risk appetite of investor’s leading to lackluster session of performance at Dalal Street.

On the result front, biggest disappointment crept in from stocks state-owned power equipment maker BHEL, which tanked over massive 6%, on reporting lower-than-expected top line and bottom line numbers while the only positive was its EBITDA margin in the second quarter of financial year 2012. Net profit of the company fell by 9.77 percent year-on-year to Rs 1,274 during the quarter while revenues grew marginally to Rs 10,399 crore from Rs 10,299 crore year-on-year. Additionally, stocks of Havells India too were beaten blue despite reporting rise in net profit by 24 percent year-on-year to Rs 87 crore in the quarter ended September 2012, in-line with expectations. Moreover, Procter & Gamble Hygiene and Health Care (P&G), too after scaling a fresh 52 week high, succumbed to profit booking despite reporting a rise of 5.82% in net profit to Rs 45.27 crore for the quarter ended September 30, 2012. Furthermore, public sector lender Bank of India too plummeted over 2% on reporting poor Q2 numbers due to sharp rise in bad loans in the July-September quarter. Net profit of the bank fell by 38.5 percent year-on-year and 66 percent quarter-on-quarter basis to Rs 302 crore in the quarter.

On the flip side, Q2 earnings of Muthoot Finance, which provides personal and business loans secured by gold, was a hit among investor’s. The company reported a rise of 24.34% in a net profit to Rs 268.02 crore as compared to Rs 268.02 crore in the same period last year. Additionally, JSW Ispat too garnered gains of close to a percent on turning into black in September quarter. The company reported net profit of Rs 122.39 crore as compared to a net loss of Rs 345.30 crore for the same quarter in the previous year. Moreover, JSW Steel scooped up gains of over half a percent on posting over six fold rise in Q2 net profit. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1239:1590 while 136 scrips remained unchanged. (Provisional)

The BSE Sensex gained 10.48 points or 0.06% and settled at 18635.82. The index touched a high and a low of 18743.41 and 18572.02 respectively. 16 stocks were seen advancing while 14 stocks were declining on the index (Provisional)

The BSE Mid-cap index was down by 0.43% while Small-cap index was down by 0.60%. (Provisional)

On the BSE Sectoral front, Oil &Gas up by 0.62%, CD up by 0.51%, HCs up by 0.27%, TECk up by 0.13% ,IT up by 0.13% were the  top gainers , while CG down by 1.69%, Realty down by 0.72%, Power down by 0.68%, PSU down by 0.56% and Bankex down by 0.28% were the top losers in the space.

The top gainers on the Sensex were Wipro up 2.63%, Tata Power up 2.25%, Hero MotoCorp up by 1.92%, Dr Reddy’s Lab up by 1.49% and RIL up 1.44%, while, BHEL down by 6.42%, Sterlite Industries down by 2.33%, Tata Motors down by 2.18%, L&T down by 1.21% and Coal India down by 1.07% were the top losers in the index. (Provisional)

Meanwhile, concerned over ballooning budget deficit overturning economic growth, Finance minister P Chidambaram on Monday unveiled a five-year road map for fiscal consolidation to promote investments, rein inflation and push India to high growth trajectory.

In an effort to prevent the country's credit rating being downgraded to junk status, FM said that the government will work towards restricting fiscal deficit in the current financial year to 5.3 per cent of the gross domestic product (GDP), (higher than the budgeted fiscal deficit for the current fiscal at 5.1 percent of GDP) and further trimming it down to 3 per cent by 2016-17.

Emphasizing on the need of this exercise, he underscored that, “As fiscal consolidation takes place and investors' confidence increases, it is expected that the economy will return to the path of high investment, higher growth, lower inflation and long-term sustainability”.

Laying down the roadmap, the FM exhibited confidence in Government raising Rs 30,000 crore from disinvestment and Rs 40,000 crore from sale of spectrum. As regards the revenue targets, he said, “every effort will also be made to realize the revenue budgeted under tax receipts. Further, the Government would work hard to be able to contain and economies on expenditure, both on the plan and non-plan side.”

The roadmap of fiscal consolidation closely follows the recommendation of the Vijay Kelkar-headed Committee which had suggested that the government should undertake reform initiatives, go ahead with disinvestments and trim subsidies, in absence of which fiscal deficit could shoot up to 6.1 per cent in 2012-13.

India VIX, a gauge for markets short term expectation of volatility gained 6.40% at 15.12 from its previous close of 14.21 on Friday. (Provisional)

The S&P CNX Nifty gained 1.30 points or 0.02% to settle at 5,665.60. The index touched high and low of 5,698.30 and 5,645.10 respectively. 15 stocks advanced against 35 declining ones on the index. (Provisional)

The top gainers on the Nifty were Wipro was up 2.54%, Tata Power up 2.15%, Hero Moto Co up 1.73%, Dr Reddy up 1.52% and Cipla was up 1.51%. On the other hand, BHEL down 6.58%, Tata Motors down by 2.08%, BPCL down by 1.48%, LT down by 1.35% and Coal India down by 1.34% were the top losers. (Provisional)

The European markets were trading in red with, France’s CAC 40 down 1.06%, Germany’s DAX down 0.64% and the United Kingdom’s FTSE 100 down 0.53%.

Asian stock markets ended mostly lower on Monday as better-than-expected US growth data was unable to offset concerns over corporate earnings. Hong Kong market dragged down by sharp declines in local property developers, following the introduction of a 15% tax on housing purchases by foreign and corporate buyers aimed at cooling soaring property prices. Meanwhile, Japans Nikkei closed in negative territory as stronger yen proved a drag in quiet trading ahead of the Bank of Japan meeting. Taiwan went home with red mark reacting on negative earnings guidance of phone maker HTC Crop for the fourth quarter.