Profit booking in late trade drags benchmarks below their crucial level

It turned out to be a disappointing session of trade for the Indian stock markets, as market participants booked their profit ahead of IIP numbers and third quarter earning slated to be released later this week. The frontline gauges, after managing to keep their head above water in first half, turned choppy in second half as sentiments got weighed down after the Society of Indian Automobile Manufacturers (SIAM) further downgraded the growth forecasted in the automobile industry for FY’13 to 0-2% from 1-3% projected in October this year, thereby reflecting acute slowdown being faced by the automobile manufacturers across all segments like commercial vehicles, two-wheelers as well as passenger cars. Meanwhile, domestic car sales fell by 12.51% to 141,083 units in December last year compared to 161,247 units in the same month in 2011. However, motorcycle sales last month went up by 4.83% to 844,113 units from 805,198 units in December, 2011.

However, the sentiments to some extent were soothed in the dying hours of the trade, by the spurt of Railway stocks, which enticed traction after Union Railway Minister Pawan Kumar Bansal increased passenger fares by up to 20 percent. Beneficiaries of this development were Titagarh Wagon, Kalindee Rail Nirman and Texmaco Rail & Engineering. However, the recovery was not enough to pare all the losses as power stocks continued to exert pressure on the frontline indices. Stocks like, Adani Power, JSW Energy, NTPC, Power Grid Corp and Reliance Power declined after Finance Ministry raised concerns on the proposed discount on reserve price of coal mines to be offered to power companies.

Also, investors shrugged off positive global set up with most of the Asian markets shut shop in the green on Wednesday as investors resumed buying after taking profits from a sharp rally at the start of the year while warily bracing for corporate earnings season to kick off in full force. Moreover, European counters, before cooling down, climbed towards a new 22-month high after an encouraging start to the fourth quarter earnings season buoyed investors sentiment.

Back home, traders remained cautious ahead of IIP numbers which is slated to be released on January 11, 2013. The benchmarks slipped below their crucial 6,000 (Nifty) and 19,700 (Sensex) levels as selling witnessed in software pack ahead of the Oct-Dec earnings starting this Friday. Infosys, the bellwether stock of Information Technology index, will unveil its third quarter performance amid fear that software maker may cut its revenue guidance for the next quarter. However, the losses remain capped as some support came in from reports that the government is planning to hike the price of subsidised LPG cylinders by Rs 130 during January-March 2013. It also plans to hike diesel prices by Rs 1.5 a litre every month. All the PSU oil marketing companies viz. BPCL, HPCL and IOC traded higher during the session. Telecom stocks like Idea Cellular and Bharti Airtel too were trading with traction after the telecom department (DoT) approached the Supreme Court seeking extension of its January 18 deadline for shutting down mobile networks till the next round of airwaves auctions.

The NSE’s 50-share broadly followed index Nifty declined by thirty points to end below the psychological 6,000 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by seventy five points to finish well below the psychological 19,700 mark. Moreover, broader markets too butchered during the trade and ended the session with a cut of about half a percent.

The overall volumes stood above Rs 1.50 lakh crore, which remained on the higher side as compared to that on Tuesday. The market breadth remained in favor of advances as there were 1,617 shares on the gaining side against 1,318 shares on the losing side while 131 shares remain unchanged.

Finally, the BSE Sensex lost 75.93 points or 0.38% to settle at 19,666.59, while the S&P CNX Nifty declined by 30.20 points or 0.50% to end at 5,971.50.

The BSE Sensex touched a high and a low of 19,824.06 and 19,627.16, respectively. The BSE Mid-cap index was down by 0.48% and Small-cap index ended lower by 0.25%.

The top gainers on the Sensex were, Tata Motors up by 3.98%, Gail India up by 1.62%, SBI up by 1.13%, Coal India up by 1.01% and Sun Pharma up by 0.94%, while, BHEL down by 2.69%, Tata Steel down by 2.54%, Bajaj Auto down by 1.96%, ITC down 1.93% and TCS down by 1.74% were the top losers on the index.

The top gainers on the BSE Sectoral space were Auto up by 0.74%, Oil & Gas up by 0.50%, PSU up by 0.17% and Health Care (HC) up by 0.04%, while FMCG down 1.26%, Consumer Durables (CD) down 1.21%, Metal down 1.18%, Capital Goods (CG) down 1.01% and Power down 0.83% were top losers on the sectoral space.

Meanwhile, slowing GDP growth and high interest rates have slashed the car sales in India in the current fiscal. According to the data released by the Society of Indian Automobile Manufacturers (SIAM), car sales in December fell 12.5% to 141,083 units, the second consecutive monthly fall. So far this fiscal, car sales is down 0.33% on the same period a year ago. The auto industry is also expected to post weakest growth in nine years for this fiscal because of low GDP growth, rising fuel costs and expensive credit impacting the demand of cars in running fiscal.

As per the data released, motorcycle sales last month went up by 4.83% to 844,113 units from 805,198 units in December, 2011. Total two-wheeler sales for the reporting month rose by 4.45% to 11,37,148 units from 10,88,746 in the same month previous year.

Sales of commercial vehicles were down by 13% to 62,786 units from 72,166 units in the same period in 2011. Total sales of vehicles across categories registered an increase of 2.77% at 14,51,517 units last month as against 14,12,372 units in the same month previous year. The overall growth in domestic sales during April- December 2012 was 4.57% over the same period last year.

Further, SIAM has slashed its car sales growth forecast for the financial year ending March 2013 to 0-1%, its third downgrade this financial year from an initial estimate of 10-12%.

After a 30% expansion in sales in fiscal 2010-11, a slew of global carmakers including Ford, General Motors, and Nissan invested billions of dollars in building up their Indian operations. However, a series of interest rate hikes and rising fuel costs discouraged buyers, who are typically dependent on loans for purchases, affected the sales number of last year to 2.2%.

The S&P CNX Nifty touched a high and a low of 6,020.10 and 5,958.45 respectively.

The top gainers on the Nifty were Tata Motors up by 4.09%, GAIL up by 1.66%, Coal India up by 1.50%, ONGC up by 1.43% and Bharti Airtel up by 1.24%.

The top losers of the index were BHEL down by 2.91%, Tata Steel down by 2.69%, Ambuja Cement down by 2.67%, ITC down by 2.43% and Ultra Tech Cement down by 2.29%.

The European markets were trading in green, France’s CAC 40 up by 0.09%, Germany’s DAX up by 0.11% and the United Kingdom’s FTSE 100 up by 0.34%.

Asian markets ended mostly higher on Wednesday, after early session of profit taking from a sharp rally at the start of the New Year, ahead of corporate earnings season. Hong Kong’s Hang Seng closed with gains after a downturn in the prior session, with sentiment helped by recovery of Chinese shares. Japan’s Nikkei went home with green mark as yen slipped against the dollar.