Post session - Quick review

It turned out to flattish session of trade yet again at D-street, whereby benchmark equity indices failing to gain traction once again settled in the favour of red, thereby registering fourth negative consecutive sessions for the week which ended with loss of over half a percent each. Nasty December trade deficit data, mainly took a toll on the market sentiment, whereas November IIP data turned out to be a non-event. Intense profit-booking, which took place in the wee hours of the trade, mainly took the markets lower. However, the losses of the bourses remained capped on account of the surge of Information Technology (IT) stocks, which along with Technology and Consumer Durable stocks, managed to showcase exceptional trend.

On macro-economic front, in a positive surprise, India's annual industrial output growth measured by index of industrial production (IIP), contracted by just 0.1% at 167.3 for the month of November 2012, although way below the robust 8.2% growth figure in the previous month. Meanwhile, India's trade deficit lessened to $17.7 billion in December from $19.3 billion in recorded November 2012. Exports fell 1.9% year-on-year to $24.88 billion in December, whereas improved when compared to $22.3 billion recorded in November 2012.

The gains in Information Technology counters were primarily spelled by a rally in software services exporters, after Infosys surprised markets by raising its revenue outlook and posting better-than expected earnings. Consolidated net profit for the Nasdaq-listed firm was flat at Rs 2369 crore in the October-to-December quarter, against Rs 2370 crore a year earlier, higher than street’s expectation of Rs 2100 crore profit. Rivals Tata Consultancy Services (TCS), Wipro and Mahindra Satyam also rose in the range of about three to six percent each on optimism over earnings growth.

Thus, the event full session of trade saw Sensex settling sub its crucial 19650 bastion, while 50 share index, Nifty, losing close to half a percent, concluded sub 5950 psychological level. Broader indices showcasing degree of outperformance settled with cut of over a percent.

On the global front, Asian shares staged a mostly negative close on Friday barring Japanese stocks ended higher for the ninth consecutive week, the market's longest consecutive weekly climb since in 1988, as the yen weakened after Japan announced a larger-than-expected trade deficit, while Chinese stocks dropped after a pick-up in inflation. The yen weakened after Japan announced that its current account fell into a deficit of Y222.4 billion in November, much wider than the Y33.5 billion shortfall forecast by economists. Meanwhile, European shares edged down on Friday but stayed close to near two-year highs, with falls in basic resources stocks on concerns about faltering monetary stimulus from China offsetting gains in tech shares.

Closer home, profit booking was witnessed in 10 out 13 sectoral indices; defensive FMCG, Realty and Public Sector Undertaking (PSU) counter emerged to be worst performers. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1011:1924 while 142 scrips remained unchanged. (Provisional)

The BSE Sensex lost 24.21 points or 0.12% and settled at 19639.34. The index touched a high and a low of 19839.80 and 19619.83 respectively. 4 stocks were seen advancing while 26 stocks were declining on the index (Provisional)

The BSE Mid cap and Small cap indices decline 1.62% and 1.63% respectively. (Provisional)

 On the BSE Sectoral front, IT was up by 9.38% and TECk up by 6.62% were the only gainers, while FMCG down by 2.77%, Realty down by 2.29%, Power down by 1.86%, PSU down by 1.85% and Oil & Gas down by 1.80% were the top losers in the space.

The top gainers on the Sensex were Infosys up by 17.06%, Wipro up by 6.12%, TCS up by 3.69% and Sterlite Industries up 0.73%, while, Hindustan Unilever down by 3.86%, ONGC down by 3.58%, Jindal Steel down by 3.57%, ITC down by 2.92% and Mahindra & Mahindra down by 2.83% were the top losers in the index. (Provisional)

Meanwhile, as per Prime Minister's Economic Advisory Council chairman C Rangarajan, country's headline inflation may miss the expected 7 percent-mark by this fiscal-end if the government goes ahead with increasing administered prices of diesel.  While addressing an event organized by the Indian Institute of Foreign Trade, he said, ‘in the normal case, it is expected to come down to 7 percent (at the end of current fiscal). But, some adjustments are being made in the administered prices they may come in the way of headline inflation coming down.’

Inflation based on the wholesale price index (WPI) cooled down to 7.2 percent in November this year from 10.9 percent in April 2010. However, if the government accepts the Kelkar Committee’s recommendation of immediate hike in fuel prices and complete deregulation of diesel prices, a further moderation in the short-run may not be possible.

Further, the oil ministry had already moved a note to Cabinet based on recommendation of the Vijay Kelkar Committee, which was appointed by the finance ministry to suggest a roadmap for fiscal consolidation. The committee had recommended an immediate hike in price of diesel by Rs 4 per litre, kerosene by Rs 2 a litre and LPG by Rs 50 per cylinder.

Moreover, for attaining fiscal consolidation, the government must reduce the mounting subsidy bill, should act quickly to raise diesel rates to bring them in line with global. Justifying the government’s proposed move of raising fuel prices Rangarajan said, the decision to raise the diesel prices would be a right decision on a medium term and headline inflation may moderate to 6 percent in 2013-14.

 India VIX, a gauge for markets short term expectation of marginally lost 0.30% at 13.23 from its previous close of 13.27 on Thursday. (Provisional)

The S&P CNX Nifty lost 25.10 points or 0.42% to settle at 5,943.55. The index touched high and low of 6,018.85 and 5,940.60 respectively. 6 stocks advanced against 44 declining on the index. (Provisional)

The top gainers on the Nifty were Infosys was up by 17.04%, Wipro was up by 6.17%, TCS was up by 3.77%, HCL Tech was up by 0.51% and Lupin was up by 0.50%. On the other hand, Hindustan Unilever down by 4.08%, Jindal Steel down by 4.04%, JP Associates down by 3.93%, Kotak Bank down by 3.80% and ONGC down by 3.62% were the top losers. (Provisional)

European markets were trading in red, Germany’s DAX down by 0.14%, the United Kingdom’s FTSE 100 down by 0.08% and France’s CAC 40 down by 0.50% while there was no loser in space.

Asian markets ended mostly lower on last trading day of the week due to increase in Chinese inflation, which rose at 2.5% in December from a year earlier, quicker than November's 2.0% rise. Japan’s Nikkei went home with green mark after touching a fresh 22-month high, as the yen weakened after Japan announced a larger-than-expected trade deficit. Meanwhile, South Korean market closed lower as the central bank kept key interest rate unchanged and cut its forecast for the country’s economic growth this year on the back of slower corporate investment and uncertainties about the global economy. Also, the auto makers were dragged the market down, as the lower yen raised the threat from Japanese rivals.