Post session - Quick review

Local equity markets showcased a “picture perfect” performance as the domestic barometer gauges after taking a breather in the previous trading session resumed its gaining trajectory with a bang. Both BSE’s and NSE’s barometer gauge- Sensex and Nifty- showcased awe-inspiring performance after the IT bellwether –Infosys- delivered strong Q2 performance, and also pruned its full-year sales outlook by less-than-expected, thereby easing investor worries of a sharp slowdown in the outsourcing sector. The company, which counts Goldman Sachs and BT Group among its main clients, trimmed its dollar revenue growth forecast to 17.1 percent to 19.1 percent for the fiscal year, from 18 percent to 20 percent projected earlier. Indian equity markets brushing aside the mixed global cues and poor domestic data went on capturing new ground as trader’s indulged in scooping up, beaten down blue chip stocks after the previous session of consolidation. Global picture appeared to be gloomy after fears that Slovakia blocked a measure to expand Europe's financial rescue program for heavily indebted countries that mainly intensified worries that a failure by Europe to contain its debt crisis could lead to a massive debt default by the Greek government. Slovakia's parliament rejected a bill Tuesday that would have strengthened the powers of a regional rescue fund to help bail out strapped economies in the euro zone. Meanwhile, on the domestic front, confirming economic slowdown, the industrial growth number came in at 4.1%, worse than expectation of 5% and better than the 21-month low of 3.3% reported in July. However, the Industrial output growth for July was upwardly revised to 3.84 percent. Growth in factory output, as measured in terms of the Index of Industrial Production (IIP), stood at 4.5% in August last year. During the April-August period this fiscal, IIP growth stood at 5.6% , as against 8.7% in the same period last year.

On the global front, US stocks took a breather on Tuesday after the best five days for the S&P 500 in more than two years as investors looked to earnings for a reason to extend the market's rebound.  Meanwhile, Asian shares struggled to find a direction, but finally settled mostly in green with an exception of Nikkei 225 and Taiwan Weighted. European shares climbed for a fifth time in six days, erasing earlier losses, as carmakers and chemical companies increased.

Back home, all the stocks from IT sector witnessed substantial buying action after Infosys Technologies reported 9.72 per cent growth in its consolidated net profit to Rs 1,906 crore for the second quarter ended September 30 against Rs 1,737 crore in the same quarter last fiscal. Consolidated revenue rose to Rs 8,099 crore from Rs 6,947 crore in the year-ago period. However, the other gainers on the BSE Sectoral front were stocks from TECK, Bankex and Realty counters. Realty sensitive’s rose on the expectation that RBI might no go for another rate hike after lower IIP data confirmed fears that the economy was slowing down.

The 30 share sensitive index- Sensex-capturing gains of over massive 400 points ended the trade at a kissing distance of long lost 17000 mark. Similarly, the 50 share index-Nifty-too clocking in gains of over 100 points ended over 5100 mark. The broader indices too joining the run rally ended above with gains of over 1%. The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1848:982 while 101 scrips remained unchanged.

The BSE Sensex gained 432.46 points or 2.62% and settled at 16,968.93. The index touched a high and a low of 16,971.83 and 16,608.57 respectively. 27 stocks advanced against 3 declining ones on the index (Provisional)

The BSE Mid-cap index gained 1.41% while Small-cap index was up by 1.15%. (Provisional)

On the BSE Sectoral front, IT up 5.22%, TECk up 3.81%, Bankex up 3.61%, Realty up 3.17% and Capital Goods up 2.58% were the top gainers while, there were no losers.

The top gainers on the Sensex were Infosys up 7.01%, SBI up 6.31%, Jindal Steel up 4.62%, Tata Motors up 4.44% and BHEL up 3.77%.

On the flip side, Coal India down 2.12%, Tata Power down 1.31% and Bharti Airtel down 0.45% were the only losers on the index. (Provisional)
Meanwhile, country’s Index of Industrial Growth (IIP) for the month of August 2011 grew by 4.1% compared to 5.6% in August 2010. The IIP growth for August 2011 is less than the market’s expectations of 5% however it is marginally above from 3.84% in the last month. The manufacturing segment which accounts for around 76% of IIP grew by 4.5% in August compared to 2.3% in last month. Electricity segment of IIP also grew by 9.5% in August from 13.1% in July and mining segment showed negative figure of 3.4% from positive growth of 2.8% in July. The government also revised the IIP data for month of July, upward to 3.84% from 3.3%.

In the first five months of current financial year, the IIP grew by 5.7% compare to 8.7% in April-August 2010. During April to August 2011, the manufacturing, mining and electricity segments of IIP, grew by 6%, 0.2% and 9.5% compare to 9.2%, 7.7% and 4.1% in April-August 2010.

According to data released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation, the General Index for the month of August 2011 stands at 162.4, which is 4.1% higher as compared to August 2010. The cumulative growth for the period April-August 2011-12 stands at 5.6% over the corresponding period of the previous year.

The Indices of IIP for the Mining, Manufacturing and Electricity sectors for the month of August 2011 stand at 117.6, 172.6 and 149.4 respectively, with the corresponding growth rates of (-)3.4%, 4.5% and 9.5% as compared to August 2010. The cumulative growth in the three sectors during April-August, 2011-12 over the corresponding period of 2010-11 has been 0.2%, 6.0% and 9.5% respectively, which moved the overall growth in the General Index to 5.6%.

During August, in terms of industries, 11 out of the 22 industry groups in the manufacturing sector have shown positive growth during the month of August 2011 as compared to the corresponding month of the previous year with the industry group ‘paper and paper product’ showing no change in the index value. The industry group ‘Radio, TV and communication equipment & apparatus’ has shown the highest growth of 12.5%, followed by 12.1% in ‘Other transport equipment’ and 11.6% in ‘Fabricated metal products, except machinery & equipment’. On the other hand, the industry group ‘Office, accounting & computing machinery’ has shown a negative growth of 26.8% followed by 20.5% in ‘Tobacco products’.
 
As per Use-based classification, the growth rates in August 2011 over August 2010 are 5.4% in Basic goods, 3.9% in Capital goods and 1.3% in Intermediate goods. The Consumer durables and non-durables have recorded growth of 4.6% and 2.9% respectively, with the overall growth in Consumer goods being 3.7%.
 
Some of the important items of intermediate goods showing highly negative growth during the current month and thus contributing to the low growth of the overall index for the month include ‘Colour TV Picture Tubes’ [(-) 59.8%], ‘Viscose staple fibre’ [(-) 40.9%], ‘Sealed Compressors’ [(-) 38.7%] and ‘twine, jute (sutli)’ [(-) 36.0%]. However, some important items of the intermediate goods viz., Coke’ (287.4%), ‘Furnace Oil’ (38.9%) and ‘Industrial Alcohol (Rectified/Denatured Spirit)’ (36.6%) are also showing significant positive growth.
 
The other important items showing positive growth during the month are: ‘Fruit Pulp’ (359.4%), ‘Di Ammonium Phosphate(DAP)’ (64.1%), ‘Stainless/ alloy steel’ (54.9%), ‘sugar’  (50.2%), ‘Vitamins’ (38.0%), ‘Steel Castings’ (37.7%), ‘Aluminium’ (37.6%), ‘Heat Exchangers’ (32.6%), ‘Tractors’ (32.4%) and ‘Air Break Switches/ Circuit Breakers’ (32.2%). 
 
The marginal improvement in the August IIP numbers is because of the base effects. India’s industrial output is expected to be performing well in coming months because of the festive demand however it does not implies that the Industrial production is on way to recovery. 

The hovering inflation and increasing cost of capital because of non-stop hike in Reserve Bank of India’s key policy rates, has adversely affected the industrial output. In order to curb inflation, the RBI has increased its short term lending and borrowing rates for 12 times in last 18 months. However, inflation had remained at elevated level, and for month of August it stood at its 13 month high level of 9.78%.
 
India VIX, a gauge for market’s short term expectation of volatility lost 6.23% at 28.41 from its previous close of 30.30 on Tuesday. (Provisional)

The S&P CNX Nifty gained 128.85 points or 2.59% to settle at 5,103.20. The index touched high and low of 5,109.80 and 4,997.65 respectively. 45 stocks advanced against 5 declining ones on the index. (Provisional)

The top gainer on the Nifty were, Infosys up 7.05%, SBI up 6.54%, Tata Motors up  5.23%, Jindal Steel up 4.62%  and Kotak Bank up 4.50%.

 On the other hand, Coal India down 2.53%, Tata Power down 1.41%, BPCL down 0.96%, Bharti Airtel down 0.76% and Ranbaxy down 0.45% were the only losers. (Provisional)

The European markets are trading in green, with France's CAC 40 up 1.51%, Germany's DAX up 1.40% and FTSE 100 up 0.55%.

Asian markets continued their northward journey and most of the Asian markets ended the trade in positive terrain on Wednesday as investors are hoping early resolution to European debt crisis and good corporate earnings report from the US. Chinese Shanghai remained the biggest gainers among the regional peers, gaining over three percent on talk that the country's sovereign wealth fund has been supporting bank shares, moreover, the gains in Chinese market also lifted Hong Kong market and its benchmark Hang Seng gathered gain of over a percentage point. In addition, Industrial and Commercial Bank of China Ltd rose 1.5 percent in Shanghai and 1.4 percent in Hong Kong while, China Construction Bank Corp rose 2 percent in both markets. However, Nikkei declined about half a percent in the trade as Exporters declined with the development in Europe.