Post Session: Quick Review

It turned out to be an extremely choppy session of trade, where the benchmark equity indices twice slipped in red.  Nevertheless, benchmarks recovering from intra-day’s low level, negotiated modest gains on Tuesday. 41 month low inflation data mainly encouraged investors’ to go for long in some risky equities. In the choppy session of trade, Sensex, gaining a tad over neutral line ended above the psychological 19700 level, While Nifty gaining, over quarter of percent, ended just shy of crucial 6000 (Nifty) level. Meanwhile, broader indices gaining in line with larger counterparts ended with gains of around quarter percent. Bourses’ gains remained capped on account of sharp uptick in February inflation figures from upward to 7.28% from 6.84%, while the widening divergence between WPI and CPI also turned a matter of concern for investors which relentlessly cashed out profit after previous session’s drubbing.

Additionally, negative trading European counterparts, also limited further upside of bourses at D-street. European stock markets were trading in red after German economic sentiment improved less-than-expected in May, thereby underlining concerns over the impact of the euro zone’s debt crisis on the region’s largest economy. On the flip side, most of the Asian pacific shares snapping two-days losing streak rose on Tuesday as a surprising rise in US retail sales boosted sentiment. US retail sales unexpectedly rose in April, prompting Goldman Sachs and JPMorgan to upgrade their view on second-quarter growth and drove the benchmark 10-year Treasury yield up to a six-week high of 1.925 percent on Monday.

Closer home, markets after consolidating in early deals spurted to intra-day high post the release of inflation data. On the macro-front, declining for second straight month, India's main inflation gauge, surprisingly slowed down to its lowest since November 2009 at 4.89% for the month of April, as compared to 5.96% (Provisional) for the previous month of March. However, failing to capitalize more on the easing inflation figures, benchmarks soon started giving up gains. However, dipping to intra-day low level in the mid-noon session, markets soon recovered ground to end the session with modest gains. On the BSE sectoral front, stocks from Oil & Gas, Public Sector Undertaking (PSU) and Bankex counters mainly aided the recovery. The hopes that inflation, which dropped well within the RBI’s comfort zone, could facilitate rate cuts in its upcoming monetary policy review provided a shot of adrenaline to banking stocks, besides other rate sensitives’. Meanwhile, even IT stocks rose on positive economic data in the US, the biggest outsourcing market for the Indian IT firms. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1145: 1191, while 129 scrips remained unchanged. (Provisional)

The BSE Sensex gained 27.42 points or 0.14% to settle at 19,719.09.The index touched a high and a low of 19,831.79 and 19,652.69 respectively. Among the 30-share Sensex pack, 17 stocks gained while rest of them declined (Provisional)

The BSE Mid cap and Small cap indices ended higher by 0.27% and 0.05% respectively. (Provisional)

On the BSE Sectoral front, Teck up by 0.68%, Health Care up by 0.55%, PSU up by 0.50%, Power up by 0.39% and Oil & Gas up by 0.28% were the top gainers, while Consumer Durables down by 1.08%, Realty down by 0.28%, Auto down by 0.26% and FMCG down by 0.19%, were the only losers in the space. (Provisional)

The top gainers on the Sensex were Sun Pharma up by 2.03%, ONGC up by 1.78%, Bharti Airtel up by 1.77%, Gail India up by 1.57% and Tata Motors up by 0.96%, while, Dr Reddys Lab down by 2.66%,  Bajaj Auto down by 1.87%, Coal India down by 0.69%, Mahindra & Mahindra down by 0.67% and BHEL down by 0.66% were the top losers in the index. (Provisional)

Meanwhile, in a big surprise, the annual rate of inflation, based on monthly WPI, slowed down to its lowest since November 2009 at 4.89% (Provisional) for the month of April, 2013 (over April, 2012) as compared to 5.96% (Provisional) for the previous month and 7.50% during the corresponding month of the previous year. Build up inflation in the financial year so far, was 0.53% compared to a build up of 1.55% in the corresponding period of the previous year. However in a disappointment, February inflation figures were revised upward to 7.28% from 6.84%.

Manufactured products, which carry weight of 64.97% in the index, rose by 0.2% to 148.7 (Provisional) from 148.4 (Provisional) for the previous month. The index for 'Food Products' group rose by 0.5% to 165.8 (Provisional) from 164.9 (Provisional) for the previous month. The index of Fuel & Power, which has weight of 14.91%, declined by 0.7% to 194.6 (Provisional) from 195.9 (Provisional) for the previous month due to lower price of aviation turbine fuel (6%), petrol and furnace oil (2% each), lpg(1%).  However, the price of bitumen (1%) moved up.

The index of Primary Articles, having weight of 20.12% too rose by 2.0% to 228.00 (Provisional) from 223.6 (Provisional) for the previous month. The index for 'Non-Food Articles' group rose by 1.4% to 209.7 (Provisional) from 206.9 (Provisional) for the previous month, while the index for 'Minerals' group declined by 0.7% to 355.0 (Provisional) from 357.4 (Provisional) for the previous month.

However, it remains to be noted that besides the sharp uptick of February inflation figures, the widening divergence between WPI and CPI remains the matter of concern. Annual rate of inflation, based on the consumer prices index (CPI), declining for second straight month, finally came in single digit at 9.39% in April, as against 10.39% seen in the previous month.

Meanwhile, C Rangarajan, chairman of the Prime Minister’s Economic Advisory Council termed the inflation data as reassuring, and said that April WPI has now moved into a “Comfort Zone.” “RBI will have room to cut interest rates further if inflation eases”.

The Reserve Bank of India, so far, has obliged the street with rate cuts for three times, with the latest being the one on May 3. Drawing comfort from 3-year low inflation, Reserve Bank of India (RBI), in its ‘Monetary Policy Statement 2013-14’, reduced repo rate by 25 basis points from 7.5% to 7.25% with immediate effect, its lowest since May 2011.

India VIX, a gauge for markets short term expectation of volatility lost 1.94% at 17.17 from its previous close of 16.83 on Monday. (Provisional)

The CNX Nifty gained 16.65 points or 0.28% to settle at 5,997.10. The index touched high and low of 6,026.20 and 5,970.05 respectively. 33 stocks advanced against 16 declining and one stock remains unchanged on the index. (Provisional)

The top gainers on the Nifty were Ranbaxy up by 3.55%, Bank of Baroda up by 2.17%, Sun Pharmaceuticals up by 2.02%, Power Grid up by 1.92% and ONGC was up by 1.89%. On the other hand, Dr. Reddy's Laboratories down by 2.38%, Bajaj Auto down by 2.05%, HCL Tech down by 1.92%, BHEL down by 1.05% and JP Associate down by 0.88% were the top losers. (Provisional)

Most of the European markets were trading in red with, France’s CAC 40 down by 0.38%, Germany’s DAX down by 0.13% and the United Kingdom’s FTSE 100 down by 0.10%.

Asian markets ended mixed on Tuesday amid worries that Beijing may not ease policy to immediately address an economic slowdown. Chinese market went home with red mark after JPMorgan Chase & Co. cut its growth outlook for the nation’s economy. Japan’s Nikkei too closed lower a day after hitting the highest level since December 2007, as the yen strengthened against the US dollar. Furthermore, the Hang Seng market ended marginally lower after swinging between modest gains and losses in choppy trade, as investors remained concerned over China’s economic outlook. On the other hand KOSPI Composite closed shutters on firm note, as gains in South Korean car and technology companies boosted the market.