Market remains in consolidation mood; snaps the session with modest gain

After a day of sharp plunge the Indian equity markets went through a choppy session on Tuesday when benchmarks dipped into red for a couple of times despite India's headline inflation coming back in the Reserve Bank's comfort zone after surprisingly declining to 4.89 percent in April, at its more than three years low. Though sharply lower inflation numbers on the back of the declining price of food items, including fruits and vegetables, may present a case for further monetary policy easing but at the same time the traders were concerned about the increased growth risks in the manufacturing sector, reflected in a sharp drop in core inflation to 2.77 percent from 3.5 percent.

Earlier, the markets made a cautious start as the US markets made a flat closing overnight, while the Asian markets started mostly in green taking cues from the rise in the retail sales in the US as it buoyed the earnings outlook of the exporters in the region. However, at the end the result was mixed with some of the indices ending in red led by China after growth outlook was cut by an international investment banker. Further pressure was exerted on the local markets with the weakness in the European markets with materials and mining companies declining on demand growth outlook from China.

Back home, though the local markets ended in green but it was only marginal rise after the big slump of last session, traders never looked confident and every bit of recovery was countered by profit booking. There was a spike up from the lows of the day in a knee-jerk reaction to the unexpectedly lower inflation numbers for the month of April, but the optimism of rate cut got fizzled out soon as the figures of February inflation figures were revised upward to 7.28% from 6.84%. Sectorally, it was the day of healthcare with lots of major companies announcing their numbers Dr Reddy’s, Sun Pharma Advanced Research Company, Pfizer, Elder Pharma, while Dr Reddy’s reported 18% rise in FY 13 profit, Sun Pharma Advanced Research came into black for the fourth quarter,  Pfizer and Elder pharma ended higher ahead of their numbers. Power sector too remained buzzing after the Union Power Minister Jyotiraditya Scindia said that India’s transmission capacity during the 12th Five-Year Plan period ending FY 2016-17, is expected to go up from 28,000 megawatts to 65,000 megawatts, making it the largest grid in the world. IT sector too showed some upmove IT industry body Nasscom is targeting a four-fold growth in software product revenues to $10 billion in the next seven years.

Finally, the BSE Sensex gained 30.62 points or 0.16% to settle at 19,722.29, while the CNX Nifty rose by 14.95 points or 0.25% to end at 5,995.40.

The BSE Sensex touched a high and a low of 19831.79 and 19652.69, respectively. The BSE Mid cap index up by 0.27% and Small cap index was up by 0.04%.

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

The top gainers on the BSE Sectoral space were, Health Care up 0.67%, TECk up 0.64%, PSU up 0.48%, Power up 0.40% and Oil & Gas up 0.33%, while Consumer Durables down 1.16%, Realty down 0.38%, Auto down 0.20% and FMCG down 0.09% were the top losers on the sectoral space.

Meanwhile, in its probe into the issues raised by the Cobrapost sting operation, the Reserve Bank of India has revealed various discrepancies in banking operations, including non-compliance of KYC norms and fictitious PAN cards. After the Cobrapost expose that alleged money laundering by banks, RBI has completed the investigation into the working of banks. CobraPost altogether had named about 33 public and private sector banks in its various money laundering operations.

The RBI report has pointed string of violations on several counts by these banks, which include the usage of identity cards of unknown NRIs and dummy PAN, unauthorized gold sales and non-compliance of know your customer norms. Further, the central bank also revealed that banks’ staffs were also engaged in giving suggestions to customers on ways to bypass regulatory norms.

In its the annual policy review last week, the central bank had said that it will take systemic action to deal with the problem. RBI’s governor D Subbarao had said that firstly the action will be taken against individual institutions involve in practices which are not consistent with the banking regulation and prudential banking.

The CNX Nifty touched a high and a low of 6,026.20 and 5,970.05 respectively. 

The top gainers on the Nifty were Ranbaxy up 3.55%, Bank of Baroda up 2.17%, Sun Pharma up 2.02%, PowerGrid up 1.92% and ONGC up 1.89%.

On the other hand the top losers on Nifty were, Dr Reddy’s down 2.38%, Bajaj Auto down 2.05%, HCL Tech down 1.92%, BHEL down 1.05% and JP Associates down by 0.88%.

The European markets were trading in red, France’s CAC 40 down by 0.51%, the United Kingdom’s FTSE 100 down by 0.16% and Germany’s DAX down by 0.25%.

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.