Markets show signs of recovery; IT and Tech shares move higher

Indian markets are consolidating in early deals on Tuesday after suffering a big jolt in the last session. Though half of the sectoral space on the BSE is still in red but barring the consumer durables not much damage is seen on any other counter. Earlier, the start was expected to see some recovery as the US markets ended flat and most of the Asian markets made a positive start, encouraged by the report of a rise in US retail sales. However, the local traders are remaining on sideline ahead of the Wholesale Price Index (WPI) inflation data which likely rose 5.40% from a year earlier in April, slower than the 5.96% increase in March. Banking stocks are still under pressure after the Reserve Bank of India find various discrepancies, including non-compliance of KYC norms and fictitious PAN, in its probe following the Cobrapost expose. Good recovery is being witnessed in IT and technology stocks as IT industry body Nasscom is targeting a four-fold growth in software product revenues to $10 billion in the next seven years.

The broader indices too were struggling to get some traction, while the market breadth on the BSE was evenly divided; there were 604 shares on the gaining side against 608 shares on the losing side, while 53 shares remained unchanged.

The BSE Sensex opened in 19,715.80; about 24 points lower compared to its previous close of 19,691.67, and has touched a high and a low of 19,757.94 and 19,652.69 respectively. The index is currently trading at 19,683.45, down by 8.22 points or 0.04%. There were 13 stocks advancing against 17 declines on the index.

The overall market breadth has made a weak start with 47.75% stocks advancing against 48.06% decline. The broader indices were trading mixed; the BSE Mid cap up by 0.05% and Small cap indices trading down by 0.01%.

The gaining sectoral indices on the BSE were, Oil & Gas up by 0.93%, Health Care up by 0.63%, PSU up by 0.62%, IT up by 0.53% and Teck up by 0.49%, while Consumer Durables down by 0.97%, Metal down by 0.53%, Auto down by 0.39%, Realty down by 0.31% and Capital Goods down by 0.29%, were the top losers on the BSE.

The top gainers on the Sensex were ONGC up by 2.43%, Gail India up by 1.67%, TCS up by 1.05%, Bharti Airtel up by 1.03% and Hindalco Industries up by 0.72%.

On the flip side, Tata Steel was down by 1.92%, Tata Power was down by 0.97%,  Jindal Steel was down by 0.85%, HDFC Bank was down by 0.81% and  BHEL was down by 0.76% were the top losers on the Sensex.

Meanwhile, Owing to demand slowdown, the manufacturing sector’s contribution to the country's Gross Domestic Product (GDP) is expected to fall below 15% in 2013-14, leading to unutilized excess capacity. The industrial production during March improved to 2.5%, the factory output during 2012-13 worked out to be only 1%, down from 2.9% in the previous fiscal.

According to an ASSOCHAM survey, the decline is witnessed in the backdrop of government aiming to bring manufacturing contribution to 25% of the total economic activity within a decade, but the trend is certainly moving in the reverse direction. During 2012-13, the share of the manufacturing sector in the GDP declined to 15.2%, compared to 15.7% in the previous financial year.

However, the manufacturing sector, which constitutes over 75 percent of the Index of Industrial Production (IIP), grew by 3.2% in March as against a decline in output by 3.6% in the same month of 2012. Further, for the current fiscal, the government has projected economic growth at above 6%.

The CNX Nifty opened at 5,989.70; about 8 points higher as compared to its previous closing of 5,980.45, and has touched a high and a low of 5,999.50 and 5,970.05 respectively.

The index is currently trading at 5,985.90, up by 5.45 points or 0.09%. There were 30 stocks advancing against 20 declines on the index.

The top gainers of the Nifty were ONGC up by 2.35%, GAIL up by 1.49%, Lupin up by 1.18%, BPCL up by 1.07% and TCS up by 0.85%.

On the flip side, Tata Steel down by 1.83%, HCL Technologies down by 0.96%, Tata Power down by 0.91%, BHEL down by 0.87% and Ambuja Cements down by 0.83%, were the major losers on the index.

Most of the Asian equity indices were trading mixed; Shanghai Composite was down by 35.40 points or 1.58% to 2,206.52, Hang Seng was lower by 28.13 points or 0.12% to 22,961.68, KLSE Composite decline by 2.78 points or 0.16% to 1,785.12 and Jakarta Composite was down by 5.96 point or 0.12% to 5,054.65.

On the other hand, Taiwan Weighted was up by 6.66 points or 0.08% to 8,254.98, Nikkei 225 was up by 9.66 points or 0.07% to 14,791.87, Straits Times added 7.80 points or 0.23% to 3,436.76 and KOSPI Composite gained 13.86 points or 0.71% to 1,962.56.