Benchmarks under pressure as IIP data disappoint

The benchmarks have broken out of the narrow range on the downside and were trading near day's low after the April Index of Industrial Production (IIP) and Consumer Price Index (CPI) were below street expectations. The Reserve Bank of India may not go ahead with a rate cut at its policy meet next week due to weak rupee and high inflation even as the industrial activity is slowing down. However, the central bank may take into account the early onset of monsoon and lower interest rate

On the global front, All the Asian equity indices were trading in red at this point of time with Japanese stocks tumbling by over one and a half per cent, joining a global sell-off in equities and commodities as investors were rattled by the absence of fresh steps from the Bank of Japan to calm turbulence in the domestic bond market.  Back home, in a disappointment, India's annual industrial output growth measured by index of industrial production (IIP) grew by 2% for the month of April 2013, lower than street’s expectation and previous month’s figure of 2.5%. The three sectors that constitute the index, i.e., mining, manufacturing and electricity sectors for the month of April grew by -3%, 2.8% and 0.7% respectively.

Meanwhile, Declining for third straight month, annual rate of inflation, based on the consumer prices index (CPI), eased in the month of May at 9.31%, but lower than expectation of sub 9% figure. The General Indices for rural, urban and combined are 129.8, 128.4 and 129.2 respectively.  According to the data released, provisional annual inflation rate based on all India general CPI (Combined) for May 2013 on point to point basis stood at 9.31% as compared to 9.39% final inflation number for the previous month of April 2013. The corresponding provisional inflation rates for rural and urban areas for May 2013 are 8.98% and 9.65% respectively. 

The traders were seen piling up positions in Realty, Health Care and Bankex while selling was seen in Consumer Durables, Metal and FMCG sector. In scrip specific actions, Havells India zoomed after QRG Enterprises, the promoter group of the Rs 7,200-crore worth Havells India, plans to diversify into healthcare by setting up a chain of hospitals at an investment of about Rs 1,000 crore over the next five years. Fortis Healthcare soars after the company said it had entered into a pact to sell its entire stake in Vietnam-based hospital chain Fortis Hoan My Medical Corporation to Viva Holdings Vietnam for $80 million (over Rs.465 crore). Titan Industries slumped after the company was downgraded by several brokerage firms amid concerns that restrictions put by RBI on gold imports will hit business prospects. JSPL slumped after the Central Bureau of Investigation (CBI), which is probing alleged irregularities in the allocation of coal mines, registered a criminal case against Jindal Steel and Power (JSPL) and its promoter and Congress parliamentarian Naveen Jindal on Tuesday.

Meanwhile, the NSE Nifty and BSE Sensex were trading just above their psychological 5,750 and 19,000 levels respectively. The market breadth on BSE was showing positive trend with advances to declines in ratio of 870:847. The BSE Sensex is currently trading at 19065.04, down by 77.96 points or 0.41% after trading in a range of 19135.20 and 19032.08. There were 11 stocks advancing against 19 declines on the index. The broader indices were trading on mixed note; the BSE Mid cap index was down by 0.01% and Small cap index was up by 0.06%.

The only gaining sectoral indices on the BSE were, Realty up by 0.27%, Health Care up by 0.26% and Bankex up by 0.07% while Consumer Durables down by 6.00%, Metal down by 1.37%, FMCG down by 1.29%, Auto down by 1.11%, and PSU down by 0.32% were the top losers on the BSE.

The top gainers on the Sensex were Infosys up by 0.62%, RIL up by 0.61%, Tata Power up by 0.55%, ICICI Bank up by 0.53%, and ONGC up by 0.45%. On the flip side, Hero MotoCorp was down by 3.11%, Bajaj Auto was down by 2.99%, Coal India was down by 2.15% , Jindal Steel was down by 1.92% and  Maruti Suzuki was down by 1.88%  were the top losers on the Sensex.

Meanwhile, the government is in talks to buy as much as 20 million tonnes a year of liquefied natural gas or LNG in order to meet the huge energy demand of the country. While addressing third IEF NOC-IOC Forum, Oil Minister M Veerappa Moily said India is in talks but price of over $10 would remain a challenge. With LNG demand expected to grow at 5-6% per year till 2020 and 2-3% thereafter, India along with other Asian counterparts is driving this growth, he added.

By adding further, he said the government has secured supply deal of around 14 million tonnes per annum (of LNG) and around 20 million tonnes deals are in the pipeline. However, the landed cost of gas is expected to remain high in the lower range of $10-12 per million British thermal unit from $4-5 BTU, which customers are used to.

Presently, the nation has three operational LNG import facilities in Gujarat and Maharashtra and a new 5 million tonne capacity terminal is to be commissioned in Kochi, Kerala this year. Further, LNG re-gasification capacity is expected to be more than 50 million tonnes per annum by 2016-17 with a supply of 198 million standard cubic meters per day. 

India has now become fifth largest importer of LNG after Japan, South Korea, UK and Spain and accounts for 5.5% of the total trade. As per the International Energy Agency IEA projections, India will need additional 271 million tonnes of oil and 97 million tonnes of oil equivalent gas per annum by 2030. Further, the government has set an agenda to become self-sufficiency and energy independence by 2030 and has focused on finding domestic resources of oil and gas.

The CNX Nifty is currently trading at 5,772.75 down by 16.05 points or 0.28% after trading in a range of 5,789.95 and 5,756.10. There were 21 stocks advancing against 29 declines on the index.

The top gainers of the Nifty were IndusInd Bank up by 1.78%, DLF up by 1.58%, Lupin up by 1.33%, JP Associate up by 1.14% and IDFC up by 1.11%. On the flip side, Hero MotoCorp down by 2.85%, Axis Bank down by 2.74%, Bajaj-Auto down by 2.52%, Coal India down by 2.28 and Jindal Steel down by 1.92% were the major losers on the index.

All the Asian equity indices were trading in red; Jakarta Composite declined 59.27 points or 1.29% to 4,550.68, KLSE Composite dropped 10.07 points or 0.57% to 1,769.50, Nikkei 225 tumbled 61.39 points or 0.46% to 13,256.23, Straits Times slipped 6.72 points or 0.21% to 3,163.66 and KOSPI Composite was down by 11.48 points or 0.60% to 1,909.20.

Markets in China, Hong Kong and Taiwan remained shut for the trade today.