Markets negotiate positive close by recovering in dying hour

Key domestic benchmarks, after witnessing around three per cent slump in previous session, exhibited decent pull back in Friday’s trade with frontline indices managing to keep their head above water supported by recovery in dying hour. Earlier, markets kick-started the session in negative terrain tailing weakness in global equity indices. Sentiments also remain dampened after foreign institutional investors (FIIs) sold shares worth a net Rs 2094.06 crore on June 20, 2013. Cautiousness also crept in on report that India’s employment rate has slipped to 38.6 per cent in 2011-12, from 39.2 per cent in 2009-10. The number of unemployed rose to 10.8 million in January 2012 from 9.8 million in January 2010. Also, the retail inflation based on Consumer Price Index for agricultural labourers rose to 12.7 percent in May from 12.32 per cent in April, due to rise in the prices of food items and fuel.

Sentiments also remained down-beat after most of the Asian equity indices shut shop in red as investors remained cautious about the implications of the Federal Reserve’s plan to wean off the US economy’s dependence on cheap money. Chinese benchmarks too declined for second straight day after a preliminary survey showed manufacturing activity in the mainland hit a nine-month low. However, firm opening in European counters gave some boost to the domestic bourses with CAC, DAX and FTSC trading in green in early deals, recovering after the previous session’s hefty falls on prospect of diminished stimulus from the US Federal Reserve.

Back home, pull-back witnessed in Indian rupee was the saving grace for the Indian equity bourses. Rupee recovered today after diving to a record low of 59.9850 to the dollar on Thursday, following a hawkish US Fed statement. Finance Minister’s statement that there is no need to panic over the rupee’s fall too provided some solace. He assured that policymakers were monitoring the rupee and would do whatever was needed to stem the fall. Some support also came in from rally in shares of power generation companies like, Torrent Power, GVK Power & Infrastructure, NTPC, Adani Power, Reliance Infrastructure and Reliance Power which edged higher after the Cabinet Committee on Economic Affairs (CCEA) cleared a proposal to allow power companies to pass on cost of imported coal to customers.

However, gains remain capped after metal stocks continued to remain lower for second consecutive day as stocks like Hindalco, Jindal Steel & Power, Tata Steel, NMDC, Sesa Goa, Nalco, SAIL and Sterlite Industries edged lower on concerns about the health of the Chinese economy after a survey showed further slowdown in China’s manufacturing sector in June 2013. Additionally, banking counter also witnessed a cut of about half a percent on worries that the rising rupee would force the Reserve Bank of India (RBI) to defer reduction in key policy rate going forward. 

The NSE’s 50-share broadly followed index Nifty rose by over ten points to hold its psychological 5,750 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex gained over fifty points to finish above the psychological 18,750 mark.

However, broader markets struggled to get some traction throughout the session and ended the trade with a cut of upto 1.30 per cent. The market breadth remained in favor of declines as there were 982 shares on the gaining side against 1,342 shares on the losing side while 138 shares remain unchanged.

Finally, the BSE Sensex gained 54.95 points or 0.29% to settle at 18,774.24, while the CNX Nifty rose by 11.75 points or 0.21% to end at 5,667.65.

The BSE Sensex touched a high and a low of 18,820.81 and 18,615.14, respectively. The BSE Mid cap index down by 1.28% and Small cap index was down by 0.36%.

The top gainers on the Sensex were, ONGC up by 2.56%, Infosys up 2.21%, NTPC up 2.11%, Dr Reddy’s up 2.05% and Maruti Suzuki up by 1.91%, while Jindal Steel down by 8.06%, Hindalco down 4.20%, Sun Pharma down 1.85%, Sterlite Industries down 0.98% and Reliance  down by 0.66% were the top losers on the index. 

The top losers on the BSE Sectoral space were, Metal down 1.45%, Realty down 1.02%, Consumer Durables down 0.41%, Bankex down 0.37% and Capital Goods down 0.32%, while IT up 1.43%, TECk up 1.11%, Auto up 0.34%, Power up 0.27% and Oil & Gas up 0.17% were the top gainers on the sectoral space.

Meanwhile, the Cabinet Committee on Economic Affairs (CCEA) approved coal price pass-through mechanism, under which the entire additional cost of imports would be passed on to the consumers as against the averaging of prices of imported and domestic coal under the earlier planned price-pooling mechanism.

As per the new mechanism, the power plants commissioned after 2009, will source 80% of the coal requirement from Coal India Ltd, which has agreed to supply 65% of the requirement from domestic mines and the rest 15% through imports. The entire cost of imports is proposed to be passed on to the electricity consumers. Further, fuel supply situation and costs would be monitored on a quarterly basis and the power producers would be required to move the regulator for change in tariffs.

Meanwhile, the government had turned down the proposal to pool prices of domestic and imported coal, to make the fuel affordable to new power plants due to sharp opposition to scheme by older power plants and domestic coal producers. They are of the view that proposal will remove the advantage that old power projects enjoyed as compared to newer ones.

The CNX Nifty touched a high and low of 5,686.15 and 5,616.85 respectively. 

The top gainers on the Nifty were IndusInd Bank up 3.95, Hindalco up 3.32% ONGC up 2.82%, Ranbaxy up 2.11% and NMDC up by 1.88%.

On the flip side, the top losers of the index were, Jindal Steel down 7.79%, Bank of Baroda down 4.59%, PNB down 3.07%, Reliance Infra down 2.02% and Sun Pharma down by 2.00%.

The European markets were trading in green, France’s CAC 40 up by 0.76%, the United Kingdom’s FTSE 100 down by 0.91% and Germany’s DAX up by 0.42%.

Asian stock markets shut shop on a weak note on Friday amid continuing worries about the outlook for Fed's asset purchase program, which hurting sentiment and prompting investors to indulge in some heavy selling. However, Japan's Nikkei went home with green mark outshining the rest of the region, with a weaker yen against the dollar improving market sentiment. Chinese markets closed lower, despite China’s central bank offering some comfort to stressed money markets.