Corporate earnings, inflation data drives markets weak

Key equity benchmarks continue to trade in a narrow range with negative bias on weak macroeconomic data announced after trading hours on Friday, 12 July 2013. Industrial production declined by 1.6% in May 2013, data released by the government after trading hours on Friday, 12 July 2013, showed. The continuous decline in the output of mining sector remained the major drag on the growth of industrial production, while the output of manufacturing sector also declined in May 2013. The output of the mining sector declined 5.7% and that of the manufacturing sector declined 2% in May 2013. However, the electricity generation grew 6.2% in May 2013, restricting further decline in the output of industrial production in May 2013. The industrial production growth for the month of April 2013 has been revised downwards to 1.9% from 2.3% reported earlier, while the growth for the month of February 2013 has been scaled up slightly to 0.6% from 0.5% reported earlier. Consumer price inflation accelerated in June 2013, another data released by the government after trading hours on Friday, 12 July 2013, showed. The combined consumer price index (CPI) for urban and rural India edged up to 9.87% in June 2013 from 9.31% in May 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 644.82 crore on Friday, 12 July 2013, as per provisional data from the stock exchanges.

Sentiments got dampened on disappointing industrial production for May and retail inflation data for June, which were announced after trading hours on Friday. On the global front, most of the Asian markets turned red after a positive start as investors booked some of the gains garnered in last week. Bucking the trend, Chinese Shanghai was trading with a gain of about one and a half percent after the country’s second-quarter growth data met street expectations. The world’s second-largest economy expanded 7.5 per cent in the second quarter. Back home, The traders were seen piling up positions in Health Care, Realty and Capital Goods, while selling was seen in Bankex, Metal and Power sector. In scrip specific developments, Shares of state-owned oil marketing companies are trading higher in the range of 1-2% in late morning deals after these companies hiked price of petrol by Rs 1.55 a liter due to falling rupee and rising international oil prices. In scrip specific actions, Shares in SpiceJet gained after reports suggesting that Kuwait Airways may pick up stake short of the 25 percent mark in the company. The deal value is pegged around Rs 1000 crore. Tata Steel has plunged by over 3%. Tata Steel's European arm has reported a record loss of 1.2 billion pounds for the year. Tata Steel Europe, Britain's largest steel producer, reported the losses for the year until March 31 as part of its latest results filed at Companies House in the UK.

Meanwhile, the NSE Nifty and BSE Sensex were trading near the psychological 6,000 and 19,900 levels respectively. The market breadth on BSE was showing negative trend with advances to declines in ratio of 939: 664. The BSE Sensex is currently trading at 19909.56, down by 48.91 points or 0.25% after trading in a range of 19973.64 and 19883.19. There were 16 stocks advancing against 14 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.47% and Small cap index was up by 0.31%.

The top gaining sectoral indices on the BSE were, Health Care up by 0.71%, Realty up by 0.47%, Capital Goods up by 0.39%, Oil & Gas up by 0.26% and TECK up by 0.18%, while Bankex down by 0.61%, Metal down by 0.37%, Power down by 0.23% and PSU down by 0.21% were the top losers on the losers on the BSE.

The top gainers on the Sensex were TCS up by 1.42%, Mahindra & Mahindra up by 1.26%, Wipro up by 1.11%, Sterlite Industries up by 1.02% and Dr Reddys Lab up by 0.94%. On the flip side, Tata Steel was down by 2.47%, Infosys was down by 1.74%, Coal India was down by 1.33%, HDFC Bank was down by 1.28% and ICICI Bank was down by 0.72% were the top losers on the Sensex.

Meanwhile, marking the fourth revision since June, Oil companies have yet again raised petrol rates by Rs 1.55 a litre, excluding local sales tax or VAT, with effect from July 14 midnight. Oil firms had on June 1 raised prices by 75 paisa, excluding VAT, and followed it with a steep Rs 2 per litre increase on June 16 and Rs 1.82 on June 29. With the current revision, Petrol price in Delhi has been hiked by Rs 1.86 per litre to Rs 70.44 as against Rs 68.58 currently.

Combined impact of deteriorating exchange rate and increasing international oil prices apparently has forced the Oil companies to hike petrol prices. Since last price change on June 29, the downward spiral of rupee against the dollar has continued to reach a low of Rs.60.03 per dollar as against Rs 58.94 per dollar during the previous fortnight. While, international crude prices have also shown an uptrend and increased from $115.29/bbl to $117.19/bbl.

Thus, with the latest increase, all of the relief given in last four reductions in prices earlier this year has been offset. The rates cuts had brought down the price to Rs 63.01 at the beginning of May.

  The CNX Nifty is currently trading at 5,992.15 down by 16.85 points or 0.28% after trading in a range of 6,010.90 and 5,980.95. There were 24 stocks advancing against 26 declines on the index.

The top gainers of the Nifty were JP Associate up by 2.67%, Cairn up by 2.33%, Lupin up by 2.30%, HCL Tech up by 1.37% and TCS up by 1.34%. On the flip side, Tata Steel down by 2.59%, Infosys down by 1.72%, HDFC Bank down by 1.72%, BHEL down by 1.35% and Coal India down by 1.35% were the major losers on the index.

Most of the Asian equity indices were trading in red; Jakarta Composite declined 42.18 points or 0.91% to 4,590.93, KLSE Composite decreased 2.91 points or 0.16% to 1,782.74 and KOSPI Composite slipped 5.08 points or 0.29% to 1,864.63.

On the flip side, Shanghai Composite surged 31.94 points or 1.57% to 2,071.42, Hang Seng rose 40.46 points or 0.19% to 21,317.74, Taiwan Weighted was up by 13.63 points or 0.17% to 8,227.23 and Straits Times was up by 2.70 points or 0.08% to 3,238.30.

Japanese Nikkei remained shut for the trade today on account of public holiday.