Market manages a comeback in last hour supported by FMCG stocks

Markets could not return to their full fervor on Wednesday despite government’s latest effort to boost rupee and revive investment. Though, the day started on a positive note in reaction to the governments’ late evening decision to relax FDI norms for over a dozen sectors in its bid to bolster investment and growth, but the latter part of trade turned choppy with rupee once again losing its strength despite all measures.

Though, the global cues were not favourable, as the US markets snapped last session on a negative note, paring some of their gains from last few day’s rally, while the Asian markets too made a mixed start ahead of Fed Chairman Ben Bernanke's testimony before the House Financial Services Committee. Further the cautious start followed by weak trend of the European markets added pressure to the domestic market movements, which retreated following them.

Earlier, the Indian markets after RBI’s shocker in last session, got a boost after Prime Minister in a high level meeting relaxed foreign direct investment (FDI) rules in a bid to attract foreign investment in the country and ease the pressure on the currency. The government raised the FDI cap in four sectors and changed the FDI route to automatic (compared with the earlier route of requiring approval from the Foreign Investment Promotion Board) for eight sectors. However, there was no change in FDI limit in civil aviation, while FDI cap in defence production too was kept unchanged at 26 percent. Also, the government did not hiked FDI cap in politically contentious multi-brand retail. Markets also got some boost with Finance Minister P. Chidambaram saying that India will achieve its overall budgeted revenue target in the fiscal year to March. However, the money market was not that excited with the RBI’s move followed by the FDI decision, though the moves helped slightly to steady the currency but there was not much movement in the broader market, as some of the announcements looked like mere reiterations like, hike in FDI limit in insurance sector will come into effect only when Parliament clears the Insurance Bill. While in telecom, in current scenario 100 percent ownership is unlikely to excite global companies. Markets reversed their early gains in mid of the trade after finance minister P Chidambaram said that the Revenue Department will target 12 lakh service tax assessees who have stopped filing returns. However, markets returned to the green zone supported by good numbers from the private sector banking major HDFC Bank, which posted 30% increase year-on-year in its net profit at Rs 1843 crore for the first quarter of the current financial year. Though, its net nonperforming loans as a percentage of total assets increased to 0.3% compared with 0.2% a year ago and weighed on the stocks, taking it lower by over 2 percent. Meanwhile, spurt in FMCG major HUL which surged to its fresh lifetime high and ITC along with other FMCG majors, helped the markets to recover in late trade.

However the broader markets could not muster much support and ended in red, with BSE Mid cap losing half and Small cap index losing a quarter percent respectively. The market breadth stood at 2.32 lakh crore.

Finally, the BSE Sensex gained 97.50 points or 0.49% to settle at 19,948.73, while the CNX Nifty rose by 18.05 points or 0.30% to end at 5,973.30.

The BSE Sensex touched a high and a low of 19,983.22 and 19,778.54, respectively. The BSE Mid cap index was down by 0.50% and Small cap index was down by 0.22%.

The top gainers on the Sensex were, Hindustan Unilever up by 9.86%, NTPC up 3.18%, Wipro up 2.96%, ITC up 2.28% and Tata Power up by 1.96%, while Tata Steel down by 3.26%, HDFC Bank down 2.36%, ICICI Bank down 2.29%, Mahindra & Mahindra down 2.23% and Jindal Steel down by 2.03% were the top losers on the index. 

The top gainers on the BSE sectoral space were, FMCG up 3.39%, Consumer Durables up 1.10%, IT up 1%, Oil & Gas up 0.61% and Power up 0.56%, while Bankex down 2.32%, Metal down 1.82%, Auto down 0.77%, Realty down 0.71% and PSU down 0.64% were the top losers on the sectoral space.

Meanwhile, India’s gems and jewellery exports tumbled 41 per cent to $2.3 billion in June, 2013 as compared to $4 billion in the corresponding month previous year mainly due to shortage of yellow metal and limited inventory in domestic market. The major reason behind the shortage of raw-material for jewellery manufacturing was the government's move to curb gold imports. Though, the industry is expected to get a sufficient raw-material supply for jewellery manufacturing as the shortage is a short-term phenomenon.

India imported around 830 tonnes of gold in 2012-13. The government hiked the import duty on gold thrice in a year and raised it recently by 2 per cent to 8 per cent to curb demand. Besides, RBI too has put restrictions on banks on importing gold. Gold imports in June too are projected to have plunged to around 31 tonnes as against 162 tonnes in May and 141 tonnes in April. High imports strain the Current Account Deficit (CAD), which hit a record high of 4.8 per cent in the 2012-13 fiscal.

Jewellery exports declined 73 per cent as there were no outbound shipments of gold medallions and coins in June 2013. However, silver jewellery exports were up 52 per cent and outward shipments of cut and polished diamonds jumped about 22 per cent. On cumulative basis, the gems and jewellery exports declined 13.2 per cent year-on-year to $8.5 billion during April-June 2013.

India is the largest importer of gold which is mainly utilised to meet demand of the jewellery industry and the major markets for the country’s jewellery exports are the US, Europe, Middle-East, Hong Kong and Japan.

The CNX Nifty touched a high and low of 5,989.80 and 5,926.75 respectively. 

The top gainers on the Nifty were Hindustan Unilever up 9.13%, Asian Paints up 3.50%, Ambuja Cement up 2.97%, NTPC up 2.48% and ITC up by 2.32%.

On the flip side, the top losers of the index were, Tata Steel down 3.44%, Bank of Baroda down 3.18%, Axis Bank down 3.08%, M&M down 2.79% and Ranbaxy down by 2.78%.

The European markets were trading in red, France’s CAC 40 down by 0.33%, the United Kingdom’s FTSE 100 down by 0.40% and Germany’s DAX down by 0.48%.

Asian markets concluded Wednesday’s trade mostly in green on reports that foreign investment in China jumped by 20%. Concerns, however, remained over an early exit of US quantitative easing ahead of Bernanke’s testimony to the US Congress. China’s Shanghai Composite Index concluded the trade in red led by selling of property stocks. The growth of foreign direct investment (FDI) in China accelerated surprisingly in June, a rare piece of good news when the world’s second-largest economy reported a slew of disappointing data. The Ministry of Commerce stated that foreign investors channeled altogether $14.4 billion into China last month, up 20.1% from a year earlier. The pace quickened sharply from the increase of 0.29% in May, and extended the growth streak to a fifth month in a row. The country attracted a total of $61.9 billion foreign investment in the January-June period, up 4.9% on an annual basis. The Commerce Ministry spokesman added that the growth of China’s domestic consumption is expected to maintain momentum in the second half of the year.

Jakarta Composite ended in green; tight competition among lenders and rising risks on non-performing loans has caused Indonesia’s lenders to see a slowing profit growth, while having to cope with rising costs due to inflation. Bank Indonesia reported that the total combined net income of the country’s commercial banks slowed in the first five months of this year. It had kept the benchmark policy rate at a record low 5.75 percent since February last year before raising it for a total of 75 basis points in the past two months, in a bid to contain inflation after subsidized fuel prices increased by an average 33% last month.

South Korean market concluded in green as upbeat economic data from China eased market concerns caused by the scheduled congressional testimony by Federal Reserve Chairman Ben Bernanke. Singapore’s exports in June extended the longest run of declines since the global financial crisis, suggesting the island’s economic growth last quarter may be lower than the government initially estimated. Non-oil domestic exports slid 8.8% from a year earlier, falling for a fifth month, the trade promotion agency reported.

The Philippine government's outstanding debt as of end-May went up by 4.2% year on year on back of sharp rise in local loans. The Bureau of Treasury reported that national government’s debt as of May hit 5.36 trillion pesos ($123.73 billion), 64.5% of which was sourced from domestic creditors. The rest was owed to foreign creditors.