Post Session: Quick Review

The F&O expiry day of the July series was not only volatile but was a repeat of the last session’s trade in terms of losses. After making a gap-down start, markets rarely showed any significant strength, grinding lower as the trade progressed. While, there was still the hangover of RBI’s liquidity tightening measures, the global weakness weighed heavily on the sentiments. On domestic front the mixed earnings announcements were unable to provide any support to the markets. Major indices though snapped the July series with gain of over 4% but the last two session’s slump eroded significant gains. IT was the major gainer of the series, up by over 15%, while the pharma followed with gain of 9%, on the other hand Banks lost around 5% mainly on the RBI’s measures.

There was gloom across the global markets, as after the lower closing of the US indices the Asian markets too slumped with some of the major indices losing over a percent, further the European markets followed the suit and made a soft start, weighing the domestic markets in late trade.

Indian markets looked cautious from the very beginning, continuously losing ground till the end, with Nifty and Sensex at a point of time losing their psychological levels of 5900 and 19800 respectively, to snap the session near the lows of the day. Marketmen were concerned with Moody’s report that economy is unlikely to see any recovery in the second half as the downturn is expected to engulf services and the remaining sectors. It was a heavy earnings calendar day with lots of blue chips announcing their numbers and earnings too seemed dominating the trade, while Stride Arcolab, MRF and Maruti Suzuki reported good numbers, positively impacting the markets, cigarettes to FMCG and hotels major ITC, despite reporting a net profit rise of 18 percent year-on-year to Rs 1,891 crore, slumped by over 4 percent on posting lower-than-expected sales to Rs 7,339 crore. On the otherhand, Cairn India, Muthoot Finance, and GAIL suffered losses on reporting weak numbers. Markets also reacted negatively to the mega deal of the two cement majors Ambuja Cements and ACC. In a biggest ever merger & acquisition deal Switzerland-based Holcim will increase its holding in Ambuja Cements to 61.39% from 50.55%. In turn, Ambuja Cements will acquire its holding company Holcim India’s 50.01 stake in ACC. The merger of Holcim India would be in the ratio of one Ambuja Cement share for 7.4 Holcim India shares, translating into an implied swap ratio of 6.6 Ambuja shares for every ACC share. Both the stocks lost substantially on the news and were also impacted by their weak numbers for the June quarter.

The market breadth on the BSE remained negative; advances and declining stocks were in a ratio of 854: 1414, while 175 scrips remained unchanged. (Provisional)

The BSE Sensex lost 285.92 points or 1.42% to settle at 19804.76.The index touched a high and a low of 20110.81 and 19763.90 respectively. Among the 30-share Sensex pack, 5 stocks gained, while 25 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended lower by 0.89% and 0.71% respectively. (Provisional)

On the BSE Sectoral front, Teck up by 0.21% and Auto up by 0.14% were the only gainers, while FMCG down by 3.33%, Metal down by 1.73%, Health Care down by 1.64%, Oil & Gas down by 1.35% and Capital Goods down by 1.34% were the top losers. (Provisional)

The top gainers on the Sensex were Hero MotoCorp up by 4.39%, Tata Motors up by 0.84%, ONGC up by 0.39%, Bharti Airtel up by 0.27% and TCS up by 0.24%, while, ITC down by 4.44%, Wipro down by 4.44%, Hindustan Unilever down by 3.63%, Tata Power down by 3.14% and Tata Steel down by 3.13% were the top losers in the index. (Provisional)

Meanwhile, the government has recently issued another Presidential directive to state-owned Coal India to enter into fuel supply agreements (FSAs) with power plants for a capacity of 78,000 MW. Still out of the total 131 power plants, 52 of are yet to sign FSA with State-owned CIL, long after the passing of the second deadline set by the Prime Minister’s Office for signing of FSAs by early this year. Only 79 power plants, so far, have entered into the fuel supply agreements with CIL.

The 52 power firms had earlier this year, failed to meet the second deadline set by the PMO for signing FSAs. PMO had in December last year directed that the remaining FSAs should be signed within a month’s time. The directive in December, 2012 came after the November, 2012 deadline for signing of FSAs was missed.

Last year, the Coal Ministry had issued a Presidential directive for the first time to CIL to sign FSAs with the power producers assuring them of at least 80 per cent of the committed coal delivery. Earlier, some power firms including NTPC had refused to enter into FSAs with CIL over quality issues of the dry- fuel supplied to it. NTPC had also stopped payment to Coal India’s subsidiary -- Eastern Coalfields. Responding to that, the world’s largest coal miner had temporarily stopped supply of fuel to NTPC which was resolved later following government’s intervention. Uptill now, NTPC and CIL have inked FSAs for 28 units, with one remaining. While, the companies are yet to complete FSA for a 500 MW joint venture thermal power plant of NTPC and SAIL at Bhilai.

India VIX, a gauge for markets short term expectation of volatility lost 1.12 % at 16.72 from its previous close of 16.91 on Wednesday. (Provisional)

The CNX Nifty lost 85.15 points or 1.42% to settle at 5,905.35. The index touched high and low of 5,990.65 and 5,896.40 respectively. 14 stocks advanced against 36 declining on the index. (Provisional)

The top gainers on the Nifty were Hero MotoCorp up by 4.41%, Asian Paints up by 2.29%, BPCL up by 1.22%, Tata Motors up by 0.91% and Axis Bank up by 0.43%.

On the other hand, Ambuja Cements down by 10.62%, JP Associate down by 9.31%, ITC down by 4.74%, Hindustan Unilever down by 3.66% and Tata Power down by 3.41%.The European markets were trading in red; France’s CAC 40 down by 0.82%, Germany’s DAX down by 1.30% and the United Kingdom’s FTSE 100 down by 1.07%.

The Asian markets concluded Thursday’s trade in red tailing an overnight decline in stocks and commodities. Chinese shares closed lower in choppy trading, despite gains for railway-related companies after the central government vowed to fully open China’s railway construction market. This drop came even as Beijing unveiled new stimulus measures late on Wednesday, including tax cuts for small businesses. China’s job market showed some resilience in the first half despite economic difficulties, but officials warned that employment pressure remains high. The Ministry of Human Resources and Social Security spokesman Yin Chengji stated that China created more jobs in the first half compared with the same period last year. Figures from the ministry showed that China added 7.25 million jobs in the first six months of the year, an increase of 310,000 year on year. The registered urban unemployment rate stood at 4.1% at the end of the second quarter. Besides, new personal consumption loans soared in Shanghai in the first six months of this year mainly due to a surge in home transactions that have propelled new mortgages. The new personal consumption lending, including mortgages and auto loans, totaled 60 billion yuan ($9.7 billion) in Shanghai by the end of June, 50.8 billion yuan more from a year ago.

Nikkei plunged and investors unloaded shares amid concern about slow earnings growth and slack economic data. Jakarta Composite too ended the trade in red. The country’s rupiah fell to a four-year low on concern rising that US home sales will prompt the Federal Reserve to start reducing stimulus that has spurred demand for emerging-market assets. The Philippine import bill in May declined by 2.4% on year to 5.26 billion US dollars on back of a sharp decline in the value of electronics imports. Most of Philippine imports came from China, the US and South Korea. The trade gap in May narrowed to 364 million US dollars from 454 million US dollars deficit posted in the same period last year.

South Korean economy grew at the fastest pace in more than two years in the second quarter of this year as a turnaround in private consumption relieved the weak facility investment, central bank data showed. Real gross domestic product (GDP), the broadest measure of economic performance, expanded 1.1% in the second quarter from three months earlier after gaining 0.8% in the previous quarter, according to the Bank of Korea (BOK). The reading was the highest since 1.3% tallied in the first quarter of 2011, beating market consensus of 0.8%.