Benchmarks bounce back in green; positive opening of European market aids

Local equities after recuperating from early losses have now entered into green zone tailing the positive opening of European shares. Meanwhile, release of much anticipated Q2 GDP numbers also provided some audacity to cautious investors in picking up selective bargains. Indian economy expanded at a rate of 6.9% during the second quarter of fiscal 2012 lower compared with the first quarter growth of 7.7%. Meanwhile, mixed regional counterparts provided a little direction to the wary equity markets, however a little recovery even came to the Asian pacific markets after European officials agreed to strengthen a bailout fund and seek more aid from the International Monetary Fund to help lend to troubled economies as Italy's borrowing costs hit fresh highs. The US future indices continued to show downtick in the screen trade.

Back home, stocks from defensive FMCG counter, coupled with that of IT and TECk counters aided the bounce back of the bourses. However, stocks from Consumer Durable, Capital Goods and Realty counters remained the vice spell of the trade. The 30 share barometer index- Sensex- gaining close to 50 points trading over psychological 16,000 levels. In the similar way, broader 50 share index -Nifty- on NSE-gaining marginal traction was trading above its neutral line. The broader indices, however, continued to show grave sentiment. The overall market breadth on BSE remained in the favour of declines, which thumped advances in the ratio of 1400:1029, while 109 shares remained unchanged.

The BSE Sensex is currently trading at 16,056.57, up by 48.23 points or 0.30%. The index has touched a high and low of 16,074.37 and 15,849.57 respectively. There were just 18 stocks advancing against 12 declining ones on the index.

The broader indices trimmed losses; the BSE Mid cap index was down by 0.63% while, Small cap index was down by 0.56%.

TECK up by 0.41%, Oil & Gas up by 0.37%, IT up by 0.33%, FMCG up by 0.21% and Bankex up by 0.16% were the top gainers on the BSE sectoral space. On the flip side, CD down by 1.97%, CG down by 0.88%, Realty down by 0.68%, Auto down by 0.46% and Metal down by 0.29%.

The top gainers on the Sensex were HDFC Bank up by 2.01%, Bharti Airtel up by 1.65%, ONGC up by 1.63%, Maruti Suzuki up by 1.27% and Hindustan Unilever up by 1.21%..

On the flip side, Sterlite Industries down by 1.95%, Tata Motors down by 1.49%, ICICI Bank down by 1.40%, BHEL down by 1.29% and M&M down by 1.22% were the top losers on the index.

Meanwhile, substantiating fears of a slowdown, India’s economy grew by just 6.9% in the second quarter of 2011-12 financial year, the weakest expansion since the second quarter of 2009 against 8.8% in the year-ago period. The general expectation was that the economy will grow at the rate of 7% much lower than the 7.7% growth in the April-June quarter. The numbers were mainly dragged down by manufacturing sector which grew at 2.7% against 7.8% in the same quarter last year and mining which witnessed a de-growth of 2.9% compared to 8% growth Y-o-Y. Sectorally, Agriculture and Industry grew by 3.2%, Services by 9.3% and Construction growth stood at 4.3%.

As per the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, the Quarterly Gross Domestic Product (GDP) at factor cost at constant (2004-05) prices for Q2 of 2011-12 is estimated at Rs 12,27,254  crore  as against  Rs 11,48,472 crore in Q2 of 2010-11, showing a growth rate of 6.9% over the corresponding quarter of previous year. GDP at factor cost at current prices in Q2 of 2011-12, is estimated at Rs 19,55,880 crore, as against Rs 16,85,793 crore in Q2, 2010-11, showing an increase of 16.0%.

The economic activities, which registered significant growth in Q2 of 2011-12 over Q2 of 2010-11 are, ‘electricity, gas and water supply’ at 9.8%, ‘trade, hotels, transport and communication’ at 9.9% and ‘financing, insurance, real estate and business services’ at 10.5%. The estimated growth rates in other economic activities in this quarter are 3.2% in ‘agriculture, forestry & fishing’, 2.7% in ‘manufacturing’ and 4.3% in ‘construction’ and 6.6% in ‘community, social and personal services’. The growth of ‘mining and quarrying’ sector declined to (-) 2.9% during this period.

Though, the decrease in the growth of GDP in second quarter can largely be attributed to the negative growth in ‘mining and quarrying’ and steep fall in the growth of manufacturing sector but the dampening business sentiment, sluggish industrial growth and expected decline in merchandise exports are further likely to impede the growth. Even the RBI had revised downwards the baseline projection of GDP growth for 2011-12 to 7.6% from 8% earlier. 

The S&P CNX Nifty is currently trading at 4,812.65, up by 7.55 points or 0.16%. The index has touched a high and low of 4,821.35 and 4,754.80 respectively. There were 24 stocks advancing against 26 declining ones on the index.

The top gainers of the Nifty were PowerGrid up by 2.21%, HDFC Bank up by 2.07%, Kotak Bank up by 2.00%, Bharti Airtel up by 1.58% and HUL up by 1.51%.

On the other hand, Ranbaxy down by 3.01%, SAIL down by 2.86%, Siemens down by 2.59%, Sterlite Industries down by 2.34% and Tata Motors down by 1.72% were the major losers on the index.

Asian indices continue to trade mixed; Shanghai Composite plunged 3.27%, Hang Seng plummeted 1.85%, Nikkei 225 declined 0.51%, Seoul Composite shed 0.49% and Taiwan Weighted descended 1.21%.

On the other hand, Jakarta Composite advanced 0.18%, KLSE Composite added 0.94%. Straits Times gained 0.11%.

The European markets commenced the trade on an optimistic mode with, France’s CAC 40 and Britain’s FTSE 100 gained 0.46%.