Indian equities march northwards; Sensex above 16,000 mark

Indian equities have resumed its northwards journey and are trading in green after investors started accumulating frontline counters paying no heeds towards disappointing Q2 GDP numbers. In the fights between bulls and bears to gain control over the market, bears have lost the steam and bulls have taken charge pushing benchmark towards highest point for the day. Traders were seen piling up the position in FMCG, Oil & Gas and TECk sector while selling was witnessed in Consumer Durables, Capital Goods and Realty sectors. Index heavyweight RIL is seen trading firm in green with gain of around one percent making markets trade higher. Also, ONGC from Oil & Gas sector was trading in green pulling the markets higher. ITC and HUL from FMCG pack were trading with gain of around more than one percent giving the much needed support for the market. Bajaj Auto and Maruti from Auto pack were in green driving the markets up. TCS, Infosys and Wipro from IT pack were firm pulling the markets up. SAIL, Sterlite, Tata Steel from Metal pack were trading weak in red putting pressure on the markets. L&T and BHEL from Capital Goods space were seen trading in red exerting pressure on the market.

In the scrip specific development, shares of organised retailers Pantaloon Retail India, Provogue (India), Trent, Koutons Retail, Shoppers Stop and Vishal Retail were trading firm in green after Prime Minister Manmohan Singh strongly defended the Cabinet decision to allow foreign direct investment in retail sector and ruled out a rollback. GTL and GTL Infrastructure were trading weak in red as its debt restructuring plan hit a roadblock. On the global front, all Asian markets were seen trading on a mix note while the European markets were trading in red on pessimistic note. 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. However, yesterday Moody's Investors Service warned that it could downgrade the subordinated and junior debt of 87 European banks, citing the governments' inability to support them amid the region's mounting sovereign-debt problems. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 4,850 and 16,100 levels, respectively. The market breadth on BSE was in favor of declines in the ratio of 1096:1452 while 122 scrips remained unchanged.

The BSE Sensex is currently trading at 16,112.80, up by 104.46 points or 0.65%. The index has touched a high and low of 16,179.56 and 15,849.57 respectively. There were just 22 stocks advancing against 8 declining ones on the index.

The broader indices trimmed losses; the BSE Mid cap index was down by 0.58% while, Small cap index was down by 0.50%.

FMCG up by 1.10%, Oil & Gas up by 0.82%, TECk up by 0.67%, IT up by 0.66% and Bankex up by 0.44% were the top gainers on the BSE sectoral space. On the flip side, Consumer Durables down by 2.51%, Capital Goods down by 0.68%, Realty down by 0.63%, HealthCare down by 0.25% and Auto down by 0.12%.

The top gainers on the Sensex were HDFC Bank up by 2.82%, TCS up by 1.96%, Sun Pharma up by 1.85%, ONGC up by 1.74% and ITC up by 1.64%.

On the flip side, Sterlite Industries down by 2.20%, Tata Motors down by 1.41%, M&M down by 0.89%, JP Associates down by 0.87% and L&T down by 0.85% 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 4,831.95, up by 26.85 points or 0.56%. The index has touched a high and low of 4,851.55 and 4,754.80 respectively. There were 27 stocks advancing against 23 declining ones on the index.

The top gainers of the Nifty were PowerGrid up by 3.10%, HDFC Bank up by 2.91%, Kotak Bank up by 2.41%, Sun Pharma up by 1.89% and TCS up by 1.85%.

On the other hand, Ranbaxy down by 3.64%, Siemens down by 2.80%, SAIL down by 2.74%, Sterlite Industries down by 2.29% and Reliance Power down by 2.24% were the major losers on the index.

Asian indices continue to trade mixed; Shanghai Composite plunged 3.27%, Hang Seng plummeted 1.46%, Nikkei 225 declined 0.51%, Seoul Composite shed 0.49% and Taiwan Weighted descended 1.21%.

On the other hand, Jakarta Composite advanced 0.13%, KLSE Composite added 1.10% and Straits Times gained 0.28%.

The European markets were trading in red with, France’s CAC 40 down 1.19%, Germany’s DAX descended 1.08% and Britain’s FTSE 100 dropped 0.84%.