Barometer gauges cool off from the high point of the day; euphoria remains

After prolonging previous session’s jubilant mood in early deals on Thursday, benchmark equity indices have now cooled off from their high point of the day as market participants booked some profits, disconcerted by the slower growth of seasonally adjusted HSBC Purchasing Managers’ Index TM (PMI TM) - a headline index designed to measure the overall health of the manufacturing sector. The index fell to 51.0 in November, down from October’s 52.0, the second-weakest in the current sequence of growth. However, the growth of eight core infrastructure industries for the month of October 2011, which declined to six year low-level of 0.1% compared to 7.2% in October 2010, also weighed on the sentiment to some extent.

However, positive global leads counterbalanced the negative sentiment of Dalal Street. Regional counterparts, which rallied  to two-week highs on Thursday, building on strong global gains after the world's six major central banks moved to tame a liquidity crunch for European banks by providing cheaper dollar funding, mainly aided local bourses in sustaining their euphoric mood. The U.S. Federal Reserve, the European Central Bank and the central banks of Canada, Britain, Japan and Switzerland said on Wednesday they would lower the cost of existing dollar swap lines by 50 basis points from Dec. 5, and arrange bilateral swaps to provide liquidity for other currencies. Meanwhile, the US future indices continued to show an uptick in the screen trade.

Back home, although buying was witnessed across 13 pivotals, stocks from rate sensitive-Metal, Bankex and Realty counters collected massive gains in the range of 3-4%. Joining the global rally, 30 share barometer index on BSE-Sensex-accumulated over 400 points to trade over 16500 level. Imitating the similar trajectory, 50 share index- Nifty-on NSE -gaining over 120 points was oscillating above the 4900 level. The overall market breadth on BSE was in the favour of advances which thumped declines in the range of 1602:549, while 79 shares remained unchanged.

The BSE Sensex is currently trading at 16,549.66, up by 426.20 points or 2.64%. The index has touched a high and a low of 16,718.11 and 16,530.75 respectively. There were 28 stocks advancing against just 2 decline on the index.

The broader indices too pared off some gains; the BSE Mid cap and Small cap indices were trading higher by 1.76% and 1.32% respectively. Although buying was witnessed across the board, however, the top gaining sectoral indices on the BSE were, Metal up by 4.49%, Bankex up by 4.02%, Realty up by 3.41%, Auto up by 3.26% and CD up by 2.88%.

The top gainers on the Sensex were Sterlite Industries up by 7.65%, Hindalco up by 7.13%, Tata Motors up by 6.29%, ICICI Bank up by 5.88% and Tata Steel was up by 5.35%.

On the flip side, Bharti Airtel was down by 0.61%, Cipla down by 0.29% were the only losers on the Sensex.

Meanwhile, the growth of eight core infrastructure industries for the month of October 2011 declined to six year low-level of 0.1% compared to 7.2% in October 2010. This barely positive growth of core infra industries suggests that industrial growth will moderate in coming months as the eight infra industries which includes coal, crude oil, natural gas, refinery products and fertilizer, have combined weight of 38% in the Index of Industrial Production (IIP).

As per the data released by the Ministry of Commerce and Industry, the Index of eight core industries stood at 140.54 in October 2011 with a growth rate of 0.1% compared to its growth at 7.2% in October 2010. During April-October 2011-12, the cumulative growth rate of the core industries was 4.3% as against their growth at 5.9% during the corresponding period in 2010-11.

For the month of October, sectors such as steel, electricity registered a positive growth, whereas cement registered a zero growth rate. According to the official data, Electricity generation had a 4.9% growth in October 2011 compared to its 8.5% growth in October 2010. Electricity generation grew by 8.6% during April-October 2011-12 as against its 4.8% growth during the same period of 2010-11. Steel production had a growth rate of 3.8% in October 2011 against its 13.4% growth in October 2010. Steel production grew by 8.7% during April-October 2011-12 compared to its growth at 8.3% during the same period of 2010-11. Cement production registered a growth of 0.0% in October 2011 against its 18.5% growth in October 2010. Cement Production grew by 2.8% during April-October 2011-12 compared to its growth at 6.6% during the same period of 2010-11.

However, sectors such as Coal, Crude Oil, Natural Gas, Petroleum Refinery Products and Fertilizers saw negative growth in October 2011. Coal production registered a growth of (-) 9.0% in October 2011 compared to its growth at 0.7% in October 2010. Coal production grew by (-) 5.5% during April-October 2011-12 compared to its growth at 0.3% during the same period of 2010-11.

Crude Oil production registered a growth of (-) 0.9 % in October 2011 compared to its growth at 13.7% in October 2010. Crude Oil production registered a growth of 4.4% during April-October 2011-12 compared to its growth at 10.7% during the same period of 2010-11. Natural Gas production registered a growth of (-) 7.4% in October 2011 compared to its growth at 6.5% in October 2010. Natural Gas production registered a growth of (-) 8.3% during April-October 2011-12 compared to its growth at 22.2% during the same period of 2010-11.

Petroleum refinery production had a growth of (-) 2.8% in October 2011 compared to its growth at (-) 4.8% in October 2010. Petroleum refinery production registered a growth of 3.6% during April-October 2011-12 compared to its 1.4% growth during the same period of 2010-11. Fertilizer production registered a growth of (-) 2.1% in October 2011 against its growth at (-) 0.2% in October 2010. Fertilizer production grew by 0.2% during April-October 2011-12 compared to its growth at (-) 2.0% during the same period of 2010-11.

The declining trend in the core infra industries indicated slowdown in investment activities because of the policy inertia, high interest rates, moderation in consumer demand and unfavorable global environment. Just 0.1% growth in core sector, has also raised concern over the IIP growth for October, as the IIP numbers for September 2011 has also declined to 1.9%.

The S&P CNX Nifty is currently trading at 4,958.30, higher by 126.25 points or 2.61%. The index has touched a high and low of 5,011.9 and 4,951.95 respectively. There were 46 stocks advancing against 4 decline on the index.

The top gainers of the Nifty were Sterlite Industries up by 8.06%, Hindalco up by 6.43%, ICICI Bank up by 6.28%, Tata Motors was up by 6.13% and SAIL up by 5.61%.

On the flip side, BPCL down by 1.89%, Bharti Airtel down by 0.88%, Dr Reddy’s Lab down by 0.65% and Cipla up by 0.44% were the only losers on the index.

Asian markets prolonged their jubilant mood; Shanghai Composite gained 3.44%, Hang Seng surged 5.85% to 19,041.36, Jakarta Composite accumulated 2.44%, KLSE Composite rose 1.52%, Nikkei 225 added 2.23%, Straits Times expanded by 2.45%, Seoul Composite spurted 4.18% and Taiwan Weighted registered gain of 3.95%.