Post session - Quick review

Coming out of the consolidation phase the Indian equity markets finally showed some upside vigor with benchmark indices garnering gains of around half a percent. Though the mood in the morning was somber lacking any cues from the US markets which remained closed due to Independence Day holiday and the soft trading in the regional peers. There was cautiousness in the markets across the globe ahead of the ECB meeting on expectations of a rate cut to support fragile growth in the single currency bloc. However, it was flat to positive start of the major European markets that encouraged the domestic markets to move higher in second half of the trade.

Though, the consolidation hangover continued looming large in the first part of the trade as the benchmark indices after a soft start continued trading in a tight range till the late noon session. The concern of delayed monsoon continued weighing, even RBI was reported saying that its policy action in the forthcoming quarterly review this month-end will depend upon the progress of monsoon and would rely on the Meteorological Department for forecast. RBI is scheduled to announce its first quarter review of monetary policy 2012-13 on July 31. The depreciating rupee too pressured the markets to some extent. In the second half the markets moved higher after Mauritius Foreign Ministry said India has assured Mauritius economic interests won't be harmed and a joint working group will take place on August 27-28.

On the sectoral front, the rate sensitive banking sector outperformed all its peers, surging by over a percent, other major gainers were Capital Goods and Power sector, from the non sectoral gauge shares of retail companies soared amid reports that the government may allow foreign direct investment in multi-brand retail sector. On the other hand metal sector stocks remained the top laggard despite report that 8 Karnataka iron ore mines will resume operations by the end of July. The telecom stocks too were under pressure as the Department of Telecom (DoT) issued first set of guidelines for the upcoming auction of 2G spectrum in the 1800 MHz and 800 MHz bands without any mention of auction price.

The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1947:953 while 107 scrips remained unchanged. (Provisional)

The BSE Sensex gained 64.36 points or 0.37% and settled at 17,527.17. The index touched a high and a low of 17,562.89 and 17,423.45 respectively. 19 stocks were seen advancing against 11 declining ones on the index (Provisional)

The BSE Mid-cap index gained 0.84% while Small-cap index was up 1.56%. (Provisional)

On the BSE Sectoral front, FMCG up 1.08%, Bankex up 1.00%, Power up 0.84%, Capital Goods up 0.78% and Auto up 0.54% were the top gainers while, Metal down 0.57%, Realty down 0.55%, Oil & Gas down 0.24%, Consumer Durables down 0.06% and TECk down 0.05% were the only losers.

The top gainers on the Sensex were Cipla up 2.48%, ICICI Bank up 2.08%, ITC up 1.56%, Maruti Suzuki up 1.46% and Tata Motors up 1.33% while, ONGC down 2.06%, Bajaj Auto down 1.74%, Coal India down 1.55%, Sterlite Industries down 1.31% and Bharti Airtel down 0.95% were the top losers in the index. (Provisional)

Meanwhile, by the end of July, eight iron ore mines of Karnataka are likely to start their operations and would result in production of 5.5 million tonnes per annum (mtpa) of iron ore and thereby removing some deficiency in supply. The initial Reclamation & Rehabilitation (R&R) plan has been cleared for the eight mines and final approval will be given today by Central Empowered Committee (CEC).

State owned NMDC, which currently produces 10-12 mtpa has got permission from the Supreme Court (SC), which is the only miner to get the permission. Miners such as Sesa Goa, Mineral Enterprises, Vesco and Mysore Minerals will start the production in a similar way by the end of this month. Earlier the Supreme Court had banned ore mining after their wrong operation came in surface. NMDC was only allowed to restart operation in Bellary after release of comprehensive report by the CEC found company not guilty, while the other mines were banned from resuming operations.

According to the CEC report, Karnataka mines were placed under three categories A, B and C based on their extent of illegality with category A by and large, showing no illegal operations. The mine owners were being ordered by the SC to get approval from the Indian Council of Forestry Research and Eduction, Indian Bureau of Mines and the CEC in order to resume their normal activity.

Director, Department of Mines & Geology, Karnataka, HR Srinivasa said, some more mines will be allowed to restart, taking total output by the fiscal-end to around 10 mtpa, in addition to NMDC’s output. The iron ore production from Karnataka was capped by the SC at 30 mtpa.

Steel plants in Karnataka started complaining on the shortage of raw material after SC had intervened and announced that all the iron ore should be sold through e-auction.  However, the government has earned higher revenue after SC’s guidelines. In FY 2011, Karnataka government has earned an amount of Rs 520 crore as royalty on 33 million tonnes of ore production, which rose further to Rs 730 crore in the FY 2012 on an output of 22 million tonnes.

Srinivasa by adding further said, the government expects Rs 15,000 crore revenues from the state’s iron ore sector from multiple sources like levy of fines on illegal mines, a portion set aside from e-auction proceeds and also from the proposed auction of certain mines. The revenue generated from these sources will be placed under a special purpose vehicle and will be used for developing infrastructure in three iron ore mining districts such as Bellary, Chitradurga and Tumkur.

India VIX, a gauge for market’s short term expectation of volatility gained 0.43% at 18.35 from its previous close of 18.27 on Wednesday. (Provisional)

The S&P CNX Nifty gained 23.15 points or 0.44% to settle at 5,325.70. The index touched high and low of 5,333.65 and 5,288.85 respectively. 31 stocks advanced against 18 declining ones while 1 stock remained unchanged on the index. (Provisional)

The top gainers on the Nifty were IDFC up 2.96%, Cipla up 2.20%, ICICI Bank up 2.15%, Maruti Suzuki up 1.87% and HCL Tech up 1.85%. On the other hand, Asian Paints down 2.39%, ONGC down 1.79%, Bajaj Auto down 1.72%, Sterlite Industries down 1.58% and Coal India down 1.55% were the top losers. (Provisional)

The European markets were trading on a mixed note, with France's CAC 40 down 0.05%, Germany's DAX up 0.54% and Britain’s FTSE 100 up 0.26%.

Asian markets on Thursday made a mixed closing as investors remained on sideline and booked some profits ahead of the European Central Bank’s meet expecting an interest rate cut. There was no cue from the US markets as it remained closed due to Independence Day holiday. Investors were keeping their finger crossed looking down upon the European Central Bank meeting today for a possible announcement $78 billion of fresh fund from the Bank of England. The Euro was at par with dollar in a cautious trade.

Nikkei slid on Thursday as traders perceived that the market which has rallied for month has touched resistance at the 75 day moving average and was weakening now. Reconstruction stocks performed better today with construction machine maker Komatsu Ltd rising 3.5 percent and Daiki Ataka Engineering Co Ltd soaring 2.3 percent. Shanghai Composite ended lower as investors were risk averse. Hang Seng Index fell due to low trade on Thursday from seven week high on fear of weakness in Chinese Domestic benchmark.