Equity markets ricochet from intra-day’s lows; positive European markets opening aids

Equity markets have bounced out of intra-day’s low, scaled as a knee jerk reaction to release of sluggish June IIP figure’s, as investor’s estimated these figures to provide some policy direction to India’s most aggressive central Bank, Reserve bank of India, in its monetary policy meet in September. Some support also emerged to the bourses at lower level, which lifted it little higher. 30 share barometer index, Sensex, on BSE added over 0.20% to comfortably sail pass the 17600 crucial mark, while the 50 share index of National Stock Exchange, Nifty, on NSE is also holding its fort above the 5350 bastion. Meanwhile, broader indices exhibited mixed trend. Sectorally, FMCG, Metal and IT counters emerged as pocket of strength, while Capital goods, Oil & Gas and Realty underscored the underlying weakness. The sharp contraction of Capital Goods goods output, a key investment indicator, by 27.9% on y-o-y basis, mainly dragged the Capital Goods counter lower.

A positive opening of European counterparts, too seem to be doing its bit for Indian equity markets along with the steady performance of regional peers. European stocks nudged higher on Thursday after economic data out of China reignited hopes for central bank easing. China's July consumer price inflation rose 1.8% on an annual basis, slower than the 2.2% rate the month before, suggesting that Beijing has more room to undertake stimulus and encourage economic growth.

Closer home, the BSE Sensex is currently trading at 17,647.47, up by 46.91 points or 0.27% after touching a high of 17,702.98 and a low of 17,610.14. There were 20 stocks advancing against 10 declines on the index.

The broader indices continued to exhibit mixed trend; the BSE Mid cap index was up by 0.16%, while Small cap index declined by 0.09%.

The top gaining sectoral indices on the BSE were, FMCG up by 1.24%, Metal up by 1.08%, IT and Auto up by 0.64% and Health Care up by 0.36%. While, CG down by 0.55%, Oil & Gas down by 0.23% Realty down by 0.10% and Technology down by 0.06% were top losers on the sectoral space.

The top gainers on the Sensex were M&M up by 3.08%, Sterlite Industries up by 2.98%, Tata Power up by 2.40%, Coal India up by 2.27%, Hindustan Unilever up by 2.14%.

On the flip side, Bharti Airtel down by 4.14%, HDFC down by 2.93%, SBI down by 1.72%, Tata Motors down by 1.47%, L&T down by 0.61% were the top losers on the Sensex.

Meanwhile, Putting up a pathetic show, India’s index of industrial production (IIP), a key measure of industrial output shockingly registered a negative growth of 1.8% in June 2012 at 168.3, from the same period in the past fiscal, as against the expectations of 1% and also lower than 2.4% growth figure for the month of May, which was later revised a tad to 2.5%. Moreover, the cumulative growth for the period April-June 2012-13 contracted by 0.1% over the corresponding period of the previous year.

The industrial output has remained fragile in the past few months as growth in all three sectors viz. mining, manufacturing and electricity got dampened. However, this time slump in the manufacturing output mainly triggered contraction of June industrial production, as Manufacturing, which constitutes about 76% of industrial production, shrank 3.2% in the month of June versus a growth of 2.5% in May. On the flip side, mining sector exhibited a growth of 0.6% versus a negative growth of 0.9% in May. Additionally, electricity sector too grew at a robust 8.8% versus 5.9% in May.

However, Capital goods output, a key investment indicator, clearly emerged as significant driver in terms of taking the growth in negative territory, as capital goods production, sharply contracted by 27.9% on y-o-y basis, highlighting that companies are still wary of making investments in high-interest and uncertain economic climate. Consumer goods, on the other hand, grew at 3.5%, driven by robust growth of 9.1% in consumer durables, despite a negative growth of 1% in non-durables.

Industrial output, which accounts for a little over 15% of gross domestic product (GDP), highlights more weakness ahead for the Indian economy, which has registered its lowest annual rate in almost a decade, which is just at 5.3% in the March quarter. However, this dreary industrial out numbers may provide some policy direction to India’s most aggressive central Bank, which furthering its fight against inflation, has maintained a status quo stance in the past two policy meetings.  

The S&P CNX Nifty is currently trading at 5350.55 up by 12.55 points or 0.24% after trading in a range of 5,368.20 - 5,339.15. There were 28 stocks advancing against 22 declines on the index.

The top gainers of the Nifty were Sterlite Industries M&M were up by 3.07%, Coal India up by 2.48%, Grasim Industries up by 2.31% and Tata Power up by 2.24%. On the flip side, Bharti Airtel down by 4.14%, HDFC down by 2.72%, Cairn India down by 2.58%, SBI down by 1.74% and BPCL down by 1.72% were the major losers on the index.

All the Asian indices were trading in green; Kospi Composite Index up 1.74%, Nikkei 225 surged 1.10%, Jakarta Composite added 0.84%, KLSE Composite rose 0.24%, Taiwan Weighted spurted by 1.56% and Shanghai Composite gained 0.62% and Hang Seng advanced 0.99%. Straits Times remained closed on account of National Day holiday.

European markets too got to positive yet cautious start; CAC 40 gained 0.45% and FTSE100 gained 0.08%, while DAX declined by 0.02%.