Indian benchmarks convalesce in late trade; Sensex re-conquers 17,600 levels

After squandering for most part of the session around the previous closing levels, the domestic benchmark equity indices staged a smart comeback in the last leg of trade and snapped Monday’s session near day’s high with over half a percent gains. Though, the benchmarks traded near its pre-close level till mid noon session as the undertone stood cautious due to mixed global cues and owing to persistent concern about the state of the deteriorating fundamentals of Indian economy. Moreover, traders remained on the safer side awaiting July inflation data to be announced tomorrow and the pace of economic growth amid majority of Indian Inc pegging growth in the range of 6-6.5 percent for 2012-13. However, markets will remain closed on August 15, 2012 for the Independence Day holiday.

The frontline indices smartly bounced back in the last session and across the board hefty position build up, helped the gauges to outperform all its Asian as well as European counterparts. Moreover, the relentless buying by foreign funds in local equities too supported the sentiments as they pumped nearly Rs 4,800 crore into stock markets in the month of August so far. During August 1-10, foreign institutional investors (FIIs) were gross buyers of shares worth Rs 17,544 crore, while they sold equities amounting to Rs 12,750 crore, translating into net inflows of Rs 4,794 crore.

Meanwhile, the report that Department of Industrial Policy and Promotion (DIPP) is likely to ease stringent retail foreign direct investment norms in single-brand retail also supported the market sentiments and stocks like Shoppers Stop, Pantaloon Retail, Provogue India, Brandhouse Retails, Archies and SRS all edging higher in the trade. Better than expected Q1 numbers from Oil & Natural Gas Corporation (ONGC) too supported the sentiments. The company reported a rise of 48.42% in its net profit at Rs 6077.70 crore for the quarter under review while, the total income of the company increased by 23.86% at Rs 21216.24 crore for Q1FY13. Decent Q1 numbers from Reliance Communication and Pfizer too assisted the market mood.

However, the global cues remained subdued as most of the Asian equity indices ended the session in the red, with sentiment hurt by disappointing Gross Domestic Product (GDP) data out of Japan. The nation’s GDP grew at an annualized pace of 1.4% in the three months through June, a Cabinet Office report showed in Tokyo. That was less than the median estimate of 2.3% and down from 5.5% growth clocked in the previous quarter. Moreover, European counters too started the trade on a cautious note.

Back home, Prime Minister Manmohan Singh after Moody’s forecast to downgrade India’s GDP said that no doubt it is a cause of concern, but this did not mean that the country would not be able to do better than last year’s 6.5 per cent growth. However, the gains remained capped as there is threat of India getting a downgrade to its sovereign rating; Fitch Ratings has said that possibility of downgrading the country’s sovereign rating is more than 50 percent in the next 12-24 months.

Meanwhile, the NSE’s 50-share broadly followed index Nifty, rose by around thirty points to settle near its psychological 5,350 support level moreover, Bombay Stock Exchange’s Sensitive Index -Sensex- surged by over seventy points and regained its psychological 17,600 mark. Moreover, broader markets too performed in line with their larger peers and settled with gain of around half a percent.

The overall volumes stood at Rs 1.29 lakh crore. The market breadth was remained in the favour of advances, as there were 1,473 shares on the gaining side against 1,281 shares on the losing side while 121 shares remained unchanged.

The BSE Sensex gained 75.71 points or 0.43% to settle at 17,633.45, while the S&P CNX Nifty rose by 27.50 points or 0.52% to close at 5,347.90.

The BSE Sensex touched a high and a low of 17,642.38 and 17,522.10 respectively. However, the BSE Mid cap index was up by 0.49% and Small cap index up by 0.46%.

HDFC up by 3.71%, Sterlite Industries up by 2.66%, Maruti Suzuki up by 1.95%, Bajaj Auto up by 1.68% and BHEL up by 1.66% were top gainers on the Sensex, while Tata Motors down by 1.55%, Hindustan Unilever down by 1.43%, Hero MotoCorp down by 1.32%, Hindalco Industries down by 1.26% and Tata Steel down by 1.19% were top losers on the index.

The major gainers on the BSE sectoral space were, Realty up by 2.41%, Consumer Durables up by 1.70%, Capital Goods up by 1.08%, Power up 1.02% and PSU up 0.75%, while Auto down by 0.12% was only loser on the BSE sectoral space.  

Meanwhile, engineering exports declined by about 16% in June 2012 to $4.5 billion. As per the data of Engineering Export Promotion Council (EEPC), the exports have declined substantially from $5.3 billion in June last year.

The orders from key markets of US and Europe which accounts for over 60% India’s total engineering exports have reduced as buyers are retaining low or nil inventory level.

The major Indian engineering export items are transport equipment, capital goods, other machinery/equipment and light engineering products like castings, forgings and fasteners. As per the report the fall has been in three sectors particularly, Iron and Steel, Aircrafts, Spacecrafts and parts, Ships, Boats and other parts.

During 2011-12, the country’s engineering exports grew 17% to $59 billion compared to $49.7 billion in the previous fiscal. During April-June 2012-13, engineering exports dipped about 9% to $14.3 billion compared to the same period last year.

The S&P CNX Nifty touched a high and low of 5,352.45 and 5,309.05 respectively.

The top gainers on the Nifty were HDFC up by 3.46%, DLF up by 3.14%, Reliance Infra up by 3.05%, Sterlite Industries up by 2.66% and Sesa Goa up by 2.25%. On the flip side, Hindalco down by 1.50%, Tata Motors down by 1.49%, Hero MotoCorp down by 1.29%, HUL down by 1.25%, and Tata Steel down by 1.15% were the major losers.

The European markets were trading mixed, France's CAC 40 up by 0.25%, Germany's DAX was up by 0.17% and United Kingdom’s FTSE 100 was down by 0.07%.

Most of the Asian markets shut the shop in red Monday as slowdown in Japan's growth at annual rate of 1.4% in April-June quarter, increased worries about the health of the global economy. That was a sharp drop from a revised 5.5% in the previous quarter. Meanwhile, Hong Kong and Singapore both Asian financial centers reported weak second-quarter growth. Also the dismal report helped fuel speculation that China’s central bank was preparing to act with some type of measure to spur business activity.