Post session - Quick review

Building over previous session’s gains, Indian equity markets witnessed stable session of performance. However, much of the hard work was done by the bourses in the noon deals, mainly, after the release of July month’s inflation data, which appearing at pleasantly lower level of 6.87%, took the markets by surprise. Barometer indices before taking a U-turn to trade in green as knee jerk reaction to 32 month low inflation data, were languishing into the red zone in the morning deals after reports suggested that trade deficit in the month of July had widened. India's trade deficit widened to $15.5 billion in July, as exports recorded their sharpest fall since November 2011, reflecting a weakening of demand from key Western markets which has contributed to a slowdown in Asia's third-largest economy. However, buying of select blue chip stocks mainly in the Oil & Gas, Bankex and Metal counters, took 30 share barometer index, Sensex, on Bombay Stock Exchange (BSE), piercing above the 17,700 level, while 50 share index of National Stock Exchange (NSE)-Nifty, too ended past the 5350 psychological level. Broader indices, meanwhile, too accumulated gains but in lesser proportion in comparison to the frontline indices.

Markets were provided with a shot of adrenaline with sanguine trade of European  counterparts, which reversing previous session’s dip, showcase heartwarming moves after tepid growth figures from Europe bolstered the case for further stimulus measures from the region’s. Data showed on Tuesday that gross domestic product (GDP) in the euro zone shrank by 0.2% in the second quarter from the previous three months, and by 0.4% compared with a year earlier, in line with expectations. However, data showed Germany had modest economic growth in the second quarter while France stagnated. Meanwhile, positive leads from regional counterparts also added to the euphoria. Asian shares ended in green as investors hunted for bargains while waiting for more economic figures from Europe and the United States later in the day.

Closer home, the gains at Dalal Street remained capped on account of losses in Realty, Health Care and Power counters. However, banking shares, surged on optimism, that Reserve Bank of India, with the given moderation of inflation, could prune its key policy rates in its upcoming mid-quarterly policy review on September 17, 2012.

On the result front, corporate’s earning were more of misses than hits. Housing Development & Infrastructure (HDIL) slipped over two percent on reporting 40.94% drop in Q1FY13 net profit at Rs 123.47 crore for the June quarter as compared to a net profit of Rs 209.06 crore for the same quarter. Meanwhile, world's largest aluminum rolling company, Hindalco Industries, also slipped over half a percent on reporting 34.04% slippage in  net profit at Rs 424.77 crore for the June quarter as compared to a net profit of Rs 644.00 crore for the same quarter in the previous year. On the flip side, LT Foods surged over a percent and half on reporting over two fold rise in Q1FY13 net profit of Rs 7.53 crore as compared to a net profit of Rs 3.35 crore for Q1FY12. The market breadth on the BSE ended neutral; advances and declining stocks were in a ratio of 1392:1400 while 139 scrips remained unchanged. (Provisional)

The BSE Sensex gained 92.41 points or 0.52% and settled at 17,725.86. The index touched a high and a low of 17,753.43 and 17,572.34 respectively. 18 stocks were seen advancing against 11 declining ones while 1 stock remained unchanged on the index (Provisional)

The BSE Mid-cap index gained 0.22% while Small-cap index was up 0.19%. (Provisional)

On the BSE Sectoral front, Oil & Gas up 1.21%, Bankex up 1.15%, Metal up 0.81%, Auto up 0.73% and PSU up 0.68% were the top gainers, while Realty down 0.92%, Health Care down 0.44% and Power down 0.08% were the only losers in the space.

The top gainers on the Sensex were Tata Motors up 3.06%, Tata Steel up 2.79%, Jindal Steel up 2.32%, ICICI Bank up 2.17% and Coal India up 1.91% while, Sun Pharma down 2.21%, HDFC down 1.99%, Sterlite Industries down 1.54%, Bajaj Auto down 1.32% and Hindalco Industries down 0.95% were the top losers in the index. (Provisional)

Meanwhile, offering a little relief to the Reserve Bank of India (RBI), the wholesale price index (WPI), India's main inflation gauge, unexpectedly slipped at 6.87% for the month of July, its lowest since January 2010, as compared to 7.25% (Provisional) for the previous month and 9.36% during the corresponding month of the previous year.

The much awaited figure, was also way below than the consensus estimates of 7.40%. Meanwhile, build up inflation in the financial year so far was reported at 2.36% as compared to a build-up of 3.14% in the corresponding period of the previous year. Meanwhile, the annual reading for May remained unchanged at 7.55%.

The index for primary articles group, which has a weightage of 20.12 percent in overall WPI and includes food, non-food and minerals groups rose 1.1% to 218.8 from 216.4 for the previous month. The index for ‘Food Articles’ group rising by 1.4% to 212.2 from 209.2 for the previous month continued to drive the headline numbers.  Meanwhile, the index for ‘Non-Food Articles’ group rose by 2.9% at 199.2 (Provisional) from 193.5 (Provisional) for the previous month. However, the index for ‘Minerals’ group declined by 3.4% to 335.8 (Provisional) from 347.6 (Provisional) for the previous month.

The index for fuel and power group with a weightage of 14.91percent in index too declined by 1.5% to 175.5 from 178, due to lower prices of light diesel oil (10%), furance oil (8%), naphtha (7%), aviation turbine fuel (ATF) and petrol (4% each). Meanwhile, the index for Manufactured Products, which carries weight of almost 65% in the index, rose by 0.6% to 145.7 from 144.8 for the previous month.

Although the numbers have come lower than expectation, but still fail to emerge as game changing number. Inflation staying above 7% mark for almost two-and-half-years by now, has limited RBI’s abilities of easing monetary policy too aggressively despite the steepest slide in economic growth in almost a decade in the January-March quarter.

The connoisseur are of the beliefs that lower than expected numbers would cast no impact on world’s most aggressive central bank’s anti-inflationary stance during its next mid-quarterly policy review on September 17, 2012, as risk for inflation continues to remain on the upside . The RBI, like previous mid-quarterly policy review, this time around also is expected to maintain its status quo stance on key policy rates.

India VIX, a gauge for market’s short term expectation of volatility lost 2.31% at 15.64 from its previous close of 16.01 on Monday. (Provisional)

The S&P CNX Nifty gained 31.00 points or 0.58% to settle at 5,378.90. The index touched high and low of 5,387.05 and 5,328.80 respectively. 31 stocks advanced against 18 declining ones while 1 stock remained unchanged on the index. (Provisional)

The top gainers on the Nifty were Tata Motors up 3.31%, Ranbaxy Laboratories up 3.30%, IDFC up 2.85%, Tata Steel up 2.67% and Axis Bank up 2.66%. On the other hand, Sun Pharma down 2.33%, HDFC down 2.08%, Hindalco Industries down 1.24%, Sterlite Industries down 1.23% and BPCL down 1.15% were the top losers. (Provisional)

The European markets were trading in green, with France's CAC 40 up 0.50%, Germany's DAX up 0.77% and Britain’s FTSE 100 up 0.50%.

All Asian markets went home with green mark as several board members of Bank of Japan in the last meeting said that the central bank should not dismiss any policy options in combating risks to the economy. South Korea's Kospi rallied on foreign investor’s buying in local shares, which increased technology and auto stocks. Meanwhile, markets positioned itself ahead of a raft of economic data coming out later in the day from Europe and the U.S. The German economy, reported by 0.3% growth in the second quarter beating market expectations also supported markets.