Benchmarks end volatile trade slightly lower; Nifty holds 5,250 mark

Indian key benchmarks, after a firm opening, snapped the day’s trade slightly lower as General Anti Avoidance Rules (GAAR) deferral hopes were offset by subdued manufacturing growth of India, which eased to a nine-month low to 52.8 in August, 2012. Manufacturing accounts for a little over 15 percent of India’s gross domestic product (GDP) and has been the biggest drag on growth. Poor showing by the manufacturing sector pulled down the GDP growth to 5.5% in the first quarter, the decade’s worst Q1 performance, against the growth figure of 8% in the corresponding period in the last fiscal. The sentiments also remained lethargic after India’s exports slumped 14.8 percent to $22.44 billion in July as compared to $26.34 billion recorded during the corresponding month in 2011 due to lower demands in North America and Europe. Meanwhile, imports dropped 7.61 percent to $37.93 billion in July, leaving a monthly trade deficit of $15.49 billion.

The selling pressure intensified after Morgan Stanley today lowered India’s growth forecast to 5.1% for the current fiscal, from its earlier estimate of 5.8%. The disruption of parliament continued for the ninth consecutive session by the opposition party BJP over CAG report on coal allocation also hurt the sentiments. The mood also remained dampen as PSU oil marketing companies extended their recent losses triggered by concerns about high under-recovery. PSU OMCs incurred under-recovery of Rs 47,811 crore in Q1 June 2012. Stocks like HPCL and IOC edged lower in the trade. Some amount of pressure also came in from Aviation sector where stocks like Spice Jet and Jet Air India tumbled over 4 percent after fuel or Aviation Turbine Fuel (ATF) prices were hiked by a steep 7.6 per cent or by Rs 5,146.16 per kilolitre (kl), the biggest hike ever that took ATF price to all-time high of Rs 72,282 per kilolitre, with effect from August 31 midnight.

However, the losses remain capped as some respite was provided by Auto space, which gained about half a percent after companies like M&M and Tata Motors reported decent August sales figure. Tata Motors registered a 12% growth in its total sales at 71,826 vehicles for the month of August 2012, including exports of Tata commercial and passenger vehicles while, M&M reported 21.74% jump in sales at 45,836 units for August against 37,684 units in the same month last year.

Positive global cues too helped the Indian markets too pare their losses. Asian counters shut shop in the green after a contraction in China’s manufacturing boosted expectations of more stimulus for the world’s second-biggest economy. European markets opened lower after weak data from world’s second largest economy China. But the market immediately recovered early losses on hopes of stimulus from central banks and the improvement in Germany, UK and Eurozone’s PMI data (MoM).

Back home, the NSE’s 50-share broadly followed index Nifty, down by just four points, managed to end above the psychological 5,250 support level while Bombay Stock Exchange’s Sensitive Index - Sensex moved down by forty five points to finish below the psychological 17,400 mark. However, the broader markets too struggled to get some traction but, ended the session slightely in the positive. The market breadth remained in favor of declines as there were 1,389 shares on the gaining side against 1,419 shares on the losing side while 112 shares remain unchanged.

The BSE Sensex lost 45.16 points or 0.26% to settle at 17,384.40, while the S&P CNX Nifty declined by 4.75 points or 0.09% to close at 5,253.75.

The BSE Sensex touched a high and a low of 17,509.99 and 17,349.57 respectively. However, the BSE Mid cap index was up by 0.09% and Small cap index up by 0.03%.

Bajaj Auto up by 3.04%, Coal India up by 2.18%, Cipla up by 1.79%, Maruti Suzuki up by 1.79% and BHEL up by 0.98% were top gainers on the Sensex, while Jindal Steel down by 2.23%, Tata Power down by 1.91%, Tata Motors down by 1.24%, Tata Steel down by 1.23% and ONGC down by 1.20% were top losers on the index.

The only gainer on the BSE sectoral space was, Capital Goods up 0.63%, Consumer Durables (CD) up 0.61%, Auto up 0.40%, Power up 0.12% while Realty down 0.86%, Oil & Gas down 0.80%, Bankex down 0.65%, Metal down 0.59% and Health Care down 0.34% were major losers on the BSE sectoral space.  

Meanwhile, opening up about 5 million tonnes production of iron-ore a year again, the Supreme Court has lifted the ban on iron ore mining from 18 Category ‘A’ mines in Karnataka, the country's second-largest supplier, after a suspension of over a year on environment concerns. However, the court has permitted mining subject to statutory compliance, as the legal clearances in respect of some A category mines would be coming to an end in October.

Citing environmental violations, the apex court in 2011, banned iron ore mining in Bellary, Chitradurga and Tumkur districts of Karnataka and asked a federal government body to carry out an environmental impact assessment.

In an attempt to boost iron-ore production, the apex court allowed 18 mines to resume iron ore mining in Karnataka, as clamp down on illegal mining combined the nation's capital desire to keep supplies for domestic steel mills, had began to eat into the iron-ore production.

Asia’s third largest economy used to produce about 200 million tonnes a year of iron ore, with exactly half of that being exported. However, the potential increase in output from Karnataka is unlikely to affect flagging global iron ore prices unless the state allows exporters to ship the raw material overseas. Furthermore, the order is unlikely to mean further exports as the steel making ingredient is deficit domestically and with 30 percent export tax and excessive freight rates, not making shipments a feasible option. However, the output from the re-started mines will be in addition to state-run NMDC's 1 million tonnes per month, which was permitted by the Supreme Court for production from August 6, 2011.

The S&P CNX Nifty touched a high and low of 5,295.80 and 5,243.15 respectively.

The top gainers on the Nifty were Ranbaxy up by 3.12%, Coal India up by 2.66%, Bajaj Auto up by 2.65%, Maruti Suzuki up by 2.32% and Hero MotoCorp up by 2.21%. On the flip side, SAIL down by 2.24%, Tata Power down by 2.21%, Jindal Steel down by 2.03%, IDFC down by 2.01% and Ambuja Cement down by 2.00% were the major losers.

The European markets were trading in green, France's CAC 40 up by 0.49%, Germany's DAX was up by 0.41% and United Kingdom’s FTSE 100 was up by 0.62%.

Most Asian markets went home in green as statements from US Federal Reserve Chairman Ben S. Bernanke and economic news across the region raised hopes that central banks will boost stimulus measures. Though, Japanese Nikkei ended lower as the yen rose against most of its major counterparts.  Hong Kong and China shares ended higher on Monday, aided by gains in the property sector after weaker-than-expected economic data spurred hopes that Beijing will act to stem the slowdown in the world's second-largest economy.