Indian equities witnesses consolidation awaiting IIP, Inflation data

After vehemently surging around two and a half percent in previous two sessions, Indian equity benchmarks went on to consolidate the gains in Monday’s session by settling just above the neutral line. It turned out to be a range bound session for the frontline indices which somehow managed to stick on to the levels reached on Saturday, as investors at large chose to play the waiting game ahead of a series of developments both from the domestic as well as global front which will pave the way forward for the local bourses. Marketmen awaited the release of industrial production (IIP) data for July, amid speculations that IIP might edge up 0.3 percent year on year in July, after shrinking 1.8 percent in June, which was the third contraction in four months. Traders also remained cautious ahead of August headline inflation figure slated to be released on September 14. Inflation remains above the comfort level of the government, as well as the Reserve Bank. The new data will provide key inputs for a decision on interest rates ahead of RBI’s monetary policy review on September 17, 2012. Investor’s also preferred cashing some profits on worries that further delays in fiscal reforms from the government would prevent the central bank from lowering interest rates.

Global market too remained extremely quite with European indices trading flat amid concern about slowdown in top economies such as the US, China and Japan while, Asian counters ended mixed as investors digested a slew of disappointing reports on the state of the world’s top three economies. Moreover, all eyes will now be on the two-day FOMC policy meeting that begins on September 12, 2012. Federal Reserve Chairman Ben S Bernanke has in the recent past indicated his willingness to introduce QE3 in a bid to shore up the world's largest economy and boost employment in an election year.

Back home, metal stocks provided strength to the key benchmarks as metal shares like NMDC, Hindalco, Sail, Tata Steel, JSW Steel and Sterlite Industries edged higher as LMEX, a gauge of six metals traded on the London Metal Exchange, jumped 3.01 percent on September 7, 2012. Moreover, Auto space too remained one of the top gainers after Petroleum Minister Jaipal Reddy stated that state-run oil companies don’t have an immediate plan to increase the prices of fuel products such as gasoline and diesel despite their mounting revenue losses.

The NSE’s 50-share broadly followed index Nifty, rose by just over four points and managed to end above the psychological 5,350 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex moved up by about fifteen points to finish above the psychological 17,750 mark. However, the broader markets outperformed benchmarks.

The markets rose on overall volumes of over Rs 0.80 lakh crore, which remained on the lower side as compared to that on Friday. Moreover, the market breadth remained in favor of advances as there were 1,525 shares on the gaining side against 1,307 shares on the losing side while 118 shares remain unchanged.

The BSE Sensex gained 17.13 points or 0.10% to settle at 17,766.78, while the S&P CNX Nifty rose by 4.75 points or 0.09% to close at 5,363.45.

The BSE Sensex touched a high and a low of 17,810.90 and 17,728.12 respectively. However, the BSE Mid cap index was up by 0.28% and Small cap index up by 0.70%.

Sun Pharma up by 2.63%, Bharti Airtel up by 2.32%, Coal India up by 1.76%, Tata Steel up by 1.63% and Tata Motors up by 1.28% were top gainers on the Sensex, while Jindal Steel down 2.16%, BHEL down 2.15%, SBI down 1.80%, Tata Power down 1.19% and Wipro down 1.17% were top losers on the index.

The major gainers on the BSE sectoral space were, Consumer Durables (CD) up 0.99%, Health Care (HC) up 0.95%, Metal up 0.71%, Auto up 0.49% and TECk up 0.19%, while Realty down 0.78%, Bankex down 0.77%, Power down 0.44%, FMCG down 0.23% and Consumer Durables down 0.05% were top losers on the BSE sectoral space.  

Meanwhile, underscoring the fears of sluggish economic growth in Asia's third-largest economy, domestic passenger car sales registered its first fall in 10 months in August at 118,142 units compared to 145,066 units in the same month in 2011, thereby recording a plunge of 18.56 percent. Total passenger vehicles sales also declined in August 2012 by almost 4 percent over same month last year.

According to the data released by the Society of Indian Automobile Manufacturers (SIAM), motorcycle sales in last month dropped for the first time since 2009 to 766,127 units from 836,887 units in the same month previous year, clocking drop of 8.46 per cent.  Meanwhile, total two-wheeler sales in August 2012 decreased by 4.50 per cent to 1057,925 units from 1107,782 units in the same period of previous year. However, on cumulative basis two-wheelers registered a growth of 6.80 percent during April-August 2012.

Further, total sales of vehicles across categories registered a dip of 3.90 per cent to 1354,436 units in August, against 1409,412 units in the corresponding month of the previous year. The overall growth in domestic sales during April-August 2012 was 6.61 percent over same period last year. However, total sales of commercial vehicles for the month under review have risen by 3.92 per cent to 66,767 units from 64,248 units in the year-ago period.

Soaring fuel prices, costly loans as well as fears of job losses in a slowing economy have crimped demand for cars and sport-utility vehicles. Thus, the falling trend has forced many automakers into production cuts and temporary shutdowns over the past three months. 

SIAM has further averred that, 'now we are entering a desperate zone,' and ‘if the negative trends continue in September as well, we will have to revise our targets downwards.' The SIAM has already pruned its car sales growth target to 9% from 10-12% due to high fuel prices and expensive interest rates.

The S&P CNX Nifty touched a high and low of 5,375.45 and 5,349.10 respectively.

The top gainers on the Nifty were Sun Pharma up by 2.77%, Bharti Airtel up by 2.20%, Bajaj Auto up by 1.71%, Coal India up by 1.71% and Tata Steel up by 1.27%. On the flip side, Axis Bank down by 2.89%, BHEL down 2.32%, SBI down 2.13%, Jindal Steel 1.86% and DLF down by 1.47% were top losers.

The European markets were trading mixed, France's CAC 40 down by 0.09%, Germany's DAX was up by 0.03% and United Kingdom’s FTSE 100 was down by 0.01%.

Asian markets ended mixed on Monday, on the back of weak data from China and the United States which raised hopes for new stimulus measures ahead of Federal Reserve meeting. Japan's Nikkei 225 ended lower on the government’s statement that the economy grew at a slower pace than earlier estimated for the April-June quarter. Growth stood at an annual 0.7%, slower than the 1.4% given in August. Meanwhile, Hong Kong shares held on to gains on Monday despite less contribution from the investors after last week's sharp run-up as optimism over Chinese infrastructure spending was tempered by weak monthly trade data that pointed to a worsening economic outlook.