Benchmarks witness a roller-coaster ride; settle with marginal gains

It turned out to be a roller-coaster ride for the frontline indices which narrowly escaped from closing in the negative territory despite surging to the highest point in the session in the last hour of trade. The eventful session saw the benchmarks begin trading on a sluggish note as sentiments across the Asian markets remained cautious on increasing concerns about US debt woes that came on top of the worsening euro zone debt crisis after Moody's threatened to downgrade the US government AAA bond credit rating that it has held since 1917. The morale of the marketmen was also weakened by the triple blasts in the financial capital late on Wednesday that killed at least 17 people. However, sentiments gradually improved through the morning session and the indices clawed back into the green terrain soon after the weekly and monthly inflation numbers were released by the ministry of commerce. The headline inflation measured by WPI for June came in at 9.44% against 9.06% in the previous month. Though the WPI index quickened in the month of June however, the numbers have come as a respite since economists had forecast a gloomier picture and a sharper rise to 9.7% because of the recent hike in prices of petroleum products by the government. The key gauges managed to capitalize on the momentum thereafter and even went on to test the 5,650 and 18,800 levels, however, those levels proved as stern resistances for the indices as weak monsoon data took its toll on sentiments and erased a large chunk of gains. India's Met department opined that monsoon rains were 19% below normal in the week ended July 13. Investors also were worried as the European counterparts traded with grave losses after Italy auctioned bonds and Greece's credit rating was cut three levels to Fitch Ratings' lowest grade for any country in the world.

Back home, the benchmark which touched the lowest point in early trading hours managed to claw back into the green terrain in early afternoon session. The indices even managed to regain the 5,650 and 18,800 levels in the last hour of trade, however hefty profit in the dying moments ensured that the key indices settle with only marginal gains. The NSE's 50-share broadly followed index Nifty, gained a quarter percent and settled a touch below the crucial 5,600 support level while Bombay Stock Exchange's Sensitive Index, Sensex amassed just twenty two points and closed above the psychological 18,600 mark. The broader markets traded with a positive bias through the session but came off the highs in the dying hours, still managing to outperform their larger peers. On the sectoral front, it was the Realty counter which vivaciously rallied by over 2% after majors like DLF and Unitech soared by 3.15% and 3.98% respectively. The rate sensitive Bankex pocket too remained amid the thick of things and gained 1% on speculations that the RBI may be forced to pause its monetary tightening measures after the longest stretch of rate increases in a decade. On the other hand information technology pocket languished in the red terrain as Infosys extended the downtrend and also ahead of TCS's quarterly earnings announcement. The Auto counter too remained under some pressure after two wheeler major Bajaj Auto got punished post its lower than expected Q1 earnings announcement. The markets consolidated on strong volumes of over Rs 1.66 lakh crore while the turnover for NSE F&O segment also remained on the higher side compared to Wednesday at over 1.52 lakh crore. The markets breadth remained positive as there were 1590 shares on the gaining side against 1219 shares on the losing side while 156 shares remained unchanged.

Finally, the BSE Sensex gained 22.18 points or 0.12% to settle at 18,618.20, while the S&P CNX Nifty rose by 14.35 points or 0.26% to settle at 5,599.80.

The BSE Sensex touched a high and a low of 18,803.05 and 18,449.23, respectively. The BSE Mid cap and Small cap indices were up by 0.38% and 0.18% respectively.

The top gainers on the Sensex were DLF up 3.15%, Tata Motors up 1.95%, Cipla up 1.84%, ICICI Bank up 1.40% and SBI up 1.39%.

On the flip side, TCS down 2.23%, Infosys down 1.55%, Reliance Communication down 1.42%, Bajaj Auto down 1.25% and ONGC down 1.18% were the top losers on the index.

The top gainers on the BSE sectoral space were Realty up 2.26%, Bankex up 1.04%, Health Care (HC) up 0.80%, Metal up 0.69 and Capital goods (CG) up 0.40%, While IT down 1.47%, TECk down 1.01%, FMCG down 0.27%, Oil & Gas down 0.24% and Power down 0.20% was the top losers on the BSE sectoral space.

Meanwhile, the headline inflation measured by Wholesale Price Index (WPI) for June surged to 9.44%; however the surge was on expected line as government decided to increase the price of fuel. Government also had revised upward April's WPI inflation to 9.74% from 8.66%, after this revision headline inflation for the first half of the 2011 is hovering around 9% level.

All the three major segments of WPI increased for the month, the prices of manufacturing products stood at 7.43% in June up from 7.27% in May, prices of fuels and power increased to 12.85% in June from 12.32%, prices of primary articles increased to 12.22% in June from 11.30% in May. However, the prices of food items was more or less stable, it stood at 7.38% over 7.37% last month,

According to the data released by the ministry of commerce and industry, the Wholesale Price Index for 'All Commodities' (Base: 2004-05 = 100) for the month June, 2011 rose by 0.9 % to 153.0 (Provisional) from 151.7 (Provisional) for the previous month. The annual rate of inflation, based on monthly WPI, stood at 9.44% (Provisional) for the month of June, 2011 (over June, 2010) as compared to 9.06% (Provisional) for the previous month and 10.25% during the corresponding month of the previous year. Build up inflation in the financial year so far was 2.34% compared to a buildup of 2.57% in the corresponding period of the previous year.

On M-O-M basis, the index for Primary Articles rose by 2.8% to 197.5 (Provisional) from 192.1 (Provisional) for the last month. The index for 'Food Articles' group rose by 1.9% to 190.1 (Provisional) from 186.5 (Provisional) for the previous month due to higher prices of tea (13%), jowar (10%), milk (6%), coffee, egg and fish-marine (5% each), gram (4%), pork, fish-inland and mutton (2% each) and maize and fruits & vegetables (1% each).  However, the prices of arhar (4%), bajra, masur, ragi, poultry chicken, barley and urad (3% each), condiments & spices (2%) and moong (1%) declined.

The index for 'Non-Food Articles' group declined by 1.7% to 181.3 (Provisional) from 184.5 (Provisional) for the previous month due to lower prices of logs & timber (21%), gingelly seed (9%), raw cotton and raw jute (8% each), mesta (7%), raw silk (6%), castor seed, flowers and safflower (2% each) and sunflower and raw rubber (1% each). However, the prices of gaur seed (12%), rape & mustard seed and linseed (5% each), fodder (3%), groundnut seed (2%) and copra (1%) moved up. The index for 'Minerals' group rose by 17.2 % to 312.5 (Provisional) from 266.7 (Provisional) for the last month.

The index for the fuel and power, which has weight of almost 15% in the WPI, rose by 0.7 % to 161.6 (Provisional) from 160.4 (Provisional) for the previous month due to higher prices of kerosene (5%), petrol and LPG (4% each), high speed diesel and bitumen (2% each).  However, the prices of light diesel oil (7%), aviation turbine fuel (5%), naphtha (4%) and furnace oil (3%) declined.

The index for Manufactured Products, which has weight of almost 65% in the WPI, rose marginally by 0.1% to 137.3 (Provisional) from 137.2 (Provisional) for the previous month. Under this major group, products such as 'Food Products, 'Beverages, Tobacco & Tobacco Products', 'Wood & Wood Products',  Paper & Paper Products' group, registered growth in prices for the month of June. However, products like 'Textiles' group, 'Rubber & Plastic Products' 'Transport, Equipment & Parts products showed decline in prices for June.

Earlier, RBI and government had expressed their hopes that inflation will come down to comfort level by the end of this financial year, however, the first half of year's headline inflation is hovering around 9%. This elevated headline inflation is a major concern for country's sustainable economic growth. Government also has revised inflation figures for the month of April, which is 9.74% from 8.66%; this revised figure showed that inflation for month of April was the highest in the first half of the current year.

Despite the slowdown in industrial output and investment rate, Reserve Bank of India (RBI) is expected to go for another interest rate hike in its upcoming monetary policy review. The RBI has continued its anti-inflationary stance for more than a year but has failed to control inflation, while the on the other hand increase in interest rate has pushed capital cost further making investment costly, resulting in a slowdown in Industrial production. IIP for month of May stood at 5.6% due to poor performance of manufacturing sector.

The S&P CNX Nifty touched high and low of 5,653.95 and 5,541.70, respectively.

The top gainers of the Nifty were IDFC up 3.53%, Ambuja Cement up 2.96%, Sesa Goa up 2.93%, ACC up 2.73% and DLF up 2.55%.

On the flip side, TCS down 2.60%, RCOM down 2.09%, GAIL down 1.85%, Siemens down 1.82% and Powergrid down by 1.72% were the top losers on the index.

The European markets were trading in red. France's CAC 40 lost 0.99%, Britain's FTSE 100 plunged by 1.01% and Germany's DAX down by 0.81%.

Asian equity indices finished the day's trade on a mixed note on Thursday as Moody's Investors Service's review of US credit ratings for a possible downgrade prompted caution, pressuring financial stocks and some exporters. China's main stock index ended the trade with a gain of over half a percent, supported by strong gold miners for a second-straight session on the back of surging gold prices. However, Taiwan stocks ended flat for second consecutive day, with mostly defensive sectors such as oil and gas gained at the expense of techs, though HTC Corp rebounded after shedding more than 20 percent since July 6 amid investor concern over its plan to purchase 3S Graphic and a new patent lawsuit by Apple Inc.

Asian Indices	Last Trade	Change in Points	Change in %
Shanghai Composite	2,810.44	14.97	0.54
Hang Seng	21,940.20	13.32	0.06
Jakarta Composite	3,997.64	16.79	0.42
KLSE Composite	1,579.84	-0.83	-0.05
Nikkei 225	9,936.12	-27.02	-0.27
Straits Times	3,088.70	0.28	0.01
Seoul Composite	2,130.07	0.43	0.02
Taiwan Weighted	8,481.35	-6.71	-0.08

 

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