Re-energized bulls take Nifty beyond the crucial 5,000 bastion; Sensex surges 1.59%

Boisterous benchmarks showcased yet another enthusiastic performance on Tuesday rallying well over one and half a percentage points and breaking psychological levels on the northbound journey, ahead of the two day holiday. Though the session was highly volatile yet the benchmarks managed to fervently surge to higher levels as investors continued to hunt for fundamentally strong but oversold bargains. The BSE's thirty share Sensex has amassed over eight hundred points since the start of new week while Nifty has gone on to retrace the crucial 5,000 bastion by garnering over two hundred fifty points in last two session. Sentiments remained euphoric right from the initial moments of trade as apart from the spillover effect of Monday's rally, the strong overnight rally on Wall Street as well as in European markets buoyed local sentiments. Marketmen traded with conviction on the back of overnight encouraging developments including the impact of Hurricane Irene turning out to be less severe, robust US consumer spending data reinforcing views that the world's largest economy was not sliding back into recession and reports of merger of the 2nd and 3rd largest Greek banks as well as reassurance from the European commission which said a fresh round of bank recapitalizations was not needed. On the domestic front, the largely in line GDP growth numbers showed that Indian economy grew at 7.7% in the April-June period, the slowest pace since 2010, confirming fears of a slowdown mainly due to the poor performance of the manufacturing sector. RBI's longest stretch of monetary tightening in a decade made borrowing more expensive and slowed investment and consumer demand in Asia's third-largest economy. Though, the GDP numbers were largely in line with expectations yet the frontline indices came off to some extent in the noon trades as marketmen dissected the first quarter GDP numbers and speculated tough times ahead amid the aggressive monetary tightening from Indian central bank and the persistence of debt crisis in developed economies.

Earlier on Dalal Street, the benchmark got off to a gap up opening in tandem with the optimistic sentiments prevailing in Asian markets on the back of sanguine global developments. But some profit booking at higher levels caused the frontline indices to drift to lower levels. The key indices were swift enough to move back to around sessions' highs in mid morning trades but only for a brief period as the gauges drifted to the lowest point in the session in early noon trades post the government released the economic growth numbers. Just when it looked like the indices will not be able to forestall the decline and slip into the red terrain, the indices found support and speedily recovered to eventually settle around the intraday high level for the second straight session. Finally the NSE's 50-share broadly followed index Nifty, accumulated over one and half a percent to settle a tad above the crucial 5,000 support level while Bombay Stock Exchange's Sensitive Index, Sensex garnered over two hundred fifty points and ended above the psychological 16,650 mark. The broader markets traded on an optimistic note through the session, but failed to match the fervor displayed by their larger peers and settled with gains of over a percent. On the BSE sectoral space, the metal and rate sensitive counters like Bankex and Realty witnessed maximum traction and settled as top gainers. On the other hand, the defensive FMCG pocket remained the only chunk in the armor settling with moderate losses. Among individual losers, index heavyweight ONGC too got butchered in the session as it lost over four percent, being the top laggards among the heavyweights followed by ITC, Tata Power and L&T. The markets bounced on good volumes of over Rs 1.23 lakh crore while the turnover for NSE F&O segment too remained reasonable compared to Monday at over 1.13 lakh crore. The market breadth remained extremely optimistic as there were 1841 shares on the gaining side against 976 shares on the losing side while 127 shares remained unchanged.

Finally, the BSE Sensex surged 260.42 points or 1.59% to settle at 16,676.75, while the S&P CNX Nifty soared 81.40 points or 1.65% to close at 5,001.00.

The BSE Sensex touched a high and a low of 16,714.70 and 16,443.35 respectively. The BSE Mid cap and Small cap indices were up by 1.44% and 1.10% respectively.

The top gainers on the Sensex were DLF up 4.42%, Jindal Steel up by 5.34%, Sun Pharma up by 5.16%, Tata Steel up by 4.79% and Hindalco Inds up by 4.34%.

On the flip side, ONGC down 4.29%, ITC down 0.97%, Tata Power down 0.35%, L&T down 0.31% and Bharti Airtel down 0.16% were the top losers on the index.

The top gainers on the BSE sectoral space were, Metal up 3.74%, Reality up 3.62%, Bankex up 2.24%, IT up 2.08% and TECk up 1.71%. While FMCG down 0.32% was the lone loser on the BSE sectoral space.

Meanwhile, India's economic growth rate slowed down to 7.7% in the first quarter of 2011-12 as compared to 8.8% achieved in the same quarter of the previous financial year, on the back of steady rise in interest rates combined with persistently high inflation. The lower growth rate has come mainly on account of construction, which saw an increase of just 1.2% during April-June 2011, compared with 7.7% in the same quarter of last year.

As per the data released by the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, the decline in GDP growth is due to moderation in the construction activities which fell to 1.2% in April-June 2011 from 7.7% achieved in April-June 2010. Other sector such as mining and quarrying (1.8%), manufacturing (7.2%) and community, social and personal services (5.6%) showed moderation in growth in April-June 2011. However, sectors like agriculture, forestry and fishing (3.9%), electricity, gas and water supply (7.9%), and trade, hotels, transport and communication (12.8%) showed improvement.

The estimates of GDP for the April-June quarter of 2011-12 released by the CSO of the Ministry of Statistics an Programme Implementation said the GDP had grown to Rs 12,26,339 crore in the first quarter (Q1) of 2011-12 as against Rs 11,38,286 crore in the same quarter of 2010-11.

According to the latest estimates available on the Index of Industrial Production (IIP) for the new series, the index of mining, manufacturing and electricity, registered growth rates of 1.0%, 7.5% and 8.2%, respectively, during Q1 of 2011-12 as compared to the growth rates of 8.0%, 10.3% and 5.4% in these sectors during Q1 of 2010-11. The estimates of Q1 for 2009-10 and 2010-11 have been revised on account of using new series of IIP.

The key indicators of construction sector, namely, production of cement declined by 0.9% and consumption of finished steel registered growth rate of 1.5%, during Q1 of 2011-12. Among the services sectors, the key indicators of railways, namely, the net tonne kilometres and passenger kilometres have shown growth rates of 6.3% and 6.1%, respectively during Q1 of 2011-12.

In transport and communication sectors, the sales of commercial vehicles, cargo handled at major ports, cargo handled by the civil aviation, passengers handled by the civil aviation registered growth rates of 14.1%, 5.2%, 4.9% and 14.6% respectively during Q1 of 2011-12 over Q1 of 2010-11. The other key indicators, namely, aggregate bank deposits, and bank credits have shown growth rates of 18.7%, and 21.0%, respectively during Q1 of 2011-12 over Q1 of 2010-11.

However, the investment in economy have decline because of increased interest rates, as per the CSO data, in terms of GDP at market prices, the rates of Gross Fixed Capital Formation (GFCF) at current and constant (2004-2005) prices during Q1 of 2011-12 are estimated at 28.4% and 31.2%, respectively, as against the corresponding rates of 29.2% and 31.4%, respectively in Q1 of 2010-11.

In terms of GDP at market prices, the rates of the Government Final Consumption Expenditure (GFCE) at current and constant (2004-2005) prices during Q1 of 2011-12 are estimated at 10.5% and 10.4%, respectively, as against the corresponding rate of 11.1% each in Q1 of 2010-11. In terms of GDP at market prices, the rates of Private Final Consumption Expenditure (PFCE) at current and constant (2004-2005) prices during Q1 of 2011-12 are estimated at 58.1% and 60.5%, respectively, as against the corresponding rates of 58.7% and 61.7%, respectively in Q1 of 2010-11.

The slowdown in the GDP growth rate for the first quarter of 2011-12 has mainly come from the interest rate sensitive sectors such as constructions, manufacturing activities and sectors, which indicate that, nonstop hike in Reserve Bank of India's short term leading and borrowing rates have adversely affected the economic growth.

This quarterly decline in the India's GDP growth, is the slowest in last six quarters, during the January-March 2011, India had achieved economic growth of 7.8%. The government has also revised downward GDP data from 9.3% to 8.8% for the first quarter of 2010-11. Another issue of concern is the investment rate i.e. GFCF also showed the moderation during April-June 2011, which can have backlog effect on the growth of manufacturing and other sectors indicating, this slowdown in economic growth may continue in coming quarters. The S&P CNX Nifty touched high and low of 5,016.25 and 4,927.55, respectively.

The top gainers of the Nifty were Sesa Goa up 11.05%, DLF up 6.78%, HCL Tech up 6.03%, JP Associate up 5.92% and Jindal Steel up 5.19%.

On the flip side, ONGC down 4.09%, GAIL down 0.83%, ITC down 0.77%, BPCL down 0.76% and Bharti Airtel down 0.35% were the top losers on the index.

The European markets were trading in mixed. France's CAC 40 lost 0.13%, Britain's FTSE 100 jumped 2.31% and Germany's DAX lower by 0.74%.

Most of the Asian equity indices finished the day's trade in the positive terrain on Tuesday following Wall Street rally after a better-than-expected batch of US consumer spending data. Moreover, news of merger between two big Greek's banks too aided the sentiments. Meanwhile, Seoul shares snapped the day's trade with a gain of about 0.80 percent, with foreign investors turning net buyers after three consecutive sessions of selling, snapping up 196 billion won ($182.5 million) worth of shares. However, Chinese Shanghai trimmed earlier gains and ended with a cut of 0.40 percentage point on lingering concerns of a liquidity squeeze after the central bank ordered banks to hold more types of deposits in reserve.

Meanwhile, Malaysian and Singaporean bourses are closed on account of Hari Raya Puasa today while the stock markets in Indonesia too remained shut for Idul Fitri holiday. Indonesian stock exchanges will remain closed till September 2.

Asian Indices	Last Trade	Change in Points	Change in %
Shanghai Composite	2,566.59	-9.82	-0.38
Hang Seng	20,204.17	339.06	1.71
Nikkei 225	8,953.90	102.55	1.16
Seoul Composite	1,843.82	14.32	0.78
Taiwan Weighted	7,646.19	68.18	0.90
Jakarta Composite	-	-	-
KLSE Composite	-	-	-
Straits Times	-	-	-

 

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