Nifty should stay above 4,780 for the rise to continue

The market priced in the lower GDP numbers and settled in the green, off the day’s high. The Nifty managed to end in the positive although it stayed below yesterday’s low. The gain was on a large volume 78.12 crore shares on the National Stock Exchange (NSE). We may still see struggled gain up to the level of 5,000 if the Nifty manages to sustain itself above 4,780.

Nervousness ahead of the release of the second quarter GDP numbers led the market lower at the opening bell. The political impasse, which has stalled Parliament proceedings in the Winter Session that began on 22nd November, also weighed on the sentiments. The Nifty opened at 4,766, down 39 points, and the Sensex declined 139 points to start trade at 15,869.

The market fell to its intraday low in early trade wit the Nifty falling to 4,755 and the Sensex moving back to 15,850. Consumer durables, metal, banking and oil & gas stocks witnessed selling pressure, which kept the indices lower in the morning session.

The Indian economy expanded at a lower rate in the second quarter of the current fiscal year as a series of rate increases by the Reserve Bank of India (RBI) and a global slowdown hurt local demand. India’s economy grew 6.9% in Q2 September 2011, after expanding by 7.7% in the first quarter, government data showed. GDP growth in the first six months of FY11-12 stood at 7.3% against 8.6% in the corresponding period of the last financial year, the CSO data showed today.

Despite the lower growth numbers, the market moved higher in noon trade as the data was in line with analysts’ expectations. The benchmarks hit the day’s high around 1.45pm with the Nifty rising to 4,852 and the Sensex scaling 16,180. However, profit booking at higher levels pushed the indices lower once again.

Institutional buying in select stocks in the last half hour enabled the market close in the green, but off the day’s high. The Nifty settled 27 points higher at 4,832 and the Sensex added 115 points to close trade at 16,123.

The advance-decline ratio on the NSE was 632:1046.

While the benchmarks managed to make a positive close, the broader indices underperformed the Sensex and ended lower. The BSE Mid-cap index settled 0.66% down and the BSE Small-cap index lost 0.73%.

The sectoral gainers were led by BSE Oil & Gas (up 1.63%); BSE Fast Moving Consumer Goods (up 1.20%); BSE TECk (up 0.95%); BSE IT (up 0.64%) and BSE Power (up 0.61%). The main laggards were BSE Consumer Durables (down 2.04%); BSE Realty (down 0.91%); BSE Auto (down 0.69%); BSE Bankex (down 0.61%) and BSE Capital Goods (down 0.18%).

Bharti Airtel (up 3.17%); ONGC (up 3.06%); Sun Pharma (up 2.84%); NTPC (up 2.40%) and Hindustan Unilever (up 2.26%) were the top performers on the Sensex. On the other hand, ICICI Bank (down 3.01%); Sterlite Industries (down 2.98%); Hero MotoCorp (down 2.76%); Tata Motors (down 2.76%) and Jaiprakash Associates (down 1.66%) settled at the bottom of the index.

The major gainers on the Nifty were Power Grid Corporation (up 3.83%); ONGC (up 3.63%); DLF (up 3.26%); NTPC (up 3.03%) and Jindal Steel (up 2.71%). The key losers were SAIL (down 3.94%); Sterlite Ind (down 3.03%); Ranbaxy (down 2.96%); Axis Bank (down 2.73%) and Hero MotoCorp (down 2.43%).

Asian stocks settled mixed, snapping the steepest two-day gain, after Standard & Poor's cut credit ratings on 15 top lenders including Bank of America, Goldman Sachs and Citigroup. On the positive side, European officials agreed on a plan to insure the first 20%-30% of new bond issues, however, they provided few details on how much leverage the fund would use and how big its size would be.

The Shanghai Composite tumbled 3.27%; the Hang Seng declined 1.46%; the Nikkei 225 fell by 0.51%; the Seoul Composite lost 0.49% and the Taiwan Weighted tanked 1.21%. On the other hand, the Jakarta Composite gained 0.74%; the KLSE Composite climbed 1.90% and the Straits Times advanced 0.53%.

Back home, selling by foreign funds in the equities segment was offset by buying by domestic investors on Tuesday. Foreign institutional investors were net sellers of stocks aggregating Rs320.87 crore while domestic institutional investors were net buyers of stocks worth Rs361.23 crore.

The SAIL-led consortium that has bagged rights to three iron ore mines in Afghanistan today said it may invest around $11 billion on the entire project, including infrastructure creation, mining and setting up a six million tonne per annum steel plant and 1,000MW thermal power plant. SAIL tumbled 3.94% to close at Rs80.50 on the NSE.

Amid concerns of rising non-performing assets in the banking industry, IndusInd Bank has undertaken steps to tighten its credit appraisal process to ensure better asset quality. As per the new initiatives, the bank is extending corporate loans mostly to existing customers instead of adding new ones. It is also shying away from taking credit exposure in those companies, which get impacted by high volatility in the rupee-dollar exchange rates. The scrip declined 3.72% to Rs246 on the NSE.

Hindustan Unilever (HUL), in an effort to fight against shrinking margins, has hiked retail prices of premium bathing soaps by 2.6%-5.5%. The price of 90gm pink and white Lux soap has been raised by Re1 to Rs19 while the prices of 45gm and 75gm packs of Dove soap have also been hiked by Re1 to Rs19 and Rs39 respectively.  The stock gained 1.75% to close at Rs395 on the NSE.