If today’s low on the Nifty holds we may see the gains continuing, but a correction is due
The market, which was choppy during the entire session on concerns about the slowdown in growth as was highlighted by the economic indicators that were announced today, managed a flat close in the positive. Yesterday we had mentioned that the Nifty may see day of gains after which the market may correct. Today was a fourth day in a row when the index continued to make a higher high and higher low. If today’s low holds we may see the gain continuing or else the index may see a correction. The National Stock Exchange (NSE) saw a lower volume of 54.17 crore shares.
The market opened flat with a mixed bias amid subdued cues from its Asian peers which were lower in morning trade on the back of poor manufacturing data from China for July. The Nifty opened eight points down at 5,221 and the Sensex resumed trade at 17,244, up eight points over its previous close.
The market was range-bound with the benchmarks hovering on both sides of their previous close. Investors are awaiting signals from the P Chidambaram, who has been re-appointed as finance minister, for further direction.
The benchmarks touched their lows in the first hour on profit booking following three days of gains. At the lows, the Nifty fell to 5,213 and the Sensex dipped to 17,189.
The market continued its sideways movement in subsequent trade. A lower reading of India’s manufacturing output for July also weighed on the investors.
The HSBC India Manufacturing Purchasing Managers’ Index (PMI)—a measure of factory production—declined to 52.9 in July, from 55 in June. Although it showed the weakest growth rate since November, the index has remained above the 50 mark—below which it indicates contraction.
This apart, the country’s exports contracted for the second consecutive month in June by 5.45%, year-on-year, to $25 billion on account of growing economic uncertainties in the Western markets. Imports dipped more sharply, by 13.5% to $35.37 billion during the month, compared to $40.8 billion in June 2011, resulting in a narrower trade deficit of $10.3 billion.
Renewed buying interest in select stocks saw the market emerge into the positive in noon trade. The indices hit the day’s high at around 12.45pm with the Nifty touching 5,246 and the Sensex rising to 17,292.
Volatility continued in the second session as the key European indices were mixed on receding hopes of fresh initiatives from the ECB.
The market settled flat in the absence of any domestic triggers with all eyes on the announcement from the US Federal Reserve at the end of its two-day meeting later today. The Nifty settled 12 points up at 5,241 and the Sensex closed trade at 17,257, a rise of 21 points.
The advance-decline ratio on the NSE was tilted in favour of the gainers at 1086:593.
Today was the day of the broader indices as the BSE Mid-cap index climbed 0.95% and the BSE Small-cap index surged 1.12%.
The leaders in the sectoral space were BSE Healthcare (up 1.32%); BSE Capital Goods (up 1.07%); BSE Realty (up 0.88%); BSE Power (up 0.87%) and BSE Fast Moving Consumer Goods (up 0.42%). BSE Metal (down 0.69%); BSE Oil & Gas (down 0.35%); BSE IT (down 0.34%); BSE TECk (down 0.33%) and BSE PSU (down 0.19%) settled at the lower end of the index.
Cipla (up 4.40%); BHEL (up 2.13%); Tata Power (up 1.63%); State Bank of India (up 1.37%) and HDFC (up 1.28%) were the top gainers on the Sensex. The key losers were Coal India (down 2.73%); ONGC (down 1.94%); Hero MotoCorp (down 1.71%); TCS (down 1.05%) and Tata Steel (down 1.03%).
The top two A Group gainers on the BSE were—Century Textiles (up 6.03%) and Rural Electrification Corporation (up 5.77%).
The top two A Group losers on the BSE were—Coal India (down 2.73%) and HPCL (down 2.40%).
The top two B Group gainers on the BSE were—Symphony (up 19.98%) and Sanhghvi Forging and Engineering (up 19.97%).
The top two B Group losers on the BSE were—Golden Securities (down 19.91%) and Zenith Healthcare (down 14.71%).
The top gainers on the Nifty were Cipla (up 4.46%); Kotak Mahindra Bank (up 3.71%); Ambuja Cement (up 3.19%); Jaiprakash Associates (up 3.07%) and Reliance Infrastructure (up 2.49%). The main laggards were Coal India (down 2.59%); ONGC (down 2.32%); Sesa Goa (down 2.13%); Hero MotoCorp (down 1.88%) and TCS (down 1.58%).
Markets in Asia settled mostly lower following a decline in China’s manufacturing output in July. China’s official factory purchasing managers’ index fell to an eight-month low of 50.1 in July from 50.2 in the previous month. Fading optimism on the economic stimulus from the ECB also dampened sentiments.
The Shanghai Composite surged 0.94%; the Hang Seng rose 0.12%; the KLSE Composite added 0.05% and the Straits Times gained 0.48%. On the other hand, the Jakarta Composite declined 0.29%; the Nikkei 225 dropped 0.61%; the Seoul Composite fell 0.11% and the Taiwan Weighted lost 0.03%.
At the time of writing, to of the three the key European indices were in the green and the US stock futures were in the positive.
Back home, foreign institutional investors were net buyers of shares totalling Rs879.97 crore on Tuesday while domestic institutional investors were net sellers of stocks worth Rs493.48 crore.
After the oil ministry veto, three state-owned oil firms IOC, ONGC and BPCL have decided not to press for acquiring Asian Development Bank’s (ADB) stake in Petronet LNG (PLL), the nation’s largest liquefied natural gas importer. The ADB on 23rd August last year offered to sell its 5.2% stake in PLL, in which GAIL, Indian Oil (IOC), Bharat Petroleum (BPCL) and Oil and Natural Gas Corp (ONGC) hold 12.5% stake each and have a first right of refusal. PLL dipped 0.48% to close at Rs145.70 on the NSE.
Buoyed by the good response to the SBI bond sale last week, another public sector lender—Indian Overseas Bank (IOB)—on Wednesday said it will speed up its $500 million overseas bond issue and will launch the same within a month. The stock gained 1.10% to settle at Rs73.30 on the NSE.
IT services major Tulip Telecom has received a Rs 87.23-crore order from the Unique Identification Authority of India (UIDAI) for hosting data centre space. Tulip Telecom would host UIDAI servers from Tulip Data City based out of Bangalore for UIDAI’s unique ID project ‘Aadhaar’. The duration of the project is three years, which will be extended further. The stock tanked 3.64% to close at Rs97.95 on the NSE.
