Indian frontline equity indices went through a lot of commotion on the last trading session of the week and got battered by a percentage point, ignoring a largely optimistic trend that the Asian and European counterparts exhibited. Despite commencing the session on an optimistic note tracking the optimism in global markets on the back of better than upbeat corporate earnings and better than expected US employment data which showed that the number of people filing for unemployment benefits for the first time fell last week. However, gains for the domestic bourses were not as pronounced as in the US and the key indices drifted into the red territory despite the pleasantly surprising June IIP numbers which surged by 8.8% in June as compared to a nine-month low of 5.6% in May. The sharply higher reading failed in enthusing domestic investors as expectations were rife that the RBI will continue tightening policy in coming months until inflation peaks, despite increasing uncertainty over a global economic slowdown and an extended period of easy policy in the developed world. Domestic sentiments were also undermined amid steep sell-off in European markets which after opening on a weak note plunged deeper into the red terrain. The BSE Sensex plunged over four hundred points from the high point of the day after European shares drifted on getting France's gross domestic product data which came in flat during the second quarter and missed expectations for a 0.3% rise, suggesting the nation's economy is stalling. Back home, a RBI statement opined that India's services exports for the month of June 2011 declined by 6.7% to $11.04 billion from $11.83 billion in month of May 2011. The service sector accounts for more than 50% of India's gross domestic products.
Earlier on Dalal Street, the benchmark got off to a smart opening on the back of encouraging leads from the overnight stock markets. But the optimism proved short lived as the investors started taking profits off the table ahead of the IIP numbers announcement. The upbeat IIP numbers failed to surprise marketmen as pessimistic leads from the European markets outweighed them. After hitting intraday lows and drifting around the psychological 16,800 and 5,050 levels in the early second half, the frontline indices chose to consolidate their position thereafter through the end of session. Eventually the NSE's 50-share broadly followed index Nifty, plunged by over one and a quarter percent to settle above the crucial 5,050 support level while Bombay Stock Exchange's Sensitive Index, Sensex shaved off over two hundred points and ended above the psychological 16,800 mark. The broader markets which traded with some conviction before the robust IIP numbers were released, too slipped into the red terrain but settled with moderate losses, outclassing their larger peers. In the BSE sectoral space, the IT and TECk pockets seem to have done the maximum damage as they shaved off around two and half a percent as the worries over global economic slowdown did not augur well for the Indian IT industry which relies heavily on outsourcing work from US and European region. The rate sensitive counters like Banking, Automobile and high beta Real Estate once again bore the brunt of hefty selling pressure amid mounting fears of 12th interest rate hike by Indian central bank since March 2010. There remained no sectoral gainer in the space however few individual heavyweights like Jindal Steel, ONGC, Hero Moto Corp and M&M managed to enlist their name in gainers. The markets sank on weaker volumes of over Rs 1.30 lakh crore while the turnover for NSE F&O segment remained on the higher side compared to Thursday at over 1.13 lakh crore. The market breadth too remained pessimistic as there were 1257 shares on the gaining side against 1569 shares on the losing side while 124 shares remained unchanged.
Finally, the BSE Sensex shaved off 219.77 points or 1.29% to settle at 16,839.63, while the S&P CNX Nifty plunged by 65.35 points or 1.27% to close at 5,072.95.
The BSE Sensex touched a high and a low of 17,246.88 and 16,784.56, respectively. The BSE Mid cap and Small cap indices were down by 0.46% and 0.44% respectively.
The top gainers on the Sensex were Jindal Steel up 2.57%, Mahindra & Mahindra up by 1.82%, Hero Motors up by 1.79%, ONGC up by 0.76% and Hindustan Unilever up 0.17%. On the flip side, Tata Motors down 5.26%, Hindalco Inds down 4.04%, Jaiprakash Associate down 3.28%, Tata Power down 3.12% and Wipro down 2.92% were the top losers on the index.
There was no gainer on the BSE sectoral space. While, IT down 2.44%, TECk down by 2.24%, Bankex down by 1.63%, Realty down 1.49% and Power down 1.14% were the top losers on the BSE sectoral space.
Meanwhile, the industrial growth for the month of June has allied the fear of slowdown in the industrial output. India's industrial production measured by the Index of Industrial Production (IIP) shows growth of 8.8% in June 2011 as compared to 7.4% in June 2010. This increase in growth of the IIP is due to increase in manufacturing and electricity sector which grew by 10% and 7.9% respectively, however, the mining segment of IIP saw moderation in growth, it grew by 0.6% in June 2011 from 6.9% in corresponding month of last fiscal. However, the industrial production from April to June 2011 stood at 6.8% which is less than the same period of corresponding period. This fall in growth on Q-on-Q basis is due to decline in mining and manufacturing which stood 1% and 7.5% respectively during the said period. However, electricity sector surged during the same period to 8.2%.
According to data released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation, the General Index for the month of June 2011 stood at 170.3, which is 8.8% higher on year-on-year basis. The cumulative growth for the period April-June 2011-12 stands at 6.8% over the corresponding period of the previous year.
The IIP for the Mining, Manufacturing and Electricity sectors for the month of June 2011 stand at 126.0, 182.1 and 144.3 respectively, with the corresponding growth rates of 0.6%, 10.0% and 7.9% as compared to June 2010. The cumulative growth in the three sectors during April-June, 2011-12 over the corresponding period of 2010-11 have been 1.0%, 7.5% and 8.2% respectively, which moved the overall growth in the General Index to 6.8%.
During June 2011, in terms of industries 15 out of 22 industry groups in the manufacturing sector have shown positive growth in June 2011 from June 2010. The industry group 'Electrical machinery and apparatus n.e.c.' has shown the highest growth of 88.9%, followed by 19.1% in 'Office, accounting and computing machinery' and 18.6% in 'Other transport equipment'. On the other hand, the industry group 'Medical, precision and optical instruments, watches and clocks' has shown a negative growth of 10.3% followed by 10.1% in 'Radio, TV and communication equipment and apparatus'.
As per Use-based classification the growth rates in June 2011 as compared to the corresponding month of the previous year are 7.5% in Basic goods, 37.7% in Capital goods and 1.9% in Intermediate goods. The Consumer durables and Consumer non-durables have recorded growth of 1.0% and 2.1% respectively, with the overall growth in Consumer goods being 1.6%. Some of the important items of capital goods showing high growth during the current month include 'Cable, Rubber Insulated' (232.4%), 'Printing Machinery' (81.1%), 'Rubber Transmission and V Belts' (57.0%), 'Packaging Machinery' (48.5%), 'Textile Machinery' (47.9%), 'X-ray equipment' (33.1%) and 'Industrial Chains' (32.0%).
The other important items showing highly positive growth during the month are: 'Sugar' (246.9%), 'Molasses' (179.5%), 'Viscose staple fibre' (72.9%), 'Stainless/ alloy steel' (72.4%), 'GP/GC sheets' (54.1%), 'Tanned or Chrome Skins and Leathers' (53.6%), 'sponge iron' (38.0%), 'CR Sheets' (33.4%) and 'Indust. Alcohol (Rectified/Denatured Spirit)' (31.0%).
On the flip side, Tata Motors down 5.88%, Hindalco down 4.90%, Reliance Capital down 4.74%, JP Associate down 3.89% and Kotak Bank down 3.39% were the top losers on the index.
The European markets were trading in green. France's CAC 40 gained 1.73%, Britain's FTSE 100 higher by 1.63% and Germany's DAX surged by 2.38%.
Asian equity indices finished the day's trade mostly in the positive terrain as sentiments remained strong in the region on the back of overnight rally on Wall Street, supported by unexpected drop in jobless claims and higher-than-estimated earnings coupled with trade deficit, which was smaller than expected. But, the Asian indices pared their early gains on the last trading day of the week as investors remained cautious amid a turbulent global market. Chinese Shanghai rose about half a percent as country allowed the Yuan to rise steadily against the dollar and pumping cash into its own banking system. Japanese index dipped further below the 9,000 line on Friday, extending hefty losses sustained during the most volatile week since the March 11 earthquake as the yen's strength prompted foreigners to sell carmakers, pulling Toyota Motor to its lowest level this year.
Earlier on Dalal Street, the benchmark got off to a smart opening on the back of encouraging leads from the overnight stock markets. But the optimism proved short lived as the investors started taking profits off the table ahead of the IIP numbers announcement. The upbeat IIP numbers failed to surprise marketmen as pessimistic leads from the European markets outweighed them. After hitting intraday lows and drifting around the psychological 16,800 and 5,050 levels in the early second half, the frontline indices chose to consolidate their position thereafter through the end of session. Eventually the NSE's 50-share broadly followed index Nifty, plunged by over one and a quarter percent to settle above the crucial 5,050 support level while Bombay Stock Exchange's Sensitive Index, Sensex shaved off over two hundred points and ended above the psychological 16,800 mark. The broader markets which traded with some conviction before the robust IIP numbers were released, too slipped into the red terrain but settled with moderate losses, outclassing their larger peers. In the BSE sectoral space, the IT and TECk pockets seem to have done the maximum damage as they shaved off around two and half a percent as the worries over global economic slowdown did not augur well for the Indian IT industry which relies heavily on outsourcing work from US and European region. The rate sensitive counters like Banking, Automobile and high beta Real Estate once again bore the brunt of hefty selling pressure amid mounting fears of 12th interest rate hike by Indian central bank since March 2010. There remained no sectoral gainer in the space however few individual heavyweights like Jindal Steel, ONGC, Hero Moto Corp and M&M managed to enlist their name in gainers. The markets sank on weaker volumes of over Rs 1.30 lakh crore while the turnover for NSE F&O segment remained on the higher side compared to Thursday at over 1.13 lakh crore. The market breadth too remained pessimistic as there were 1257 shares on the gaining side against 1569 shares on the losing side while 124 shares remained unchanged.
Finally, the BSE Sensex shaved off 219.77 points or 1.29% to settle at 16,839.63, while the S&P CNX Nifty plunged by 65.35 points or 1.27% to close at 5,072.95.
The BSE Sensex touched a high and a low of 17,246.88 and 16,784.56, respectively. The BSE Mid cap and Small cap indices were down by 0.46% and 0.44% respectively.
The top gainers on the Sensex were Jindal Steel up 2.57%, Mahindra & Mahindra up by 1.82%, Hero Motors up by 1.79%, ONGC up by 0.76% and Hindustan Unilever up 0.17%. On the flip side, Tata Motors down 5.26%, Hindalco Inds down 4.04%, Jaiprakash Associate down 3.28%, Tata Power down 3.12% and Wipro down 2.92% were the top losers on the index.
There was no gainer on the BSE sectoral space. While, IT down 2.44%, TECk down by 2.24%, Bankex down by 1.63%, Realty down 1.49% and Power down 1.14% were the top losers on the BSE sectoral space.
Meanwhile, the industrial growth for the month of June has allied the fear of slowdown in the industrial output. India's industrial production measured by the Index of Industrial Production (IIP) shows growth of 8.8% in June 2011 as compared to 7.4% in June 2010. This increase in growth of the IIP is due to increase in manufacturing and electricity sector which grew by 10% and 7.9% respectively, however, the mining segment of IIP saw moderation in growth, it grew by 0.6% in June 2011 from 6.9% in corresponding month of last fiscal. However, the industrial production from April to June 2011 stood at 6.8% which is less than the same period of corresponding period. This fall in growth on Q-on-Q basis is due to decline in mining and manufacturing which stood 1% and 7.5% respectively during the said period. However, electricity sector surged during the same period to 8.2%.
According to data released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation, the General Index for the month of June 2011 stood at 170.3, which is 8.8% higher on year-on-year basis. The cumulative growth for the period April-June 2011-12 stands at 6.8% over the corresponding period of the previous year.
The IIP for the Mining, Manufacturing and Electricity sectors for the month of June 2011 stand at 126.0, 182.1 and 144.3 respectively, with the corresponding growth rates of 0.6%, 10.0% and 7.9% as compared to June 2010. The cumulative growth in the three sectors during April-June, 2011-12 over the corresponding period of 2010-11 have been 1.0%, 7.5% and 8.2% respectively, which moved the overall growth in the General Index to 6.8%.
During June 2011, in terms of industries 15 out of 22 industry groups in the manufacturing sector have shown positive growth in June 2011 from June 2010. The industry group 'Electrical machinery and apparatus n.e.c.' has shown the highest growth of 88.9%, followed by 19.1% in 'Office, accounting and computing machinery' and 18.6% in 'Other transport equipment'. On the other hand, the industry group 'Medical, precision and optical instruments, watches and clocks' has shown a negative growth of 10.3% followed by 10.1% in 'Radio, TV and communication equipment and apparatus'.
As per Use-based classification the growth rates in June 2011 as compared to the corresponding month of the previous year are 7.5% in Basic goods, 37.7% in Capital goods and 1.9% in Intermediate goods. The Consumer durables and Consumer non-durables have recorded growth of 1.0% and 2.1% respectively, with the overall growth in Consumer goods being 1.6%. Some of the important items of capital goods showing high growth during the current month include 'Cable, Rubber Insulated' (232.4%), 'Printing Machinery' (81.1%), 'Rubber Transmission and V Belts' (57.0%), 'Packaging Machinery' (48.5%), 'Textile Machinery' (47.9%), 'X-ray equipment' (33.1%) and 'Industrial Chains' (32.0%).
The other important items showing highly positive growth during the month are: 'Sugar' (246.9%), 'Molasses' (179.5%), 'Viscose staple fibre' (72.9%), 'Stainless/ alloy steel' (72.4%), 'GP/GC sheets' (54.1%), 'Tanned or Chrome Skins and Leathers' (53.6%), 'sponge iron' (38.0%), 'CR Sheets' (33.4%) and 'Indust. Alcohol (Rectified/Denatured Spirit)' (31.0%).
The industrial production for the month of June 2011 is higher than May 2011 and June 2010 indicating that industrial activities have increased. However, the first quarter data are not so encouraging; the April to June 2011 IIP growth stood at 6.8% as compared to 9.6% during same period of previous fiscal. Almost 3% fall in industrial production is due to elevated inflation and RBI's nonstop increase in its key policy rates. Since March 2010, RBI has increased its key policy rates by the 11 times, and it is further expected to increase it on the backdrop of recent development in international economy.
The top gainers of the Nifty were Jindal Steel up 2.74%, M&M up 1.72%, Hero Motors up 1.65%, GAIL up 1.40% and Cairn up 1.07%. On the flip side, Tata Motors down 5.88%, Hindalco down 4.90%, Reliance Capital down 4.74%, JP Associate down 3.89% and Kotak Bank down 3.39% were the top losers on the index.
The European markets were trading in green. France's CAC 40 gained 1.73%, Britain's FTSE 100 higher by 1.63% and Germany's DAX surged by 2.38%.
Asian equity indices finished the day's trade mostly in the positive terrain as sentiments remained strong in the region on the back of overnight rally on Wall Street, supported by unexpected drop in jobless claims and higher-than-estimated earnings coupled with trade deficit, which was smaller than expected. But, the Asian indices pared their early gains on the last trading day of the week as investors remained cautious amid a turbulent global market. Chinese Shanghai rose about half a percent as country allowed the Yuan to rise steadily against the dollar and pumping cash into its own banking system. Japanese index dipped further below the 9,000 line on Friday, extending hefty losses sustained during the most volatile week since the March 11 earthquake as the yen's strength prompted foreigners to sell carmakers, pulling Toyota Motor to its lowest level this year.
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