TECHNICAL BOUNCE

Local bourses trading in the fine contour have enticed some more gains, however broader indices barring the trend, have trimmed some of their gains.  Borrowing positive cues from global front, benchmark indices staged a technical bounce back post previous session's massacre. Regional counterparts trading higher have mainly buoyed the sentiment. Asian stocks soared after encouraging comments from the Greek prime minister on debt talks, the euro zone's move toward a closer fiscal union and positive economic data in Japan, but earnings concerns weighed on Tokyo exporters and China steelmakers. The US future indices are showing an uptick in the screen trade.

Back home, although buying was witnessed across the space, however, stocks from Bankex, oil & Gas and Information technology counters have mainly fuelled the rally. However, stocks from Capital Goods space are the only laggards among the space. The 30 share barometer index- Sensex- on BSE surging over 150 points is trading over 17000 mark, while widely followed 50 share index- Nifty-on NSE adding over 50 points is trading over 5100 level. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1318:723, while 84 shares remained unchanged.

The BSE Sensex is currently trading at 17,046.17, up by 182.87 points or 1.08%. The index has touched a high and a low of 17,081.54 and 16,965.58 respectively. There were 21 stocks advancing against just 9 declining one's on the index.

The broader indices had trimmed some gains; the BSE Mid cap and Small cap indices were up by 0.80% and 0.73% respectively. The top gaining sectoral indices on the BSE were, Bankex up by 2.06%, Oil and Gas up by 1.75%, IT up by 1.47%, Realty up by 1.40% and TECK up by 1.32% while, CG down by 1.06% was the sole loser on the index.

The top gainers on the Sensex were SBI up by 2.78%, ICICI Bank up by 2.59%, Bajaj Auto up by 2.42%, RIL up by 2.21% and  TCS up by 2.11%.

On the flip side, L&T down by 1.63%, Coal India down by 1.52%, Maruti Suzuki down by 1.35%, NTPC down by 1.02% and HUL down by 0.68% were the only losers on the Sensex.

Meanwhile, reflecting slowness in industrial activity, the overall growth of eight core industries has dipped to almost half in December as compared to the same period in the last fiscal. According to the data released by the Commerce and Industry Ministry, the combined index for the month of December 2011 grew at the rate of 3.1% as compared to 6.3% growth in December 2010. 

During April-December 2011-12, the cumulative growth rate of the core industries was 4.4% as against their growth at 5.7% during the corresponding period in 2010-11. The eight core industries namely coal, steel, cement, refinery products, electricity, natural gas, fertilizers and crude oil have a combined weight of 37.90% in the Index of Industrial Production (IIP), and are considered fair indicators of the growth of infrastructure and factory output in the economy. The lack of demand due to the global slowdown and the high interest rate regime seemed to have hit investments in the core industries, bringing down their growth rates.

The most drastic dips came in the growth of crude oil, petroleum refinery products and steel. These three products also happen to be the heaviest in the index. Crude Oil production (weight: 5.22%) registered a growth of (-) 5.6% in December 2011, a drastic fall as compared to its growth at 15.8% in December 2010. Cumulatively crude oil production registered a growth of a meager 1.9% during April-December 2011-12, compared to its growth at 12.0% during the same period of 2010-11.

Petroleum refinery production (weight: 5.94%) had a growth of 0.8% in December 2011, down substantially from its growth of 8.3% in December 2010. In cumulative terms petroleum refinery production registered a growth of 4.1% during April-December 2011-12, compared to its 1.7% growth during the same period of 2010-11. Steel production (weight: 6.68%) had a growth rate of 2.2% in December 2011 against its 9.4% growth in December 2010. Cumulatively steel production had a 7.5% growth during April-December 2011-12 compared to its 8.3% growth during the same period of 2010-11.

The sectors that saw a positive growth were cement, electricity and coal. Cement production registered a growth of 13.3% in December 2011 against its (-) 2.2% growth in December 2010. The cumulative growth of cement production was 5.3% during April-December 2011-12 compared to its 4.4% growth during the same period of 2010-11.

Electricity generation had an 8% growth in December 2011 compared to its 5% growth in December 2010. Electricity generation on the other hand had a cumulative growth of 9.2% during April-December 2011-12 as against its 4.7% growth during the same period of 2010-11. Moreover, coal production had a growth of 5.6% in December 2011 compared to its growth at 3.8% in December 2010. However, in cumulative terms coal production had a negative growth of (-) 2.7% during April-December 2011-12 compared to its growth at 0.8% during the same period of 2010-11. 

The industrial production can be expected to turn around, given that the RBI goes for a rate cut in the near term. If this happens, we could see some improvement in GDP numbers of the third quarter of FY12, as compared to its second quarter. Industrial output had contracted in October by 4.7%, but rebounded by a 5.9% growth in November. With the recent numbers showing sluggishness, industrial production in December is expected to slowsown due to the high base effect and also due to the recent lag of improvement in coal output.  

The S&P CNX Nifty is currently trading at 5,142.90, higher by 55.60 points or 1.09%. The index has touched a high and a low of 5,156.65 and 5,120.15 respectively.  There were 39 stocks advancing against just 8 declining one's on the index, while 3 shares remained unchanged.

The top gainers of the Nifty were SBI up by 3.02%, ICICI Bank up by 2.65%, PNB up by 2.36%, Reliance up by 2.30% and Axis Bank up by 2.12%.

On the flip side, Siemens down by 1.96%, Coal India down by 1.67%, L&T down by 1.51%, Maruti Suzuki down by 1.32% and JP Associate down by 1.28% were the major losers on the index.

All the Asian equity indices were trading in the green; Shanghai Composite gained 0.19%, Hang Seng surged 0.71%, Nikkei 225 added 0.17%, Seoul Composite inched up 0.02%, Taiwan Weighted gained 0.59% and Jakarta Composite inched up by 0.01%.