MARKETS RECOVER

Indian equity markets recovered from early lows and were currently trading in positive territory despite of lower than expected industrial output for April. The BSE Sensex and NSE Nifty were up over 0.20% on hopes of rate cut as India's annual industrial output measured by index of industrial production (IIP), showed a negligible growth of 0.1% for the month of April 2012 versus a contraction of (-) 3.5% in March. Growth in investment led capital goods sector contracted by 16.3% and mining registered de-growth of -3.1% for April. However, growth in manufacturing sector came in at just 0.1%, electricity at 4.6% and basic goods at 2.3%. In currency markets, Indian rupee hits one week low against American currency on fresh worries over the worsening debt crisis in Europe. On sectoral front, rate sensitive sectors like bank, auto realty were trading in green, while FMCG, power and healthcare stocks were trading in red. On the global markets, Asian shares were trading in red. Back home, the market breadth favoring negative trend; there were 1,025 shares on the gaining side against 1,147 shares on the losing side while 141 shares remained unchanged.

The BSE Sensex is currently trading at 16,711.43, up by 43.42 points or 0.26%. The index has touched a high and low of 16,729.65 and 16,553.47 respectively. There were 20 stocks advancing against 10 declines on the index.

The broader indices were trading mixed at this point of time; the BSE Mid cap index was up by 0.26% and Small cap index down by 0.02%.

The top gaining sectoral indices on the BSE were, Bankex up by 1.21%, CD up by 1.04%, Realty up by 0.72%, CG up by 0.70% and Auto up by 0.48%. While, FMCG down by 0.48%, HC down by 0.48% and Power down by 0.20% were the top losers on the index.

The top gainers on the Sensex were Sterlite Industries up by 1.77%, L&T up by 1.44%, HDFC Bank up by 1.26%, SBI up by 1.08% and ICICI Bank up by 1.03%. On the flip side, Wipro down by 2.21%, Dr Reddy down by 1.98%, Tata Power down by 0.88%, ITC down by 0.75% and HUL down by 0.69% were the top losers on the Sensex.

Meanwhile, exuding confidence that growth prospects of Asia's third largest Indian economy will turnaround in coming months, Union Finance Minister Pranab Mukherjee opined that the government is completely aware of the current economic situation and went on to rebuff global rating agency S&P's recent report, warning that India could be first BRIC nation with a non investment-grade sovereign credit rating.

In April 2012, Standard & Poor's had reviewed India's sovereign debt rating and though they had reaffirmed the nation's long-term rating but slashed the rating outlook to negative from stable citing weak GDP expansion prospects and the risk that its external liquidity and fiscal flexibility may wear down. The Finance Minister quelled concerns over S&P's recent report stating that it was not based on a fresh rating action.

He emphasized that barring the disappointing fourth quarter GDP growth numbers; there have been no significant events between April 2012 and now, to indicate that the economy's vulnerability to shocks has increased. Highlighting that S&P's recent report suggests that the main factor that would determine India's investment grade credit rating would be government's reaction to potentially slower growth and greater vulnerability to economic shocks, he opined that government is already taking efforts to revive the economic growth prospects.

Pranab Mukherjee underscored several positives for the Indian economy including RBI's recent reversal of interest rate cycle by announcing a cut of 50 basis points at its last review of monetary policy; mining sector growth has turned around, progress has been made on fuel linkage for coal based power projects; there is a turnaround in the quarterly investment growth rate, which had been negative in the third quarter of 2011-12; a normal south west monsoon has been predicted for 2012-13 and there has been a decline in international oil prices in recent weeks.

He further elucidated that Foreign Institutional Investors (FII) are reposing faith in the Indian economy and had already poured in net $12 billion in the first five months of the current calendar year. Similarly, the fiscal year 2011-12 has witnessed gross FDI flows of $46.8 billion, as against $34.8 billion in the fiscal year 2010-11. The Finance Minister remained certain that all these factors should help in the recovery of domestic growth momentum.

The S&P CNX Nifty is currently trading at 5,066.35, up by 12.25 points or 0.24%. The index has touched a high and low of 5,074.00 and 5,015.15 respectively. There were 32 stocks advancing against 18 declines on the index.

The top gainers of the Nifty were BPCL up by 2.03%, Sterlite Industries up by 1.83%, Bank of Baroda up by 1.81%, Punjab National Bank up by 1.73% and Sesa Goa up by 1.40%.

On the flip side, Wipro down by 2.24%, Dr Reddy down by 2.08%, HCL Technology down by 1.55%, Ranbaxy down by 1.33% and Siemens down by 0.98%, were the major losers on the index.

All the Asian equity markets were trading in the red; Shanghai Composite declined by 0.63%, Hang Seng Index slid 0.69%, Jakarta Composite slipped 0.75%, KLSE Composite shed 0.22%, Nikkei 225 plummeted 1.02%, Straits Times Index dropped 0.40%, KOSPI Composite Index sank 0.66% and Taiwan Weighted slumped 0.68%.