Post Session Commentary - July 2 2009

The domestic market today took a sharp turn after the posting good gains yesterday, to close on flat note on profit booking. Depressing US index futures along with negative European markets fueled the negative sentiments. The market was extremely volatile on as the investors were eyeing the outcome of the Economic Survey report, which gave emphasis on the disinvestment of the PSUs as well as decontrolling of fuel prices, tax cuts and phasing out of cesses and surcharge on taxes, etc. However, the Benchmark indices were under pressure also on concerns ahead of forthcoming Union Budget on 6th July. Worries for inflation also contributed to instability as it remained in negative terrain for third successive week. The wholesale price index fell to minus 1.30% for the week ended June 20, as compared to minus 1.14% of the previous week June 13. However, market bounced back during mid session but were unable to hold the momentum and slipped again. BSE Sensex ended around 14,650 level and NSE Nifty around 4,350 mark.

The market opened on positive note tracking favorable cues from the global markets. The US stocks markets ended higher on Wednesday but off highs following a barrage of economic reports. The ISM Manufacturing Index for the month of June came in-line at 44.8, from 42.8 in May, slightly higher than expected. However, Indian market gave up all early gains soon after start and turned volatile. Investors were concerned for inflation as it continued to hold negative territory and stood at minus 1.30% for the week ended June 20. Further, the benchmark indices rebounded from its lows to witness sharp gains though they slipped later with negative European markets and lower US index futures. Market came off from day’s high also on announcement of the Economic Survey. Finally market concluded the extremely volatile session on flat note. Meanwhile, the government yesterday hiked the petrol prices by Rs 4 per litre and diesel by Rs 2 per litre effective from midnight in order to cut the losses of oil companies due to rising global oil rates. However, the government kept the prices of Kerosene and LPG unchanged. From the sectoral front, Metal, PSU, Reality, Pharma and Consumer Durables stocks witnessed most of the buying. Mid Cap and Small Cap stocks also remained on buyer’s radar. However, Capital Goods, Auto and Teck stocks remained out of favour.

The Economic Survey for 2008-09, which was released today, stated that the government should sell a minimum stake of 10 per cent in all the unlisted public sector enterprises and "auction" those that can''t be revived. It also recommended a disinvestment target of Rs 25,000 crore annually. The Economic Survey for financial year 2009 stated 100% FDI in health and weather insurance, disinvestment target of Rs 25,000 crore per year, removed Commodity Transaction Tax, Securities Transaction Tax, and Fringe Benefit Tax, etc. Moreover, the survey suggested tax cuts as well as increase in government expenditure as part of another stimulus package to boost the economy. Besides this, the government should phase out all cesses and surcharges on taxes and securities transaction tax, fringe benefit tax and introduce a new income tax code, the Economic Survey said. On the top of this, decontrol the petrol and diesel prices to take the advantage of low inflation and global crude prices, the Economic Survey said.

Among the Sensex pack 15 stocks ended in green territory and 15 in red. The market breadth indicating the overall health of the market remained positive as 1459 stocks closed in green while 1141 stocks closed in red and 92 stocks remained unchanged in BSE.

The BSE Sensex closed marginally higher by 13.02 points at 14,658.49 and NSE Nifty ended slightly up by 7.95 points at 4,348.85. BSE Mid Caps closed with gains 16.76 and 42.82 points at 5,144.27 and 5,800.24 respectively. The BSE Sensex touched intraday high of 14,764.35 and intraday low of 14,469.69.

Gainers from the BSE Sensex pack are ONGC Ltd (7.02%), Tata Steel (6.37%), Grasim Industries (4.20%), Sterlite Industries (3.75%), DLF Ltd (3.12%), Sun Pharma (2.46%), HDFC (2.33%), NTPC Ltd (2.17%), Tata Power (2.04%), Reliance Infra (1.56%) and Hindalco (1.38%).

Losers from the BSE Sensex pack are BHEL (3.03%), Reliance (2.29%), Bharti Airtel (2.27%), RCom (1.83%), Tata Motors (1.67%), Maruti Suzuki (1.53%), SBI (1.17%), Herohonda Motors (0.96%) and HUL (0.88%).

India’s annual rate of inflation remained in negative terrain for third successive week. The wholesale price index fell to minus 1.30% for the week ended June 20, as compared to minus 1.14% of the previous week June 13, according to official data released on Thursday. However, inflation was 11.91% during the corresponding period of previous year. The index for primary articles increased 0.5%, while for fuel and power rose by 0.1% and manufactured products went up by 0.05%.

On the global markets front the Asian markets which opened before the Indian market, ended mostly mixed. Hang Seng, Nikkei 225, Straits Times index and Seoul Composite closed down by 200.68, 63.78, 31.73 and 0.18 points at 18,178.05, 9,876.15, 2,320.82 and 1,411.48 respectively. However, Shanghai Composite closed up by 52.10 points at 3,060.25.

European markets, which opened after the Indian market, are trading in red. In Frankfurt the DAX index is trading lower by 68.33 points at 4,837.11 and in London FTSE 100 is trading down by 31.16 points at. 4,309.55.

The BSE Metal index gained (4.26%) or 355.15 points at 11,243.85 after LMEX, a gauge of six metals traded on the London Metal Exchange, improved 2.9% overnight. Scrips that gained are Tata Steel (6.37%), Jai Corp Ltd (4.93%), Steel Authority (3.77%), Sterlite Industries (3.75%) and Jindal Steel (3.64%).

The BSE PSU index jumped (1.95%) or 156.06 points to close at 8,156.03. Main gainers are Gail India (7.85%), Power Financ (6.57%), Hindustan Copper (4.99%), REC Ltd (4.97%) and Mahanag Tele (4.96%).

The BSE Realty stocks also gained (1.55%) or 51.67 points to close at 3,395.18. Major gainers are Sobha Dev (4.98%), Anant Raj (4.96%), Ansal Infra (3.99%), DLF Ltd (3.12%) and Parsvnath (2.34%).

The BSE Pharma index advanced by (0.84%) or 29.78 points to close at 3,590.24. Gainers are Glenmark Pharma (4.44%), Glaxosmith (2.86%), Sun Pharma (2.46%), Apollo Hos (2.29%) and Orchid Chem (1.43%).

The BSE Capital Goods index decreased by (1.01%) or 130.26 points at 12,770.31. Usha Martin (3.05%), BHEL (3.03%), Areva (2.85%), Alstom Proje (2.45%) and Suzlon Energy (2.34%) ended in negative territory.

The BSE Auto index ended slightly down by (0.91%) or 41.78 points at 4,573.98. Losers are Bajaj Auto (3.10%), Escorts Ltd (2.97%), Apollo Tyre (2.65%), Ashok Leyland (2.11%) and Tata Motors (1.67%).