Delight for D-Street, distress for peers

Major news for the month:

Q4 gross domestic product comes at 8.6%

India’s exports surge 36.2% in April

Index of industrial production for April at 17.6%

Inflation rises to 10.16% in May

Government okays de-control of fuel prices



Monthly report

After losing over 3.5% in May, the domestic indices signed off June with significant gains of over 4%. The domestic markets ride on lot of positive news like India’s gross domestic product (GDP) growing at 8.6% in Q4 and 7.4% in FY10, April exports rising to 36%, April index of industrial production (IIP) up 17.6%, higher advance tax payments by Indian Inc and foreign institutional investors (FIIs) once again starting to show buying interest in the Indian equities. Also, Fitch upgrading the India's local currency rating outlook to stable from negative along with the progress of monsoon back home supported the markets. The domestic indices shrugged off the pessimistic news like China’s slow manufacturing growth along with resurge of euro zone worries on news that Hungary is close to defaulting on its debts, US Federal Reserves’ cautious outlook for the global economic recovery and India’s May inflation rising to 10.16%.

During the month, the government hiked the fuel prices — petrol, diesel, kerosene and LPG. It also approved partial de-control of fuel prices. The Union Government raised over Rs38,300 crore from the India's broadband wireless access (BWA) spectrum auction, which ended on June 11, 2010.

Trading volatile, the Sensex swung 1601 points and the Nifty 405 points during the month. In the process, the Sensex and the Nifty regained the psychological levels of 17000 and 5300 respectively. The BSE bellwether signed off the month 756 points (or 4.27%) higher at 17701 and the NSE benchmark shut 226 points (or 4.45%) up at 5312.

The entire 13 sectors ended June in the positive territory except BSE Metal, which fell by 3.01%. Fast moving consumer goods (FMCG), auto and capital goods (CG) stocks played the significant role in pulling the markets up, with BSE FMCG, BSE Auto and BSE CG advancing by 7.73%, 7.49 and 7.16% respectively.

Among ‘A’ group stocks, Reliance Communications surged the most with gains of 36.90%, followed by Hindustan Petroleum Corporation and GTL Infrastructure gained by 30.15% and 28.79% respectively. Among losers, REI Agro fell the most by 28.74%, followed by Sesa Goa and Tulip Telecom that were down by 7.72% and 7.41% respectively.

On the global front, all the major indices posted considerable losses. However, India’s key benchmark index, Sensex and Hong Kong’s Hang Seng index bucked the trend ending the month with significant gains of 4.27% and 1.84% respectively. Among losers, Shanghai Composite fell the most, with losses of 7.48%. FTSE 100 and Nasdaq ended the month lower over 5% each.

Foreign institutional investors (FIIs) turned to net buyers in June after selling heavily in May. It bought stocks worth Rs10,684.50 crore in June. Domestic institutional investors (DIIs) continued to be the net sellers, shedding Rs589 crore worth of shares in the month.

In July, the domestic markets will be looking for Indian Incs quarterly results. The Reserve Bank of India’s quarterly review of the monetary policy on July 27, 2010 will be a key event for the domestic market along with IIP and inflation data, sales numbers of auto & cement companies along with export and import figures. The global risk appetite holds key with regard to inflow of foreign funds into the Indian equities. The domestic indices may continue to follow the global footprints in the upcoming month.