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Wednesday, July 25, 2012

Sensex ekes out slim gains…HUL surges, Wipro slips


After witnessing its sharpest decline in the past two months on Monday, the Indian equity markets were back into consolidation mode. The BSE Sensex and the NSE Nifty just about managed to eke out slim gains on the back of sustained strength in index heavyweight Hindustan Unilever, which hit a lifetime high in trade today. However, gains were limited amid lingering worries over the eurozone debt crisis and the Government's ability to push through pending reforms amid stiff opposition to various proposed measures. The Indian markets showed resilience despite weakness in the US and other global markets. Key indices ended with a positive bias despite rupee depreciating to its lowest against the US dollar this month. The euro and other global risk assets remained under pressure after Moody's downgraded Germany's sovereign outlook to negative. The Sensex ended at 16,918, gaining by 41 points or 0.25% over the previous close. It had earlier touched a day’s high of 16,962 and a day’s low of 16,839. It opened at 16,907. The NSE Nifty settled at 5128, up 10 points or 0.20%. It touched a day’s low of 5,103 and a day’s high of 5,144. Wipro, SAIL, L&T, Kotak Mahindra Bank, Sun Pharma, Asian Paints, Tata Power, M&M, IDFC and Infosys were the notable losers on the Sensex and the Nifty today. Hindustan Unilever, Ranbaxy, Sterlite, Maruti, Sesa Goa, Bharti Airtel, Axis Bank and ACC were among the gainers on the Nifty. The INDIA VIX on NSE lost by 9% to close at 16.97. It hit a day’s high of 18.66 and a day’s low of 16.56. The market breadth on the BSE was almost even, 1396 stocks ending lower and 1391 stocks rising. On the BSE-500, eClerx Services, Triveni Turbine, HUL, Tata Global, Onmobile Global, Bajaj Corp, United Breweries and Bajaj Hindusthan were the notable gainers. Shree Ashtavinayak Cinevision, Tata Elxsi, 3i Infotech and HDIL were the decliners on the broader market index. "Tension across world markets has escalated in the last couple of sessions amid mounting concerns about the financial health of Spain. Sovereign bond yields in Spain soared to new euro area record while stocks across Europe got pummeled. A ban on short selling saw markets in Spain and Italy recover smartly. US stock indices also closed off session lows," says Amar Ambani, Head of Research, IIFL. "Meanwhile, Moody’s has cut credit outlooks for Germany, the Netherlands and Luxembourg. Greece too is back in the spotlight amid reports it may not get international aid if it doesn’t comply with planned budget reforms," he added. "Back home, monsoon expectations have been scaled back further. Petrol prices have been increased marginally. Markets are waiting for the Centre to announce pending reforms amid continued opposition to some of the measures. Earnings reports have accelerated and will vie for investors’ attention. Volatility could rise in the run up to Thursday’s F&O expiry," Ambani said. Globally, the Asian markets recovered from session lows after a provisional China manufacturing PMI data from HSBC showed improvement in July over the preceding month while Japanese shares were pressured by growing concerns over the ongoing eurozone debt crisis. The Nikkei ended lower by 0.2% while the Kospi in South Korea ended up 0.3%. The Taiex in Taiwan lost ~0.3%. The S&P/ASX 200 index gained 0.2%. The Hang Seng in Hong Kong was down ~0.8%. Hong Kong's local stock and derivatives markets reopened for the afternoon session after morning trade was cancelled due to extreme weather. The Shanghai Composite Index rose 0.2%. China’s manufacturing may contract at a slower pace in July after monetary easing and a rebound in lending spurred demand in the world’s second-largest economy, a private survey indicated today. The preliminary reading was 49.5 for a purchasing managers’ index (PMI) released today by HSBC Holdings Plc and Markit Economics. If confirmed, that would be the highest since February. In June, the final number was 48.2. In Europe, stock markets opened flat to a tad higher, recovering from heavy losses in the previous two sessions. A strong reading on China manufacturing activity was countered by a lowered outlook on Germany's "AAA" rating to negative from stable by Moody's Investors Service. The Stoxx Europe 600 index was up 0.2%. The FTSE in the UK, the CAC 40 in France and the DAX in Germany were up marginally. However, the IBEX 35 index in Spain was down more than 2% while the FTSE MIB index in Italy lost ~0.9%.