Sensex ends static…Broader market falls; VIX slips

The NSE Nifty has now closed in the red for the past five trading sessions. Also, this was the third consecutive occasion when the Nifty opened with a positive gap but closed lower after failing to capitalize on the early gains. Markets erased early morning gains and were on a constant declining trend throughout the day, as investors remained cautious amid cloudy outlook for monsoon and its impact on the sluggish Indian economy. In addition, the enthusiasm over a possible rate cut has been dampened after the RBI Governor said that inflation remains beyond the central bank's comfort levels. Investors seem to be taking a breather of sorts after lifting the Nifty to 5300 recently on optimism about reforms under the stewardship of Dr. Manmohan Singh. At the same time, global investors continue to bet on more stimulus out of the US and China. All eyes are on the Federal Reserve Chairman Ben S. Bernanke, who is due to update the Congress on the state of the US economy on Tuesday as well as on Wednesday. The BSE Sensex and the NSE Nifty finished flat. Much of today’s action was seen in the broader market, where the Small-Cap index and the Mid-Cap index lost some flab after steadily gaining in the past several sessions. Except for the defensive plays of FMCG, Pharma and Consumer Durables, most other sectoral indices on the BSE ended lower. Auto, Realty and Power indices were the top losers. The INDIA VIX was down sharply today, falling by over 5%. The Sensex ended at 17,105 almost unchanged from the previous close. It had earlier touched a day’s high of 17,236 and a day’s low of 17,074. It opened at 17,176. The Nifty settled at 5192, down 4 points. It touched a day’s low of 5,181 and day’s high of 5,236. Reliance Infra, BPCL, Bajaj Auto, Axis Bank, BHEL, Siemens, TCS, M&M and DLF were the notable losers on the Sensex and the Nifty today. Wipro, Dr Reddy’s, ITC, Sun Pharma, Coal India, Hindalco and PNB were among the gainers on the Nifty. The INDIA VIX on NSE lost by 5.2% to close at 17.78. It hit day’s high of 18.77. It hit a low of 17.72. Markets in Asia brushed aside concerns on the slowing global economy after the IMF cut its global growth forecast citing the protracted eurozone debt crisis and moderation in the emerging markets. Recent weak data have prompted economists to cut their US second-quarter GDP growth forecast to 1.3% from a previous projection of 1.5%. US retail sales fell for a third consecutive month in June as Americans remained concerned about weak job creation, stalled global growth and the European debt crisis. There are also expectations that China will cut its banks’ reserve requirement ratio (RRR) again soon to shore up growth in the world's second largest economy. Banks and oil firms supported European stock markets today, as investors waited for the much-anticipated testimony of Fed Chairman Bernanke later in the day. "One must be careful in the near-term, as there might be some more weakness ahead. What could possibly cause a downfall from here on? It could be anything from a few bad earnings, lack of progress on monsoon, continued policy impasse at the Centre, persistently hawkish tone of the RBI on inflation, downbeat global data and Fed’s reluctance to announce QE3," says Amar Ambani, Head of Research, IIFL. Stocks in the News Mahindra & Mahindra fell on concerns that weak monsoon rains this year may hit demand for tractors adversely. Pharmaceutical stocks rose on defensive buying in a choppy market. Analysts say the export-dependent sector will benefit from a weaker rupee and from exclusive rights to sell some drugs in the US markets. Axis Bank shares declined after the bank's ratio of gross non-performing assets (NPAs) rose to 1.06% of gross advances on 30 June 2012, higher than 0.94% on 31st March, 2012. Bajaj Auto shares fell ahead of the company's Q1 FY13 results announcement tomorrow. Infosys shares managed to recover some ground due to bargain hunting after tumbling ~12% in the preceding three sessions to Rs 2,172.60 on July 16 from a recent high of Rs 2,466.35 on July 11. BOC India shares rose after the company said that it has commissioned a 2,550 tons per day air separation unit at Tata Steel's Jamshedpur unit. Bajaj Finance shares rose after its Q1 FY13 net profit jumped 53% to Rs 139 crore on 56% growth in total income at Rs 703 crore. Cadila Healthcare shares advanced after the company said that the US Food and Drug Administration (USFDA) has found the company's facilities at Moraiya are acceptable. With this, the warning letter issued by them earlier is resolved. Exide Industries shares rose after its net profit rose 6.68% to Rs 152.03 crore on a 7.28% rise in net sales at Rs 1551.08 crore. Aviation shares fell after public sector oil marketing companies on Monday hiked jet fuel rates by 1.7% in line with firming international oil rates. Shares of IOC and HPCL rose as US crude futures traded near the highest level in seven weeks amid speculation that US stockpiles will decline and tension with Iran may escalate. Tata Coffee rose after the company’s consolidated net profit jumped 112.7% to Rs 28.18 crore on 23% growth in net sales at Rs 407.74 crore. Thirumalai Chemicals stock has been hitting the upper circuit since it announced a stellar financial performance last week. After surging to Rs 102.30, the stock closed 12.55% higher at Rs 95.95. The company reported a net profit of Rs 16.79 crore in the first quarter ended June 30, 2012, as against Rs 0.79 crore in the quarter ended March 31, 2012. The sharp jump in net profit can be attributed to an increase in profit from other activities during the period under review.