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Wednesday, September 12, 2012

Sensex climbs modestly…Metal shares sink


The Indian stock market indices had a smart session on Tuesday, showing some resilience in the backdrop of weak global equities. Overnight losses in the US and Asian markets dragged the sentiment down at open; however after hitting an intra-day low of 5332, the Nifty index was on a constant uptrend. Market sentiment got a fillip after the Germany's Constitutional Court said that it would not postpone its ruling on the legality of the eurozone's bailout fund, despite a last-minute legal challenge. The smart upswing was led by gains in Realty, IT, Power, Telecom, Banking and Consumer Durables. The Mid-Cap and the Small-Cap indices extended rally, with both gaining 0.3% and 0.6%, respectively. The undercurrent was cautious ahead of a couple of important global events and two key domestic economic reports later this week. Germany’s Federal Constitutional Court is due to rule on Wednesday on the country’s participation in the European Stability Mechanism (ESM), the euro area's permanent 500 billion-euro rescue fund. The dollar declined against major currency rivals today before a two-day Federal Open Market Committee (FOMC) meet tomorrow. Speculation has been rife that the Federal Reserve will announce a third round of asset purchases known as QE3. On the domestic front, markets will react to the latest industrial production (Sept. 12) and WPI inflation numbers (Sept. 14). The BSE Sensex ended at 17,852, up by 86 points or 0.5% over the previous close. It had earlier touched a day’s high of 17,867 and a day’s low of 17,677. It opened at 17,711. The NSE Nifty settled at 5390, up 26 points or 0.5% over the previous close. It touched a day’s low of 5,332 and a day’s high of 5,393. Siemens, IDFC, BPCL, HDFC, Kotak Bank, Bank of Baroda, NTPC, BHEL, TCS and Grasim were among the notable gainers in the Sensex and the Nifty. Sesa Goa, Sterlite, Jindal Steel, Hero Morocotp, Power Grid, Tata Steel, SAIL and DLF were the top losers in the Sensex and the Nifty. The INDIA VIX on NSE ended higher by 0.7% at 15.38. It hit a day’s high of 15.51 and a day’s low of 15.10. The market breadth on the BSE was positive, with 1574 stocks ending higher and 1263 stocks closing lower. The Metals space continued to be under pressure after the Goa government suspended all iron ore mining operations in the state. Two former Chief Ministers of Goa have been indicted in the Shah Commission report on illegal iron mining. Shares of public sector oil marketing companies (OMCs) were in the spotlight amid media reports that the Cabinet meeting later this evening could take a call on the sensitive issue of fuel price hike. However, just before the closing bell, media reports said that the CCPA meeting on fuel price revision had been cancelled. News of an impending increase in regulated fuels such as diesel and LPG has been doing the rounds for quite some time now. But, the Government has dragged its feet over this issue for far too long due to stiff political resistance. "The ongoing political impasse will continue to be a major overhang for Indian stocks, unless the Congress-led Government decides to do something. In the near-term, sentiment will be driven by IIP and WPI inflation numbers and global events like FOMC policy meeting and the German court's ruling on ESM. Meanwhile, the rain gods seem to have woken up wee bit late this monsoon season. Although a lot of damage to crops has already been done, even the late showers will come in handy. Reservoirs will swell up, helping farmers in the Rabi season. There might just be some positive impact on food prices, especially that of farm commodities, if the rains continue for few more days," says Amar Ambani, Head of Research, IIFL. Asian stock indicess closed mostly lower, as investors remained jittery over the dimming prospects for growth in the world's top economies such as the US, China, Japan and Europe. The regional benchmark was poised for the first drop in four days amid mounting concerns that Europe will fail to contain its debt crisis. Investors were also awaiting the outcome of the two-day Federal Reserve policy meeting that kicks of on Wednesday. Japan’s Nikkei Stock Average was down 0.70%, South Korea’s Kospi was down 0.24% and Australia’s S&P/ASX 200 index shed 0.1%. In China, the Shanghai Composite Index was down ~0.7% while Hong Kong’s Hang Seng Index was up 0.15%. European stock indices opened a tad lower, tracking overnight losses on Wall Street. Mining and bank stocks led the fall. The Stoxx Europe 600 index was down 0.4%. The indices in France and UK were down 0.4% each while the German index was down 0.2%. The Spanish index IBEX was down by ~1%.