Negative End To A Weak Trading Day

The Indian markets finally ended the day in the negative territory, with the Sensex closing 0.1% down and Nifty ending lower by 0.19%. Around noon, the markets tried to recovered their morning losses and traded higher, but they ended the day in disappointment. Among the sectoral indices, Realty, Consumer Durables, Metals and Capital Goods took the most beating today, closing over 1% down. Only two indices, FMCG and Bankex, closed trades in the green zone.

Other Asian markets saw mixed results today. Hang Seng and Nikkei closed in the negative territory, while Shanghai closed the day 1% up. The Chinese market closed higher on investor speculation that after the rate cut yesterday, the Chinese economy would manage to see growth going ahead.

The European markets are still holding some of their morning losses, with FTSE, CAC and DAX trading lower in the range of 0.1%-0.2%. Yesterday, the European Central Bank (ECB) lowered the key rates. However, the ECB President remained silent on the Long Term Refinancing Option (LTRO). He further guided that the European economy is going through tough times, with concerns still looming large.

Dow Jones Futures is currently trading down 17 points or 0.13% at 12815, indicating a negative sentiment in the US markets.

Back home, Jindal Steel is the leading index loser, down 3.61% at Rs 453.10. Other Metals stocks also saw some profit booking, with Sterlite Industries and Hindalco closing 1.87% and 0.92% lower respectively. IT stocks also closed negative, with big names like Infosys and Wipro witnessing losses of 1.58% and 0.93% respectively. This was after a leading business newspaper reported that the Jun 2012 quarter numbers for IT could be disappointing. Other stocks like Sun Pharma, ONGC, RIL, NTPC, etc. closed the day lower marginally in the red.

On the other hand, the defensive bets traded higher. Stocks like HUL and ITC closed higher by 1.15% and 1.06% respectively. The private banking space witnessed some buying, as stocks like ICICI Bank and HDFC Bank closed up by 1.55% and 0.38% respectively. Others like Dr. Reddy’s Labs, Tata Motors and BHEL ended marginally in positives.

Jain Irrigation closed the day 1.54% higher at Rs 89.05 after the company made an announcement on the exchange that the company has obtained the regulatory nod for the launch of a new agri NBFC. Eros International Media closed with 3.82% gains at Rs 191.50 after reporting to the exchange that it has signed a satellite television agreement with COLORS' Viacom18 Media.

The market breadth, which indicates the overall health of the market, was negative for today. Out of the 3358 stocks traded on the BSE, 1781 declined, 1446 advanced and 131 remained unchanged.

We expect the markets to remain volatile next week as investors are jittery in this uncertain environment. The Index of Industrial Production (IIP) data will be released next week, i.e. on Jul 12, 2012. The results announcement from IT bellwethers Infosys and TCS are also scheduled for the same date. We advise investors to exercise caution as the Jun 2012 quarter results season could take the market in either direction.