Markets End Weak On Waning Rate Cut Hopes

The Indian markets ended the day lower in the negative territory after the WPI inflation data, which came in lower than expectations. They also responded negatively to the speculations that there would be no rate cut in the RBI’s monetary meet scheduled for Jul 31. The markets opened in the positive territory, following which they traded in a narrow range for most part of the day and closed in the deep red. Both the broader indices closed down by almost 0.6%.

The WPI data for Jun 2012 came in at 7.25%, which was lower than the street's estimation of around 7.6%. The WPI figure for Apr 2012 was also revised to 7.5% from 7.23%.

Other Asian markets continued their morning trend, and the Hang Seng closed the day with marginal gains, while Shanghai closed down by almost 1.7%. This is after the Bloomberg's reports that the Chinese premier Wen Jiabao had warned that the nation’s recovery is yet to build up momentum, fueling speculations on extra economic support measures. The Nikkei market was closed for today.

The European markets are currently trading in marginal losses. Major indices like FTSE, CAC and DAX are trading lower on the back of media reports, which said that the resource firms had dropped following downbeat comments from China.

Dow Jones Futures is currently trading 23 points or 0.18% down at 12689, indicating a negative sentiment in the US markets.

The Metals pack continued its losing momentum. Tata Steel was among the leading index losers, down by 3.95% at Rs 408.85. Other stocks in the group like Jindal Steel, Sterlite Industries and Hindalco also closed lower in the range of 1.7%-2.7%. Further, Tata Motors, Infosys, Tata Power and GAIL India are some of the stocks that ended lower by more than 1% each. Stocks like M&M, HUL, ITC, BHEL and HDFC Bank closed lower marginally in the red zone.

Atul Auto plunged by 3.16% to Rs 114.80 after the company made an announcement on the exchange that it has entered into a long term supply agreement with Greaves Cotton for the supply of diesel engines for its three-wheelers.

Castrol India closed marginally in the red, down 0.3% at Rs 553.6. This was after the company declared its Jun 2012 quarter results, posting a net profit after tax of Rs 1209 million for the quarter as compared to Rs 1425 million for the quarter ended June 30, 2011. Its total income has increased from Rs 8126 million for the quarter ended June 30, 2011 to Rs 8675 million for the quarter ended June 30, 2012.

For tomorrow, investors could watch out for stocks like Axis Bank, Bajaj Finserv, Jindal Hotels, Automotive Stamp, GIC Housing, etc., which are going to announce their Jun 2012 quarter numbers. One could see some volatility in the prices of these shares in tomorrow’s trade.

We expect the markets to remain volatile for tomorrow and advise our readers to play with caution, as the Jun quarter results could take the market in either direction.