Disappointing June IIP Data Weighs Trades Down

The Indian markets have shed some of their early gains and are presently trading on a flat, positive note. The Sensex and Nifty are currently trading up by 0.2%. The IIP number for Jun 2012 has come at -1.8%, which is below the market's expectation, thereby dragging the markets lower from their day’s high. Among the individual sector growth figures, Gapital Goods has disappointed, showing de-growth of 29% versus the 38.7% growth witnessed in the same period last year. Manufacturing too contracted at (-) 3.2% as against a growth of 2.5% in the previous month and 11.1% in the previous year.

In the Asian markets, Nikkei, Hang Seng and Shanghai are still trading in the positives, notching up gains of 1.09%, 1.09% and 0.60% respectively. Data received added to the picture of a slowing Chinese economy, as the Jul retail sales rose 13.1%, down from 13.7% in Jun, while the industrial output advanced 9.2%, down from the 9.5% gain in Jun. However, the mixed economic data from China has kept hopes alive for policy action that is needed to tackle the slowdown in the economy.

The European indices opened on a positive note and are currently trading higher. The CAC, DAX and FTSE are higher in the range of 0.66%-0.64%. Tracking gains in the Asian markets and hopes of stimulus measure has kept the markets in the green.

Some of the sectors turned negative later in the morning after a good start. Those still in the positive include Metals, FMCG, IT, Auto and Bankex, up by 1.18%, 1.15%, 0.66%, 0.46% and 0.26% respectively. Of the losers pack, Realty, CG and Oil & Gas are down in the range of 0.10% to 0.57%.

The Metals and FMCG indices are witnessing a particularly favourable trading session. Coal India, Sesa Goa, JSW Steel and Sterlite Industries are up by 2.32%, 2.47%, 1.13% and 3.83% respectively.

In the losers pack, Bharti Airtel continues to trade lower by 4.61%, taking its total losses in the past two days to almost 12%. The scrip took these losses after the company reported disappointing results for the Jun quarter. Other index heavyweights like HDFC and SBI have lost nearly 2% each.

The market breadth continues to remain negative. On the BSE, 1451 shares have declined, 1095 shares have advanced, and 144 shares are unchanged.