MUMBAI: Indian markets ended in the negative terrain discounting better-than-expected June IIP data and positive cues from European peers. All the sectoral indices ended lower with technology, banks and realty space worst hit. Recovery in the European markets also failed to lift sentiment back home.
Benchmarks opened on a positive note and turned rangebound ahead of the June IIP data, which was expected to be around 5.5 per cent. However, the figures surprised everyone by showing growth of 8.8 per cent vs 5.9 per cent (revised) in May. Manufacturing growth rose to 10 per cent versus 5.6 per cent in May.
"While June IIP numbers are better than expected, we maintain our FY12 7.6% GDP estimates on the back of aggressive tightening (125bps in the last 3 months), structural policy issues and worsening prospects on the global front.
While export growth is so far robust (1QFY12 growth at 46%), a further deterioration on the global front could shave off ~20bps from our full year GDP estimates. All this indicates that the timeline for moving back to an 8%+ growth path is likely to get extended to FY13," said, Rohini Malkani, the Chief India Economist, Citigroup.
Meanwhile, reacting to the IIP data, Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission, said that the latest IIP figures show improvement and he is of the view that GDP can grow 8 - 8.3% this fiscal.
The IIP figures failed to excite the market as benchmarks slipped below psychological levels. Concerns of inflation and possible rate hike by the RBI next month kept the rate sensitive sectors under pressure.
Bombay Stock Exchange's Sens*x ended at 16839.63, down 219.77 points or 1.29 per cent. The 30-share index touched intraday low of 16784.56 and high of 17246.88.
National Stock Exchange's Nifty closed at 5072.95, down 65.35 points or 1.27 per cent. The broader index touched a high of 5194.45 and low of 5053.35 in trade today.
"Nifty has been hovering in a broader range of 5000 to 5200 levels for the past five sessions. Now a range breakout may give further momentum of 100-150 points on either side.
On option front, maximum Put OI is seen at 5000 strike while fresh writing is seen at 5200 and 5300 strike. Nifty has given 50% pull back of recent fall from 5550 to 4950 levels.
Now if it fails to cross 5000 levels then it may move down towards 4900-4800 levels. If sustains above 5200-5230 levels then it may go towards 5300-5350 levels. Market is facing selling pressure on every rise so better to hedge long position by buying respective put of stock or index," said Chandan Taparia, Derivatives Analyst, Retail Research, Anand Rathi.
Nifty ends below 5075; tech, banks, realty down
CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
12 August 2011
CAclubindia
