Markets make smart recovery on industrial growth data

FIIs were net sellers by Rs 1,211.2 crore; domestic institutional investors were net buyers for Rs 500.44 crore.Oil and gas, capital goods and metal stocks were major gainers

Stocks sagged in the early hours of trade on the RBI’s hike in short-term lending rates, to make sharp recovery only hours later as the Index of Industrial Production figures came in.
The Sensex fell by a hefty 437 point intra-day; it finally closed at 15,250, witnessing a swing of more than 500 points from its day’s low of 14,748.

FIIs sold equities for the fourth consecutive day of the week; they were net sellers by Rs 1,211.2 crore. Domestic institutional investors were net buyers for Rs 500.44 crore, according to BSE and NSE’s provisional data.

Net sales of equities by FIIs in the past three days amount to Rs 2,336 crore; FII net sales in June so far amount to Rs 5,321.50 crore.

“The markets today showed remarkable recovery in spite of weak global cues and RBI’s move to increase the repo rate by 25 basis points to 8 per cent. Good IIP numbers also helped,” said Mr P.K. Agarwal, President, Research, Bonanza Portfolio Ltd.

The Index of Industrial Production (IIP) data released on Thursday for April recorded a 7 per cent growth as compared to 3 per cent in March. However, it was much lower than the 11.3 per cent growth for the same month a year ago.

“This year is going to be tough since we are dependent on FIIs inflows but they don’t seem to be in a hurry to come back; we may see another heavy fall,” said Mr Waqar Naqvi, Chief Executive, Taurus Asset Management Co. Ltd.

“When commodity prices come down, India might become more attractive for the FIIs,” said Mr Naqvi adding that “The economies of Russia, Brazil and Vietnam, where commodity stocks had 65 to 75 per cent share in the local equities markets, were not falling.”
BSE Midcap and Small cap indices outperformed the Sensex by gaining 0.53 per cent and 0.78 per cent.

Some major gainers include Rajesh Exports up over 13%, RNRL up 7%, Reliance Petro up 5%, Aban Offshore up 6%, Jyoti Structures up 13%, Deccan Chronicles up over 14%, Idea Cellular up 11%, Spice Communications up 5.5%, Neyveli Lignite up almost 5%, Bilcare and Lupin rose 5% each, Aptech rose 5.7%.Other mid and smallcap gainers included ABG Shipyard up 6.4%, Adani Enterprise up 5.6%, Amara Raja Batteries up 5.8%, Himatsingka Seide up 9%, Pantaloon up 9%, Plethico up 7%, Renuka Sugars up over 6%, S Kumars up 12%, Balrampur Chini up over 5%, Bajaj Hindustan up 6.6%, Praj Industries up 6%, City Union Bank up almost 6%, Entegra up another 10%, EIH Associated up 5% again, Fortis Financial Services (renamed Religare Renova) up 10% again, Greenply up over 7%, Indus Fila up 6% again, Lloyd Steel up 6.5%, Mangalore Chem up 10%, Nilkamal up 12%, Orient Paper up 8%, Saint-Gobain up over 7%, Shree Ashtavinayak rose almost 6% and touched its 52-week high, Valecha up 12.5%, Zandu Pharma up 10% among many others.Bang Overseas aside from Shree Ashtavinayaka, touched its 52-week high today.

Some major losers included Suzlon Energy down 7%, JSW Steel dropped 7.4%, United Breweries Ltd dropped 7.3% after yesterday's rise, Bajaj Holdings down 5%, Nahar Industrial down 7% and touching its 52-week low, Natco Pharma down 7%.

Among the sectoral indices, BSE Oil & Gas, Capital Goods and Metals were the major gainers.
The industrial sectors that were major losers on Thursday were IT, health care and automobile.

A near term trigger for the market will be corporate advance tax payments for the first installment which falls due on 15 June 2008. The income tax law requires a company to 15% the estimated tax liability for the year as advance tax in the first installment. The advance tax payment by the corporate sector will give a cue on Q1 June 2008 results.