Nifty struggling to rally: Monday Closing Report

The Nifty may try to stage a rally but the problem is that the US market is likely to decline sharply

A spike in April inflation and weak global cues saw the indices falling to their lows in post-noon trade; however, a small bounce-back in the last hour helped the market pare some of the losses. In our Friday's closing report we had mentioned that the Nifty may hit 4,880 on Monday. Today, the index slipped below this level but closed above it at 4,908. The next support lies at 4,860. If the benchmark manages to close above this level and closes above the previous day's high, we may see a possible change in direction. The National Stock Exchange (NSE) saw a volume of 51.08 crore shares, the lowest since 16 April 2012.

The market opened with minor gains this morning, ahead of the release of the inflation data for the month of April. The Asian pack was subdued in morning trade on the political impasse in Greece and the Chinese central bank's move to reduce bank reserve requirement on Saturday. Back home, the Nifty opened at 4,934, up five points, and the Sensex resumed trade at 16,318, a gain of 25 points over its previous close.

Buying in metal, banking and auto stocks lifted the benchmarks to their day's high in morning trade. At the highs, the Nifty rose to 4,957 and the Sensex climbed to 16,390.

The market was range-bound till late morning trade. However, a spike in inflation for the month of April coming in at 7.23% compared to 6.89% in the previous month saw the indices paring all their gains and moving into the negative.

A lower opening of the key European indices added to the woes of the local investors in subsequent trade. The benchmarks fell to their lows at around 2.40pm with the Nifty touching 4,875 and the Sensex going down to 16,125.

A marginal recovery in the last hour saw the indices come off their lows, but the push was not enough leading to the market closing in the red for fifth straight day. The Nifty settled 21 points lower at 4,908 and the Sensex ended trade at 16,216, a cut of 77 points.

The advance-decline ratio on the NSE was negative at 443:976.

Among the broader markets, the BSE Mid-cap index declined 1% and the BSE Small-cap index tanked 1.26%.

The top sectoral gainers were BSE Healthcare (up 0.78%); BSE IT (up 0.41%); BSE Consumer Durables (up 0.36%); BSE Capital Goods (up 0.34%) and BSE Fast Moving Consumer Goods (up 0.28%). The losers were led by BSE Oil & Gas (down 1.69%); BSE Bankex (down 1.61); BSE Realty (down 1.27%); BSE PSU (down 0.91%) and BSE Power (down 0.79%).

Larsen & Toubro (up 1.84%); Bajaj Auto (up 1.80%); Tata Power (up 1.51%); Sun Pharma (up 1.26%) and Infosys (up 1.13%) were the key gainers on the Sensex. The major losers were DLF (down 2.64%); Tata Motors (down 2.42%); Reliance Industries (down 2.32%); HDFC Bank (down 2.02%) and BHEL (down 1.99%).

The Nifty was led by Asian Paints (up 3.06%); Ranbaxy (up 2.29%); Sesa Goa, BPCL (up 1.87% each) and Bajaj Auto (up 1.80%). The top laggards were Cairn India (down 4.82%); Bank of Baroda (down 4.59%); SAIL (down 3.42%); Reliance Infrastructure (down 3.20%) and Punjab National Bank (down 3.07%).

Markets in Asia, with the exception of the Nikkei 225, settled in the red, on political instability in Greece and concerns of a slowdown in China. News that German chancellor Angela Merkel's party lost a regional election was a setback to investors.

The Shanghai Composite fell by 0.60%; the Hang Seng declined 1.15%; the Jakarta Composite tanked 1.48%; the KLSE Composite dropped 0.58%; the Straits Times slipped by 0.67%; the KOSPI Composite shed 0.18% and the Taiwan Weighted settled 0.33% lower. at the time of writing, the key European indices were reeling with cuts of 1.79% to 2.22% and the US stocks futures were deeply in the negative. If the S&P 500 closes below 1,340, we will possibly see a sharp decline which will affect Indian stocks as well.

Back home, foreign institutional investors were net buyers of shares totalling Rs158.56 crore on Friday. On the other hand, domestic institutional investors were net sellers of equities amounting to Rs243.29 crore.

The board of Kanoria Chemicals & Industries has proposed 30% dividend for FY11-12 against 100% in FY10-11. The company reported a standalone net profit of Rs305.62 crore for the whole year against Rs16.98 crore in the previous fiscal. The rise in net profit has been attributed to the sale of its chloro chemicals division. Kanoria Chemicals declined 0.87% to close at Rs34 on the NSE.

GlaxoSmithKline Consumer Healthcare, makers of the brand Horlicks, on Monday announced the launch of its Horlicks Aahar Abhiyan. The campaign will focus on issues of malnutrition among the youth. The stock shed 0.08% to settle at Rs2,780 on the NSE.

Jain Irrigation Systems, leader in irrigation systems, has signed an agreement with Kibbutz Naan to acquire the remaining 50% of the irrigation solutions company-NaanDanJain-which up till now was jointly equally owned by Jain Irrigation and Kibbutz Naan. This acquisition realizes the call option that the Indian company Jain Irrigation has held since acquiring the first 50% in 2007. The stock fell by 0.46% to close at Rs75.20 on the NSE.


L&T Q4 net profit up 14% to Rs1,920 crore

L&T said decelerating growth momentum across the sectors during 2011-12 led to deferment of capital expenditure and fresh investment decisions

Mumbai: Engineering and construction company Larsen & Toubro (L&T) on Monday reported a growth of 13.9% in its standalone net profit at Rs1,920.41 crore for the quarter ended March 2012, largely on the back of improved order inflows, reports PTI.

The company had reported a net profit of Rs 1,686.21 crore during the corresponding quarter last fiscal.

During the quarter, net sales of the company rose 21% to Rs18,460.90 crore as against Rs15,261.17 crore of in the same period FY11, it said in a filing to the BSE.

The company's total expenses during the quarter rose by 22.2% to Rs16,080.50 crore, though its tax outgo decreased by over 19% to Rs708.10 crore.

The engineering company did not provide consolidated results for the fourth quarter of last fiscal.

For the full year 2011-12, the company reported a growth of 5.3% in its consolidated net profit to Rs4,693.69 crore as compared to Rs4,456.17 crore in FY11. Consolidated net sales of the company was up 23.6% in FY12 to Rs64,313.11 crore, while its total expenses went up by over 25% to Rs57,123.46 crore.

During the fiscal, the company received orders worth Rs70,574 crore, which includes Rs63,574 crore orders received in the engineering and construction sector. As on March 2012, the company had a total order book of Rs1.45 lakh crore, it said in a separate statement.

"Decelerating growth momentum across the sectors during 2011-12 led to deferment of capital expenditure and fresh investment decisions. Still the company was able to garner sizeable new orders...," L&T said.

Giving its guidance for the current fiscal, Larsen and Toubro said: "A clear policy direction from the government, inflation containment, benign interest rate environment and improved fiscal situation are key to revive the growth momentum and investment confidence."

It, however, added that due to its large order book, the company is well positioned to sustain revenue growth momentum in the medium term.

The company Board has recommended a dividend of Rs16.50 per share.

L&T closed Monday 1.8% higher at Rs1,159.8 on the BSE, while the benchmark Sensex ended marginally down at 16,215.


Public Interest Exclusive
El Niño possibility lowers normal monsoon forecast

According to Rajan Alexander of Dev Consult Group, which tracks international weather forecasts, the El Niño appears to be virtually struggling to establish itself for the last couple of months. Experts say that considering that the large part of country is already in a drought-like situation, the news will severely impact Indian farming community

International climate forecast models are talking about early signs of an emerging El Niño which are manifesting the drought condition. This comes contrary to the forecast of the Indian weather officials which had predicted a normal monsoon and ruled out the impact of an El Niño weather pattern on the monsoon. Experts say that considering that the large part of country is already in a drought-like situation, the news will severely impact Indian farming community.  

El Niño refers to the abnormal warming in the tropical eastern Pacific Ocean, creating havoc weather patterns across the Asia-Pacific region. It is linked with poor rains and drought-like situation in Southeast Asia and Australia.

According to Rajan Alexander of Dev Consult Group, which tracks international weather forecasts, the El Niño currently appears to be virtually struggling to establish itself for the last couple of months. The latest forecast by the Australian POAMA model (Predictive Ocean Atmosphere Model for Australia) appears to indicate El Niño threshold values being reached by the latter part of June and strengthen right through September and beyond. However, the expected event is most likely to be a weak one.  

The India Meteorological Department (IMD) has forecast average rainfall. LS Rathore, director general, IMD was quoted saying, "Yes there are chances of El Niño phenomenon emerging in the Pacific which may not favour rains in the month of August-September. But overall monsoon is likely to be normal. El Niño is just one of the parameters being considered while forecasting".

Forecast on the Indian Ocean Dipole (IOD) (an irregular oscillation of sea-surface temperatures in which the western Indian Ocean becomes alternately warmer and then colder than the eastern part of the ocean) is also negative says Dev Consult. "The POAMA IOD forecast indicates a negative IOD right through June-September, with the period June-July being expected to be relatively stronger. As in the case with the El Niño, the saving grace is that it is likely to be a weak event.  However, when this POAMA IOD forecast is juxtaposed with their El Niño forecast, this could result in a below average monsoon rainfall this season, if these models are right."
In India the monsoon is expected in less than a month over south-west coast. However, it requires a temperature/pressure gradient to propel into the northern India. Such a condition is provided by sustained heating of the north-west and lower pressure but the process has been delayed for almost a month now.

Considering such phenomena, Dev Consult explains that, "This happens to be the other major problem that goes against the expectation of a normal monsoon season. Weather models had indicated a small window for heating to begin this week, but an incoming western disturbance appears to have closed it somewhat. Rain inducing western disturbances (WD) is passing low-pressure waves which set up thunderstorms, thunder squalls, dust storms, rain, thundershowers and even hail. All these serve only to put a cap on the heating process, which normally sets up heat waves to severe heat waves over north-west, central, east and east-central India."

Jai Shankar, an agricultural scientist, was quoted saying, "Farmers will be able to sow crops on time in June-July, which means field crops will be at the maturity stage by the time El Niño makes its impact felt."

Explaining the current status on El Niño, Dev Consult says that climate indicators across the tropical Pacific Ocean remain neutral, ruling out possibility of neither El Niño nor La Niña. It noted that during the past fortnight, the tropical Pacific Ocean reached its warmest state since May 2010. However, all major indicators of El Niño/La Niña-Southern Oscillation (ENSO), including cloudiness, trade winds, the Southern Oscillation Index (SOI) and sea surface temperatures in the tropical Pacific, currently are within the ENSO-neutral range. According to the Australian Met Office, the NIÑO3.4 SST has risen to +0.1 deg C the highest since May 2010. But according to the US-based The National Oceanic and Atmospheric Administration (NOAA), the latest weekly NIÑO3.4 SST is -0.1 deg C. Meanwhile, the Southern Oscillation Index (SOI) has continued rebounding during the past week, after remaining around ?7 during the preceding week. The latest (6 May) 30-day SOI value is +3.7.

You may like to visit Dev Consult's blog




4 years ago

Last month eastern Pacific saw the end of a strong La Nina that extended through the winter into April. This means Good Monsoons in Asia. A weak and delayed El Nino also means a normal Monsoon, while a strong one means a poor Monsoon. Although, the cooling of the Indian subcontinent this spring and well into the summer may be a cause for a delay, can't see why anyone's talking of a poor Monsoon this year?!

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