Sensex, Nifty in no man’s land: Friday Closing Report

Nifty has to close decisively below today’s close for a short downturn to start

Disappointment after inaction by the ECB on Thursday and concerns about the deficient monsoon led the market lower. Yesterday we had mentioned that the Nifty is now seen moving in a range of 5,190 and 5,245, which has to be broken for further direction. Today the index breached the lower range but made a gradual recovery in the second half. The Nifty is now in a no man’s land. If the benchmark closes decisively in the negative on Monday, it may result in a few days of decline. The National Stock Exchange (NSE) saw a volume of 53.33 crore shares.
The market opened lower as the European Central Bank (ECB) on Thursday let down investors, who were hoping for some action on the debt crisis in Europe. The ECB inaction resulted in the markets in Asia remaining weak in morning trade. Back home, the Nifty fell 32 points to open trade at 5,196 and the Sensex dipped 60 points to start off at 17,164.
Selling pressure in auto, banking, metal and capital goods stocks soon saw the benchmarks trudging lower. Concerns about the failure of the monsoon also weighed on the market.
The benchmarks fell to their lows in late-morning trade as selling expanded to most sectors. At the lows, the Nifty was down at 5,165 and the Sensex dropped to 17,027.
However, a positive opening of the key indices in Europe saw the local market paring some of its losses in noon trade. The gains enabled the market hit their in the last hour. At this point the Nifty rose to 5,220 and the Sensex climbed to 17,208.
The market closed off the highs, down for the second day in a row. The Nifty settled 12 points down at 5,216 and the Sensex finished trade at 17,198, a cut of 26 points.
The advance-decline ratio on the NSE was negative at 686:969.
Among the broader markets, the BSE Mid-cap index declined 0.18% and the BSE Small-cap index fell 0.08%.
BSE Oil & Gas (up 0.68%); BSE Healthcare (up 0.58%); BSE IT (up 0.54%) and BST TECk (up 0.21%) were the sectoral gainers. The top losers were BSE Metal (down 1.64%); BSE Auto (down 0.83%); BSE Bankex (down 0.62%); BSE Realty (down0.56%) and BSE Fast Moving Consumer Goods (down 0.37%).
The key gainers on the Sensex were Wipro (up 2.04%); NTPC (up 1.84%); Dr Reddy’s Laboratories (up 1.62%); ONGC (up 1.34%) and GAIL India (up 1.29%). The main losers were Sterlite Industries (down 2.62%); Tata Steel (down 2.20%); Hindalco Industries (down 2.06%); ICICI Bank (down 1.98%) and Jindal Steel (down 1.91%). 
The top two A Group gainers on the BSE were—Tech Mahindra (up 5.78%) and MRF (up 5.62%).
The top two A Group losers on the BSE were—Rural Electrification Corporation (down 3.68%) and Manappuram Finance (down 3.61%).
The top two B Group gainers on the BSE were—Salora International (up 17.06%) and Alchemist Realty (up 15.09%).
The top two B Group losers on the BSE were—Tricom Fruit Products (down 19.88%) and Landmarc Leisure Corporation (down 19.05%).
The Nifty was led by Asian Paints (up 2.92%); Wipro (up 1.97%); NTPC (up 1.77%); ONGC (up 1.50%) and GAIL India (up 1.46%).Sterlite Ind (down 2.82%); Jindal Steel (down 2.51%); Tata Steel (down 2.48%); IDFC (down 2.47%) and Jaiprakash Associates (down 2.33%) settled at the bottom of the index.
Markets across Asia closed mostly lower on inaction by the ECB, which disappointed investors who were hoping for fresh measures for solving the debt crisis in Europe. Speculations that China will also delay easing its policy also spooked investors.
The Hang Seng fell 0.12%; the Nikkei 225 tanked 1.13%; the Seoul Composite dropped 1.11% and the Taiwan Weighted declined 0.69%. On the other hand, The Shanghai Composite surged 1.02%; the Jakarta Composite rose 0.16%; the KLSE Composite added 0.10% and the Straits Times gained 0.50%.
At the time of writing, the CAC 40 of France was up 2.29%; Dax of Germany was up 2.02% and UK’s FTSE 100 was trading 1.34% higher and the US stock futures were in the positive, indicating a green start to the US markets.
Back home, foreign institutional investors were net buyers of shares totalling Rs140.13 crore on Thursday while domestic institutional investors were net sellers of stocks amounting to Rs66.48 crore.
Competition watchdog CCI has approved the proposed merger of JK Sugar with Dhampur Sugar Mills (DSML). JK Sugar has sugarcane crushing capacity of over 4,000 tonnes per day while Dhampur Sugar Mills has capacity to crush 39,500 tonnes of cane per day. Both companies are based in Uttar Pradesh, the second largest sugar producer after Maharashtra. The Dhampur Sugar Mills stock surged 2.33% to settle at Rs68 on the NSE.
Pharma major Ranbaxy Laboratories on Friday said it has entered into an in-licensing agreement with Gilead Sciences to promote access to low-cost generic versions of Gilead’s HIV medicine emtricitabine in developing countries. Gilead will provide a technology transfer for the manufacture of emtricitabine, together with funding to assist with investment in process improvements to reduce manufacturing costs, Ranbaxy said in a filing to the Bombay Stock Exchange. Ranbaxy closed 1.38% up at Rs509 on the NSE.
Micro Technologies (India) has introduced a product called Micr CallBlocker which can detect and block unsolicited calls and SMSs. The CallBlocker can lock all contacts, phone numbers and text messages so that only its user can have access to the data, as per the company’s press release. The stock declined 2.40% to close at Rs64.95 on the NSE.


Natural gas plunges amidst record supplies, uncertainties and weak demand

Natural gas, which had risen recently due to a hot summer in America, has crashed on reports of record reserves in the US, increased supplies, weak demand and economic uncertainties

The US Energy Information Administration (EIA) recently reported that the US natural gas stocks rose by a total of 28 billion cubic feet (bcf). Working gas in storage was 3,217 bcf according to EIA estimates, which is above the five-year historical range. This represents a net increase of 28 bcf from the previous week. Stocks were 472 bcf higher than last year at this time and 407 bcf above the five-year average of 2,810 bcf. What more, the “proved reserves” of US oil and natural gas in 2010 rose by the highest amounts ever recorded since they began publishing proved reserves estimates in 1977, said EIA, on 1 August 2012.

However, demand was weak enough to absorb the excess supply as the Federal Reserve remained tight-lipped about future monetary and fiscal measures to boost supply. This failed to act as a counterbalance to increasing supply. The spot price of natural gas, on MCX,  tanked by 8% yesterday to Rs162.9 per mmBtu, while MCX August futures contract dipped 2.81% to Rs175.6 per mmBtu.


According to EIA, the net additions to proved reserves of crude oil plus lease condensate in 2010 totalled 2.9 billion barrels, surpassing the previous high of 1.8 billion barrels added in 2009 by 63%, according to the press statement. Net additions of wet natural gas in 2010 totalled 33.8 trillion cubic feet (tcf), nearly 5 tcf (17%) higher than the previous record of 28.8 tcf, also added in 2009. The data is for 2010 though since it takes time to evaluate “proven reserves”, is different from supply data released every week, by the same agency. The next release of “proven reserves” will be January 2013.

Earlier, natural gas prices had risen as more people, especially in America, draw more energy to cool themselves down in what is termed as a record summer, in terms of soaring temperatures. This had led to a drought and fears of a next food crisis in the agricultural commodities segment.

According to the energy agency, the markedly increase in reserves was due to advances in technologies as well as the expanding application of horizontal drilling and hydraulic fracturing in shale and other ‘tight’ (very low permeability) formations. Another important factor for each fuel—particularly oil—was a higher price used to assess economic viability relative to the prices used for the 2009 reporting year.


Monsoon expected to be 15% deficient this season

The country, as a whole, has received 378.8 mm rainfall as against the normal of 471.4 mm—a deficiency of 20%

New Delhi: India’s crucial monsoon is expected to be 15% deficient this season—the weather office said today—the first indication of a drought in three years, reports PTI.
The country has received 20% less rains than normal since the delayed onset of monsoon in June. Till yesterday, the country had received 378.8 mm rainfall against the normal of 471.4 mm.
“We expect monsoon to be 15% deficient than the long period average (LPA) which is 89cm,” Laxman Singh Rathore, director general, India Meteorological Department (IMD), told reporters.
A country-wide drought is declared when the monsoon rains are less than 90% of the LPA and at least 20% area of the country experiences deficient showers of 25% or more.
On the impact of failed monsoon on agriculture, Mr Rathore said that paddy cultivation would not be affected but conditions were worrisome for production of coarse cereals.
However, monsoon in August is expected to be normal, but a question mark looms over rainfall in September as El Nino conditions (warming of central Pacific Ocean) appear set to turn unfavourable for the country, IMD said in an update to the monsoon forecast.
“In August, we are hoping for a better rainfall scenario, but there will be some problem in the terminal part of the monsoon,” Mr Rathore said.
He apprehended poor rainfall in September on account of the warming of the central Pacific Ocean, known as the El Nino phenomenon.
The central Pacific Ocean is expected to experience a warming of the sea surface temperature by 0.5 to 0.7 degrees Celsius.
In recent times, the country faced drought in 2009 and 2002.
In 2002, rainfall deficiency for June-September season was 19% while in 1918 it was 28%.
Since its delayed onset in June, southwest monsoon has been 11% deficient in the northeast, 36% deficient in the northwest, 15% deficient in central India and 24% deficient in the southern peninsula.
The country, as a whole, has received 378.8 mm rainfall as against the normal of 471.4 mm, a deficiency of 20%.
In terms of areas covered, monsoon has been deficient or scanty in 63% regions of the country and normal in 37% regions.
Officials said Haryana, Punjab, Gujarat, Madhya Pradesh, Maharashtra, Marathwada and interior Karnataka would be areas of concern where deficient rainfall has been recorded.
Earlier this week, the government had rolled out contingency plans to tackle a drought-like situation faced by several states owing to a weak monsoon.
An IMD statement said El Nino conditions were building up in the equatorial Pacific with sea surface temperature (SST) rise of 0.5 degrees Celsius observed over much of the recent two weeks.
The latest forecasts from a majority of the dynamical and statistical models indicate strong possibility (with a probability of about 65%) for weak to moderate El Nino conditions to emerge in the next two months, it said.
“The El Nino conditions are likely to have adverse impact on the rainfall over the country during the second half of the monsoon season,” the statement said. 


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