Markets end flat, Sensex gains 38 points

Markets have ended flat amid a choppy trading session on Wednesday as investors turned cautious on lower industrial growth and rising CPI in July.

Moreover, weak first quarter earnings from capital goods major BHEL also soured investor sentiment.

The S&P BSE Sensex gained 38.18 points or 0.15% at 25,918.95 and the CNX Nifty ended higher by 12.50 points or 0.16% at 7,739.55.

The broader market, further, underperformed key benchmark indices as the BSE Mid-cap and Small-cap indices slumped between 1-3% each.

Foreign portfolio investors bought shares worth a net Rs 370.83 crore on Tuesday, 12 August 2014, as per provisional data from the stock exchanges.

Meanwhile, Nomura has raised the BSE Sensex target to 30,310 by end of August 2015. The target implies a 17% gain from Tuesday's BSE closing level.

The overall market breadth on the BSE was poor with 2042 declines and 877 advances.

ECONOMY

Showing signs of sluggishness in the economy, growth rate of industrial production slowed to 3.4% in June, as against 5% in May, mainly due to lower output of consumer goods.

The output, as measured by the Index of Industrial Production, had contracted by 1.8% in June, 2013.

Pushed by food items, the Consumer Price Index-based inflation rose to 7.96% in July from 7.46% in June, which was an all-time low since the new series was launched in January 2011.

The official data, issued on Tuesday, justified the Reserve Bank of India’s stance of not cutting the policy rate at its review earlier this month.

However, inflation in July was still the third lowest in the series. Beside June 2014, it was only in January 2012 that inflation was lower than this July. In January 2012, it was 7.55%.

INDIAN RUPEE

The rupee is trading at 61.26 vs previous close of 61.08/09.

Traders say the higher-than-expected rise in July CPI and dull June industrial output weakens sentiment.

GLOBAL MARKETS

Asian shares eked out modest gains on Wednesday, as investors remained cautious after downbeat data from China and Japan and as the crisis in Ukraine threatened a fragile economic recovery in Europe.

Japan's Nikkei share average ended up 0.4% higher, Shanghai shares ended flat with a positive bias while Hang Seng gained 0.8%.

European stocks gained ground in early trade on Wednesday, helped by forecast-beating results from bellwethers such as Swiss Life and Salzgitter.

Britain's FTSE gained 0.2%, while Germany's DAX and France's CAC 40 was seen rising nearly 1% and over 0.5%, respectively.

BUZZING SECTORS & STOCKS

The BSE Realty index plunged over 5% followed by Capital Goods, Power, Metal, Bankex, Oil & Gas and Auto indices, all down between 1-3%

each.

The BSE FMCG index gained over 2% whereas IT and Pharma ended up over 0.5%.

BHEL slipped nearly 7% after a sharp 58% year-on-year drop in its net profit at Rs 194 crore for the quarter ended June 30, 2014 (Q1), mainly due to decline in sales from power and industry segments.

L&T also slipped over 2.5%.

Sun Pharmaceutical Industries gained over 2% after reporting a better-than-expected consolidated net profit at Rs 1,391 crore for Q1, on back of higher sales.

Coal India and Hindalco are other Sensex losers, all down over 3%. ITC, HUL, HDFC and Wipro are among the top Sensex gainer, all up between 1-3% each.

Shares of real estate and banking sectors are under pressure, falling by up to 6% on the bourses, after retail inflation as measured by the CPI accelerated to 7.96% in July from 7.46% in June.

Therefore, RBI is likely to maintain a cautious stance in the next policy too.

Unitech, Indiabulls Real Estate, HDIL and DLF from real estate sector are down 4-18% on the NSE. SBI, Axis Bank, Canara Bank, Federal Bank, Bank of Baroda and Bank of India from the banking space down between 2-4% each.

Birla Corporation gained over 6% after the MP Birla group flagship company Birla Corporation has more than doubled its net profit for the first quarter of the current fiscal at almost Rs 100 crore as against Rs 45.99 crore in a year ago period.

Apollo Hospitals gained nearly 5% at Rs 1,110 after the company posted a 4.8% increase in its standalone net profit to Rs. 82.74 crore for the quarter ended June 30, 2014.

Jaiprakash Associates tanked nearly 10% after the company posted a net loss of Rs 80.6 crore in the quarter ended June 2014. Meanwhile, the company had reported a profit of Rs 334.51 crore.

Engineers India plunged over 14% after posting a sharp drop in net profit at Rs 80 crore for Q1, on the back of lower sales and higher expenditure. The company had recorded a profit of Rs 129 crore in the same quarter year ago.

Prakash Industries tanked over 14% extending its previous day’s 4% fall on NSE, after rating agency CARE downgraded the company’s credit rating to ‘BB+’ from 'BBB+'.

Jammu and Kashmir (J&K) Bank tanked 12% after reporting 58% year-on-year (yoy) drop in net profit at Rs 130 crore in the June quarter due to rise in non-performing assets. The bank had profit of Rs 308 crore in the same quarter last fiscal.

Eicher Motors rallied over 12% extending its previous day’s 8% surge, after brokerage houses have raised the price target on the stock by up to Rs 11,000.