Weak Industrial Production

123jump.com Staff
12 Mar, 2008
New York City

Morning rally on the back of a rise in global stocks quickly faded on the release of weaker than expected industrial prodution data. January industrial production growth declined to 5.3% from 11.6% a year ago on weak growth in manufacturing, mining, and utilities. Rural Electrification priced its IPO at 125 rupees and closed at 121.30 rupees.

[R]10.00AM New York, 7.30PM Mumbai - Industrial growth data erased morning rally, Sensex marginally gained 0.03%.[/R]

Market Sentiment

Indian markets reversed the morning rally on Wednesday after the data released by the government showed that industrial growth plunged 5.3% in January 2008 as compared to 11.6% in the same month in 2007.

The 30-share BSE Sensex marginally rose 0.03% or 4.83 to 16,127.98 with 16 shares declining and 24 gaining.

In the broader markets, NSE index Nifty rose 0.1% to 6.10. At close, the NSE-50 share stood at 4,872 levels.

Metal and software share were battered. Real estate stocks rallied for the second day in row while select private sector banking stocks advanced.

Stocks of oil marketing companies fell on reports that Indian crude basket crossed $100 a barrel mark for the first time on Monday. Hindustan Petroleum Corporation, Bharat Petroleum Corporation and Indian Oil Corporation fell.

The coordinated move between Central banks in Europe, UK, Australia, and Canada led by the U.S. Federal Reserve to pump additional liquidity of as much $256 billion lifted U.S. stocks, a largest one-day gain in five years. The move was orchestrated to stem the rise in mortgage rates but many traders believe the Fed led action may fall short in curbing the rate rise.

Of the BSE stocks 1,448 shares declined, 1,220 that advanced while 59 shares remained unchanged. Investors are waiting for advance tax payment data from corporations for the year on March 15th.

Turnover

Daily turnover on the BSE stood at 6,372 crore rupees and on the National Stock Exchange was at 15,594 crore rupees.

Rural Electrification Corporation was the most active stock on the BSE with turnover of 825 crore rupees followed by Reliance Natural Resources, Reliance Petroleum, Reliance Industries and GSS America Systems.

Economic News

Industrial growth dropped to 5.3% in January 2008 as compared to 11.6% in the same month last year on weak performance in manufacturing, mining, and utilities. Growth in manufacturing in the month declined to 5.9% from 12.3% in January 2007.

Industrial growth, as measured by Index of Industrial Production (IIP), has moderated to 8.7% in the first 10 months of the current fiscal which will end in March, against 11.2% during the same period of the previous fiscal.

According to the official data, key sectors like manufacturing, mining and electricity recorded a decline in production growth. The report said consumer durables production registered a negative growth both in January and the first 10 months of this fiscal.

Output of consumer durables declined 3.1% in the month compared to 5.3% a year ago. Manufacturing output fell to 5.9% in January, electricity generation growth dropped to 3.3%, and mining output growth moderated to 1.8%.

Gainers and Decliners

Hindalco Industries fell 6.5% to 189.70 rupees and led the losers in the Sensex index. Cilpa gained 4% to 203.70 rupees and led the advancers in the Sensex index

Infosys shed 3.4% to 1,379.90 rupees and Satyam Computer Services fell 4.7% to 377.10 rupees. However, TCS rose 0.6% to 828 rupees.

DLF fell 5.5% to 708 rupees.

HDFC Bank rose 2.4% to 1,364.10 rupees. State Bank of India slipped 5.7% to 1,783.90 rupees.

IPO Update

Rural Electrification Corporation settled at 121.30 rupees on BSE, a premium of 15.52% compared to IPO price of 105 rupees. The stock debuted at 125 rupees, a premium of 19.04% to issue price of 105 rupees.

Reliance Update

Reliance Communications dropped 2.3% to 538.80 rupees and Reliance Industries gained 0.6% to 2,360.25 rupees. Reliance Energy gained 2.9% to 1,325 rupees.

Earnings News

Tata Steel dropped 6.5% to 766 rupees. The company reported 34.22% rise in consolidated net profit to 1,415.54 crore rupees on 428.61% spurt in total income to 32,096.03 crore rupees in third quarter 2007 compared to a year ago on the recent acquisition of UK steel company Corus.