India equity markets end in red

Indian equity markets opened the day on a weak note and dropped in the late afternoon session on concerns over growth recovery in China after exports in the world's second-biggest economy fell for the first time in 17 months. While the BSE-Sensex closed lower by 145 points, the NSE-Nifty closed lower by 42 points. Both the BSE Mid Cap and the BSE Small Cap closed on a negative note. Oil and Gas and Auto stocks were the biggest losers.

As regards global markets, Asian indices closed in the green. European indices have opened in the red. The rupee was trading at Rs 60.35 to the dollar at the time of writing.

According to a leading financial daily, Tata Steel has reported a 26% jump in sales at 2.005 million tonnes (MT) in the first quarter of this fiscal ended June 30. The company had sold 1.585 MT during the April-June quarter of previous fiscal and 2.279 MT during the January- March, 2013 period. Production of saleable steel of the company also rose by 23% to touch 2.145 MT during the April-June period of the current fiscal from 1.740 MT a year ago. Tata Steel had produced 2.263 MT saleable steel during January-March 2013 quarter. Total hot metal production of the company was higher by 20% to 2.464 MT during the reporting quarter compared to 2.053 MT a year earlier. Crude steel production was also accordingly up by 22% to 2.223 MT during the April-June quarter of the current fiscal compared to 1.817 MT a year earlier.

According to a leading financial daily, Dr Reddy's has said that it will focus on fixing its European operations and strengthening its local business, the two major markets where it has underperformed. Dr Reddy's European sales declined in FY13 on account of its struggling German unit Betapharm Arzneimittel GmbH, which contributes about 70-75% of revenue in Europe. Dr Reddy's bought Betapharm, the fourth largest German generic drug marketing firm in February 2006 but a dramatic shift of policy in Germany to source medicines from the lowest-cost vendor through a tender-based model has hurt the company. As part of the new turnaround strategy for Germany, Dr Reddy's will launch products outside the scope of tenders and plans to adopt a selective approach of picking its product portfolio.

Mid cap & small cap buck trend
01:30 pm

As weakness persisted in index heavyweights, Indian share markets continued to trade below the dotted line in the post-noon trading session. Majority of the sectoral indices are trading in the red with FMCG, auto and oil and gas stocks being the biggest losers. However, consumer durables, pharma and banking stocks are trading in the green.

BSE-Sensex is down 37 points and NSE-Nifty is trading 4 points down. BSE Mid Cap is trading up 0.2%, whereas BSE Small Cap index is trading up by 0.3%. The rupee is trading at 60.1 to the US dollar.

Energy stocks are trading mixed with Jindal Drill and Petronet LNG being the major gainers and Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) being the biggest losers. As per a leading financial daily, Reserve Bank of India (RBI) has issued orders to state-owned oil companies namely Indian Oil Corporation, HPCL, BPCL and Mangalore Refineries to purchase their daily dollar requirements from a single public sector bank. The move is aimed to curb volatility in exchange rate in the light of steep depreciation in the rupee against the US dollar. Reportedly, the state oil refineries, who are the biggest buyers of US dollars, have agreed to implement the RBI order with immediate effect.

Automobile stocks are trading mixed with Tube Investments and TVS Motors being the leading gainers while Mahindra Scooters and Tata Motors are the biggest losers. As per a financial daily, the Supreme Court has asked Tata Motors, to make its stand clear on the leasehold rights over the Singur land at West Bengal. The said land was acquired by the company for manufacturing Nano cars. However, due to various political issues raised on the said project, the Tatas moved the Nano project to Sanand in Gujarat. With the land at Singur, remaining unutilized, the Supreme Court wants Tatas to return the land to the farmers. Reportedly, the court has asked Tata's counsel to get back to the court with an answer on returning the land back to farmers by 6th August 2013. Tatas had taken this land on 90 years lease and claim to have paid around 90% of compensation to farmers. Tata Motors' stock was trading down by 1.3%.

Indian share markets slip in red
11:30 am

After opening on a positive note, Indian share markets slipped into the red just some time back. Consumer durables and healthcare are leading the pack of winners while metals and auto are facing the maximum selling pressures.

The BSE-Sensex is down by 41 points while NSE-Nifty is trading 8 points lower. BSE Mid Cap index is up by 0.1% and BSE Small Cap index is up by 0.3%. The rupee is trading at 60.14 to the US dollar.

Barring HCL Infosystems and Info Edge, IT shares are trading in green with CMC Ltd and NIIT Ltd leading the gains. According to a leading financial news daily, HCL Tech has started an internal campaign called 'Reset' whose objective is to bring the mindsets of the company's top executives in line with the fundamental changes in the global technology outsourcing market. Accordingly, the Company would sharpen its focus on new technologies such as cloud, big data, social media and mobility. For HCL Tech, which employs nearly 85,000 people, growth has resulted from the superior performance of the 'Infrastructure Management' segment while its core 'Software Services' segment has lagged its peers although this segment still contributed to 72% of last fiscal's revenue. It is hoped that the new drive would enhance HCL Tech's performance across both the segments. HCL Tech's share is trading up by 0.8%.

Cement shares are trading on a mixed note with Ultratech Cement and Mangalam Cement leading the gains while JK Lakshmi Cement and India Cements are leading the losses. According to a leading financial news medium, Ultratech Cement is reportedly set to establish a Rs 25 bn greenfield cement plant in Tamil Nadu. It has done with the public hearing for the project in May, as part of the environment impact assessment and management plan. This plant will have the capacity of 5.5-million tonne a year with 4.5 mt clinker production, 75 MW captive power plant (with additional power from diesel generating sets of about 18 MW) and a waste heat recovery facility of about 15 MW. This new plant will have two production lines of 2.25 million tonnes each. The total project area is about 263 hectares with a plant area of about 86 hectares. This factory will add to the 36 million tonnes of cement production capacity in Tamil Nadu.

Indian share markets open firm
09:30 am

Barring South Korea (down 0.1%), all major Asian stock markets have opened the day on a firm note with Indonesia (up 1%), Taiwan (up 0.6%) and Singapore (up 0.5%) leading the gains. The Indian share market indices have also opened the day on a firm note with stocks in the consumer durables and information technology space leading the gains. However, auto and metal stocks are trading weak.

The Sensex today is up by around 43 points (0.2%), while the NSE-Nifty is up by around 11 points (0.2%). Mid and small cap stocks are also trading in the green with the BSE Mid Cap and BSE Small Cap indices up by around 0.4% each. The rupee is trading at Rs 60.02 to the US dollar.

Power stocks have opened the day on a firm note with GVK Power and Infra, Jaiprakash Power and JSW Energy leading the gains. As per a leading financial daily, India's largest power producer National Thermal Power Corporation (NTPC) has laid the foundation stone for a 5 megawatts (MW) solar power plant at Faridabad in Haryana. The state-run firm has awarded the main solar plant work to Eversun Energy. On the other hand, Enmas GB Power System Projects has been awarded the power evacuation package. The plant is expected to generate 7.44 million units of electricity per annum. The power generated would be equivalent to the power requirement of 6,000 households. It is said that the project will help cut carbon dioxide emission by about 6,800 tonnes per annum. It must be noted that NTPC has commissioned one 5 MW solar power project each at Dadri and Port Blair. Moreover, 85 MW of solar power projects are under implementation.

Auto stocks have opened the day on a mixed note with Tata Motors, Bajaj Auto and Hero MotoCorp leading the losses. However, Eicher Motor and Tube Investments are trading firm. As per a financial daily, India's leading automaker Tata Motors is gearing up to enter the Indonesian car market which is set to overtake Thailand to become the biggest car market in Southeast Asia by 2014. The Indian automaker is aiming to make Indonesia a hub to export vehicles to Southeast Asia. The company is set to commence sales in the country in two months. Tata Motors is intending to sell enough vehicles in the Indonesian market so that setting up a local assembly there would become feasible. High volume sales in Indonesia would also provide a boost to the content of locally manufactured components to 40%. It must be noted that this level is a prerequisite for selling to members of the Association of Southeast Asian Nations (ASEAN) at zero duty.

Has the gold era come to an end?

Throughout history, gold has earned the reputation of being a safe haven. In the era of unabated money printing, fiat currency and rising inflation, gold is the only thing that seems real and tangible and a true store of value. So it's no wonder that the yellow metal witnessed a long bull run. However, the trend seems to be changing now. As the US dollar is appreciating, gold seems to be losing sheen. Further, with economies coming up with restriction on gold imports, not much seems to be going in favour of the gold. So does this signal the end of the gold era?

As per an article in Money News, the legendary guru Mr Jim Rogers believes that a further correction in the gold is likely. Mr Rogers had warned 2 years back of gold prices falling at the time when they were witnessing new heights. That said, he still sees gold as a reliable bet in the very long term. And we couldn't agree more with him on this for several reasons. For one, we still don't see any stable signs of recovery in the global economy. Unemployment rates still remain high, the companies are shying from investing and consumers are not spending either. While the Fed is hinting towards tapering off its QE program, it has not happened yet and we wonder if it will be able to exit smoothly as envisaged. In economies like Japan, monetary easing is still on the roll.

In short, the logic to buy and hold gold still remains intact. As stated earlier it acts as an insurance against reckless economic policies, inflation and money printing. Also, its universal appeal as an investment class cannot be denied. So far from losing faith in it, we believe that a correction in gold prices should be viewed as an opportunity to make it a part of one's portfolio.