Markets open flat; BHEL drops 4%

Markets opened flat on weak June IIP and rise in July consumer price inflation

Markets continue to trade flat as gains in oil and gas shares helped offset losses in capital goods shares. Meanwhile, weak industrial growth in June and rising consumer price inflation in July weighed on investor sentiment.

At 9:35AM, the 30-share Sensex was up 6 points at 25,889 and the 50-share Nifty was up 2 points at 7,729.

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.

However, the factory output number has remained in the positive territory for the third month in a row mainly due to a better show by manufacturing, mining and power sectors and higher output of capital goods.

IIP for May was revised to 5% from the provisional estimates of 4.7% released last month, according to data released by the Central Statistics Office (CSO).

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

Asian shares except for Japan were trading lower tracking weak overnight cues from Wall Street while tensions in Ukraine also weighed on investor sentiment. Japanese shares were trading with marginal gains and the benchmark Nikkei was up 0.2%. Shanghai Composite, Hang Seng and Straits Times were down 0.2-0.5% each. In Asia, the focus is on a series of Chinese economic data due, including industrial production and retail sales for July.

BSE Healthcare, Oil and Gas indices were the top sectoral gainers along with FMCG and Bankex. Capital Goods, Power and Realty indices were among the top losers.

BHEL was the top Sensex loser down nearly 4% 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. The state-owned company had profit of Rs 465 crore during the same period last fiscal. The company's income from operations was down 20% to Rs 5,068 crore from Rs 6,353 crore in the corresponding quarter last fiscal. It peer L&T was down 1%.

Profit taking was seen in financial stocks with HDFC, ICICI Bank, Axis Bank down 0.3-0.5% each.

Sun Pharma was up 1.4% after its posted a net profit of Rs 1,391 crore in the first quarter of FY15, compared with a net loss of Rs 1,276 in the year-ago period. Net sales for the June 2014 quarter stood at Rs 3,927 crore, a growth of 13 per cent over same quarter last year. The loss in the June 2013 quarter was on account of a provision of Rs 2,517 crore towards settlement for patent infringement litigation related to generic versions of 'Protonix', the company said in a statement.

In the oil and gas space, ONGC and Reliance Industries were up 0.7-1.6% each.

Other Sensex gainers include, ITC, HUL and Bharti Airtel among others.

Among other shares, NMDC was up nearly 5% on upbeat June quarter performance driven by volumes. While revenues at Rs 3,475 crore were up 21 per cent year-on-year, these were also ahead of consensus analysts’ estimates of Rs 3,451 crore as per Bloomberg. But, what’s more interesting is the 26 per cent growth in Ebitda. This not only outpaced sales growth but led to Ebitda of Rs 2,402 crore, much higher than consensus estimate of Rs 2,283 crore. The net profit at Rs 1,915 crore, too, was way ahead of estimates of Rs 1,817 crore and was up 22 per cent y-o-y.

In the broader market, the BSE Mid-cap and Small-cap indices were down 0.1% each.

Market breadth was neutral with 744 gainers and 735 losers on the BSE.