Markets shrug off +ve IIP data, Nifty ends below 2800

12 January 2009

It was the day of heavyweights, which led the cracks in the benchmark indices. Frontrunners from infrastructure, oil & gas, banking, realty, telecom and metal stocks took a huge beating on the bourses. The bleeding has continued for the third day running and markets even shrugged off positive IIP (index of industrial production) data as well.

The effects of Satyam scam was seen in today's trade as well; Shares of Andhra Pradesh-based companies witnessed selling pressure as well as the companies, which have exposure to Satyam or Maytas Infra.

Leading heavyweights involved in today's trade were Reliance Industries, NTPC, Bharti Airtel, SBI, BHEL, Wipro, SAIL, Infosys, TCS, ICICI Bank, DLF, Reliance Communication and Tata Steel (Also See : Top Losers).

The markets completely ignored positive, better-than-expected IIP data, even though internals like capital goods output showed a decline trend. The IIP numbers for November came in at 2.4% compared to -0.4% month-on-month (MoM) and 4.9% year-on-year (YoY). Mining output was up 0.5% vs 6.3% (YoY) and manufacturing output was up 2.4% vs 4.7% (YoY). Capital goods output was down 2.3% vs 24.2% (YoY) and consumer goods output was up 4.4% vs (-) 2.9% (YoY).

Shubhada Rao, Chief Economist, Yes Bank, said the IIP numbers were quite a positive surprise because the market consensus was that they would be in contraction mode. ''We were seeing it at a negative 1.4%. So against this backdrop, it is a positive surprise.''

M Govinda Rao, Director, National Institute of Public Finance and Policy (NIPFP), also shares the view that we have seen the worst in October - ''the liquidity problem has been eased and sales have improved,'' he said. He sees IIP numbers clawing up very gradually. ''It will not be very a fast acceleration. It will go up gradually maybe by the time we come to the middle of 2009, I think there will be a substantial improvement in the system.''