Benchmarks see-saw in dying hours; settle on a flat note

Domestic equity markets ended a very choppy day of trade on a flat note as the bourses showed great resilience in the last minutes of trade. After crashing over 400 points from its intraday high level in the dying hours the Bombay Stock Exchange's Sensitive Index displayed a sharp bounce back as it broke into the green in the last minutes of trade on short covering. However, it remained the sixth consecutive day of decline for the benchmark indices. The NSE's 50-share broadly followed index, Nifty ended a tad above the psychological 5,750 level while the BSE's Sensex registered marginal decline to close a touch below the crucial 19,200 mark. The broader markets though continued their run of underperformance and once again failed to gain traction as both the BSE's midcap and smallcap indices settled with over half a percent cut. The Bankex made a sharp comeback to end the day as the top sectoral gainer on BSE after the recent plunge on rate hike worries. Heavyweight banking stocks in the 30-share Sensex pack such as SBI and ICICI Bank rose 3.01% and 1.48%. Meanwhile, the Reserve Bank of India (RBI)'s pre-credit policy meeting saw Indian Banks' Association urging the central bank to cut cash reserve ratio (CRR) and statutory liquidity ratio (SLR). Realty index once again emerged as the biggest laggard in the BSE sectoral space with Unitech and HDIL plunging 5.73% and 4.48% respectively.

On the global front, cues remained weak from the start of trade today as most Asian equity indices fell on the back of renewed tensions over the sovereign debt crisis in Euro-zone as investors were worried that debt-ridden Portugal would be forced into a bailout, joining Greece and Ireland. Though, all key benchmark indices in Europe were trading on a strong note with FTSE 100 being the biggest gainer in the space after surging over a percent point. The screen trading for US index futures also indicates that the Dow could gain a quarter percent at the opening.

Earlier on the Dalal Street, the markets got off to a positive start as the frontline indices looked to consolidate after two days of huge freefall. The indices dipped into the red for a few seconds in the initial hours but gained back momentum to trade in the green terrain through the first half as it looked like a mild recovery for the local markets. The sentiments solidified in the second half as the frontline indices gradually went on to touch the intraday high levels. However the late antics of the benchmarks saw the indices test the crucial 19,000 and 5,700 support levels and bounce back into the green to eventually settle on an absolutely flat note in the last half an hour of trade. The late sell-off followed by short covering could not help the bourses to close in the green zone as they went home with losses, though marginal, for the sixth straight day. Volumes remained weaker than yesterday at around Rs 1.77 lakh crore while the turnover for NSE F&O segment too remained on the lower side compared to Friday at over Rs 1.59 lakh crore. The market breadth on the BSE too was negative as there were 1102 shares on the gaining side against a 1763 shares on the losing side while 146 shares remained unchanged.

On the charts: For the S&P CNX Nifty, 5680 and 5640 (E200 DMA) will be strong support in near time whereas resistance will be around 5850 and 5890 mark. If the index breaks 5640 and closes below 5640 mark, negative trend for the index may continue.

Finally, the BSE Sensex trimmed 27.78 points or 0.14% to settle at 19,196.34 while the S&P CNX Nifty cropped 8.75 points or 0.15% to end at 5754.10.

The BSE Sensex touched a high and a low of 19,431.56 and 19,003.60, respectively. The top gainers on the Sensex were Hindalco Inds up 3.46%, Bajaj Auto up 3.42%, SBI up 2.51%, BHEL up 2.35% and RCom up 2.07%.

Jaiprakash Associates down 2.62%, TCS down 2.58%, Infosys down 1.98%, Jindal Steel down 1.69% and RIL down 1.62%, were the top losers on the index.

The BSE Mid-cap and Small-cap indices fell 0.67% and 0.87%, respectively.

Meanwhile, India's exports can achieve a volume of $500 billion by 2014-15, said the Federation of Indian Export Organizations (FIEO) on Monday. "The export target of $500 billion by 2014-15 can be achieved. This would require an annualized growth rate of 25%. This growth rate appears to be ambitious but is definitely achievable," president of the FIEO Ramu S Deora said.

The exporters' representative body has outlined a strategy to boost shipments on a sustainable basis by focusing on identifying new emerging markets for Indian goods and services and development of export infrastructure. India's exports went down sharply following the global crisis but have been doing very well for last several months and recorded impressive 36.4% growth in December 2010, the fastest in nearly three years.

"The government should identify the requirement of investment to meet the milestone. Investment would be required in roads, ports, airports, power and warehousing segments," said Deora adding that for reaching the $500 billion target India would require physical infrastructure in the country to be at par with major exporting countries like China, South Korea and Japan.

"Quantum jump in infrastructure investment is needed so as to augment the installed capacity.  The present bottlenecks in various segments of infrastructure call for immediate intervention," he said. Another demand of the FIEO is that fluctuation in exchange rate hurts exporters and importers, so the government should consider full convertibility of Indian rupee to curb high volatility.

The Commerce Ministry is also presently working on a strategy paper on taking India's exports from $200 billion to $400 billion in the next three years. FIEO feels that with global trade showing strong recovery over last several months, and Indian exports riding a high growth trajectory, it should not be very difficult to achieve a sustainable 25% growth. Expanding in new markets will be most critical aspect as a major chunk of the $500 billion exports being targeted would come from the emerging markets of Southeast Asia, Africa, Latin American countries and Commonwealth of Independent States.

The top gainers in the BSE sectoral space were Bankex up 1.24%, Public Sector Undertakings (PSU) up 0.49%, Auto up 0.37%, Capital Goods (CG) up 0.22% and Metal up 0.12%.

On the other hand, Realty down 2.74%, Information Technology (IT) down 1.60%, TECk down 1.27%, Oil & Gas down 0.85% and Power down 0.35% were the major losers in the BSE sectoral space.

India's auto industry continues to remain in top gear with domestic passenger car sales jumping by 28.91% in month of December 2010 to touch 1,48,681 units, compared to 1,15,337 units in the same month a year ago. This was despite the fact that December is generally regarded as a leaner month of auto makers as consumers avoid buying close to year-end due to downside in resale value.

According to the figures released by the Society of Indian Automobile Manufacturers (SIAM) on Tuesday, motorcycle sales also remained on fast growth track surging 27.13% in December 2010 to touch 7,53,358 units from 5,92,589 units in the same month previous year. Total two-wheeler sales in December 2010 grew by nearly 31% to 10,06,545 units compared with 7,67,789 units in the same period of previous year.

Sales of commercial vehicles, generally considered a good barometer of overall economic growth, also remained strong. SIAM data showed that total sales of trucks and buses rose 27.3% in the month under review to touch 61,880 units as compared with 48,611 units in the year-ago period. Commercial vehicle was the worst affected segment following the global financial crisis but has posted very strong recovery over last few quarters.

Overall auto sales in India grew nearly 31% in 2010, indicating that the industry had probably reached the inflexion point and the sharper growth trajectory may continue in the medium term as well. Analysts however cautioned that with the high base effect coming into the equation, year-on-year growth may moderate in the next year, though in absolute numbers, car sales will remain very strong.

India's auto industry has been going through a dream phase over a year as rising disposable income, strong economic outlook of the country, easy availability of finance at reasonable cost and a flurry of new models being launched by aggressive automakers keep the demand high. In fact, the scenario is such that major auto makers are facing serious capacity constraint and capacity expansion plans are being aggressively formulated by most of the established players.

The S&P CNX Nifty touched a high and a low of 5842.60 and 5698.20, respectively.

The top gainers on the Nifty were Hindalco Inds up 5.34%, Bajaj Auto up 4.66%, Sesa Goa up 4.48%, Axis Bank up 4.42% and RCom up 3.36%.

On the other hand, Suzlon Energy down 2.33%, TCS down 2.02%, Jaiprakash Associates down 1.90%, Jindal Steel down 1.82% and Infosys down 1.56% were the top losers on the index.

European markets were trading in the green on Tuesday. France's CAC 40 gained 0.79%, Germany's DAX added 0.46% and Britain's FTSE 100 rose 1.02%.

The Asian equity indices finished the day's trade on a mixed note on Tuesday. Chinese index surged about half a percent as investors snapped up property shares despite a report that Shanghai was likely to impose a property tax. Moreover, Seoul shares also ended with a gain of about 0.40 percent, helped by a bounce in crude refiners and shipyards, but the index's gains were capped down by investor worries about government debt burdens in Europe, while Japanese Nikkei declined in trade on concern over the euro zone's debt problems that encouraged some investors to book profits on recent gains.

Asian Indices	Last Trade	Change in Points	Change in %
Shanghai Composite	2,805.40	13.03	0.47
Hang Seng	23,760.34	233.08	0.99
Jakarta Composite	3,455.13	-23.42	-0.67
KLSE Composite	1,562.94	-0.58	-0.04
Nikkei 225	10,510.68	-30.36	-0.29
Straits Times	3,241.49	12.22	0.38
Seoul Composite	2,088.32	7.51	0.36
Taiwan Weighted	8,931.36	113.48	1.29

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