Selling appears again; markets nosedive to intraday lows

The Indian equity indices have nosedived going in last leg of the trade. Earlier it seemed that the markets have recovered from the news of sharp increase in the monthly inflation numbers but the things have turned sour and selling pressure has once again gripped the rate sensitive's with auto taking the lead. The weakness in the markets crept in as the European markets weakened after a flat start while most of the Asian markets too closed lower, though the US futures are still showing some uptick in the screen trade. The local markets are not getting any support from the domestic front either, though the earnings announcements so far have been mixed. HDFC's net profit after tax for the quarter ended December 31, 2010 rose by 32.72%, while Zee Entertainment's consolidated net profit rose by 6.16%. On the sectoral front Auto, realty, CG, metal all have tanked over one percent while IT,HC and technology stocks are give some respite.

The BSE Sensex has shed 120.30 points or 0.63% at 19,062.52. The index touched a high and a low of 19,447.82 and 19,002.57, respectively.

The BSE Mid-cap and Small-cap indices were down by 0.40% and 0.11%, respectively.

The gainers on the BSE sectoral indices were IT up by 0.36%, HC up by0.19%, TECk up by 0.17% and FMCG was up by 0.05%.

On the flip side, Auto down by 1.55%, Realty down by 1.49%, CG down by 1.37%, Metal down by 1.19% and Bankex down 0.96% were the major losers in the BSE sectoral indices.

Meanwhile, the World Bank has projected India's growth rate in 2012 ahead of that of China. Although most economists agree that somewhere in the current decade India should overtake China in growth as the latter was bound to slow due to its higher base. If it does turn out to be the case, it could be the defining trend for Indian economy going forward.

In its latest World Economic Outlook (WEO), the multilateral institution has projected India's growth at 8.7% in 2012 while that of China at 8.4%, giving a slight edge to the third-largest economy in Asia. At present, India is the second fastest growing large economy in world and has held this title for many years now. In the current financial year, India is expected to expand by around 8.5% while China's growth is likely to be around 9.5%.

Most economists expect that although China managed to handle the global financial crisis reasonably well, the Asian giant will have to face some moderation in coming days as it tries to check rising inflation by cooling down its red hot economy. Interest rates are also set to rise which will result in higher cost of capital and will thereby slowdown investment, the engine of Chinese growth. Also, rising wages is bound to increase cost of production in China which will also act as a dampener on very high growth. Finally, owing to its one-child policy, China is bound to witness decline in working population going forward and hence moderation in growth trajectory.

India on the other hand has a lot of head room to expand if it can manage its rising population well. The demographic dividend, which implies increasing working age population, will help propel the manufacturing as well as services sectors of Indian economy and can provide sustained high growth for couple of decades. This however would require business friendly reforms and improvement in governance.

The gainers on the Sensex were Wipro up by 1.54%, Jindal Steel up by 0.79%, RCom up by 0.36% and HUL up by 0.28%.

Tata Motors down by 3.86%, L&T down by 2.76%, Maruti Suzuki down by 2.61%, HDFC down by 2.59% and HDFC Bank down by 2.48%, were the top losers on the index.

The S&P CNX Nifty slid 34.00 points or 0.59% to 5,717.90. The index touched a high and a low of 5,833.65 and 5,695.35, respectively. 

The top gainers on the Nifty were Wipro up by 2.47%, Ranbaxy up by 1.83%, Powergrid up by 1.81%, HCL Tech up by 1.38% and Jindal Steel was up by 1.25%.

The top losers on the index were SAIL down by 6.41%, Axis Bank down by 3.48%, Tata Motors down by 3.17%, Maruti Suzuki down by 2.93% and HDFC was down by 2.67%.

Other Asian markets ended mixed, Shanghai Composite was down by 1.29%, KLSE Composite declined by 0.11%, Nikkei 225 lost 0.86%, Straits Times was down by 0.30% and Taiwan Weighted was marginally lower by 0.03%.

On the other hand Hang Seng gained 0.18%, Jakarta Composite rose 0.12% and Seoul Composite, was up by 0.89%.

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