Benchmark indices continue to trade in negative territory

The benchmark equity indices continued to trade in negative territory in late afternoon session as global cues were not that much encouraging. Most of the Asian markets closed in red with deep cuts and European futures were also trading in red while US Dow Futures down 42 points in the screen trade kept the investors' sentiments low. Back home, on the sectoral front, Power, Auto, Healthcare, Fast Moving Consumer Goods (FMCG) and Bankex counters' shares were giving some support to the markets to fall further while TECk down, Information Technology, Realty, Oil and Gas and PSU sector were under pressure. The broader markets also were down and the BSE Mid-cap and Small-cap indices were trading with loss of 0.28% and 1.08%, respectively. The market breadth on the BSE was extremely negative and was in favour of declines in the ratio of 1906:910 while 81 scrips remained unchanged.

Meanwhile, India is likely to see a strong growth in the current financial year, but the same will moderate in the next fiscal due to factors like higher base effect and further monetary policy tightening by the central bank to counter an increasingly sticky looking inflation, expects the global financial services conglomerate HSBC.

On the inflation front, the HSBC expects headline figure to be around 7% by the end of the fiscal year on March 31, the same level where the central bank pegged inflation in its last monetary policy review. The RBI had earlier put the fiscal-end inflation at 5.5% but revised the same upwards to 7% on January 25 following a sharp reversal in headline inflation, mainly due to surge in food inflation the month of December.

The BSE Sensex plunged 143.65 points or 0.82% at 17,449.12.The index touched a high and a low of 17,636.88 and 17,362.59, respectively.

The BSE Mid-cap and Small-cap indices tanked 0.28% and 1.08%, respectively.

In the BSE sectoral space TECk down 1.43%, Information Technology (IT) down 1.43%,  Realty down 1.27%, Oil and Gas down 0.98% and PSU down 0.68% were the major losers.

On other hand, Power up 0.79%, Auto up 0.76%, Healthcare (HC) up 0.27%, Fast Moving Consumer Goods (FMCG) up 0.23% and Bankex up 0.20% were the only gainers in the BSE sectoral space.

The top gainers on the Sensex were Rel Infra up 9.95%, JP Associates up 3.39%, Tata Motors  up 2.55%, Reliance communication up 1.95% and DLF up 1.92%.

On other hand, SBI down 3.13%, BHEL down 2.51%, BHEL down 2.91%, Bharti Airtel down 2.41%, Cipla down 2.21%, HDFC down 2.03% were the top losers on the index.

Even as the domestic auto sales have continue to remain robust despite fading impact of stimulus, tightening of monetary policy and rising base, the exports of auto majors have been going down. The Society of Indian Automobile Manufacturers (SIAM) has said that the country was set to miss the export target for passenger vehicles, as overseas demand was weaker.

'Earlier we had set export target of 5 lakh units of passenger vehicles this fiscal, but it is unlikely that we will meet it,' SIAM Director Sugato Sen said on Wednesday. He added that even in the best case scenario, the passenger vehicle exports from India by end of the current financial year will reach anywhere between 4 lakh and 4.5 lakh units.

India's passenger vehicle exports so far in the fiscal are in the red on a year-on-year basis due to both the slowdown in demand, and a very high base from last year. Total exports of passenger vehicle (including utility and multipurpose vehicles) from India in the April-January period of FY11 stood at 3,58,538 units, as against 3,69,180 units in the same period of the last fiscal, down nearly 2.87%.

'This is mainly because the European market, the biggest market for Indian small car makers, has not recovered from the slump,' Sen said. The basic reason behind the trend is that following the global slowdown many European countries had launched scrappage schemes under which consumers were provided incentives on purchase of new small cars in exchange for old. The objective was to boost the automotive sector as well as bring more efficiency in gasoline consumption. Indian auto exporters made the maximum out of these schemes and posted strong growth in exports then.

This year however, the scrappage schemes have been closed by the European countries and as a result, sans the fiscal incentives, Indian exports have become somewhat more costlier. Further, although some significant improvement in the European economy has been seen over the last few quarters, unemployment still remains higher which was dampening automotive demand and hence India's exports as well. 

The S&P CNX Nifty trimmed 26.75 points or 0.51% to 5226.80. The index touched a high and a low of 5272.50 and 5196.80, respectively. 

The top gainers of the Nifty were Rel Infra up 9.71%, SAIL up 5.59%, JP Associates up 2.84%, Kotak Bank up 2.77% and HCL Tech up 5.16%.

The top losers of the index were SBI down 3.49%, HDFC down 2.91%, Bharti Airtel down 2.39%, Cipla down 2.36% and BHEL down 2.33%.

All the Asian markets with an exception of Shanghai Composite, which was up by 1.62%, were settled in the red; Hang Seng declined 1.97%, Jakarta Composite shed 1.28%, KLSE Composite trimmed 2.09%, Nikkei 225 tanked by 0.11%, Straits Times tumbled 1.64%, Seoul Composite plummeted 1.81% and Taiwan Weighted dropped 1.89%. 

European markets were trading red. FTSE declined 0.49%, CAC-40 trimmed 0.68% and DAX shed 0.24%.

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