Markets sway along with global sentiments

The domestic markets have made a weak start of the day deeply influenced by the global cues, though the US markets remained closed on Monday the Asian pack is reeling in red with most of the indices down by over a percent. The unrest in Libya turning violent has all of a sudden raised the crude prices on supply concern as the OPEC member exports around 1.1 million barrels per day (bpd) of crude. Back home all the sectoral indices along with the broader indices have lost most of their previous day's gains in very early trade. Oil and Gas sector is the only saving grace for the markets in morning trade,led by the surge in the heavy weight Reliance Industries. The company has signed the relationship framework and transactional agreements in London with BP. The partnership across the full value chain comprises BP taking a 30% stake in 23 oil and gas production sharing contracts that Reliance operates in India, including the producing KG D6 block, and the formation of 50:50 joint venture between the two companies for the sourcing and marketing of gas in India. The joint venture will also endeavour to accelerate the creation of infrastructure for receiving, transporting and marketing of natural gas in India. The partnership will combine BP's world-class deepwater exploration and development capabilities with Reliance's project management and operations expertise. BP will pay Reliance Industries an aggregate consideration of $7.2 billion, and completion adjustments, for the interests to be acquired in the 23 production sharing contracts. 

The BSE Sensex opened at 18,390.72; about 50 points lower compared to its previous closing of 18,438.31, and has touched a high and a low of 18,394.17 and 18,283.39 respectively.  The index is currently trading at 18,316.22, down by 122.09 points or 0.66%. There was just a single advancing stock against 29 declines on the index.

The overall market breadth has made an extremely weak start, with 31.80% stocks advancing against 65.20% declines. The broader indices too were trading in the red; the BSE Mid cap and Small cap indices were down by 0.62% and 0.39%, respectively.

The lone gaining sectoral index on the BSE was Oil & Gas up by 2.44%.

On the other hand, the top laggards on the sectoral front were Auto down by 1.72%, CG down by 1.67%, Bankex down by 1.39%, Realty down by 1.38% and TECk was down by 1.18%.

The lone gainer on the Sensex was Reliance Industries up by 4.68%.

On the other hand ONGC down by 2.48%, JP Associates down by 2.45%, Tata Motors down by 2.39%, M&M down by 2.30% and Tata Steel was down by 2.19% were the major losers.

The Prime Minister's Economic Advisory Council (PMEAC) has in its latest review of Indian economy projected a growth rate of 8.6% for 2010-11 in line with the advanced estimates released earlier by the central statistical organization (CSO) and 9% in 2011-12. It also advocated appropriate tightening in monetary and fiscal policies to protect the economy from inflation.

Both, in the Economic Outlook released in July 2010, and in the earlier review, the Council had taken a view that economic growth in 2011-12 will be about 9%. It had revisited the view on the components of GDP in July 2010, somewhat reducing the projected growth rate for industry and increasing it for services. Overall, the Council still believes that it was very much possible to achieve a growth rate of 9% in the next fiscal.

It has however slightly changed the projections for GDP components. The farm sector is now expected to grow by 3%, the industrial sector by 9.2% and the services sector by 10.3%. Per capita GDP at factor cost is projected to increase by 7.5% in 2011/12, as against 7.1% in 2010/11. "These adjustments reflect ongoing changes observed in the industrial and services sector, both in respect of the domestic economy and global prospects," said the PMEAC.

On the inflation front, the council expected that wholesale price index (WPI) based inflation which had reversed direction in December 2010 on account of an unexpected rise in vegetable prices, would begin to ease towards the end of January 2011. The headline rate on this count is expected to come down further during February and March 2011 to about 7%. Further declines can be expected during the first quarter of 2011-12 and but the PMEAC said that combination of appropriate policy management should be undertaken to create conditions conducive to returning the economy to the path of 5% inflation.

Further, in view of the forthcoming Budget, the Council made a case for withdrawing some of the tax incentives to the industry to put the economy back on track for fiscal consolidation. The Indian government had cut excise duty by 4% across the board following the global slowdown and only hiked it back by 2% in last Budget. The PMEAC has now said that given the strong prospects of growth, and need to cut deficit, the government should return to pre-crisis levels in terms of excise duty.

The S&P CNX Nifty opened at 5,504.40; about 15 points lower compared to its previous closing of 5518.60, and has touched a high and a low of 5,504.65 and 5,466.60, respectively.  The index is currently trading at 5,482.25, down by 36.35 points or 0.66%. There were 7 stocks advancing against 43 declines on the index.

The top gainers of the Nifty were RIL up by 4.71%, Cairn up by 1.36%, IDFC up by 1.15%, Sterlite Industries up by 0.36% and Bajaj Auto was up by 0.32%.

The top losers of the index were BPCL down by 3.42%, JP Associates down by 2.45%, Tata Motors down by 2.38%, Suzlon down by 2.22% and M&M was down by 2.18%.

All the Asian equity indices were trading in red; Shanghai Composite was down by 61.19 points or 2.09% to 2,871.05, Hang Seng was down 460.05 points or 1.98% to 23,020.70, Jakarta Composite was down 42.00 points or 1.20% to 3,455.63, KLSE Composite was down 12.98 points or 0.85% to 1,512.57, Straits Times was down 40.62 points or 1.32% to 3,030.21, Seoul Composite was down 38.35 points or 1.91% to 1,967.25 and Taiwan Weighted was down by 7 212.02 points or 2.40% to 8,627.68.

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