Turbulent Indian markets shut shops with half a percent cuts

Turbulence just doesn't seem to dyeing down any time soon for the Indian stock markets which are being slaughtered session after session either due to fragile local macroeconomic background or due to weak global triggers. Thursday's trading session too remained no exception as the frontline indices passed through an extremely unstable day though they managed few brief stints into positive territory but could not succeed to capitalize on the momentum and succumbed to unrelenting profit booking by investors. Meanwhile the sharp decline in food inflation numbers which rose 13.07% on annual basis during week-ended Jan 29, significantly slower compared with 17.05% recorded in the previous week was of little help and the matters didn't went worse capping the downside risks for the bourses. After yesterday's sharp cut in shares of Anil Dhirubhai Ambani Group (ADAG) which got chopped to their 52 week lows, the ADAG pack heaved some sigh of relief as most of them recovered some lost ground. While the struggling European markets too undermined local sentiments which led the NSE's 50-share broadly followed index -Nifty-- to sink around half a percent and settle below the psychological 5,250 level. The Bombay Stock Exchange's Sensitive Index, or Sensex though shaved of three fourth of a percentage points to finished below the crucial 17,500 mark. The broader markets too remained highly volatile and ended the day below the neutral line as the BSE's midcap and smallcap indices fell 0.11% and 0.86% respectively. The Technology pack on the BSE sectoral space languished at the bottom of the table as it shaved of 1.54% with majors like Tata Communication sinking 8.90% followed by Tech Mahindra that plunged 4%. The high beta Realty counter too witnessed ruthless position squaring as it plummeted 1.03% as stocks like Parsvnath Developers and Sunteck Realty shrank 15.47% and 8.86% respectively. On the other hand, the rate sensitive Auto pocket climbed 0.83% on the back of rise in stocks like Ashok Leyland which rocketed 5.60% followed by Apollo Tyres which surged 3.02%. Steel major SAIL zoomed over 4% in the day's trade on getting Environment Ministry's conditional nod to mine the remaining half of the Chiria deposits, estimated to hold more than 1 billion tons of iron ore and on report that the proposed FPO will be coming in this fiscal only.

On the global front, cues remained subdued as all Asian markets barring the Shanghai Composite, finished the day in the negative territory. The Japanese benchmark went home with marginal losses as investors opted to book profits ahead of a long weekend. While the European counterparts were trading on a somber note with notable losses visible on the key benchmarks. On the other hand, the screen trading for US index futures also indicated that the Dow could open with a cut of 0.34%.

Earlier on the Dalal Street, the index commenced the day on a positive note shrugging weak cues from the Asian markets which mostly traded in the red zone in the morning session as sentiments remained cautious on the back of quiet closing in the overnight US markets after the Fed chief's statement that unemployment may remain high for several years. However the bourses once again failed to capitalize on the initial impetus and drifted into the red. The benchmarks made a desperate attempt to climb back into the green in late morning session but remained unsuccessful as selling gathered greater force. The frontline indices eventually went home with moderate cuts which was far more acceptable than the recent nasty lacerations. Volumes for markets remained lower compared to Wednesday at around Rs 1.52 lakh crore while the turnover for NSE F&O segment too stayed on the lower side at over Rs 1.34 lakh crore. The market breadth on the BSE was negative as there were 1032 shares on the gaining side against 1811 shares on the losing side while 125 shares remained unchanged.

The market breadth on the BSE was negative as there were 1032 shares on the gaining side against 1811 shares on the losing side while 125 shares remained unchanged.

Finally, the BSE Sensex fell 129.73 points or 0.74% to settle at 17,463.04 while the S&P CNX Nifty slipped 27.75 points or 0.53% to end at 5225.80.

The BSE Sensex touched a high and a low of 17,636.88 and 17,362.59, respectively.

The top gainers on the Sensex were Reliance Infra up 9.45%, JP Associates up 5.25%, Tata Motors up 2.37%, RCom up 1.79% and DLF up 1.45%.

SBI down 3.64%, Bharti Airtel down 2.80%, Sterlite Inds down 2.53%, BHEL down 2.48% and Infosys down 2.27% were the top losers on the index.

The BSE Mid-cap and Small-cap indices declined 0.11% and 0.86%, respectively.

Meanwhile, food inflation in the country eased sharply in the week-ended January 29, finally giving some slim hopes that a bumper Kharif harvest and strong outlook for the Rabi crop as well as tightening by the monetary authority will help bring down the surging pace of rising prices in the country.

According to the data released by the ministry of commerce and industry on Thursday, food price index rose 13.07% on annual basis during week-ended Jan 29, significantly slower compared with 17.05% recorded in the previous week. On a sequential or week-on-week basis, the index for food goods decreased by 2.8% to 186.9 from 192.2 for the previous week, mainly due to lower prices of pulses and vegetables (11%) and pulses (4%).

The index for 'Non-Food Articles' group on the other hand rose by 2.5% to 183.5 compared with 179.0 in the previous week, neutralizing some of the gains made in food commodities. As a result, the broader 'Primary Articles' index, which has a weight of 20.12% in the overall wholesale price index (WPI), decreased by 1.4% to 191.8 compared with 194.6  for the previous week. The annual rate of inflation, calculated on point to point basis, for this group also decreased significantly to 16.24% from 18.44% for the previous week.

The index for 'Fuel & Power' with a weight of 14.91% in overall WPI on the other hand remained unchanged at its previous week's value of 151.9. The annual rate of inflation for this group too remained unchanged at 11.61%. With crude oil prices in Asian markets breaching the $100 a barrel mark in wake of the ongoing unrest in Egypt, even if the government does not hike the administered prices of diesel and cooking fuels, the hike in prices petrol, naphtha and aviation turbine fuel (ATF) by the oil marketing companies may further push fuel inflation coming weeks.

The sharp decline seen in food prices has come as a major relief to policy makers who have been predicting a sharp decline in inflation since last one quarter or so riding on bumper farm production and high base effect from last year. The RBI had in its last policy review on January 25 hiked its short term lending rate by 25 basis points (bps), implementing seventh rate hike in the current financial year so far. The central bank is widely expected to further tighten its policy by at least 100 bps in 2011, something that can hit the growth of Indian economy. However, if the declining trend seen in food inflation continues in the coming months as well, it will give more space to the central bank to keep its policies growth supportive. 

In the BSE sectoral space TECk down 1.54%, Information Technology (IT) down 1.53%, Realty down 1.03%, Oil & Gas down 0.81%, and Public Sector Undertakings (PSU) down 0.76% were the major losers.

On the flip side, Auto up 0.83%, Power up 0.82%, Healthcare (HC) up 0.58% and Capital Goods (CG) up 0.03% were the only gainers in BSE sectoral space.

Even as the domestic auto sales have continued 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 touched a high and a low of 5272.60 and 5196.80, respectively.

The top gainers of the Nifty were Reliance Infra up 9.56%, SAIL up 4.44%, Sun Pharma up 2.72%, JP Associates up 2.29% and Ranbaxy up 2.28%.

The top losers of the index were SBI down 3.37%, Bharti Airtel down 2.81%, Infosys down 2.51%, Sterlite Inds down 2.32% and HDFC down 2.27%.

European markets were trading in the red on Thursday. France's CAC 40 lost 0.84%, Germany's DAX dipped 0.38% and Britain's FTSE 100 dropped 0.67%.

Most of the Asian markets barring China's Shanghai Composite closed lower on Thursday. The mood of the markets remained somber from the very beginning tracking the weakness in the US markets overnight on concerns of employment in the world's largest economy. Though all the major indices were pummeled down but the Japanese market suffered due to profit booking ahead of a three-day weekend amid the weaker-than-expected machinery orders. FII selling is prevalent in most of the regional bourses and the Seoul shares too fell on heavy foreign selling and profit-locking moves. On the other hand, bucking the regional trends, Chinese Shanghai Composite Index moved higher, breaking through the key 250-day moving average (DMA).It has been reported that Chinese developers are building more homes in cities across the nation away from the financial hub of Shanghai and the capital Beijing, after the curb imposed on them.

Asian Indices	Last Trade	Change in Points	Change in %
Shanghai Composite	2,818.16	44.10	1.59
Hang Seng	22,708.62	-455.41	-1.97
Jakarta Composite	3,373.64	-43.83	-1.28
KLSE Composite	1,503.99	-32.08	-2.09
Nikkei 225	10,605.65	-12.18	-0.11
Straits Times	3,098.79	-51.77	-1.64
Seoul Composite	2,008.50	-37.08	-1.81
Taiwan Weighted	8,836.56	-170.26	-1.89

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