Benchmarks witness blood bath in early trade; Nifty down 2.57%

The Indian equity markets have witnessed massacre in the early trade tracking weak cues from the Asian counterparts led by worse conditions in quake-stricken Japan. All the Asian markets were bleeding badly as Japanese Nikkei tumbled by over 13 per cent amid fears of a meltdown at a nuclear power plant, at this point of time, indicating somber investors' sentiments. The US markets closed lower overnight also dampened the sentiment. Back home, sustained selling in all the heavyweights and broader indices were keeping the momentum on a negative side. NSE's -- Nifty -- lost its crucial 5,400 level as massive sell-off witnessed amid huge losses on other Asian bourses. On the sectoral front, realty, metal and auto were the major losers, while there were no gainers in the trade. The broader indices too have witnessed lackluster trade in the early morning session. The market breadth on the BSE was negative; there were 1,409 shares on the losing side against just 251 shares on the gaining side while 47 shares remained unchanged. However, traders are eying for advance tax numbers to be announced later today, which will give further guidance to the market as it will show the health of the India Inc., in the fourth quarter.

The BSE Sensex opened at 18,113.79; about 326 points lower compared to its previous closing of 18,439.48, and has touched a low of 17,952.60, while high remain its opening.

The index is currently trading at 18,004.42, down by 435.06 points or 2.36%. All the stocks were trading in the negative terrain on the index.

The overall market breadth has made a weak start with just 14.70% stocks advancing against 82.54% declines. The broader indices too were bleeding badly; the BSE Mid cap and Small cap indices lost 1.96% and 1.95% respectively.

All sectoral indices on the BSE were trading down; Realty down by 2.86%, Metal down by 2.77%, Auto down by 2.70%, IT down by 2.42% and TECk down by 2.36%, were the major losers on the index.

Tata Power down by 3.60%, Jaiprakash Associates down by 3.45%, M&M down by 3.35%, Jindal Steel down by 3.26% and Maruti Suzuki down by 3.25% were the top losers on the index, while there were no gainers on the BSE Sensex.

Meanwhile, according to a recent report released by credit rating agency, CRISIL, the profitability of Indian companies for January-March 2011 quarter (Q4 FY11) is expected to be under pressure on the back of increase in raw material costs and increased competition. Around 23 companies were included for the purpose of analysis; however oil refining and marketing companies were not included in the research.

According to the report, revenue growth would be higher compared with the year-ago period, but operating margins would be lower. Analysis of the aggregate financial performance of these companies revealed that "revenues, which grew by 22.4% y-o-y in October-December 2010, are likely to decelerate to 20-21% in Q4 FY11. The expected growth in revenues is significantly higher than the 13.7% growth witnessed in January-March 2010." CRISIL Research further expects the operating profit margin (OPM) to decline to around 22-23% in Q4 FY11, from 26.1% in the same period last year.

As per the report, the rising costs of inputs are likely to put pressure on the margins of automobile manufacturers as well as cement producers during Q4 FY11. In IT services too, margins are expected to remain under pressure on a y-o-y basis due to the appreciating rupee and wage inflation, it says.

Meanwhile, on the positive side, the anticipated increase in steel prices and strong demand would offset the impact of rising input costs for steel players, for whom margins are expected to improve in Q4 FY11. Similarly, for yarn manufacturers, operating margins are likely to remain stable, as players would pass on the rise in raw material costs to consumers by hiking product prices and altering the raw material mix by using more of polyester.

The S&P CNX Nifty opened at 5,420.00; about 111 points lower compared to its previous closing of 5,531.50, and has touched a high and a low of 5,427.35 and 5,380.95 respectively.

The index is currently trading at 5,389.50, down by 142.00 points or 2.57%. There was only 1 stock advancing against 49 declines on the index.

Siemens up by 0.30% was the lone gainer on the Nifty.

The top losers of the index were Power Grid down by 1.21%, Cairn down by 1.24%, PNB down by 1.43%, HUL down by 1.51% and ACC was down by 1.68%.

All the Asian markets were bleeding badly today; Shanghai Composite was down 63.00 points or 2.14% to 2,874.63, Hang Seng was down 896.28 points or 3.84% to 22,449.60, Jakarta Composite was down 89.40 points or 2.50% to 3,480.44, KLSE Composite was down 16.06 points or 1.07% to 1,479.29, Nikkei 225 was down 1,340.14 points or 13.93% to 8,280.35, Straits Times was down 83.08 points or 2.74% to 2,947.78, Seoul Composite was down 85.31 points or 4.33% to 1,885.92 and Taiwan Weighted was down by 421.34 points or 4.95% to 8,098.68.

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