Local markets recover slightly from the day's low

Indian equity markets after falling in early trade amidst fears of a nuclear catastrophe in Japan have now recovered slightly from the day's low as market bellwether--Reliance Industries (RIL)--returned to the green, after paying a higher advance tax for the fourth quarter Siemens too has moved higher on the 50 share index thereby aiding the markets to trim some of its loss. Domestically, it is the RBI policy and the advance tax numbers that are making the markets cautious in the context of global markets.  Now it is the prices of the crude oil that will be determining the current of the local equity markets. At the moment softening crude oil prices have prompted to investors to indulge in some lower level buying. On the global front, the Wall Street closed lower overnight with the Dow falling 51 points to end below the 12,000 mark, while uniform fall is seen across all the Asian markets, markets across Asia traded on a jittery note as Japan crisis deepened. Japan's problems are set to increase as the third nuclear reactor at Fukushima Daichi exploded today and the Japanese Prime Minister Naoto kan warned that radiation levels would increase around the earthquake hit power plants, thereby causing concerns that Japan might slip back into the recession. Meanwhile US future indices too are showing a downtick on the screen trade.

Back home, on the BSE Sectoral front, all the sectoral indices were off colour, however, stocks from Realty, Power and Metal counters plummeted the most. The benchmark indices despite peeling off some of their losses were trading below their psychological level, while the broader indices too were trading low with a cut of over 1% each. The overall market breadth was in favour of declines, outnumbering advances in the ratio of 1766:444, while, 68 shares remained unchanged.

The BSE Sensex is currently trading at 18,155.01, down by 284.47 points or 1.54%. The index has touched a high of 18,155.01 and a low of 17,920.55 respectively. All the 30 stocks were trading low.The broader indices too were clobbered out of shape; the BSE Mid cap and Small cap indices lost 1.41% and 1.46% respectively.

All sectoral indices on the BSE were trading down; Realty down by 2.74%, Power down by 2.12%, Metal down by 1.90%, Auto down by 1.81% and IT down by 1.78% were the major losers on the index.

Maruti Suzuki down by 3.28%, Tata Power down by 3.20%, Jaiprakash Associates down by 2.79%,DLF down by 2.50% and M&M down by 2.48% were the top losers on the index, while there were no gainers on the BSE Sensex.

Tata Power Co., the biggest non-state Indian electricity generator, sank 3.2 percent, the most in more than a year as Japanese Prime Minister Naoto Kan today said the risks are increasing after an explosion at a nuclear power plant in Fukushima.

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 is currently trading at 5,446.45, down by 85.05 points or 1.54%. The index has touched a high of 5,448.65 and a low of 5,373.65 respectively. There was only 2 stock advancing against 48 declines on the index.

Only Siemens up by 0.12 % and Reliance Industries up by 0.08% were the gainer on the Nifty, while, the top losers of the index were Reliance Power down by 3.97%, HCL Technology down by 3.90%, Tata Power and Maruti Suzuki down by 3.12% each and Sesa Goa was down by 3.03%.

All the Asian markets were bleeding badly today; Shanghai Composite declined 2.61%, Hang Seng shed 3.84%, Jakarta Composite trimmed 2.29%, KLSE Composite dropped by 1.14%, Nikkei 225 plunged 10.51%, Straits Times slid 2.87%, Seoul Composite skid 1.81% and Taiwan Weighted plummeted by 3.47%.

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