Heavyweights drag benchmarks by over a percent

Indian frontline indices have prolonged the dismal run in the Tuesday afternoon session after beginning the day on a quiet note as investors at large are looking to take profits off the table from the blue-chip stocks amid dearth of significant triggers. The benchmarks have shunned over a percent points in the session so far and even went ahead to test the crucial 5,800 and 19,300 support levels. Investors have exerted selling pressure on almost all the frontline stocks especially in FMCG majors like HUL and ITC and Capital Goods heavyweights like L&T and BHEL. Investors also continued to punish index heavyweight Reliance Industries for second straight session for reporting below expectation earnings for Q4, it has shaved off around a percent point so far. Some buying interests were witnessed in Cement stocks like ACC and Ambuja cements while PSU oil marketing companies like IOC, HPCL and BPCL too traded in the green terrain because of wilt in international crude oil prices. On the global front, Asian indices traded on a subdued note while leads from the European counterparts too remained unsupportive for the local bourses..

Meanwhile, the broader markets traded with moderate cuts as the midcap index slipped by 0.64% while the smallcap index fell 0.62%. The market breadth on the BSE was strongly in favor of declines in the ratio of 920:1705 while 100 scrips remained unchanged. Moreover, the market volumes remained very high as it has already crossed the turnover of Rs 1 lakh crore mark.

The BSE Sensex plunged by 244.18 points or 1.25% at 19,340.13. The index touched a high and a low of 19,600.79 and 19,306.92 respectively.

On the BSE sectoral front, no index was in green while the FMCG down 1.96%, CG down 1.45%, Auto down 1.28%, Bankex 1.21% and Power down 1.14% were the major laggards in the space.

The top gainers on the Sensex were Bharti Airtel up 0.97%, R Com up 0.52% and Hindalco up 0.43%.

On the flip side only HUL down 2.92%, HDFC down 2.60%, M&M down 2.31%, Wipro down 2.19% and R Infra down 2.09% were the major losers on the index.

India's oil marketing companies (OMCs) have continued to subsidies prices of petrol despite the government deregulating the same in June last year. In fact under-recoveries of OMCs on petrol have increased sharply over last couple of months owing to surge in global crude prices.  

However, with the crucial assembly elections coming to an end soon, OMCs are likely to get a window for raising petrol prices, though partially. While the under-recovery on petrol is currently around Rs 7 a litre, fuel retailers may hike prices by around Rs 3 a litre. This action may come by middle of the next month by when the ongoing elections for various state assemblies would be over.

The three government controlled OMCs had last time revised petrol prices in January this year when the same were hiked by Rs 2.50 a litre, the sixth hike implemented since the fuel was deregulated in June last year. After that the companies were hoping for some reduction in duties on petroleum sector in the FY12 Budget but the same evaporated as Finance Minister Pranab Mukherjee maintained a status quo on petroleum sector duties.

Then the state assembly elections came close and OMCs had to hold on to petrol prices even as the global crude prices surged beyond $120 a barrel. Now as the state assembly elections are nearing an end, OMCs are getting ready to implement a hike in petrol prices. Following that, the Union Oil and Gas minister S Jaipal Reddy is expected to raise a proposal at the Cabinet level for cutting the subsidies in other fuels by raising market prices, and possibly by cutting some duties as well.

The finance ministry will anyway have to bear the brunt of higher crude prices. Even if it does not reduce duties, it will still have to bear a much larger share of under-recoveries of the OMCs as the latter do not have the financial muscle to bear substantial losses. The oil ministry has already cleared that up-stream companies will not bear more than 33% of the under-recoveries and OMCs would not be in a position to absorb more than 10-15% of the under-recoveries. Therefore, a large chunk of the subsidy burden will fall on finance ministry only. 

The S&P CNX Nifty plummeted 70.10 points or 1.19% at 5,804.40. The index touched a high and low of 5,878.25 and 5,791.55, respectively.

The top gainers on the Nifty were Bharti Airtel up 1%, BPCL up 0.82%, Ambuja Cement up 0.77%, R Com up 0.72% and Hindalco up 0.59%.

On the other hand, Kotak Bank down 3.33%, HUL down 2.94%, REL Capital down 2.68%, HDFC down 2.59% and M&M down 2.35% were the major losers on the index.

On the Asian front, Shanghai Composite was down 0.80%, Hang Seng was down 0.97%, Jakarta Composite was down 1.06%, KLSE Composite was down 0.11%, Nikkei 225 was down 1.17%, Straits Times was down 0.51%, Seoul Composite was down 0.44% and Taiwan Weighted was down 0.03%.

The European markets have started on an absolutely flat note as the France's CAC 40 eased 0.29%, Germany's DAX fell 0.48% and Britain's FTSE 100 slipped 0.07% 

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