Markets remain under pressure; Nifty below 5800 mark

The benchmark indices continue to reel under pressure and are trading in negative terrain in the early noon session, with the broader market too not showing any sign of recovery. It seems market have given up hopes of trading in positive terrain with bears getting charged up due to weak IIP numbers. Industrial production in India expanded at a tepid 3.6% pace in February. It was manufacturing that dragged the growth in index of industrial production (IIP) down as capital goods production contracted on annual basis and consumer durables also showed significant slowdown. The impact of the numbers are clearly visible on the Capital Goods sector, where stocks started losing momentum soon after the announcements. Broader indices too remained in sluggish mood and the BSE Mid-cap and Small-cap indices were down by 0.55% and 0.54%, respectively. Some BSE sectoral indices like FMCG and Health Care are trading in green while Auto, Realty, PSU, Oil & Gas, Consumer Durables, Power and IT remain the top loser. The market breadth on the BSE was in favour of declines in the ratio of 1039:1655 while 80 scrips remained unchanged. On the global front the Asian markets continue to trade in red barring Jakarta Composite which is marginally in green.

India's tea production suffered yet another month of decline owing to weather related problems in February. According to the data compiled by the Tea Board of India, total production in February 2010 declined by 6.8% to touch 16.73 million kg compared with 17.97 million kg of tea produced in the corresponding month of last year. India's auto industry continues to remain in a bullish mode despite the high inflation pushing costs and monetary tightening by the Reserve Bank of India (RBI) raising interest rates on auto loans. According to the data released by the Society of Indian Automobile Manufacturers (SIAM), domestic passenger car sales rose 24.37% in March to 1,94,199 units as compared with 1,56,145 units in the same month last year. Indian Railways managed to achieve the targeted level of earnings in the last financial year despite a number of public protests impacting its operations on several days in North India in the last quarter as a strong economy boosts demand for rail transport. All the major tea companies were trading in the red, Mcleod Russel was down by 0.83%, Tata Global Beverages down by 1.67%, Dhunseri Petrochem & Tea down by 0.59% and Goodricke group was down by 0.73%.

The BSE Sensex lost 153.07 points or 0.79% at 19,298.38. The index touched a high and a low of 19,426.30 and 19,268.97 respectively.

The BSE Mid-cap and Small-cap indices lost 0.55% and 0.54%, respectively.

The two sectoral indices trading in the green on the BSE are FMCG up 0.30% and Health Care up 0.02%.

On the flip side, Realty down 2.36%, Auto down 2.06%, Oil & Gas down 1.49%, PSU down 0.85% and Consumer Durables down 0.70% were the major losers.

The top gainers on the Sensex were BHEL up 0.78%, ITC up 0.71%, Cipla up 0.66%, Sterlite Industries up 0.52% and Infosys up 0.34%.

On the flip side, DLF down 3.10%, Bajaj Auto down 2.71%, Tata Motors down 2.59%, M&M down 2.58% and Jindal Steel down 2.41% were the major losers on the index.

Meanwhile, the recent dip seen in foreign direct investment (FDI) into India is notwithstanding, the Nomura India believes that the country continues to remain the second most preferred investment destination globally and FDI will soon recover to pre-crisis levels.

FDI has seen a sharp decline in India over the last one year or so. While many attribute the development to global factors, others feel that local issues including delays on environment related clearances etc were also significant factor in discouraging foreign investors. Over the April-January period of last financial year, FDI has declined by nearly a quarter to $17 billion.

Nomura however said that the decline is temporary in nature and was more because of global factors. It expects, going forward, the country to continue attract increasing FDI. "Of the $12-billion decline in FDI inflows between 2008 and 2010, around 60% was due to weak inflows into service spaces like computer software and hardware, financial services, banking, and construction," said Sonal Varma, Chief economist of Nomura.

"The sharp drop in inflows into banking and other financial services is unsurprising as the crisis led firms to restructure operations. As a result, share of infrastructure in total FDI inflows rose to 24.7% in 2010 from 16.3% in 2007 and that of manufacturing rose to 32.1% from 19.6 percent, despite an fall in the absolute numbers in FY11,' Nomura said in a recent research report prepared by Verma.

Many domestic policy makers have already raised concern on slowdown in FDI. The Reserve Bank of India (RBI) had said in its policy review about a quarter ago that it would prefer greater amount of FDI rather than often volatile foreign institutional investment (FII) for bridging the current account deficit (CAD). The Indian government too though believes that the slowdown in FDI was mainly on account of global factors and the same would recover in next financial year.

The S&P CNX Nifty was down by 46.10 points or 0.79% at 5795.90. The index touched high and low of 5830.30 and 5784.50, respectively.

The top gainers on the Nifty were SesaGoa up 1.84%, Sun Pharma up 1.82%, HCL Tech up 1.44%, ITC up 0.93% and Cipla up 0.69%.

On the other hand, Siemens down 3.72%, IDFC down 3.22%, DLF down 3.20%, Bajaj Auto down 2.93% and M&M down 2.75% were the major losers on the index.

Most of the Asian markets were trading in red barring Jakarta Composite which is up by 0.05%.The loser were Shanghai Composite down 0.25%, Hang Seng down 0.34%, KLSE Composite down 0.86%, Nikkei down 0.50%, Strait Times down 0.63%, Seoul Composite down 0.26% and Taiwan Weighted down 0.16%.

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