Domestic benchmarks continue to sulk in the early afternoon session as jittery market participants have turned to hefty position squaring from the rate sensitive and metals counters as they fear that inflationary pressure and hike in interest rates would lead to higher borrowing costs, thereby hurting corporate earnings. Meanwhile discouraging leads from the markets across the globe on the back of renewed concerns over the euro zone debt crisis too pounded on the local sentiments. Majority of Asian peers traded with over one and half a percent laceration while the European counterparts too have commenced their session exhibiting similar trends of not less than a percent losses. Back home, the banking pocket has so far shaved off over two and half a percent points as majors like ICICI bank and HDFC Bank slipped by 2.90% and 2.76% respectively. While the metal pack and other rate sensitives like Auto and Realty too have lost around two percent points as bears showed little mercy and continued to book heavy profits. Badly butchered ONGC too prolonged the downtrend and took a nasty blow of 3.05% while other index heavyweights like Reliance Industries, L&T too failed to make their presence felt and plunged by 1.33% and 1.27% respectively. The only respite came from the FMCG index which resiliently kept its head above the water as the bellwether ITC amassed 1.61%.
Back home, the broader markets traded too succumbed to the intense selling pressure exerted on their larger peers and traded with large cuts. The midcap index shed 1.10% and the smallcap index dropped 1.08% points. The market breadth on the BSE was in favor of declines in the ratio of 727:1711 while 94 scrips remained unchanged.
The BSE Sensex plummeted 274.06 points or 1.50% at 18,052.03. The index touched a high and a low of 18,269.06 and 18,037.90 respectively.
The BSE Mid-cap index sank 1.10% and Small-cap index dived 1.08%.
On the BSE sectoral front, FMCG up 0.26% remained the only gainer.
While, Bankex down 2.55%, Metal down 2.28%, Realty down 2.21%, Auto down 1.99% and Healthcare down 1.41% were the major laggards in the BSE sectoral space.
The top gainers on the Sensex were ITC up 1.61% and BHEL up 0.03%.
On the flip side RInfra down 3.32%, Tata Motors down 3.15%, ONGC down 3.05%, ICICI Bank down 2.90% and JP Associates down 2.81% were the major losers on the index.
Meanwhile, the new National Manufacturing Policy (NMP) is expected to get some headway on June 2, with the committee headed by the Prime Minister Manmohan Singh taking a final call on the proposed draft of NMP. The new policy is aimed to increase the share of manufacturing sector in India's GDP from 16% to 25% by 2022, with the idea of shifting the large proposition of work force from agriculture to manufacturing. Manufacturing contributes over 80% in overall industrial production. Under the upcoming policy, the government has proposed to set up integrated greenfield mega-investment zones to attract global investment and latest technologies. There have been many confrontations among the various ministries since a discussion paper on the NMP was floated by the department of industrial planning and promotion of the commerce ministry and major differences emerged among the ministries on the proposed draft. The Ministry of Labour and Environment had raised their concerns over the labour and environment issues, as the Ministry of Commerce and Industry had suggested an exemption from labour laws for easier hiring and firing of workers. In the proposal, the Contract Labour Abolition Act would also not be applicable and workers' rights to join unions would also be curtailed. Instead, an alternative safety net would be provided to workers in these zones.
As per the discussion paper, which was issued by DIPP around last year, "The situation of the manufacturing sector in India is a cause of concern, especially when seen in the context of transformation registered in this sector by other Asian countries in similar stages of development. While the dramatic shifts in global manufacturing bases over the past four decades have brought these economies in focus, India has not been able to fully leverage the opportunities provided by the dynamics of the world economy".
The DIPP suggests making National Manufacturing and Investment Zones (NMIZ). These NIMZ are expected to come up across the country and their sizes would be double that of Special Economic Zone (SEZs). The NMIZ are planned to be specifically drawn for the establishment of manufacturing facilities for domestic and export-led production, along with the associated services and infrastructure. The processing area may include one or more SEZs including industrial parks, warehousing zones and export oriented units. The land would be acquired by the state governments.
Anxiety has been raised by many ministries on NMIZ, and hence the industry minister Anand Sharma said in the Confederation of Indian Industry's India-Africa Forum Summit "the PM had intervened in the matter; the meeting will take place on June 2. Once the PM gives his nod, the policy would then be formally approved by the Cabinet Committee on Economic Affairs".
Sharma added, "it was imperative for India to have a new policy to make India a manufacturing hub. The new policy is also expected to attract huge foreign investments, besides encouraging large-scale industrial activity. Foreign investment inflows have seen a decline in 2010-2011, compared to 2009-10. Besides, this would result in job creation which remains a primary concern for the government".
To address differences over the proposed NMIZ policy, Prime Minister Manmohan Singh is scheduled to hold a meeting with at least six ministers, including commerce and industry minister Anand Sharma, finance minister Pranab Mukherjee, labour and employment minister Mallikarjuna Kharge, environment minister Jairam Ramesh, corporate affairs minister Murli Deora, HRD and telecom minister Kapil Sibal and planning commission deputy chairman Montek Singh Ahluwalia. The planned meeting is also expected to consider to formulae the National Manufacturing Competitiveness Council and Planning commission. The S&P CNX Nifty nosedived 85.95 points or 1.57% at 5,400.40. The index touched high and low of 5,456.70 and 5,394.55, respectively.
The top gainers on the Nifty were ITC up 1.10%, SAIL up 0.53%, Ranbaxy up 0.20% and BPCL up 0.01%.
On the other hand, Sesa Goa down 4.42%, IDFC down 3.82%, R Infra down 3.45%, ONGC down 3.19% and Tata Motors down 3.10% were the major losers on the index.
On the Asian front, Shanghai Composite got crushed by 2.82%, Hang Seng plummeted 2.02%, Jakarta Composite got pounded by 2.36%, KLSE Composite declined 0.70%, Nikkei 225 plunged 1.52%, Straits Times shaved off 1.65%, Seoul Composite got butchered by 2.64% and Taiwan Weighted sank 1.01%.
The European markets have opened a somber note as the France's CAC 40 sulked 1.52%, Germany's DAX drifted 1.58% and London's FTSE 100 deposed 1.34%.
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