Nifty hits fresh intraday lows

The local equity indices have wiped out all their gains hitting, fresh intraday lows in late afternoon session despite positive global cues. The European markets were trading in green and US index futures also trading in positive at this point time. Most of the other Asian markets too settled in green but were unable to prevent the selling in domestic markets. The Sensex and the Nifty were trading below their psychological level of 18500 and 5550 respectively. Heavy selling came out in banking and consumer durables stocks. Majority of the sectors are in red, while FMCG and Realty stocks were attracting some buying. The market breadth on the BSE has turned negative and was in favour of declines in a ratio of 1382:1250 while 134 scrips remained unchanged. The broader market is doing better than the Large-Cap peers; the BSE Mid cap index down by 0.05% while Small cap index up by 0.09%.

Hindustan Unilever (HUL)'s shares jumped over 4%, to Rs298.40, their highest of last one month, after the company's Q4 results beat market estimates, strong volume growth offset rising input costs.

The BSE Sensex shed 54.03 points or 0.72% at 18474.93. The index has touched a high of 18,689.37 and a low of 18,454.49, respectively.

The BSE Mid cap indices down by 0.05% while Small cap indices up by 0.09%.

The top gainers on the BSE sectoral indices were FMCG up 1.03%, Realty  up 0.66%, PSU up 0.13%, Auto up 0.02% and Metal up 0.01% while, Consumer Durables (CD) down 1.16%, Bankex down 0.97%, CG down 0.44%,HC down 0.24% and IT down 0.14% were the major losers in the BSE sectoral space.

The top gainers on the Sensex were HUL up 4.20%, Sterlite Inds up 2.36%, RCom up 1.96%,  NTPC up 1.91% and Bajaj Auto  up 1.13%.

On the flip side, HDFC Bank down 2.36%, Reliance infra down 1.86%, HDFC down 1.78%, Tata Power down 1.45% and Tata Steel down 1.34% were the major losers on the index.

Meanwhile, banks in India are already showing signs of slowdown in credit off-take as they are feeling the heat of Reserve Bank of India's anti-inflationary stance. According to the data released by the Reserve Bank of India (RBI) on April 22, bank advances declined by 0.95% to Rs 3,919,000.47 crore compared with the previous fortnight. For the fortnight ended April 8, total bank credit had posted a marginal (0.45%) increase as against the fortnight before while on a year on year basis, though, bank credit was up 21.89% for the fortnight ended April 22. On the other hand, deposit growth remained flat over the fortnight ended April 22, 2011 but on a yearly basis, deposit growth improved to 18%.

Reverberations of the Reserve Bank of India's aggressive stance to rein in the inflationary pressure on the economy have already started to emerge and its recent double whammy of hiking Repo and reverse repo rates by 50 bps and savings bank rate to 4% from 3.5%, may prove even worse for banks which are already struggling with higher borrowing costs compounded by the inability to raise lending rates sharply on concerns of moderating loan demand.

Credit growth for banks is usually subdued in the initial months of a fiscal year because corporate bodies are busy with their audits. However, expectations are rife that credit growth may stay slack for a longer period as retail credit growth, in sectors like housing, automobiles and consumer durables would be largely affected. After the RBI's 50 basis points hike in key policy rates, banks at large are on a spree to hike their base rates, which are touching double digits and making funds costlier for the corporate bodies as well as retail borrowers.

In the last fiscal year, the central bank had hiked rates eight times, to which the banks did not respond with base rate hikes of the same quantum. According to RBI norms, banks have to review their base rates at least once every quarter. Credit growth is the biggest and most potent contributor to demand-side inflation and therefore banks, the largest channel of loan disbursements, are seen as the most effective tool to manage inflation. Banks expect credit growth of 18-22% in FY12, with high interest rates impacting demand for loans from customers.

The S&P CNX Nifty lost 20.40 points or 0.37% at 5,530.70.  The index has touched a high and a low of 5592.60 and 5523.25, respectively.

The top gainers of the Nifty were HUL up 4.20%, Sterlite Inds up 2.36%, RCom up 2.24%, NTPC up 1.68% and Bajaj Auto up 1.15%.

On the flip side, HDFC Bank down 2.21%,HDFC down 2.13%, Reliance Infra down 1.91%, Sun Pharma down 1.57% and Ambuja Cement down 1.54% were the major losers on the index.

Rest of the Asian markets barring Taiwan Weighted declined 0.14%, settled in the green. Shanghai Composite increased 0.60%, Jakarta Composite jumped 0.40%, KLSE Composite climbed 0.39%, Nikkei 225 soared 0.25% and Straits Times surged 0.64%.

Stock markets in South Korea and Hong Kong remained shut today on account of a public holiday.

The European markets were trading in green. CAC 40 added 1.15%, DAX 0.90% and FTSE 100 gained 0.84%.

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