Benchmarks trade weak; Sensex below 18,500 mark

Indian equity indices pared off gains and continue to trade in a negative zone with selling witnessed among the broad based index and frontline equities as investors sold off stocks from Realty, Health Care and Bankex sector. Meanwhile, the government is likely to support State Bank of India's (SBI) Rs 20,000 crore right issue by contributing Rs 12,000 crore. At present, the government holds about 59% stake in the bank. The Country's largest lender SBI is expected to raise Rs 20,000 crore by December 2011 via rights issue. DB Realty gained 5.70% on reporting results for the year ended March 31, 2011. The company's net profit for the year ended March 31, 2011 registering growth of 12.44% stood at Rs 255.69 crore as compared to Rs 227.39 crore for the year ended March 31, 2010. Its total Income has increased by 26.81% to Rs 361.15 crore for the year from Rs 284.80 crore for the year ago. Majority of Asian markets were trading in red barring Shanghai Composite and Nikkei while the European markets too were trading with a deep cut of more than half percent spilling pessimism in the local market. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,550 and 18,500 levels, respectively. The market breadth on the BSE was in favor of declines in the ratio of 1276:1449 while 130 scrips remained unchanged.

Moreover, an informal group of ministers is likely to decide whether to permit cotton exports beyond the current ceiling of 55 lakh bales for the current season or not. A decision will be taken on the demand of allowing exports of another 15 lakh bales of cotton to exhaust the excess stocks. Against the backdrop of the demand from the Agriculture Ministry, supported by the Commerce Ministry, that the 55 lakh bales limit be raised. Cotton season runs from October to September and the total cotton production, estimated by the Cotton Advisory Board is 320 lakh bales while, the domestic consumption of cotton is estimated to be 240 lakh bales, hence as per current scenario there is surplus of cotton in the country.

The BSE Sensex lost 84.04 points or 0.45% at 18,495.62. The index touched a high and a low of 18,505.10 and 18,366.80 respectively.

The BSE midcap index declined 0.07% and the smallcap index gained 0.16% points.

On the BSE sectoral front, FMCG up 0.80%, Consumer Durables up 0.23% and Capital Goods up 0.00% were the only gainers. While, Realty down 0.90%, Healthcare down 0.69%, Bankex down 0.65%, Metal down 0.61% and Oil and Gas down 0.58% were the major laggards in the BSE sectoral space. 

The top gainers on the Sensex were R Com up 2.07%, NTPC up 1.13%, ITC up 1.11%, Tata Motors up 0.58% and BHEL up 0.38% and. On the flip side, Hero Honda down 3.12%, Hindalco down 2.13%, ONGC down 2.01%, Maruti Suzuki down 1.63% and JP Associates down 1.30% were the major losers on the index.

Meanwhile, the Finance Minister Pranab Mukharjee asked foreign institutional investors (FIIs) to remain bullish on Indian economy's growth in the long run. The government is committed to take all the necessary steps to achieve a sustainable economic growth rate. The Finance Minister asked FIIs not be bothered by the short-term statistics and assured them of building a consensus on hike on FDI (Foreign Direct Investment) by private insurers to 49% from presents 26% and opening up the multi-brand retail sector for foreign investment. He also said that the government would continue to take investor friendly policies to encourage further growth.

According to finance minister, the long term growth scenario is quite optimistic for the Indian Economy and it will be driven by the next generation of reforms, he said, 'The next generation financial sector reforms have already been initiated which include among other steps, the widening and deepening of the Indian securities markets, liberalizing the policy on foreign capital flows, strengthening the regulatory and other institutional architecture and reducing transaction cost in the securities markets,'

The growth of Indian economy is slowing down on account of high inflation and increase international commodity prices, the GDP growth for 4th quarter of 2010-11 were lowest in last five quarters and the overall growth of the economy was marginally below from the government's estimation. The finance minister accepted that economic growth for the current financial years may be around 8.5%, the same level as of 2010-11, but it would be lower than the estimated 9% by the Economic Survey. However, Finance Minister showed confidence that the fiscal deficit for the current year would be maintained at 4.6& of GDP, as the revenue collection is expected to remain stable. Fiscal deficit for the 2010-11 was 4.7% much below form the target of 5.1% and well below for 6.4% of 2009-10.

On the issue of fuel subsidy, Finance Minister said, it would be difficult to accurately estimate the burden on the government from fuel subsidy in view of the volatility in global crude prices. Nonetheless, he assured them that if there was any additional requirement for the subsidy; funds would be committed with least impact on fiscal deficit. On disinvestment, finance minister said, it would also be too premature to reach a judgment on the disinvestment programme as only the first two months of the financial year have gone by. Last year disinvestment programme was not pursed fully because of extra revenue generation form 3G spectrum allocation and BWA. Last year, government generated around Rs 23,000 crore from disinvestment, the amount was less than the target of Rs 40,000 crore. In present financial year government has raised Rs 1,145 crore by public issue of Power Finance Corporation. 

The S&P CNX Nifty lost 26.20 points or 0.47% at 5,529.95. The index touched high and low of 5,556.60 and 5,514.90 respectively.

The top gainers on the Nifty were RCom up 1.90%, NTPC up 1.47%, BPCL up 1.19%, GAIL up 1.10% and ITC up 0.98%. On the other hand, Hero Honda down 3.27%, Hindalco down 2.24%, Sun Pharma down 2.06%, ONGC down 2.04% and Siemens down 1.69% were the major losers on the index.

On the Asian front, Shanghai Composite added 0.22% and Nikkei 225 advanced 0.07%.  On the flipside, Hang Seng slipped 0.91%, Jakarta Composite shed 0.45%, Straits Times slipped 0.39%, Seoul Composite sank by 0.78%, Taiwan Weighted dropped 0.55% and KLSE Composite down 0.01%.

The European markets are trading in red with France's CAC 40 down 0.76%, Germany's DAX shed 1.03% and London's FTSE lost 0.87%.

Unit-8, 3rd Floor, First Mall, The Mall, Ludhiana-141001, Punjab (INDIA).

To unsubscribe or change subscriber options visit: http://www.aweber.com/z/r/?TJzsLEwstCyc7OysHMyctEa0jAwMnMzsnEw=