Indian equities dip deeper in the red; global leads drag sentiments

Indian frontline equity indices are trading around the session's low levels in the Wednesday afternoon session and have even gone on to breach the psychological 4,900 and 16,350 levels. Selling pressure have intensified after European counterparts surrendered all the gains as the optimism got swiftly petered out and investors were apprehensive about the market outlook amid the lingering uncertainties. Leads from Asia too remained discouraging as Moody's Investors Service slashed Japan's credit rating by one-notch to Aa3 citing concerns over growth prospects for the world's third largest economy, massive government debt and constant political uncertainty. On the domestic front, sentiments got undermined on report that CLSA has cut its target on the Sensex 18,200 from 19,500, citing "faster slowdown of growth" and increased earnings downgrade. On the sectoral front, the Information Technology counter that witnessed hefty short covering in the previous session once again got clobbered and languished at the bottom of the table with one percent losses. While the rate sensitive Automobile pack too were not spared either slipping by close to a percent after heavyweights like Maruti Suzuki and Hero Moto plunged around one half a percent. However, some gains in DLF held the high beta Realty index above the neutral line. Hefty short covering in some ADA group shares like R Capital, R Infra and R Com also restricted the frontline indices from drifting deeper into the red.

Moreover, the broader markets continued to show resilience and traded in the green terrain with moderate gains, bucking the sluggish trend that their larger peers exhibited. The bourses receded on good volumes given that this is the penultimate day of August month F&O expiry week while the market breadth on BSE was favor of advances in the ratio of 1413:1110 and 107 scrips remained unchanged.

The BSE Sensex is currently trading at 16,378.52 down by 119.95 points or 0.73% after trading as high as 16,533.22 and as low as 16,325.61. There were 4 stocks advancing against 26 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index gained 0.20% and Small cap rose 0.34%.

On the BSE sectoral space, Consumer Durables up 0.43%, Realty up 0.07% were the only gainers while IT down 0.91%, Auto down 0.86%, Metal down 0.82%, TECk down 0.78% and Bankex down 0.60% were the only losers on the index.

Hindalco up 1.03%, DLF up 0.58%, HUL up 0.52% and L&T up 0.13% were the only gainers on the Sensex, while Tata Power down by 3.88%, Jindal Steel down 2.64%, Coal India down 2.44%, Tata Steel down 1.78% and MAruti Suzuki down 1.67% were the major losers on the index.

Meanwhile, India's export of gems and jewellery grew at a slower pace of 5.4% in July compared to previous month, in June; the exports surged by 17%. As per the data released by the Gems and Jewellery Export Promotion Council (GJEPC) data, during July 2011, the exports of gems and jewellery increased by 5.4% to $3.3 billion from $3.1 billion in July 2010.

The debt crisis in the US and Europe, which are important market destination, had adversely affected the demand for gems and jewellery. The fall in exports is mainly due to the decline in demand from these markets.  The US and Europe account for around 25% and 20% of the India's total Gems and Jewellery exports. 

GJEPC Chairman Rajiv Jain said, 'there are less number of orders from markets like the US and European markets,' however, by adding further he said that demand from new markets like Russia, Latin America and Africa is increasing.

The traders are concerned over the debt crisis in the western economies, which could affect demand and lead to payment problems. According to GJEPC data, in July, exports of silver jewellery surged by 63.4% year-on-year followed by the gold medallions and coins which increased by 33.8% and gold jewellery by 25.33%. However, exports of coloured gemstones declined by 82% in July.

During the April-July 2011, the exports of gems and jewellery increased by 14.4% to $14.1 billion from the April-July 2010. As per the commerce ministry data, in last financial year, exports of gems and jewellery increased by 15.34% to $33.54 billion from previous fiscal year.   The S&P CNX Nifty is currently trading at 4,915.05, lower by 33.85 points or 0.68% after trading as high as 4,962.40 and as low as 4,900.10. There were 13 stocks advancing against 37 declines on the index.

The top gainers of the Nifty were R Capital up 3.09%, R Com up by 2.77%, R Infra up 1.61%, Hindalco up 1.10%, and DLF up 0.85%.

Tata Power down 4.02%, Jindal Steel down 2.71%, Tata Steel down 1.76%, TCS down 1.45% and SBI down 1.44% were the major losers on the index.

Asian markets traded on a pessimistic note, Shanghai Composite eased 0.46%, Hang Seng plunged 1.38%, Jakarta Composite slipped 0.23%, KLSE Composite slipped 0.03% Nikkei 225 shed 1.07%, Straits Times sank 0.84%, Seoul Composite plummeted by 1.23% and Taiwan Weighted dropped 0.63%.

The European markets traded on optimistic note as France's CAC 40 advanced 0.98%, Germany's DAX surged 0.93% and London's FTSE gained 0.46%. 

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