Local bourses retreat into red; broader indices too lose strength

After breaking out in green in early deals, local bourses have once again recoiled in red as funds and retail investors continued to limit their exposure to the sinking equity market in the absence of positive cues amidst negative counterparts. Worsening tribulations in developed economies and lack of clarity about domestic growth (amid rising inflation, tightening monetary policy and uncertainty over policymaking) are the factors playing the malice behind the downtrend of the equity markets. Investment in safe heaven securities are being more preferred over equities as outlook for equities is turning grimmer post the Europe's plagued banking system threatens to implode and the US economy stares at the possibility of another recession.  Overnight, at Wallstreet, the Dow Jones industrial average fell 172.93 points, or 1.57 percent, to end at 10,817.65. The Standard & Poor's 500 Index dropped 17.12 points, or 1.50 percent, to 1,123.53. The Nasdaq Composite Index slid 38.59 points, or 1.62 percent, to close at 2,341.84. Meanwhile, Asian shares are also mostly down in volatile trade amid subdued sentiment, with traders in Tokyo remaining on high alert for yen-selling intervention by Japanese authorities after the currency advanced to a fresh record high on Friday. The US future indices too are showing in the screen trade. Back home, however, volatility noticed in early deals of the fresh week could also be attributed to the expiry of August month contract of F& O series this Thursday.  Fresh shorts created in the Information Technology,  Healthcare and Bankex counter mainly have prompted the losses of the bourses. However, surge of Realty, Capital Goods and Power counters have limited the downfall of the barometer gauges. The 30 scrip sensitive index losing over 30 points is currently trading over 16100 mark, while 50 share index to magnifying losses is trading close to 4800 mark. The broader indices despite losing substantial weight are afloat in green. The overall market breadth on BSE is in the favour of advances which have outpaced declines in the ratio of 1266:899, while 61 shares remained unchanged.

The BSE Sensex is currently trading at 16,103.89, down by 37.78 points or 0.23%. The index has touched a high and low of 16,237.41 and 16,057.53 respectively. There were 11 stocks advancing against 19 declines on the index.

The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices rose 0.07% and 0.52% respectively.

The top gaining sectoral indices on the BSE were, Realty up by 0.56%, CG up by 0.30%, Power up by 0.25%, CD up by 0.19% and FMCG up by 0.08%. While, IT down by 0.76%, HC down by 0.68%, Bankex down by 0.67%, Metal down by 0.50% and Auto down by 0.45% were the top losers on the index.

The top gainers on the Sensex were Jaiprakash Associates up by 2.77%, Jindal Steel up by 2.22%, BHEL up by 1.65%, Bharti Airtel up by 0.91% and Hero Moto Corp up by 0.68%.

On the flip side, Sun Pharma was down by 3.08%, Hindalco was down by 2.15%, M&M down by 1.64%, TCS down by 1.51% and Cipla down by 1.49% were the top losers on the Sensex.

Meanwhile, by expressing concern over the limited reserve of iron ore in the country the Parliamentary Panel recommended the government to explore the possibility of curbing iron ore exports to ensure availability of the key steel making raw material, as the domestic reserves may last only for 10 years more. The Parliamentary Panel chaired by Kalyan Banerjee said, 'the Committee is concerned to note that reserve of iron ore may last till 2021-22. With a view to conserving iron ore for long-term use of domestic steel industry and also to ensure its availability to them at an affordable price, the government must explore possibility of restricting the export of iron ore.'

The production of iron ore was more than the domestic consumption, as a result of which more than half of the output was exported. As per the government estimates, during last financial year, country's iron ore production and exports were around 208 million tonne and 97.6 million tonne respectively. During 2009-10 country has exported around 117.37 million tonne of iron ore. India mostly exports iron ore to China and it has around 22% share in China's total imports.  

To restrict the exports of iron ore from India, the government has increased the exports duty on the exports of iron ore. It had increased the export duty by 5-20% from lumps and 5% for fines. However, the industrial bodies has opposed the recommendation of the Parliamentary Panel, by arguing that this would lead to up 35% decline in shipment and many job losses in the labour intensive mining sector.

Earlier according to the miners body Federation of Indian Mineral Industries, iron ore exports may fall by over 20% to around 75 million tonnes (MT) in the current fiscal as a result of hike in duty on overseas shipments. In the Budget for 2011-12, finance minister had raised export duty on fines four-fold to 20%.

The S&P CNX Nifty is currently trading at 4,829.00, lower by 16.65 points or 0.34%. The index has touched a high and low of 4,868.35 and 4,817.60 respectively. There were 16 stocks advancing against 34 declines on the index.

The top gainers of the Nifty were Jaiprakash Associates up by 2.94%, RCom up by 2.84%, Reliance Infra up by 2.71%, Reliance Power up by 2.53% and IDFC up by 2.43%.

On the flip side, Sesa Goa down by 4.92%, Sun Pharma down by 3.14%, Hindalco Industries down by 2.33%, Axis Bank down by 2.11% and Gail India down by 2.00% were the major losers on the index.

All the Asian equity indices were trading in the red; Shanghai Composite was down by 0.57%, Hang Seng was down 0.93%, Jakarta Composite was down by 1.74%, KLSE Composite was down by 0.90%, Nikkei 225 was down by 0.58%, Straits Times was down by 0.82%, Seoul Composite was down by 0.73% and Taiwan Weighted was down by 0.78%. 

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