Indian benchmarks off day’s lows; trade below key psychological levels

Indian benchmark indices have managed to prune some part of their hefty losses and are trading with cuts of around a percentage points in Monday afternoon session. The indices are gradually crawling towards the important psychological 4,600 (Nifty) and 15,300 (Sensex) levels at a time when markets across Asia including the Chinese Shanghai Composite, have cut their losses. However, sentiments largely remained pessimistic in the local markets amid heightened worries about the uncertainty looming over Europe’s future and also amid the gloomy domestic macro-economic headwinds. Discouraging developments from Europe continued to dissuade investors amid heightened worries that potential credit ratings downgrades of several Euro-zone nations may derail progress towards resolving the region's onerous debt problem. In addition, fears of political instability in the Asian region increased after reports that the mercurial leader Kim Jong Il of nuclear-armed North Korea has died. Back home, sentiments were also undermined after an influential securities firm CLSA downgraded India's weight in its relative-return portfolio by two percentage points to 11%, citing the rising subsidies bill and broadening fiscal deficit as concerns. On the BSE sectoral space, the rate sensitive counters continued to bear the brunt of hefty position squaring with high beta Realty index being the top laggard in the space after plunging over four percent while the Banking counter got pounded by over three and half a percent. The badly beaten down Capital Goods space too got pummeled and slipped by over three and half a percent. On the other hand, only the defensive FMCG pocket managed to hold its head above the water and traded with marginal gains.

Moreover, the broader markets too traded on a daunting note with around two and half a percent losses, underperforming their larger peers by a quite a margin. The bourses sank on strong volumes of over Rs 0.60 lakh core. The market breadth on BSE was dominantly in favor of declines in the ratio of 2011:515 while 82 scrips remained unchanged.

The BSE Sensex is currently trading at 15,260.24 down by 231.11 points or 1.49% after trading as high as 15,440.10 and as low as 15,202.35. There were 7 stocks advancing against 23 declines on the index.

The broader indices were trading on a pessimistic note; the BSE Mid cap index plunged 2.28% and Small cap plummeted 2.52%.

On the BSE sectoral space, FMCG up 0.16% was the only gainer while Realty down 4.21%, Capital Goods down 3.64%, Bankex down 3.55%, Power down 2.47% and PSU down 2.07% were the major losers in the space.

Tata Motors up 1.97%, HUL up 1.26%, Bharti Airtel up 1.01%, Cipla up 0.63% and ITC up 0.51% were the major gainers on the Sensex, while DLF down 4.82%, ICICI Bank down 4.19%, L&T down 3.98%, SBI down 3.58% and BHEL down 3.54% were the major losers in the index.

Meanwhile, even as uncertainty over the Euro-zone debt crisis looms and domestic economy continues to slow, Indian government remains confident of doubling exports to $500 billion by 2013-14, with a compound average growth of 26.7% per annum. The commerce ministry’s goal in the medium-term as outlined in the Foreign Trade Policy (FTP 2009-14) is to double India’s exports of goods and services by 2014 with a long term objective of doubling India’s share in global trade by the end of 2020 through appropriate policy support.

Union Commerce Minister, Anand Sharma in his strategy for doubling exports has outlined four pronged strategy namely, Product Strategy; Market Strategy; Technologies and R&D and Building a Brand image. The strategy paper underscored that considerable growth potential is likely in engineering goods, basic chemicals and organic and inorganic chemicals, pharmaceuticals (including biotech) and electronics to boost exports.

The commerce minister also stated that the government will provide necessary policy support needed to realize the ambitious export targets for 2013-14 and beyond. The government proposes to continue the existing incentive schemes and aims to follow a stable policy environment while providing preferential access to new markets and putting in place conducive trading arrangements. 

The S&P CNX Nifty is currently trading at 4,578.75, lower by 72.85 points or 1.57% after trading as high as 4,623.15 and as low as 4,560.25. There were 11 stocks advancing against 39 declines on the index.

The top gainers on the Nifty were Ambuja Cement up 1.41%, Tata Motors up 1.36%, HUL up 1.13%, Cipla up 0.84% and GAIL up 0.33%.

Axis Bank down 5.48%, DLF down 5.28%, ICICI Bank down 4.18%, L&T down 3.91% and Tata Power down 3.83% were the major losers on the index.

Asian markets traded on a pessimistic note, Shanghai Composite declined 0.62%, Hang Seng plunged 1.55%, Jakarta Composite eased 0.03%, Nikkei 225 sank 1.26%, Straits Times plummeted 1.34%, Seoul Composite got pounded by 3.43% and Taiwan Weighted slumped 2.24%.