Weakness increases in market; Nifty below 5,400 mark

Weakness has increased in the Indian equity markets following disappointing IIP data for December. India’s industrial output rose by a slower-than-expected 1.8% in December compared with a year earlier. The figure stood at 8.1% in December 2010. Meanwhile, Nifty slipped below the 5,400 mark due to weak Asian cues, while Sensex was down 24 points. On sectoral front, information technology was the major dragger and consumer durables and metal stocks were showing some support. On the global front, Asian bourses were trading in red. Back home, the market breadth favoring the positive trend; there were 1,468 shares on the gaining side against 1,092 shares on the losing side while 110 shares remained unchanged.

The BSE Sensex is currently trading at 17,804.91, down by 25.84 points or 0.14%. The index has touched a high and a low of 17,890.11 and 17,770.39 respectively.  There were 13 stocks advancing against 17 declining ones on the index.

The broader indices protracted their consistent performance; the BSE Mid cap and Small cap indices surged by 0.40% and 0.62% respectively.

The top gaining sectoral indices on the BSE were Consumer Durable (CD) up by 0.81%, Metal up by 0.64%, PSU up by 0.60%, Auto up by 0.58% and Capital Goods up by 0.35%. While Information Technology down by 0.71%, TECk down 0.33%, Realty down 0.3%, Health Care (HC) down 0.10% and Oil & Gas down 0.08% were top losers on the index.

The top gainers on the Sensex were Tata Steel up by 3.96%, Tata Motors up by 1.03%, Bharti Airtel up by 0.97%, Bajaj Auto up by 0.83% and ONGC up by 0.83%.

On the flip side, Sterlite Industries down by 1.85%, Maruti Suzuki down by 1.72%, Hindalco Industries down by 1.20%, Infosys down by 1.18% and ICICI Bank down by 1.03% were the top losers on the Sensex.

Meanwhile, India’s trade deficit is likely cross 3.5% of GDP in the fiscal year ending March 2012. A slowdown in exports combined with ballooning import bills threaten to make FY’12 the worst fiscal in the past eight years. Trade Secretary, Rahul Khullar has projected that the trade gap in FY’12 is likely to touch $160 billion, higher than the earlier estimate of about $150 billion.

He has further stated that FY’13 is likely to be a tough fiscal for the Indian economy given the uncertainty in the US and Europe markets and rising import bills. The Indian government also may not be in a position to provide any fiscal stimulus to support the exporters, given its strained finances. On the other hand, import bills are on the rise and rose 20.3% year on year in the month of January, 2012 to $40.1 billion, resulting in a trade deficit of $14.7 billion for the month.

If the situation persists, the Indian rupee could come under pressure and would have to depend on volatile capital flows to keep it stable. The rupee fell nearly 16% against the US dollar in 2011, before recovering strongly this year. It rebounded on the back of strong capital inflows and measures taken by the central bank to stabilize the exchange rate. A 7% appreciation in the rupee's value against the US dollar since the end of December should help bring down the import bill and help lower the trade gap in the next two months. However the slowdown in exports due to the euro zone crisis is likely to make the coming year difficult.

The S&P CNX Nifty is currently trading at 5,398.55, lower by 13.80 points or 0.25%. The index has touched a high and a low of 5,427.75 and 5,390.20 respectively. There were 19 stocks advancing against 30 declines and one remained unchanged on the index.

The top gainers of the Nifty were Sesa Goa up by 3.88%, Tata Steel up by 3.75%, BPCL up by 2.96%, SAIL up by 2.07% and Punjab National Bank up by 1.44%. Cairn India down by 2.14%, Sterlite Industries down by 2.11%, Ambuja Cement down by 1.85%, Siemens down by 1.77% and Maruti Suzuki down by 1.77% were the major losers on the index.

All the Asian markets were trading in the red; Shanghai Composite down by 0.20%, Hang Seng was down by 1.29%, Jakarta Composite plunged 1.68%, Nikkei 225 slid 0.61%, Straits Times lost 0.56%, Seoul Composite plummeted by 1.04% and Taiwan Weighted succumbed by 0.61%.