Selling continues unabated; sensex on verge of losing 27000 level

The selloff started in early morning in the Indian markets is not looking to subside anytime soon with benchmarks continuing to reel under pressure with cuts of over one and half a percent, with Sensex and Nifty on the verge of losing their crucial support levels of 27000 and 8150 respectively. Traders apart from domestic jitters were concerned about the global developments with insufficient progress on talks between debt-strapped Greece and its creditors. Greece won limited support from the eurozone Monday for the progress it has made in difficult bailout talks. Most of the Asian markets worried about the development in Eurozone were trading in red, adding pressure to the local markets. On the domestic front, there is cautiousness since beginning ahead of the key macro data, IIP or the Industrial production is expected to have slowed to 2.8-3.0 percent in March from three-month high of 5.0 percent a month before, while Consumer price inflation is expected to have eased to a four-month low of 4.9 percent in April from 5.2 percent a month ago. Traders were also concerned about the depreciation in rupee past the $64 a dollar mark after the American currency firmed up overseas. Back on Street, while the cuts on broader markets were a bit less, all the sectoral indices were trading considerably lower from their previous closing on the BSE. Banking, oil & gas, metal, power and capital goods were the laggards.

The BSE Sensex is currently trading at 27036.46, down by 470.84 points or 1.71% after trading in a range of 27011.96 and 27502.91. There were just 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.56%, while Small cap index lost 1.20%.

The top losing sectoral indices on the BSE were Bankex down by 2.49%, Oil & Gas down by 2.45%, Metal down by 2.39%, Power down by 2.27%, Realty down by 2.08%.

The top gainers on the Sensex were Hero MotoCorp up by 3.93%, Dr. Reddys Lab up by 2.03%, Coal India up by 0.31% and ITC up by 0.06%. On the flip side, Vedanta down by 5.00%, Tata Steel down by 4.34%, ICICI Bank down by 3.45%, BHEL down by 3.39% and Reliance Industries down by 2.76% were the top losers.

Meanwhile, government has sought suggestions on a draft paper to frame policy on the capital goods industry, envisioning an increase in its contribution from 12 per cent at present to 20 per cent of the total manufacturing activity in the country by 2025. The “Draft Base Paper for National Policy on Capital Goods and Engineering” prepared by the Department of Heavy Industry points out that imports continue to address 35 to 40 percent of domestic demand with the proportion being significantly higher in “critical components” segment for each subsector.

The capital goods sector contributes 12% to the total manufacturing activity and 15% of the GDP, but this component in industrial production has lagged in recent years due to slow pace of domestic demand leading to growing dependence on imports and following slow growth in the world economy.

The draft paper has highlighted the fact that support facilities, technology development institutions and skilled man-power continue to lag behind global standards, even as cost disabilities such as higher cost of power, finance and infrastructure lead to higher operating cost.

The paper has asked suggestions to help implementing full-fledged scheme on “Enhancement of Competitiveness in the Indian capital goods sector” through enabling policies for technology transfer, up-gradation and innovation. It has set a mission to become one amongst top 10 capital goods producing nations of the world and raise exports to a significant level of at least 40% of total production.

The CNX Nifty is currently trading at 8171.10, down by 154.15 points or 1.85% after trading in a range of 8158.75 and 8326.65. There were just 2 stocks advancing against 48 stocks declining on the index.

The gainers on Nifty were Hero MotoCorp up by 3.99% and Dr. Reddys Lab up by 2.33%. On the flip side, Bank Of Baroda down by 6.01%, Vedanta down by 5.25%, Tata Steel down by 4.43%, PNB down by 3.59% and ICICI Bank down by 3.51% were the top losers.

The Asian markets were mixed, Nikkei 225 was marginally up by 3.93 points or 0.02% to 19,624.84, Taiwan Weighted gained 17.01 points or 0.18% to 9,680.73, Jakarta Composite gained 31.22 points or 0.6% to 5,203.70 and Shanghai Composite surged by 61.34 points or 1.42% to 4,394.92.

On the flipside, Hang Seng lost 73.16 points or 0.26% to 27,645.04, Straits Times declined by 13.59 points or 0.39% to 3,457.21, FTSE Bursa Malaysia KLCI was lower by 4.19 points or 0.23% to 1,801.30 and KOSPI Index was tad down by 0.61 points or 0.03% to 2,096.77.