Indian markets slide in early trade on weak Asian cues

The Indian stock markets began the week on a rough note with both Indian benchmark indices Nifty and Sensex losing in early trade on Monday on fresh selling by funds amid a weak trend on other Asian bourses. Globally, China said it is targeting the slowest growth since 2004 and the nation’s service industries contracted. US and European markets too closed in the red on Friday. Back home, Sensex breached its crucial 17,500 mark as sentiments remained subdued ahead of the UP election results, due on Tuesday. On the sectoral front, auto remained the lone gainer on the Sensex while, major part of the blow was absorbed by banking, metals and capital goods stocks. Among front-liners, JP Associates, ICICI Bank, SBI, ICICI Bank, Bajaj Auto, ONGC, HUL and TCS were under selling pressure. However, Reliance Communications, Reliance Power, Reliance Infrastructure moved up 1-2 percent. Meanwhile, the broader indices too were struggling to get some traction and the market breadth on the BSE was negative; there were 683 shares on the gaining side against 852 shares on the losing side while 71 shares remained unchanged.

The BSE Sensex opened at 17,598.42; about 38 points lower compared to its previous closing of 17,636.99, and has touched a low of 17,450.44 while high remained its opening.

The index is currently trading at 17,498.24 down by 138.75 points or 0.79%. There were 6 stocks advancing against 24 declines on the index.

The overall market breadth has made a negative start with 42.53% stocks advancing against 53.05% declines. The broader indices too were trading in the red; the BSE Mid cap and small cap indices declined 0.30% and 0.15% respectively.

The only gaining sectoral index on the BSE was Auto up by 0.03%. While, Bankex down by 1.56%, Metal down by 1.47%, CG down by 1.42%, Realty down by 0.91% and PSU down by 0.84% were the top losers on the index.

The top gainers on the Sensex were Tata Motors up by 1.36%, Bharti Airtel up by 0.99%, Maruti Suzuki up by 0.88%, M&M up by 0.66% and Sun Pharma up by 0.47%.

On the flip side, Hindalco was down by 2.57%, Jindal Steel was down by 2.33%, DLF was down by 2.09%, L&T was down by 2.03% and HDFC Bank was down by 1.91% were the top losers on the Sensex.

Meanwhile, the Cotton Corporation of India (CCI) has ruled out the possibility of intervening in the market this season given the higher price of cotton than its Minimum Support Price (MSP). The price of the natural fibre is currently 10% above its MSP.

CCI usually intervenes on the government's behalf when market prices are below MSP. But cotton prices are now quoting Rs 700-800 per quintal more than the MSP. The CCI, which procured 13 lakh bales in the 2010-11 cotton season (Oct-Sep) has so far purchased less than one lakh bales. The higher price of cotton has been attributed to the slow pace of its arrival in the market as compared to last year.

Domestic market supply saw a decline of 4% to 223.43 lakh bales (of 170 kg each) as on February 26, against 233.84 lakh bales that arrived for sale during the same period last year, data put out by the Cotton Corporation of India (CCI) showed. Although supplies in February showed an increased, recovering from a 14% fall until January-end, they were cumulatively lower compared with the previous year. The marketing year for the crop runs from October to September.

Cotton mills too haven’t buying too much cotton despite declining arrivals due to the tight liquidity situation. Usually mills maintain four to six months' inventory but it has now dwindled to two months due to erosion in working capital. Textile mills on their part have urged the government to empower CCI to play a larger role in stabilizing the volatile cotton prices.

The S&P CNX Nifty opened at 5,342.55; about 18 points lower compared to its previous closing of 5,359.40, and has touched a high and a low of 5,344.50 and 5,302.75 respectively.

The index is currently trading at 5,313.70, lower by 45.70 points or 0.85%. There were 11 stocks advancing against 39 declines on the index.

The top gainers of the Nifty were RInfra up by 2.54%, RPower up by 2.40%, RCom up by 1.74%, Tata Motors up by 1.14% and Maruti Suzuki up by 0.85%.

On the flip side, Jaiprakash Associates down by 4.43%, Hindalco down by 2.67%, Jindal Steel down by 2.35%, L&T down by 2.21% and Hero MotoCorp down by 2.17%, were the major losers on the index.

Most of the Asian equity indices were trading in the red; Shanghai Composite was down 1.34 points or 0.05% to 2,459.35, Hang Seng was down 242.94 points or 1.13% to 21,319.32, Jakarta Composite was down 16.05 points or 0.40% to 3,988.82, Nikkei 225 was down 58.16 points or 0.59% to 9,718.87, Straits Times was down 3.29 points or 0.11% to 2,990.20, Seoul Composite was down 22.19 points or 1.09% to 2,012.44 and Taiwan Weighted was down by 99.41 points or 1.23% to 8,015.03.

On the flip side, KLSE Composite was up by 6.89 points or 0.44% to 1,590.67.