Post session - Quick review

Halting two day’s gaining streak, barometer gauges, tottering under intense selling pressure witnessed nasty cut of over two percent each, to conclude the session dismally below the respective crucial bastions of 17200 (Sensex) and 5250 (Nifty) respectively. The session, which was constantly accompanied by volatility, finished on a large volume of over 2 lakh crore.

After signaling a green for third straight session, barometer gauges failed to protract their northbound journey as after starting on a positive note wilted in an hour on report that the Comptroller and Auditor General (CAG) pegged loss of massive Rs 10.67 lakh crore in revenue to the government on sale of coal deposits cheaply, doing a lot of annihilation for the companies which were named as its beneficiaries. The beneficiaries of the coal block allocation as per the reports included some private companies and public sector units in industries such as power, steel and cement. Reacting to this some steel stocks like Bhushan Steel, Tata Steel, Jindal Steel & Power, JSW Steel witnessed a drastic cut between 4-7% each.

However, the losses at Dalal Street just could not be blamed to the domestic political uncertainties, but also to the gloomy global set up. Asian shares ended surrendering most of their earlier gains on Thursday after data showed China's factory activity shrank for a fifth successive month, renewing concerns about a growth slowdown in the world's second largest economy.

Meanwhile, European shares, having own worries, weakened for a fourth straight session on Thursday after weak economic data from Germany reignited concerns about the strength of global demand.

Back home, underlying weakness of the bourses also came in from some oil marketing companies (OMC’s), which incurred heavy losses after the reports suggested that  the OMCs, which are unable to hike prices despite the deregulation of petrol, have sought re-regulation of petrol prices. Oil marketing companies are compensated by the government for selling diesel, kerosene and liquefied petroleum gas at government-fixed prices, however petrol since June 2010 have been de-regulated and the government allowed oil marketers to fix petrol prices. Reacting to this, IOC, HPCL and BPCL slipped in the range of 1.5-2.50%.

Additionally, gold loan companies too witnessed the brunt of profit booking after the Reserve Bank of India came out with curbs on the business, restricting loans to 60% of the jewellery value and bar loans against coins and gold biscuits. Muthoot Finance was down by 11.18% while Manappuram Finance was down by 17%. Meanwhile, broader indices too showcased no different trend as both Midcap and Smallcap index edged lower in the range of 1.50-2.50%. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 919:1976 while 108 scrips remained unchanged. (Provisional)

The BSE Sensex lost 447.74 points or 2.54% and settled at 17,153.97. The index touched a high and a low of 17,687.01 and 17,136.50 respectively. 2 stocks advanced against 28 declining ones on the index (Provisional)

The BSE Mid-cap index lost 2.43% while Small-cap index was down 1.73%. (Provisional)

On the BSE Sectoral front, there were no gainers while Realty down 4.56%, Power down 4.07%, Bankex down 3.74%, Metal down 3.66% and Capital Goods down 3.48% were the top losers.

The top gainers on the Sensex were Coal India up 1.93% and Hero MotoCorp up 0.04%.

On the flip side, Jindal Steel down 7.30%, Tata Power down 5.33%, DLF down 5.21%, Tata Steel down 5.08% and RIL down 4.37% were the top losers in the index. (Provisional)

Meanwhile, the government will make all attempts to implement the food security bill by December 2012, as per the Food Minister, K V Thomas. The minister has further clarified that the government has enough foodgrains to meet the requirements of the food bill as well as export requirements till 2014.

The Food Security Bill was introduced in the Lok Sabha in December, and is currently being examined by the Parliamentary Standing Committee. It is estimated that the bill will increase the subsidy burden of the government by Rs 88,000 crore this year, which will go upto Rs 1.09 lakh crore with the revision in the 2000 census and 1993-94 poverty line estimates.

The bill will be a taxing affair for the government unless it tries to cut on the subsidies it is providing on fuel. The Finance Minister has stated that efforts are being made to reach a political consensus over the issue but whether all political parties agree to it, remains to be seen.

Another factor that is a cause for worry is that the economy may grow at a subdued pace even in the next fiscal, which will lead to a fall in revenue collections of the government. Additional income will come due to the recent increase in the rates of excise duty and service tax, but the extent shall vary depending on the economic growth.

The food security bill endows a legal right of mandatory supply of foodgrains (at subsidised rates) to 75% of rural population and 50% of urban population. Further every person belonging to ‘priority’ household will be entitled to receive 7 kgs of foodgrains a month and every ‘general’ category person would be entitled to not less than 3 kgs of grains. The bill provides for supply of rice at Rs 3 per kg, wheat at Rs 2 per kg and coarse cereals at Re 1 per kg to ‘priority’ households.

India VIX, a gauge for market’s short term expectation of volatility gain 17.95% at 24.77 from its previous close of 21.00 on Wednesday. (Provisional)

The S&P CNX Nifty lost 139.45 points or 2.60% to settle at 5,225.50. The index touched high and low of 5,385.95 and 5,214.60 respectively. 2 stocks advanced against 48 declining ones on the index. (Provisional)

The top gainers on the Nifty were Coal India up 1.65% and Hero MotoCorp up 1.02%.On the other hand, JP Associates down 7.18%, Jindal Steel down 7.06%, Reliance Infrastructure down 6.33%, IDFC down 6.24% and Reliance Power down 6.13% were the top losers. (Provisional)

The European markets were trading in red, with France's CAC 40 down 1.71%, Germany's DAX down 1.70% and Britain’s FTSE 100 down 1.04%.

Most of the Asian equity indices ended the day’s trade in the positive terrain on Thursday shrugging off data showing China’s manufacturing activity shrank for a fifth straight month in March, with market participants seeing Japanese equities as a buy. The world’s third largest economy Japan registered an unexpected trade surplus of 32.9 billion yen in February, the first surplus in five months, against a forecast for a 120 billion yen deficit, sending the yen against the dollar to an intraday low. However, gains were capped by weak Chinese purchasing managers index (PMI).

The Chinese Shanghai Composite edged lower by 0.10 percent as data showing the country’s factory activity shrank renewed concerns about global growth. The HSBC flash PMI, the earliest indicator of China’s industrial activity, fell to 48.1 in March from February’s four-month high of 49.6, with new orders sinking to a four-month low.