Sensex off day’s lows aided by supportive European cues

Stock markets in India are trading with large cuts of around a percent on humungous volumes in the afternoon session on Monday. The bourses though have gone on to pare some amount of losses helping the benchmarks to recover from day’s lows as sentiments got some support from the positive European market opening which spurred some buying in local shares at lower levels. The important psychological 5,200 (Nifty) and 17,100 (Sensex) levels proved to be strong supports for the frontline indices. The rate sensitive counters like Bankex and Realty continued to do bulk of the damage after they got thrashed by around two percent as market participants remained worried over the nation’s fiscal deficit target and amid speculations that inflationary pressures on the economy is likely to resurface. Also the index heavyweights like Reliance Industries, Infosys and L&T got pounded in the session and pressured the benchmarks indices on the first day of March series futures and options expiry week. Meanwhile, amid the depreciating rupee and spiking international crude oil prices, the resurfacing inflation concerns have multiplied the worries of investors because there was excise duty and service tax increases in the budget, which will add to inflation. Leads from the Asian counterparts remained weak as most markets traded with losses though few traded with marginal gains. While, European markets started on a positive note after recording their steepest weekly loss since the start of the year on Friday, as investors searched for bargains and positioned themselves for a potential strong German economic report.

Moreover, the broader markets too traded on a pessimistic note but were performing better than their larger peers. The bourses plunged on extremely large volumes of over Rs 1 lakh crore while market breadth on BSE was in favor of declines in the ratio of 1732:837 while 114 scrips remained unchanged.

The BSE Sensex is currently trading at 17,163.88 up by 197.86 points or 1.14% after trading as high as 17,377.59 and as low as 17,070.02. There were just 2 stocks advancing against 28 declines on the index.

The broader indices were trading on a weak note; the BSE Mid cap index slipped 0.89% and Small cap sank 0.80%.

On the BSE sectoral space, FMCG up by 0.08% was the only gainer, while Realty down 2.21%, Bankex down 1.84%, Power down 1.72%, Auto down 1.27% and PSU down 1.22% were the major losers in the space.

Wipro up 1.10% and ITC up 0.25% were the major gainers on the Sensex, while Tata Power down 3.47%, ICICI Bank down 3.41%, NTPC down 2.56%, DLF down 2.42% and Tata Motors down 1.85% were the major losers in the index.

Meanwhile, executives across the globe expect an improvement in the economic scenario in the first quarter of this year, as per a report by the consulting firm McKinsey & Co. However it is unlikely that the sentiment will translate into greater investments as there is still an underlying air of caution. The report which is based on an online survey saw participation from 2,060 executives. About 42% of them said that conditions are better now as compared to six months ago and about 48% expect them to get better in the coming six months. This number is significantly up from the 26 % in a similar survey in December 2011.

India leads the optimism with 65% of the executives feeling that conditions will improve for the better. While the numbers stood at 59% and 48% for North America and ‘developed Asia’. The euro zone too has received encouraging numbers as increasing number of people feel that conditions will be better in the next six months.

However it is unlikely that this optimism will translate in to investments as about 30% of respondents said that their companies are postponing or deciding not to pursue capital investments. About 24% said their companies are postponing M&A decisions that would typically be considered for growth.

Around 58% of the respondents felt that rising oil prices would impede growth while 31% cited geopolitical instability as a barrier to growth. Executives also reported smaller changes with respect to their companies' hiring and investment decisions. 48% reportedly said that they expect the size of their companies' workforce to stay the same, 32% expected an increase, and 18% expected a decrease.

The S&P CNX Nifty is currently trading at 5,213.05, lower by 65.15 points or 1.23% after trading as high as 5,274.95 and as low as 5,187.85. There were 7 stocks advancing against 43 declines on the index.

The top gainers on the Nifty were JP Associates up 3.08%, Kotak Bank up 1.60%, Wipro up 0.88%, ITC up 0.56% and Ranbaxy up 0.14%.

Tata Power down 3.51%, IDFC 3.48%, Axis Bank down 3.48%, ICICI Bank down 3.45% and NTPC down 2.97% were the major losers on the index.

In the Asian space, Shanghai Composite eased 0.09%, Hang Seng shed 0.01%, Jakarta Composite declined 0.35%, Straits Times fell 0.07%, Seoul Composite slipped 0.38% and Taiwan Weighted plummeted 1.35%.

On the other hand, Nikkei 225 added 0.07% and KLSE Composite rose 0.01%.

The European markets were trading in green with, France’s CAC 40 added 0.41%, Germany’s DAX ascended 0.30% while Britain’s FTSE 100 gained 0.35%.