Sensex sheds over 200 points; Nifty clings on to crucial 5,250 levels

Stock markets in Indian have steadied their momentum and are gyrating in a narrow range in the Monday afternoon trading session after the frontline equity got off to a gap down opening and dived over a percentage point in late morning trades. The benchmark gauges have extended their declining run for second straight session as investors continued to book hefty profits across the board. The 50-share Nifty has somehow managed to cling on the important psychological 5,250 levels. The key indices are trading around the session’s lows as sentiments got undermined from the dismal cues from global markets. Sentiments in the Asian region got undermined amid concerns over the slowdown in the US and lingering debt crisis in Euro-zone, denting the earnings prospects for Asian exporters. Investors lacked conviction as cues from over the weekend US markets remained unsupportive as US employers added fewer jobs than forecast, damping the outlook for a recovery in the world’s biggest economy. Besides, the reports that China’s consumer price index (CPI), a main gauge of inflation, exceeded forecasts as it came in at 3.6% year on year in March also undermined investors’ morale. Back home, investors were seen squaring off hefty positions from the Metal counter tracking the global weakness in commodities while Capital Goods and rate sensitive pockets too bore the brunt of hefty selling pressure. On the other hand only the defensive Healthcare sector kept its head above the water with around a quarter percent gains after majors like Ranbaxy Labs and Dr Reddy's Labs surged in the session. Reports showed that Macquarie has put an outperform rating on Ranbaxy with a target of Rs 500.

Moreover, the broader markets traded on a weak note but the Small Cap index was outperforming all its larger peers as it traded with relatively moderate losses. The bourses declined on weak volumes of over Rs 0.5 lakh crore while the market breadth on BSE was in favor of declines in the ratio of 1515:1003 while 108 scrips remained unchanged.

The BSE Sensex is currently trading at 17,287.14 down by 198.88 points or 1.14% after trading as high as 17,407.66 and as low as 17,243.69. There were 6 stocks advancing against 24 declines on the index.

The broader indices were trading on a weak note; the BSE Mid cap index lost 0.92% and Small cap sank 0.40%.

On the BSE sectoral space, Healthcare up 0.24% was the only gainer, while Metal down 2.47%, Capital Goods down 2.40%, Power down 1.82%, Bankex down 1.51% and PSU down 1.35% were the major laggards in the space.

Cipla up 1%, HUL up 0.96%, DLF up 0.91%, Bajaj Auto up 0.75% and Bharti Airtel up 0.15% were the major gainers on the Sensex, while Hindalco down 3.64%, BHEL down 3.05%, Jindal Steel down 3.04%, Sterlite down 2.67% and L&T down 2.64% were the major losers in the index.

Meanwhile, the Cotton Association of India (CAI) has demanded revocation of ban on cotton exports as the move will benefit farmers. CAI has argued that a sizeable quantity of cotton is still in the hands of the farmers who are not willing to let go due to the fall in prices, post the ban.

On March 5, the government banned exports of cotton as they had surpassed government estimates fuelling fears of low domestic supply. However the ban was severely criticized and the government lifted it partially on March 12. It was decided that the already approved export orders would be executed but no fresh permits for exports would be entertained. Before the ban, the Commerce Ministry had issued registration certificates for 130 lakh bales (of 170 kg each), of which 95 lakh bales had already been exported.

The ban led to a fall in the domestic price of cotton. Although Indian mills could enter the market and take advantage of the low prices, they did not do so in a big way, thereby providing no support to the prices. Hence, CAI has written to Prime Minister requesting him to lift the ban.

CIA has further argued that in case a need does arrive later on in the season, the spinning mills have the option of importing duty free cotton as they have been doing so in the past. It is also extremely unlikely that the import figures will be large as Australian, Brazilian and East African cotton is expected to be abundant in the international market. It  has further reasoned that even during the years when India was a net cotton deficit country, cotton exports were always kept under Open General Licence (OGL). However, it is ironical that in the years of surplus availability of cotton, export is meted out with restrictive policies now.

The S&P CNX Nifty is currently trading at 5,251.15, lower by 71.75 points or 1.35% after trading as high as 5,287.90 and as low as 5,243.75. There were 10 stocks advancing against 40 declines on the index.

The top gainers on the Nifty were Ranbaxy up 2.98%, Dr Reddy’s up 1.73%, HUL up 0.93%, DLF up 0.68% and Bajaj Auto up 0.63%.

JP Associates down 4.19%, Hindalco down 3.94%, Cairn down 3.61%, IDFC down 3.53% and SAIL down 3.52% were the major losers on the index.

In the Asian space, Shanghai Composite sank 0.75%, Jakarta Composite declined 0.38%, KLSE Composite dropped 0.36%, Nikkei 225 got thrashed by 1.47%, Straits Times plunged 0.87%, Seoul Composite plummeted 1.57% and Taiwan Weighted dived 1.35%.

Markets in Hong Kong along with European markets remained closed on Monday on account of Easter holiday.