Weakness widens in market; Nifty below 5,250 level

Indian equities further drifted lower to continue its weak trade in red in the late afternoon session as selling continued on street in the frontline blue chip counters. The benchmark gauges have extended their declining run for second straight session as investors continued to book hefty profits across the board. Traders were seen piling up position in Health Care sector while selling was witnessed in Metal, Capital Goods and Power sector. Further, the next major trigger for the market is Q4 March 2012 and year ending March 2012 (FY 2012) earnings. Besides, all eyes are set on IT bellwether Infosys March Q4, 2012 result which the company will announce it on April 13, 2012, further giving direction for the markets.  Hindalco, Sterlite, Sesa Goa, SAIL, Jindal Steel and Tata Steel from Metal pack were seen trading weak in red pulling the markets lower. BHEL and L&T from Capital Goods space were trading in red with cut of around more than three percent pushing markets down. Reliance Power, NTPC, Tata Power and Power Grid from Power sector were trading in red exerting pressure on the market. In the scrip specific development, Reliance MediaWorks, controlled by billionaire Anil Ambani, was trading firm in green on reports that it is in talks to sell stake in some of its movie theatres to Mexico's multiplex operator Cinepolis. IVRCL is trading firm on reports that it is close to selling its three BOT assets to raise around Rs 500 crore. Mahindra Satyam is trading weak in red after Aberdeen Global and others claimed damages in excess of $150 million from the company for losses they allegedly suffered by investing in the scam-hit company.

On the global front, Asian markets were trading in red on pessimistic note. On the home turf, the NSE Nifty and BSE Sensex were trading below their psychological 5,250 and 17,300 levels respectively. The market breadth on BSE was in favor of declines in the ratio of 1044:1631 while 109 scrips remained unchanged.

The BSE Sensex is currently trading at 17,252.42 down by 233.60 points or 1.34% after trading as high as 17,407.66 and as low as 17,238.78. There were 4 stocks advancing against 26 declines on the index.

The broader indices were trading on a weak note; the BSE Mid cap index lost 1.08% while Small cap sank 0.50%.

On the BSE sectoral space, Health Care up 0.25% was the only gainer, while Metal down 3.13%, Capital Goods down 2.80%, Power down 2.14%, Consumer Durables down 1.66% and Bankex down 1.65% were the major laggards in the space.

HUL up 1.36%, DLF up 0.86%, Cipla up 0.77% and Bajaj Auto up 0.67% were the only gainers on the Sensex, while Hindalco Industries down 4.81%, Sterlite Industries down 4.16%, BHEL down 3.60%, Jindal Steel down 3.40% and L&T down 3.07% 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.

CAI 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 5,245.40, lower by 77.50 points or 1.46% after trading as high as 5,287.90 and as low as 5,241.10. There were 7 stocks advancing against 43 declines on the index.

The top gainers on the Nifty were Ranbaxy up 3.54%, Dr Reddy’s up 1.94%, HUL up 1.58%, Cipla up 1.03% and DLF up 0.81%.

Hindalco Industries down 5.00%, Cairn India down 4.83%, JP Associates down 4.36%, Sterlite Industries down 4.25% and Sesa Goa down 4.03% were the major losers on the index.

In the Asian space, Shanghai Composite sank 0.90%, Jakarta Composite declined 0.32%, KLSE Composite dropped 0.40%, Nikkei 225 got thrashed by 1.47%, Straits Times plunged 0.94%, Seoul Composite plummeted 1.57% and Taiwan Weighted dived 1.37%.

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