Post session - Quick review

Volatility has become a constant companion to the Indian equity indices ahead of the F&O expiry next week. Barometer gauges after dilly-dallying for the entire trading session, halted the four days gaining streak on Friday, to capitulate to furious selling pressure, sharply witnessed in the latter half of the session. However, barometer gauges, despite recuperating from intra-day’s low, concluded with a nick of over half a percentage points. The 30 scrip sensitive index of BSE-Sensex- ended below the 17400 bastion. While, the widely followed 50 share index of National Stock Exchange (NSE)-Nifty- settled below its 5300 bastion. The picture was no different for broader indices which suffered a loss of over 0.50%.

Sharp decline in the benchmark indices was after the report of potential 'freak trade' in the Nifty April futures, which plunged over 300 points to hit a low of 5,000. Nifty futures dropped 1.5%, dragging down spot indexes, which several dealers attributed to a trading mistake. In a statement, however, the National Stock Exchange (NSE) told that its surveillance department is examining the issue and it is too early to say whether it was a freak trade or not.

However, investors also scuttled out of equities ahead of weekend on account of lingering caution ahead of Reliance Industries' fourth quarter earnings, which is schedule to be announced later today. Oil-to-yarn and retail conglomerate is expected to post a year-on-year (y-o-y) decline in profit for the second quarter in a row as margins in its core businesses of refining and petrochemicals continue to be under pressure. A consensus estimates pegs consolidated net profit of the group at Rs 4,434.5 crore, down 17.5% from the year earlier, despite revenue seen 26.3% higher at Rs. 91,813.35 crore.

Even bleak global cues pulled the already fragile sentiment. Asian shares slipped on Friday after disappointing US economic data stirred doubts about the strength of the recovery. Renewed worries on the euro zone debt crisis also kept riskier assets under pressure and supported safe-haven US Treasuries, as a better-than-feared Spanish bond auction failed to allay concerns that Spain may follow Greece, Ireland and Portugal in needing an international bailout.On the other hand, positive cues from European shares were peculiarly overlooked. A rebound in bank shares set track for 1st weekly gain in a month of European markets.

Back on the home turf, stocks from Capital Goods (CG), Power and Realty counters led the market in red. However, strong resilience was put forth from stocks belonging to the Auto, Fast Moving Consumer Goods (FMCG) and Consumer Durable (CD) space. Expectations that auto sales would improve after this week’s aggressive interest rate cut from the Reserve Bank of India aided the rally in auto shares for fourth consecutive session. Tata Motors rose 3.1 percent while Maruti Suzuki gained 2.9 percent.

The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1222:1569 while 127 scrips remained unchanged. (Provisional)

The BSE Sensex lost 131.46 points or 0.75% and settled at 17,372.25. The index touched a high and a low of 17,519.88 and 17,231.34 respectively. 8 stocks advanced against 22 declining ones on the index (Provisional)

The BSE Mid-cap index lost 0.95% while Small-cap index was down 0.47%. (Provisional)

On the BSE Sectoral front, FMCG up 0.28% and Auto up 0.03% were the only gainers while Capital Goods down 1.97%, Power down 1.78%, Realty down 1.53%, Oil & Gas down 1.46% and Bankex down 1.20% were the major losers.

The top gainers on the Sensex were M&M up 2.66%, Tata Steel up 0.64%, Cipla up 0.63%, ITC up 0.55% and Bharti Airtel up 0.34% while, ONGC down 2.66%, Hindalco Industries down 2.61%, Tata Power down 2.47%, Jindal Steel down 2.44% and L&T down 2.26% were the top losers in the index. (Provisional)

Meanwhile, the recent amendment of the Income Tax Act, which allows India to tax foreign takeovers retroactively to 1962, has raised concerns in the US corporate sector. US is of the view that such steps dampen enthusiasm about India's investment climate. The US Treasury Secretary Timothy Geithner has reportedly told his Indian counterpart that US businesses have become worried about changes in India's tax regime for foreign companies. Also Washington is examining India's proposed tax provisions to determine how they will impact on the US-India bilateral income tax treaty and overall economic relations.

Timothy has reportedly encouraged Finance Minister Pranab Mukherjee to reassure foreign investors that India will continue to welcome foreign capital. The Finance Minister in this year’s Union Budget came up with a proposal to amend the IT Act with retrospective effect to bring into the tax net Vodafone-type merger and acquisition deals involving assets in India. The UK-based Vodafone, which in 2007 bought Hong Kong-based Hutchison’s telecom business that included Indian assets for around $11 billion, has attracted tax of Rs 11,000 crore.

However, Vodafone has refused to pay the tax arguing that since both companies are not based in India, the tax rule does not apply on them. The Supreme Court has given its judgment in favour of Vodafone. Nevertheless, the amendment to the law itself and the ability of the IT department to tax companies retrospectively has drawn flak from investors domestically and internationally.

In recent months, foreign investors have begun to sour on India due to these major policy swings. In a letter to Premier Manmohan Singh earlier this month, seven global business groups, including the Confederation of British Industry and the US Business Roundtable, warned of a 'widespread reconsideration of the costs and benefits of investing in India.'

India VIX, a gauge for market’s short term expectation of volatility gain 3.82% at 20.09 from its previous close of 19.35 on Thursday. (Provisional)

The S&P CNX Nifty lost 40.25 points or 0.75% to settle at 5,292.15. The index touched high and low of 5,336.15 and 5,245.45 respectively. 8 stocks advanced against 41 declining ones while 1 stock remained unchanged on the index. (Provisional)

The top gainers on the Nifty were M&M up 2.75%, Wipro up 1.01%, Cipla up 0.70%, ITC up 0.64% and Tata Steel up 0.62%.On the other hand, IDFC down 3.30%, JP Associates down 2.87%, Siemens down 2.52%, Hindalco Industries down 2.50% and Jindal Steel down 2.42% were the top losers. (Provisional)

The European markets were trading on a mix note, with France's CAC 40 up 0.34%, Germany's DAX up 0.45% and Britain’s FTSE 100 down 0.04%.

Sentiments in the Asian region continued to remain bearish for second consecutive day and most of the Asian equity indices snapped the last trading day of the week in the negative terrain on Friday as downbeat US housing, jobless claims and manufacturing data raised anxiety about the outlook for the world's largest economy, eclipsing stronger-than-expected U.S. earnings, a positive Spanish bond auction and improved prospects for the International Monetary Fund's resources to expand. The Labor Department said weekly applications for unemployment benefits were down 2,000 to 386,000 but anything above 375,000 is generally taken as a sign that hiring is not strong enough to lower the unemployment rate.

On the regional turf, Korean and Japanese exporters underperformed on concerns over the global growth outlook. Meanwhile, Japanese Nikkei edged lower to post its third straight weekly loss after a Spanish bond auction failed to extinguish fears of a renewed euro zone debt crisis, but a weaker yen offered support. While, Chinese Shanghai Composite ended with a gain of over a percentage point, boosted by expectations of further policy easing after a senior government economist said China's economic growth may rebound in the third quarter of this year and that there is room to adjust the country's macroeconomic policy.