Sensex shows feeble movement; see-saws around the neutral line

Stock markets in India are showing lackadaisical movements in the Friday afternoon session amid lack of investor conviction to pile up fresh positions amid uncertain market conditions. The key equity gauges continue to move sideways in an extremely narrow range around the psychological 5,350 (Nifty) and 17,500 (Sensex) levels, lacking any significant upside triggers as investors indulged only in stock specific activities. The benchmark gauges were pressured by continued profit booking in the Capital Goods and Power counters which remained among the top laggards after heavyweight BHEL once again suffered severe pounding, falling about one and half a percent amid reports that an US investment bank downgraded BHEL to Underweight citing slack demand led India from an under-supplied to an over-supplied market for power equipment. Sentiments also were grim ahead of the earnings announcement by Sensex’s heaviest component Reliance Industries which plunged over a percent amid expectations that the company is likely to report quarterly figures that would disappointing the Street. The drop in rate sensitive Banking and Realty pockets too was not supporting the sentiments. On the other hand, the downside in local bourses was limited as Automobile counter continued to remain in top gear with BSE auto index rising for a seventh straight session to a new all-time highs on expectations that sales will improve after the RBI’s 50 basis points cut in repo rate. The beaten down IT and TECk pockets too saw some buying interest and did its bit in preventing the frontline indices from drifting to lower levels. The markets traded on a subdued note through the session tracking the mixed cues from Asian peers after disappointing economic reports from world’s largest economy’s recovery and renewed concerns over the financial situation in Euro-zone offset the positive cues from encouraging earnings announcement by blue-chip firms. European markets too opened on a soft note, extending losses for a third straight sessions with sentiment capped by political frictions threatening to slow down the International Monetary Fund's efforts to tackle the euro zone debt crisis .

Moreover, the broader markets traded on a positive note with the Small-cap index outperforming in all its larger peers as it traded with around half a percent gains. The bourses consolidated on good volumes of over Rs 0.60 lakh crore while the market breadth on BSE was in favor of advances in the ratio of 1322:1204 while 99 scrips remained unchanged.

The BSE Sensex is currently trading at 17,487.60 down by 16.11 points or 0.09% after trading as high as 17,519.88 and as low as 17,442.23. There were 15 stocks advancing against 15 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index rose 0.01% and Small cap added 0.46%.

On the BSE sectoral space, Consumer Durables up 0.84%, Auto up 0.63%, TECk up 0.52%, IT up 0.37% and Metal up 0.33% were the major gainers, while Capital Goods down 0.74%, Oil & Gas down 0.71%, Power down 0.43%, Realty down 0.35% and Bankex down 0.20% were the major laggards in the space.

M&M up 2.19%, Bharti Airtel up 1.39%, Maruti up 1.20%, Tata Steel up 1.18% and Sun Pharma up 0.93% were the major gainers on the Sensex, while BHEL down 1.41%, RIL down 1.25%, ICICI Bank down 0.82%, Tata Power down 0.79% and HUL down 0.77% were the major losers in the index.

Meanwhile, the Indian gem and jewellery industry has witnessed a marginal decline of 0.36% in exports in FY ’12.  The dip has come due to a fall in the exports of diamonds. Gold jewellery has been the major driver of growth and has registered an increase of 30% in FY‘12.

As per Gems and Jewellery Export Promotion Council (GJEPC), the total gem and jewellery industry exports were recorded at $42839 million (INR 204823 crores) in FY 2011-12 as compared to $42995 million (INR 195735 crores) in April 2010 - March 2011. Though in dollar terms there is a marginal drop of 0.36%, the exports mark an increase of 4.6% in rupee value. The gem and jewellery sector accounted for 14% of India’s total merchandise exports in FY 2011-2012.

The decrease in the exports of diamonds has been because of a decline in the imports of Cut and Polished Diamonds (CPD) due to the 2% import duty levied on them by the government in mid-January, 2012. The increase in import duty was done with the aim of reducing the trade deficit. As a result imports of CPD fell by nearly 70% during the period of Jan-March. For FY’12 CPD witnessed a decline of 17.3%. It is expected that the total import of polished diamonds at in 2011-12 may eventually come down significantly in 2012-13. It is expected that the total import of polished diamonds at in 2011-12 may eventually come down significantly in 2012-13.

Rajiv Jain, Chairman, GJEPC has said, ‘We are happy that keeping with the government objective of reducing the trade deficit, imports of cut and polished diamonds have dipped post the introduction of 2% import duty. However an increase in import figures of rough diamonds indicates stable growth of trade at the manufacturing level and growth in exports.’

Gold jewellery remained the major driver of growth and saw an increase of 30% in FY’12.  Coloured gemstone exports witnessed an increase of 9.10% in FY’12. The GJEPC is making efforts to promote exports of gems and jewellery. It has planned a series of initiatives that will provide an impetus to trade and catapult the industry to newer heights. It has taken on the onus of improving skill sets for the Industry, and has established gem and jewellery sector specific council of India to achieve the same.

The S&P CNX Nifty is currently trading at 5,328.25, lower by 4.15 points or 0.08% after trading as high as 5,336.15 and as low as 5,310.55. There were 24 stocks advancing against 26 declines on the index.

The top gainers on the Nifty were M&M up 2.22%, Bharti Airtel up 1.31%, Tata Steel up 1.22%, Sun Pharma up 1.18% and Maruti up 1.14%.

ACC down 3.01%, Ambuja Cement down 2.70%, IDFC down 1.58%, JP Associates down 1.37% and Reliance down 1.22% were the major losers on the index.

In the Asian space, KLSE Composite down 0.07%, Nikkei 225 fell 0.28%, Straits Times dropped 0.06%, Seoul Composite plunged 1.26% and Taiwan Weighted plummeted 1.52%.

On the flipside, Shanghai Composite surged 1.09%, Hang Seng added 0.10% and Jakarta Composite rose 0.02%.

The European markets got off to a flat start as France’s CAC 40 eased 0.14%, Germany’s DAX advanced 0.15% and Britain’s FTSE 100 fell 0.10%.