Global cues coupled with negative domestic development sap local markets

Volatility marked the day of trade on the Dalal Street on Monday, though what happened in second half was one way slide of the markets to the lowest levels. Initially on subdued global cues the domestic markets started flat after suffering over a percent of cut in last session. The US markets closed mixed on some weaker earnings while the Asian markets started on a soft note despite getting encouraging data from China as HSBC Flash PMI showed the country’s manufacturing activity gained some momentum in April, coming at 49.1 in April from a final reading of 48.3 in March.

Back home, the benchmark indices that started the journey on a flat note showed some courage to remain above the neutral line in the initial hours of trade, Reliance Industries that reported over 21% profit decline in Q4 started trading higher because of its better than expected GRM numbers. The company reported GRM of $7.6 per barrel as against the general expectation of $6.8-7 per barrel. The major indices showed range-bound trade initially with Sensex and Nifty hardly showing any sign to buzz from the 17,400 and 5,300 levels respectively. But jitters started in the markets on some report that Macquarie's Asia hedge fund has exited its short positions in Indian single stock futures in response to proposed tax rules that could lower investment returns. The news intensified the selling pressure in the markets and all the sectoral gauges started witnessing profit booking, fearing further downside in the markets. The rate sensitives’ that had moved higher after the RBI’s rate cut suffered the most. The weak start of the European front further added pressure on the local markets.

All the sectoral gauges plunged with that reason or of some other; the IT sector came under pressure after Infosys declined on disclosing that the company was under scrutiny from US regulating authorities for likely errors in employer eligibility documents of its staff. On the same time, banking stocks lost momentum after heavyweight State Bank of India failed to cut its base rate, though it reduced the auto loan rates and said that it will be taking further rate cut decision segment-wise. Also, Reserve Bank of India’s Deputy Governor Anand Sinha stated that earnings of banks are likely to come under pressure due to the higher capital requirements for the implementation of Basel-III norms. Telecom stocks were pounded after TRAI set 2G auction reserve price higher than 3G auction price set in 2010. Though, in this entire gloom one non sectoral index that witnessed value buying interest was of paper manufacturers. Most of the paper stocks moved higher topping their average daily volume. Ballarpur Industries was up by 3% and West Coast Paper surged by 17% and AP Papers was up by over 16%.

The broader indices that showed some resistance in the first part of the trade succumbed to profit booking in latter trade and lost in line with the benchmark indices, with BSE Mid-cap losing 1.67% and BSE Small-cap paring 1.54%. Being the F&O series expiry week, the markets plunged on a high volume of 1.97 lakh crore over Rs 1.70 lakh crore while the turnover for NSE F&O segment too remained on the higher side at over Rs 1.63 lakh crore.

Finally, the BSE Sensex plunged by 277.16 points or 1.60% to settle at 17,096.68, while the S&P CNX Nifty shaved off 90.25 points or 1.71% to close at 5,200.60.

The BSE Sensex touched a high and a low of 17,444.18 and 17,056.77 respectively. The BSE Mid cap and Small cap index were down by 1.67% and 1.54% respectively.

The major gainers on the Sensex were Sun Pharma up by 1.07%, ONGC up by 0.70%, Reliance up by 0.64%, NTPC up by 0.30%, and HDFC up by 0.6% while Hindalco down by 4.88%, Jindal Steel down by 4.32%, DLF down by 4.21%, BHEL down by 4.19% and Infosys down by 3.92% were the major losers on the index.

There was no gainer on the BSE sectoral space, while Realty down by 3.17%, TECk down by 3.02%, IT down by 2.94%, Metal down by 2.86% and Capital Goods (CG) down by 2.85% were major losers on the BSE sectoral space.

Meanwhile, India and Indonesia are aiming to increase its bilateral trade by revising the target for trade to $45 billion by 2015. The revision has come in due to the fact that bilateral trade between the countries has already crossed $20 billion and the earlier target of $25 billion is likely to be crossed in the coming time. 

Areas of interest in trade for Indonesia are electronics, telecom and textiles, and for India they are coal, rubber, timber, palm oil and wood products. Indonesia's exports to India this year was $11 billion primarily based on natural resources such as coal, crude palm oil, wood, rubber, gold and copper.

Indonesia will also resume its plan of commencing air traffic to India by this June. The Indonesian national carrier, Garuda, is set to launch direct flights to India from June. The Indonesian embassy here has suggested that the carrier link the four major metropolitan cities - Delhi, Kolkata, Mumbai and Chennai.

Attempting to facilitate further diplomatic relations between the countries, Indonesia has proposed to set up an additional Consulate office in Chennai, which is yet to be considered by the Centre.

India and Indonesia, the second and third largest economies in Asia after China, have signed 33 agreements to promote trade. They are also partners through the free trade agreement signed by the Association of South East Asian Nations.

The S&P CNX Nifty touched a high and low of 5,310.55 and 5,187.15 respectively.

The top gainers on the Nifty were ACC up by 1.64%, Sun Pharma up by 1.53%, Reliance up by 0.35%, NTPC up by 0.27% and Ranbaxy up by 0.13%.

On the flip side, RPower down by 5.82%, RCOM down by 5.68%, Reliance Infra down by 5.54%, Jindal Steel down by 5.17%, and Hindalco down by 4.88% were the top losers on the index.

The European markets were trading in red, as France's CAC 40 down 2.11%, Britain’s FTSE 100 down 1.55%, while Germany's DAX was down by 2.61%.

Sentiments remained bearish across the Asian region and all the Asian counters shut shop in the red on Monday as a little better manufacturing data from China failed to calm fears of a slowdown in the world’s number two economy. The preliminary HSBC China manufacturing purchasing managers index rose to a two-month high of 49.1 in April compared with a final reading of 48.3 in March. Investors also remained wary ahead of key central bank meetings. Moreover, the sentiments too remained dampened after French President Nicolas Sarkozy lost to Socialist candidate Francois Hollande in the first round of the presidential elections, sparking concerns about the euro zone's debt crisis.

Meanwhile, Hong Kong shares slipped about two percent, dragged lower as China Mobile posted underwhelming March subscriber numbers after markets closed last Friday. Moreover, Shanghai Composite ended lower by 0.76 percent, dragged down by financial and energy majors ahead of several first-quarter corporate earnings reports throughout this week.