Sensex takes a u-turn from intra-day’s low; broader indices get clobbered out of shape

Recuperation of overcast sentiment became apparent at Dalal Street as barometer 30 share index of Bombay Stock Exchange(BSE)-Sensex-  shun losses to trade in positive terrain as market men invested in select blue chip stocks, buoyed by the optimistic earning of country’s largest software company. TCS, surging over 9%, spilled optimism at Dalal Street. However, 50 share index continued to trade in negative terrain but with slender loss. Barometer gauges clearly retreated from intra-day’s low level as support came to ailing equity markets at lower levels, which for third consecutive session, were showing signs of underlying weakness. However, this time around, it were broader indices which were curbing the gains of Indian equity markets as both mid cap and small cap were trading with a cut of over 0.40%. Much obviously, Information technology lead the pack of gainers, however, stocks from TECk and Power counters also slug it hard to spot the second and third position respectively. On the other hand, stocks from Capital Goods, Bankex and Metal counters looked drugged.

Negative sentiment in early deals at Dalal Street was created by a political crisis in the Netherlands and concerns that a defeat for Nicolas Sarkozy, France’s President and UMP party candidate for the 2012 French presidential election, on May 6 could weaken cooperation between France and Germany in dealing with the debt crisis. Owing to which, Wall Street closed negative overnight, while Asian counterparts depicted their gloomy mood. The US future indices, however, continued to show an uptick in the screen trade.

The BSE Sensex is currently trading at 17,111.82, up by 15.14 points or 0.09%. The index has touched a high and low of 17,167.02 and 17,046.72 respectively.  There were 14 stocks advancing against 15 declines on the index, while 1 stock remained unchanged.

The broader indices continued to gyrate into red terrain; the BSE Mid cap and Small cap indices lost 0.59% and 0.43% respectively.

The top gaining sectoral indices on the BSE were, Information Technology up by 1.31%, TECk up by 0.27%, Power up by 0.18%, FMCG up by 0.05% and CD up by 0.01%. While, CG down by 1.06%, Bankex down by 0.65%, Metal down by 0.39%, Auto down by 0.33% and Oil and Gas down by 0.22% were the top losers on the index.

The top gainers on the Sensex were TCS up by 9.32%, Tata Power up by 1.86%, Wipro up by 1.72%, Hero MotoCorp up by 1.37% and HUL up by 1.00%.

On the flip side, Bharti Airtel was down by 4.01%, Infosys down by 3.40%, Jindal Steel down by 2.07%, L&T down by 1.74% and Maruti Suzuki down by 1.37% were the top losers on the Sensex.

Meanwhile, Global executives are still wary of under taking any merger and acquisition (M&A) activities, as per the survey by Ernst and Young (E&Y). Even though the global environment is improving with better access to credit and cash, caution rather than confidence is driving global M&A sentiment.

According to E&Y's Capital Confidence Barometer, which covered over 1,500 senior executives in 50 countries, a more favorable deal making environment is not yet convincing large corporates to engage in M&As. A change, if at all is expected only when there comes a point when shareholders exert pressure or governments incentivise companies to do something with excess cash. Until then the business sentiment is expected to be cautious.

Mirroring the findings of survey, the first quarter of this calendar year, M&A volumes globally were down 22% compared to the same period last year. The survey further noted that companies headquartered in India, UK, US and Germany were among the most bullish, while their counterparts in Japan and Russia are less so. In fact China, India, US, Brazil and Indonesia are the top five target markets.

Corporates are now more focused on creating value by organic growth, portfolio optimisation and divestment. The proportion of companies planning to sell assets over the next 12 months has risen from 26% in October 2011 to 31% till date. Divestment is especially pronounced in North America; and is likely to grow across Europe and Japan in the coming months as companies look to re-position themselves as a result of Euro-zone crisis, the survey added.

In terms of global economic situation, 52% of respondents thought that it is improving as against 26% in October 2011, while only 20% remain pessimistic about the economy compared with 37% six months ago.

The S&P CNX Nifty is currently trading at 5,182.85, down by 17.75 points or 0.34%. The index has touched a high and low of 5,221.60 and 5,180.35 respectively.  There were 23 stocks advancing against 27 declines on the index.

The top gainers of the Nifty were TCS up by 8.78%, HCL Tech up by 3.22%, Tata Power up by 2.26%, Wipro up by 1.53% and Hero MotoCorp up by 1.50%.

On the flip side, Bharti Airtel down by 4.06%, Axis Bank down by 3.65%, Infosys down by 3.56%, Ambuja Cement down by 3.26% and ACC down by 2.97%, were the major losers on the index.

Most of the Asian equity indices were trading in the red; Shanghai Composite crumbled by 1.45% to 2,355.17, Hang Seng declined 82.71 points or 0.40% to 20,541.68, Jakarta Composite slipped 6.95 points or 0.17% to 4,148.54, KLSE Composite dipped 3.30 points or 0.21% to 1,580.50, Nikkei 225 tumbled 115.64 points or 1.21% to 9,426.53, Seoul Composite contracted 15.10 points or 0.77% to 1,957.53 and Taiwan Weighted was down by 5.07 points or 0.07% to 7,476.02.

On the flip side, Straits Times was up by 9.40 points or 0.32% to 2,971.75.