Local markets nose-dive in global gut after gap down opening

Indian equity markets have nosedived into global gut after elections in Greece and France fuelled questions about commitments from struggling euro zone economies to pursue austerity measures. Local barometer gauges surrendering further ground to belligerent bears are currently trading near their intra-day low level. Widely followed 50 share index, Nifty after breaching its long term support, also known as the 200 day moving average (around 5,115-5,120 levels) in the previous session, is currently oscillating below the 5,000 mark, for the first time since January 19, 2012. Meanwhile, Sensex too tanking over 250 points is hovering above 16200 level.

With disappointing job growth data dealing a blow to the US markets on Friday and the French President-elect Socialist, Francois Hollande, indicating a reversal of austerity policy pursued by his predecessor, the Asian markets too are in a tailspin since morning.

Back on the home turf, although selling was broad based, but rate sensitive’s were deep in the woods, weakness in Information Technology and Oil & Gas counters too played spooked for the markets. The overall market breadth on BSE was in the favour of declines which thumped advances in the ratio of 1468:664, while 77 shares remained unchanged.

The BSE Sensex, plunging by 228.32 points or 1.36% was trading at 16,602.76. The index has touched a high and low of 16,620.44 and 16,516.77 respectively.  There were only 5 stocks advancing against 25 declines on the index.

The broader indices too continued to reel under pressure; the BSE Mid cap and Small cap indices declined by 1.38% and 1.08% respectively.

Selling was broad based though, but the major losing sectoral indices on the BSE were, Realty down by 2.21%, Bankex down by 2.05%, Information Technology (IT) down by 1.78%, Oil & Gas down by 1.44% and TECk down by 1.43%.

Hero MotoCorp down by 3.40%, SBI down by 3.31%, ICICI Bank down by 2.30%, Reliance Industries (RIL) down by 2.24% and Mahindra & Mahindra down by 2.17%.

 However, BHEL up by 1.31%, Cipla up by 0.86%, Sun Pharmaceuticals up by 0.51%, Bharti Airtel up by 0.42% and Tata Motors up by 0.41% were the top losers on the Sensex.

Meanwhile, financial services company, Nomura is of the opinion that unless efforts are made to increase investments in the country, the GDP growth could fall below the estimated 7%. It has urged the government to take urgent steps to improve the investment climate in the country and revive growth.

It has further stated (in its report) that the country's economic fundamentals have weakened over the last four years, leaving the country with slowing growth, sticky inflation and large fiscal and current account deficits. Infact it has attributed 45% of the decline in potential growth to weaker investments, another 40% to weaker total factor productivity and 15% to weaker employment growth. The worsening global situation has only made matters worse.

Pointing out that GDP growth and its estimates depend on plans of future investment, Nomura has observed that average real investment growth in the country has been averaging at 6% per annum and if the trend continues, then the potential growth can slip below 7%. It is of the opinion that to sustain an average annual growth of 7.5%, real investment growth needs to rebound to 10%.

GDP growth has dipped from a high 8.4% in FY11 to an estimated 6.9% in FY12 and is expected to average around 7.3% in the current fiscal.

The S&P CNX Nifty is currently trading at 5,018.35, lower by 68.50 points or 1.35%. The index has touched a high and low of 5021.15 and 4990.35 respectively. There were only 8 stocks advancing against 42 declines on the index.

The top gainers of the Nifty were BPCL up by 2.31%, BHEL up by 1.54%, Cipla up by 0.77%, Bharti Airtel up by 0.63% and Tata Motors up by 0.46%.

On the flip side, Cairn India down by 5.15%, JP Associates down by 4.85%, SBI down by 3.42%, Hero MotoCorp down by 2.99% and Bank of Baroda down by 2.65% were the major losers on the index.

All the Asian equity indices were trading in the red; Shanghai Composite declined 0.24%, Hang Seng plunged 2.44%, Jakarta Composite descended 1.92%, KLSE Composite shed 0.47%, Nikkei 225 plummeted by 2.61%, Straits Times descended by 2.18%, KOSPI Composite slid 1.69% and Taiwan Weighted lost 2.17%.