Post session - Quick review

Indian equity markets were in grip of bears for the entire trading session on Tuesday as benchmarks did not once muster the audacity of breaking out in green after a muted start, thereby concluding the high volume session of trade in deep red. After showcasing “reversal of trend” in the previous session, as Finance Minister delayed the much controversial GAAR in wake of investor backlash; market-men again resorted to profit-booking, to drag both the barometer gauges below the crucial level, with nasty laceration of over 2 percentage points.

Bears were active right from the dawn of the trade as investor’s read through the provisional data, which showed that foreign investors were net sellers of Rs 630 crore in Indian equities on Monday, after postponement on the so-called general anti-avoidance rule (GAAR) until Fiscal 2013/14. The widely followed National Stock Exchange’s Nifty- ending sub 5000 level, was at a level not seen since January 18, 2012. Although the index pierced through the 5100 mark, similarly, the 30 scrip sensitive BSE’s Sensex, after starting near the 16900 level, shut shop with loss below the 16600 bastion, with loss of over 300 points. Losses were also pronounced for broader indices, which settled with cut of close to a percentage point.

Drubbing of Capital Goods, Information Technology and Banking counters played havoc for Dalal Street. IT stocks came under pressure after US based tech major Cognizant Technology Solutions lowered its full-year forecast for the first time in nearly four years, echoing sentiments expressed by its India-based rivals like Infosys and Wipro as they battle lower discretionary spending by clients especially in the financial services segment.  TCS down by 5%, HCL down by 4% and Financial Technologies down by 3%, were the top losers of IT index, which faltered over three percentage. TCS collapsed after JPMorgan downgraded it to 'neutral' from 'overweight' saying the stock price was now 'fully valued' at current 19 time forward fiscal 2013 earnings.

On the flip side, Gas stocks gathered some steam on probable positive verdict from Delhi HC on PNGRB v/s IGL case. In April 2012, PNGRB had directed IGL to cut network tariff by around 60% retrospectively from April 2008 which mounted the total refund at around Rs 1,500 crore. This news had tumbled the IGL stocks by 30-35% besides hurting the other scrips in the gas sector.

However, pessimism was also spurred tracking the negative European leads which fell on renewed concerns over a potential escalation of the euro zone sovereign debt crisis in coming weeks, as the political gridlock in Greece after the election placed pressure on market confidence. On the flip side, however, Asian stock markets staged a modest recovery Tuesday as the initial shockwaves from election results in Europe faded.

Back on the home turf, on the result front, Hindalco Industries concluded over 0.50% gains as Aditya Birla's flagship firm beat Street estimates in the March quarter. The Aluminium maker reported a 9.6 per cent decline in standalone net profit at Rs 640 crore against Rs 708 crore year-on-year. However, profits were ahead of estimated Rs 494 crore.

On the other hand, Kotak Mahindra Bank tumbled over 6% after Private sector lender reported mere 6% rise in consolidated net profit for its fourth quarter ending March 31. The Group has posted a profit after tax of Rs 520.9 crore for the quarter ended March 31, 2012 as compared to Rs 491.4 crore for the quarter ended March 31, 2011.

The BSE Sensex lost 394.64 points or 2.33% and settled at 16,518.07. The index touched a high and a low of 16,918.31 and 16,502.91 respectively. 4 stocks advanced against 26 declining ones on the index (Provisional). The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1052:1688 while 132 scrips remained unchanged. (Provisional)

The BSE Mid-cap index lost 1.56% while Small-cap index was down 1.08%. (Provisional)

On the BSE Sectoral front, there were no gainers while Capital Goods was down 3.65%, Bankex down 3.40%, IT down 3.13%, Power down 2.99% and TECk down 2.76% were the top losers.

There top gainers on the Sensex were Coal India up 1.77%, GAIL India up 1.63%, Hindalco Industries up 0.86% and HUL up 0.47% while, TCS down 5.75%, BHEL down 5.02%, SBI down 4.45%, Jindal Steel down 4.41% and L&T down 3.90% were the top losers in the index. (Provisional)

Meanwhile, prices of diesel should be varied as per the end consumer and efforts should be made for an early creation of the fuel-pipeline-grid, as per the industry body ASSOCHAM. It is of the view that prices of diesel should be deregulated in a phased manner where a full market price is charged for large cars and luxury buses whereas the price is nominal for others.

It is also of the opinion that it is unfair when users of luxury vehicles get diesel fuel at the same subsidised rate as those who drive small and medium sized cars. Further, small farmers should be shielded from the price rise at least for the time being and prices for them should be changed gradually. It has also been suggested that the government should encourage replacing old vehicles, especially trucks, modern trailers with high efficiency engines.

The industry body is not in the favour of alternate solution of decreasing the taxes on fuel to make it cheaper as it feels that such a move will lower the revenues of the government substantially. This will further lead to either cutting down government’s development expenditure or raising the level of deficit financing. Either option goes against the objective of inclusive growth.

A detailed study by the chamber on diesel use has pointed out that use of high capacity trucks, paving of all major roads with cement and removal of administrative impediments to smooth highway movement of trucks will itself ensure large scale saving of diesel for trucks. It would also save the use of diesel in goods transportation and buses which would decrease the higher costs transport bodies would have to incur when diesel prices are aligned with the market price.    India VIX, a gauge for market’s short term expectation of volatility gain 9.59% at 22.16 from its previous close of 20.22 on Monday. (Provisional)

The S&P CNX Nifty lost 127.95 points or 2.50% to settle at 4,986.20. The index touched high and low of 5,119.95 and 4,983.60 respectively. 7 stocks advanced against 43 declining ones on the index. (Provisional)

The top gainers on the Nifty were Hindalco Industries up 1.51%, Coal India up 1.42%, GAIL India up 1.32%, SAIL up 0.70% and HUL up 0.29%.On the other hand, JP Associates down 8.77%, TCS down 5.75%, BHEL down 5.51%, Reliance Infrastructure down 5.38% and HCL Tech down 5.27% were the top losers. (Provisional)

The European markets were trading in red, with France's CAC 40 down 1.89%, Germany's DAX down 1.03% and Britain’s FTSE 100 down 0.21%.

After witnessing subdued close in previous session, most of the Asian equity indices showed rebound on Tuesday’s trade. Barring Shanghai and Hang Seng all the Asian counters ended the day’s trade in the positive terrain as investors kept themselves busy in buying battered down fundamentally strong stocks. Meanwhile, Japan’s Nikkei share average rose from a three-month low as investors reassessed the immediate impact of French and Greek poll results, although they remained wary of further flare up in the crisis-hit euro zone.

Meanwhile, Taiwan stocks closed flat on Tuesday, though DRAM maker Nanya Technology gained by the 7-percent daily limit after its technology partner Micron won the right to negotiate exclusively to buy bankrupt Japanese maker Elpida Memory. However, Hong Kong shares suffered a fourth consecutive loss as weakness in Chinese property developers helped reverse early gains in the face of stiff chart resistance formed after Monday's slump.