Post session - Quick review

Markets showcased weakness right from the beginning, the barometer gauge remained in grip of bears, for second straight session. Pessimistic global leads mainly contributed towards “risk-averse” environment, leading to hefty position squaring across risky class assets class such as equities, as investors sought rescue in safe haven bonds, which saw the yields tumbling to a two week level. After previous session gashes, there was no respite for Indian equity markets that ended with cut of over half a percentage points.

The 30 share barometer index, Sensex, on BSE made a sub 16500 start and ended below it, with loss of over 75 points. However, the widely followed 50 share index, Nifty, after dipping to a level last seen on January 18,2012, in the previous session, too concluded half a percent lower.

The high volume session of trade, which witnessed a volume turnover of Rs 1.5 lac crore, saw immense profit booking from  Realty, Metal and  Bankex counters, however the resilience depicted by defensive Fast Moving Consumer Goods, coupled with IT and Health Care counters, were able to cut the losses.

Reports stating the Greece’s bailout deal in jeopardy, prompted chaos at Dalal Street right from the beginning of the trade. Worries were intensified after the leader of a left-wing coalition in Greece pledged to form a government committed  tearing up the terms of his country's 'barbaric' bailout deal, a move that would spark a dangerous escalation of the Euro-zone debt crisis. Drag of Asian counterparts coupled with European shares also spilled pessimism on Dalal Street. European shares edged lower on Wednesday as a technical rebound from four-month lows was offset by falls among Spanish banks, which were dragged by fears they would be forced to raise money to cover their property assets.

Back on the home turf, gains of cigarette major, ITC and drug maker- Ranbaxy Laboratories soothed some sagging nerve. Cigarette major ITC (up 4.4%) was the top gainer on Nifty. The stock reacted positively to the government's decision of removing the ad valorem proposed in the Budget. TCS (2.4%), India's biggest software services exporter, recovered some ground today. Meanwhile, Ranbaxy Laboratories too captured gains of over 4% after the company turned black for Q1 CY12. The group’s consolidated net profit jumped by 4 folds at Rs 1246.76 crore for the January-March quarter of FY12.

On the flip side, quarterly earnings from banking majors like Union Bank and Punjab National Bank did not augur well for the market as investors not only penalized the two banks by around two and half a percent each but even acted to  pulverize the whole BSE’s Bankex index, which went home with cut of close to two percentage points.

The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 948:1780 while 126 scrips remained unchanged. (Provisional)

The BSE Sensex lost 63.69 points or 0.38% and settled at 16,482.49. The index touched a high and a low of 16,615.74 and 16,422.93 respectively. 7 stocks advanced against 23 declining ones on the index (Provisional)

The BSE Mid-cap index lost 0.93% while Small-cap index was down 1.26%. (Provisional)

On the BSE Sectoral front, FMCG up 2.69%, Health Care up 0.20% and IT up 0.10% were the only gainers while Realty was down 2.96%, Metal down 2.14%, Bankex down 1.98%, Power down 1.85% and PSU down 1.78% were the top losers.

The top gainers on the Sensex were ITC up 5.54%, Bajaj Auto up 2.10%, TCS up 2.05%, Hindalco Industries up 1.49% and Sun Pharma up 1.23% while, DLF down 4.37%, SBI down 3.79%, M&M down 3.64%, Jindal Steel down 2.93% and Coal India down 2.66% were the top losers in the index. (Provisional)

Meanwhile, the Petroleum and Oil Ministry has suggested that the government should hike the excise duty on diesel cars to offset the benefits of subsidized diesel enjoyed by them. The suggestion is in line with the view that the rich should not benefit from subsidies as it is not meant for them.

Diesel is the most consumed fuel in the country and is sold at a subsidized rate to lessen transportation costs. Prices of petrol on the hand have been deregulated. With the recent surge in prices of crude oil, petrol which is predominantly used in passenger cars, has seen a substantial hike. However diesel continues to be subsidized by the government.

As a result the demand for passenger cars has shifted from petrol cars to diesel cars. Hence it is suggested that the price of these be raised to discourage their consumption and prevent the misuse of the subsidy.

The government has budgeted Rs 40,000 crore as fuel subsidy for the 2012-13 fiscal. The Finance Minister has targeted to bring down the subsidy bill to 2% of GDP in the current fiscal. The government is also targeting better management of subsidies under the public distribution system (PDS) so that it reaches the intended beneficiaries.

As per a Planning Commission report using a particular method of measuring leakages, the government spends Rs 3.65 through budgetary food subsidies to transfer Re 1 to the poor.

India VIX, a gauge for market’s short term expectation of volatility gain 3.97% at 23.04 from its previous close of 22.16 on Tuesday. (Provisional)

The S&P CNX Nifty lost 28.60 points or 0.57% to settle at 4,971.35. The index touched high and low of 5,016.25 and 4,956.45 respectively. 17 stocks advanced against 33 declining ones on the index. (Provisional)

The top gainers on the Nifty were ITC up 5.71%, Ranbaxy up 4.54%, Bajaj Auto up 2.27%, TCS up 1.88% and IDFC up 1.81%.On the other hand, JP Associates down 5.31%, DLF down 4.19%, SBI down 3.79%, Kotak Bank down 3.78% and M&M down 3.03% were the top losers. (Provisional)

The European markets were trading on a mix note, with France's CAC 40 down 0.52%, Germany's DAX up 0.08% and Britain’s FTSE 100 down 0.33%.

Asian markets resumed southbound journey after a day halt and all the Asian counters snapped the day’s trade in the negative terrain on Wednesday as investors remained concerned over fears that Greece could leave the eurozone after the country’s second biggest party said it would rip up a bailout deal following weekend elections. Moreover, the anti-austerity Syriza leftists said Sunday’s polls showed Greeks had rejected the strict cuts imposed as part of plans to clear up Athens' mountain of debts. Further adding to jitters, the Chinese Communist Party could delay its upcoming five-yearly congress as the party struggles to finalise a once-in-a-decade leadership change, sparking fears that economic recovery could stall in the world's second-largest economy.

Meanwhile, Hong Kong shares suffered a fifth-straight loss on Wednesday, dogged by weakness in Chinese financials and growth-sensitive sectors as investors cut risk and rotated into defensive plays, underscoring fears that the Greek bailout deal could unravel. Moreover, Taiwan stocks fell about a percent, joining regional bourses in declines as uncertainty over Greece’s future cut appetite for risk, while confusion over Taiwan's controversial plan for a tax on stock trading profit added to worries.