Hopes of a comeback rally get shattered; Sensex capitulates under global pressure

All hopes of a comeback rally for the increasingly vulnerable Indian stock markets got shattered in Thursday’s trade session as many heavyweight stocks that saw short covering earlier in the day lost colossal ground in the second half. The benchmark equity indices buckled under the hefty across the board selling pressure exerted by market participants, leading the frontline indices to undo all the good work done in early part of the session.

The benchmark gauges drifted lower for the sixth time in last seven sessions and got even dragged close to the psychological 4,950 (Nifty) and 16,400 (Sensex) levels in the session. The domestic bourses were once again tormented by global developments as investors fretted over unrelenting Euro-zone worries, which prompted them to take profits off the table amid little signs of any supportive leads.

Sentiments went awry since early afternoon trades tracking gloomy developments from Europe where French industrial output fell more sharply than expected in March, adding to signs that the region’s onerous debt trouble is having its toll on the economy. Position squaring also gathered greater momentum as investors turned apprehensive about global growth prospects after weaker than expected Chinese trade data stoking fears of slowing global growth machine.

Back home, sentiments were firmly supported by the encouraging cues from money market in first half as rupee recovered by 0.53% to 53.535 against the US dollar after the Reserve Bank tightened norms for utilization of the foreign currency fixed deposit funds to check outflow of forex.

Besides measures announced by the RBI to check outflow of forex, euro's gains against the US dollar overseas also helped the rupee to recover from all-time low and drive domestic equity market higher. Investors even went on to overlook the data showing India's trade deficit at the start of the fiscal year narrowed slightly but remained worryingly high as weakening global demand made exporters struggle to sustain last year's pace of growth.

Marketmen showed unrelenting selling pressure on the Metal counters, which plunged over a percent being the top laggard in BSE’s sectoral space. The rate sensitive Auto index too plunged around a percent after industry body SIAM released data showing passenger car sales in India witnessed slowest growth during April in 10 years at 3.4% as customer sentiment remained low due to post-Budget price hikes and high interest rates, affecting the entry-level segment most. However, the downside for the benchmarks was capped by the gains in heavyweight Oil & Gas counter.

On the global front, majority of stock markets in the Asian region remained cautious and hardly budged from their previous closing levels. The disappointing Chinese trade data undermined markets’ mood. However, the downside in most markets were capped as sentiments were supported by reports that the board of European Financial Stability Facility (EFSF) has decided to make a payment of 5.2 billion euro in emergency aid to Greece, overcoming opposition from some euro zone member states. European markets after a flat opening, edged lower as weak Chinese trade data along with worsening European debt trouble casted doubts over global economic growth prospects.

The NSE’s 50-share broadly followed index Nifty suffered a single digit cut to settle above the psychological 4,950 support level while Bombay Stock Exchange’s Sensitive Index - Sensex shed sixty points to finish above the crucial 16,400 mark. Moreover, the broader markets too finished on a soft note but the Midcap index went on to outperform its larger peers by a slight margin.

The markets eased on good volumes and market breadth turned pessimistic by the end as there were 1,239 shares on the gaining side against 1,524 shares on the losing side while 145 shares remained unchanged.

Finally, the BSE Sensex lost 59.53 points or 0.36% to settle at 16,420.05, while the S&P CNX Nifty declined by 9.10 points or 0.18% to close at 4,965.70.

The BSE Sensex touched a high and a low of 16,671.81 and 16,377.02 respectively. The BSE Mid cap index up by 0.06% and Small cap index was down by 0.24%.

The major gainers on the Sensex were DLF up by 2.25%, BHEL up by 1.46%, ONGC up by 1.27%, M&M up by 0.93%, and Cipla up by 0.91% while Maruti Suzuki down by 3.18%, Jindal Steel down by 2.68%, SBI down by 2.32%, Hero MotoCorp down by 1.53% and Coal India down by 1.50% were the major losers on the index.

The few gainers on the BSE sectoral space were Oil & Gas up by 0.62% and Consumer Durables (CD) up by 0.31% while Metal down by 1.02%, Auto down by 0.89%, Power down 0.75%, Health Care (HC) down by 0.33% and FMCG down by 0.25% were major losers on the BSE sectoral space.

Meanwhile, the demand for fertilisers is likely to increase and reach at 61.27 million tonne in 2012-13, higher by 4% over last year, Minister of State for Chemicals and Fertilisers, Srikant Jena said. The retail prices of fertilisers, which have stabilized since Q3 of 2011-12 fiscal, are likely to remain steady in the ongoing fiscal (2012-13).

This year, urea demand is likely to be 32 million tonne, di-ammonium phosphate (DAP) is at 13.24 million tonne, potash at 4.69 million tonne and complex nutrients at 11.25 million tonne. In the previous year, urea demand stood at 30.51 million tonne, DAP was at 12.61 million tonne, potash at 4.82 million tonne and complexes at 10.73 million tonne.

However, country's production of urea declined below the set target of 18.93 lakh metric tonne (MT) in March, as per the data released by the government. In March 2012, the estimated urea production stood at 17.28 lakh MT. However, production of Diammonium phosphate (DAP) was 0.07 lakh MT higher to 3.10 lakh MT as against the target of 3.03 lakh MT.

India's domestic fertilisers’ production stood at 37.12 million tonnes in 2011-12 financial year and the country imported 22.29 million tonne of nutrients. The indigenous fertiliser production is almost at the equal level from 2009-10 to 2011-12. However, there is uninterrupted rise of imports of fertilisers mainly on the back of the higher demand projected by the states.

The S&P CNX Nifty touched a high and low of 5,039.30 and 4,950.30 respectively.

The top gainers on the Nifty were Cairn up by 3.87%, IDFC up by 2.78%, BPCL up by 2.62%, Axis Bank up by 2.48% and DLF up by 2.31%.

On the flip side, Maruti Suzuki down by 3.54%, Jindal Steel down by 3.46%, Ranbaxy down by 3.12%, PNB down by 2.14%, and Asian Paints down by 1.99% were the top losers on the index.

The European markets were trading in red, as France's CAC 40 down by 0.96%, Britain’s FTSE 100 down 0.59%, while Germany's DAX was down by 0.37%.

After witnessing carnage in previous session, equity indices in the Asian region snapped the day’s trade on mixed note on Thursday after European officials said Greece would get its next tranche of bailout cash but traders were nervous as politicians in Athens struggled to form a coalition. However, bargain hunting in the fundamentally strong stocks helped certain bourses to end in the green land. Meanwhile, Hong Kong shares slumped to a sixth straight loss on Thursday after Chinese April trade data came in weaker than expected, with negligible import growth raising fears of a much bigger slowdown in domestic demand. Chinese headline growth in imports unexpectedly stalled in April, at 0.3 percent which was much lower than the 11 percent Reuters consensus, raising doubts about the strength of the rebound in the world’s second-biggest economy.

However, mainland Chinese markets ended flat after a choppy session. They were up initially, but reversed course after the mid-morning release of the trade data, which accelerated losses in Hong Kong.  Japanese Nikkei ended about 0.40 percent lower at their worst finish for three months on Thursday as dealers were hit by renewed fears over Europe’s debt crisis.