Markets continue to falter in the last leg of trade

The Indian markets continue to trade under pressure in the late noon session, the impressive numbers of the capital goods major Larson & Toubro (L&T) had helped to pare the losses a bit, but the rise in inflation numbers along with weak global cues was still weighing down the sentiments. L&T reported a net profit of Rs 1,920 crore and net sales of Rs 18,481 crore for the quarter ended March 2012, much better than expected. The gains in the company and an optimistic order intake forecast have given boost to the whole sectoral gauge. Apart from the capital goods, the defensive sectors Healthcare (HC), Fast Moving Consumer Goods (FMCG) along with Consumer Durables and IT sector are keeping their head in the green, while Oil & Gas, and the rate sensitives’ banking, realty and metal were the laggard of the late trade. The global cues too remained sluggish and most of the Asian markets were trading in red, while the European indices have made a panicking start with most of the indices trading lower by 1.5-2.5%.

Back home on result reaction, Adani Power has plunged to new low on reporting net loss of Rs 293.92 crore for fiscal 2011-12 compared to Rs 523.75 crore profit in previous financial year. While Oracle Financials was down by around 4%, as the consolidated net profit of the company declined by 18.15% at Rs 909.29 crore as compared to Rs 1110.98 crore for the previous year.

The BSE Sensex is currently trading at 16,193.79 down by 99.19 points or 0.61% after trading as high as 16,390.33 and as low as 16,128.43. There were 11 stocks advancing against 19 declines on the index.

The broader indices were trading on a pessimistic note; the BSE Mid cap index plunged 1.09% and Small cap index sank 0.98%.

On the BSE sectoral space, Capital Goods up 0.59%, Healthcare up 0.52%, FMCG up 0.36%, Consumer Durables up 0.21% and IT up 0.12% were the only gainers, while Bankex down 1.58%, Oil & Gas down 1.54%, Metal down 1.31%, Realty down 1.23% and Auto down 1.18% were the major laggards in the space.

L&T up 2.59%, Maruti Suzuki up 1.13%, Infosys up 0.80%, Bajaj Auto up 0.59% and NTPC up 0.57% were the major gainers on the Sensex, while Tata Motors down 3.30%, Jindal Steel down 2.51%, BHEL down 2.44%, Hindalco down 2.16% and HDFC Bank down 1.96% were the major losers in the index.

Meanwhile, in the forthcoming foreign trade policy (FTP), which is slated to be declared in the first week of June, is likely to have some incentives for export sectors to support them from the slowdown in international market.

Commerce and Industry Minister, Anand Sharma said, ‘slowdown in exports growth in April in the backdrop of the economic crisis in the Euro Zone is also a worrisome development. I will be undertaking a stock-taking exercise with all Export Promotion Councils on May 17, and a meeting of the Board of Trade will be convened on June 01, 2012. After the stock taking exercise is complete, the government will intervene in sectors which require support.’

In April, India's exports sector witnessed a growth of 3.2% after being in negative zone in March. Few of the labour-intensive sectors like gems and jewellery contracted by 25.7%, and ready-made garments contracted by 9% in the overseas shipment. Further, sectors like engineering goods, electronic products and textiles posted high growth in the initial months of 2011-12, but subsequently slowed down. The textiles sector posted negative growth in April. For 2011-12, exports clocked 21% growth at Rs 14.5 lakh crore.

While giving reactions to the IIP data, Sharma stated that the slowdown, mainly in manufacturing and capital goods sector was causing worry. By adding further he said there is a huge social dimension attached with the manufacturing sector since it supports millions of jobs and recommended the Reserve Bank for differential rate of credit for manufacturing.

The industrial output registered a growth of just 2.8% in 2011-12 compared to 8.2% expansion in previous fiscal. On the other hand, trade deficit in 2011-12 was about 10.3% of GDP, while current account deficit was about 4% of GDP.

Earlier this year, the government did not seem leaning to give concession to exporters as it was mainly focusing on controlling ballooning fiscal deficit. In fact, the Budget for 2012-13 totally ignored the exports sector and concessions worth about Rs 1,700 crore given in October 2011 were allowed to lapse.

The S&P CNX Nifty is currently trading at 4,896.50, lower by 32.40 points or 0.66% after trading as high as 4,957.20 and as low as 4,875.30. There were 15 stocks advancing against 35 declines on the index.

The top gainers on the Nifty were L&T up 2.66%, BPCL up 2.13%, Ranbaxy up 1.67%, Maruti up 1.19% and Asian Paints up 1.05%.

Cairn down 3.56%, JP Associates down 3.50%, Tata Motors down 2.76%, Bank of Baroda down 2.73% and SAIL down 2.69% were the major losers on the index.

In the Asian space, Shanghai Composite declined 0.60%, Hang Seng plunged 1.15%, Jakarta Composite plummeted 1.48%, KLSE Composite fell 0.58%, Straits Times Index wilted 0.61%, KOSPI Composite inched down 0.18% and Taiwan Weighted fell 0.33%.

On the other hand only Nikkei 225 gained 0.23%.

The European markets are trading on a somber note as France’s CAC 40 sank 2.61%, Germany’s DAX declined 2.11% and United Kingdom’s FTSE plunged 1.73%.