Markets falter in last leg of trade as rupee slips further

Indian markets put a disappointing show on Monday and all effort of strong comeback fizzled out in last, though markets added modest gains to their last session’s positive ending, supported by some good global cues and encouraging earnings number on the domestic front. The start was marginally positive but major indices once seemed faltering, coming very close to breach the neutral line, as the rupee depreciated to its fresh all time low, however the optimism of rate sensitive banking sector and gains in power stocks supported the markets, taking to a positive close.

On the global front, though, the US markets snapped the last week on a negative note but Asian markets made a mostly positive start of the new week with the comment of Chinese Premier Wen Jiabao that China will focus more on bolstering economic growth. But all eyes were on the European markets as G-8 leaders on May 19 urged Greece to stay within the euro area. However, the cautiousness prevailed in the region ahead of the German and French leaders meet today to discuss the euro after the Group of Eight nations exposed disagreement on a rescue strategy.

The European markets made a soft-to-flattish start and that discouraged the domestic markets from going further high, and they started losing some strength. However, trade remained stable and markets bounced back to surge to the high point of day, once the European markets started showing sign of recovery, moving higher by about half a percent. Though, choppiness returned to the markets in the last and traders opted to book some profit taking the markets lower. Another factor that continued weighing down the markets was weakness in the rupee that despite all effort continued hovering near its all time low. After the market hour it came very near to breach the psychological 55 per dollar mark as the euro retreated from the day's high.

Rate sensitive sectors like, realty, banking and capital goods remained in jubilant mood since beginning, while the defensive FMCG along with IT and Technology counters which witnessed good amount of sorting suffered cut of over a percent each. However, one other sector that remained in limelight was power, adding gains of about a percent on some good result announcements in the power sector. Also one non sectoral gauge, media and entertainment too remained buzzing throughout the day after Aditya Birla Group during the weekend agreed to make a financial investment of 27.5% in Living Media India, part of India Today Group, through its private investment company. TV Today Network touched its upper circuit limit of 20%, NDTV too touched the roof, up by 10%, Reliance Broadcast Network was up by 2.9% and Entertainment Network was up by 1.76%.

The broader indices that looked firm since beginning, outperforming the benchmarks, despite losing some strength managed to post a good show, while the BSE Mid cap index was up by over a quarter percent and small cap index snapped the trade higher by a percent.

The volumes remained weak of over Rs 1.37 lakh crore, the turnover for NSE F&O segment too remained on the lower side as compared to Friday, at just over Rs 0.97 lakh crore. The market breadth remained positive as 1,643 shares were on the gaining side against 1,027 shares on the losing side while 130 shares remained unchanged.

Finally, the BSE Sensex gained 30.51 points or 0.19% to settle at 16,183.26, while the S&P CNX Nifty rose by 14.60 points or 0.30% to close at 4,906.05.

The BSE Sensex touched a high and a low of 16,298.39 and 16,149.61 respectively. The BSE Mid cap and Small cap indices were up by 0.41% and 0.99% respectively.

The major gainers on the Sensex were Tata Power up by 4.49%, SBI up by 3.37%, Maruti Suzuki up by 2.99%, BHEL up by 2.51% and Coal India up by 2.41%, while Wipro down by 2.21%, ITC down by 2.17%, Infosys down by 1.71%, Sterlite Inds down by 1.19% and Cipla down by 1% were the major losers on the index.

The top gainers on the BSE sectoral space were Capital Goods (CG) up by 1.96%, Realty up by 1.90%, Power up by 1.27%, Bankex up by 1.08% and Public Sector Undertakings (PSU) up by 0.64%, while IT down by 1.19%, FMCG down by 1.17% and Technology (TECK) down by 1% were only losers on the BSE sectoral space.

Meanwhile, the agricultural sector is expected to do marginally well in the current fiscal given the expectations of a normal monsoon. The production of foodgrains is expected to increase by 0.6% due to higher production of wheat, rice and coarse grains whereas non food crops like cotton and sugarcane are expected to fall to levels lower than the last year, as per the economic think tank Centre for Monitoring Indian Economy (CMIE).

The production of rice is expected to increase to 100 million tonnes(mt) in the current fiscal whereas wheat production is estimated to be at 87.3 mt. Coarse foodgrains will also see a growth in production by 0.7% to 42.3 mt in 2012-13. Pulses on the other hand have seen a decline in production due to a fall in acreage in 2011-12 and it is estimated that their production will decline to 17.5 mt, falling by 3.7%.

Production of non food crops on the other hand will see a decline in their production by 1.6% in 2012-13. This will largely be on the back of fall in production of sugarcane and cotton, which had seen a steep increase in acreage in the last year.

Cotton which had seen an increase in production of 6% last year to 35 million bales is set for a decline as it is expected that last year’s excess production combined with weak demand and hence volatile prices will deter farmers from sowing the fibre. It is predicted that cotton production will decrease by 7.8% to 32.2 million bales in 2012-13. Sugarcane cultivation has seen a growth in the last kharif season as acreage increased by 5% to 46.4 lakh hectares by April 27, 2012. However going forward, it is expected that production will slow down.

As far as oil seeds are concerned, production is expected to grow by 3% in FY’13. Higher production of groundnuts, safflower and sunflower seeds is expected to drive the growth. Groundnut had seen a decline in production in 2011-12 due farmers shifting to other crops. It has been estimated that the production of groundnuts has declined by over 17% to 6.9 mt in the last fiscal.

The S&P CNX Nifty touched a high and low of 4,937.50 and 4,888.50 respectively.

The top gainers on the Nifty were Tata Power up by 4.73%, BoB up by 3.92%, Reliance Infra up by 3.37%, SBI up by 3.27% and BHEL up by 3.14%.

On the flipside, Wipro down by 2.62%, ITC down by 2.17%, Infosys down by 2.09%, HUL down by 1.50% and Sterlite Inds down by 1.39% were the top losers on the index.

The European markets were trading mixed, as France's CAC 40 was up by 0.82%, Britain’s FTSE 100 was down by 0.71%, while Germany's DAX was down by 0.80%.

After fall massively last week, sentiments turned bullish in the Asian region and most of the Asian counters snapped the day’s trade in the positive terrain on Monday after G-8 leaders avowed that they want Greece to continue in the euro-zone moreover, Chinese Premier Wen Jiabao comment that China will focus more on bolstering economic growth too aided the sentiments. It also led the Chinese shares end higher by 0.2 percent. Moreover, Seoul shares bounced back on bargain-hunting, up by a percent after sharp falls in the previous few sessions, with global jitters partially soothed by a pledge from world leaders to try to keep Greece in the euro zone while, Japanese shares closed marginally in the positive with the headline Nikkei index staging a small rally after tumbling last week on euro-zone worries. However, Hong Kong shares edged lower for a fourth straight session on Monday in dismal turnover, dragged down by weakness in HSBC Holdings Plc, Europe’s largest bank, as investors await details of a pledge by global leaders over the weekend to keep Greece in the euro zone.