Gloomy economic reports wreck havoc on D-Street; Sensex dives 1.6%

Stock markets in India started the month of June on a daunting note with the benchmark equity indices getting pummeled by over one and half a percent and slipping below crucial technical levels. The frontline equity indices traded in a narrow range for most part of morning trades but a sharp wave of selling pressure emerged in late morning trades around the psychological 4,900 (Nifty) and 16,150 (Sensex) levels, which pushed the key gauges into a downslide.

Market’s south bound journey only came to a halt with the close of trade as sentiments remained uninspiring right from the start of trade. Apart from persistent disappointment over India’s horrendous fourth quarter GDP growth numbers, cues from across the globe too remained somber. Moreover, market’s mood also went awry after various influential brokerage houses slashed India’s economic growth forecasts to below the 6% threshold.

Meanwhile, a HSBC survey highlighted that though India's manufacturing PMI slipped slightly to 54.8 in May from 54.9 in April, the manufacturing sector kept up its steady expansion as slowing growth of domestic order books was evened out by fast-rising output. Besides, the slight appreciation in rupee against the US dollar did little to support sentiments in the falling market.

Shares from the Auto sector got hammered by over two percent after companies released a weaker than expected monthly sales numbers. Spicejet and Jet Airways from the Aviation pocket that traded on a sanguine note for most part of the day after oil companies reduced the prices of jet fuel prices by 2%, pruned their gains by the end and settled with sharp losses.

On the BSE sectoral front, investors were seen squaring off hefty positions from the Capital Goods counter, which got battered by about three percent, being the top laggard in the space a day after reports showed India's eight core industries growth, having a combined weight of around 38% percent in the IIP, slowed down to 2.2 percent in April from the 4.2 percent in last April.

Though largely across the board selling was evident, investors showed some buying interest in the defensive FMCG sector which traded with gains of around one third of a percent.

Cues from the global front too remained subdued as the frontline gauges traded on a weak note following the Asian markets which mostly drifted lower. Investors at large continued to fear about the global economic growth prospects after reports showed world’s largest economy grew at a weaker than expected pace while China's official purchasing managers' index too slowed more than expected.

On the other hand, the European markets after a mixed opening got brutally butchered in the session after reports showed the region’s manufacturing activity contracted at its sharpest rate in around three years in May as growing financial turbulence in Spain and Greece affected the region’s biggest economies.

Back home, the NSE’s 50-share broadly followed index Nifty, plummeted by one and half a percent to settle below the psychological 4,850 support level while Bombay Stock Exchange’s Sensitive Index - Sensex slumped over two hundred fifty points to finish above the crucial 15,950 mark. Moreover, the broader markets too succumbed to the selling pressure that was being exerted on their larger peers and settled with around one and half a percent cuts.

The markets fell expectedly on weak volumes of over Rs 1 lakh crore on the first day of a new F&O series while the turnover for NSE F&O segment also remained on the lower side as compared to that on Thursday. The market breadth remained pessimistic as there were 850 shares on the gaining side against 1,830 shares on the losing side while 118 shares remained unchanged.

Finally, the BSE Sensex shaved off 253.37 points or 1.56% to settle at 15,965.16, while the S&P CNX Nifty plunged by 82.65 points or 1.68% to close at 4,841.60.

The BSE Sensex touched a high and a low of 16,226.19 and 15,933.48 respectively. The BSE Mid cap and Small cap indices down by 1.46% and 1.22% respectively.

There was no gainer on the Sensex, while Tata Motors down by 3.73%, L&T down by 3.22%, Reliance down by 3.16%, Sterlite Industries down by 3.08% and Maruti Suzuki down by 2.94% were the major losers on the index.

The only gainer on the BSE sectoral space was FMCG up by 0.37%, while Capital Goods (CG) down by 2.99%, Power down by 2.49%, Auto down by 2.17%, Oil & Gas down by 2.11% and IT down by 2.01% were top losers on the BSE sectoral space.

Meanwhile, oil companies have gone ahead and reduced the prices of jet fuel prices by 2%. This is the fourth straight reduction in prices after April. Jet fuel prices will be reduced by Rs 1,376.81 per kl or to Rs 65,670.14 per kl in New Delhi with effect from midnight of June 01, 2012. In Mumbai, jet fuel will now cost Rs 66,587.90 per kl against Rs 68,022.08 per kl.

The three earlier reductions were to the tune of Rs 753.8 per kl in three previous fortnights. Despite the recent cut in prices of aviation turbine fuel (ATF), it still remains high and is higher than the level of Rs 62,557.12 per kl before the three price increases. However, any reduction in fuel prices will be welcomed by the cash strapped airlines industry as jet fuel forms 40% of their operating cost.

The three fuel retailers, IOC, Hindustan Petroleum and Bharat Petroleum, revise jet fuel prices on the 1st and 16th of every month, based on the average international price in the preceding fortnight.

The S&P CNX Nifty touched a high and low 4,925.00 and 4,831.75 respectively.

The top gainers on the Nifty were ITC up by 2.27%, GAIL up by 1.62%, Sun Pharma up by 0.36% and Hindalco up by 0.30%.

On the flipside, Asian Paints down by 6.13%, Cairn down by 5.57%, Siemens down by 5.43%, Bank of Baroda down by 5.05% and Ranbaxy down by 5.05% were the top losers on the index.

The European markets were trading in red, as France's CAC 40 down by 1.56%, Britain’s FTSE 100 down by 0.72%, while Germany's DAX down by 2.58%.

Sentiments continued to remain bearish in the Asian region for third day in a row on Friday amid deepening debt worries in Europe, while disappointing US data and Chinese manufacturing data too dampened the sentiments. Overnight, the US government lowered its estimate for first-quarter economic growth, to 1.9 percent from 2.2 percent following two jobs reports -- weekly unemployment claims and private-sector job creation in May -- both were disappointing, indicating slow improvement in the economy. Adding fuel to the fire, manufacturing activity in China grew at a much slower rate than expected in May. The official purchasing managers index (PMI) fell to 50.4 from 53.3 in April.

Meanwhile, Japanese Nikkei average crumbled over a percentage point and South Korean KOSPI Composite also eased half a percent after disappointing Chinese and US data; moreover, fears about the deepening euro zone debt crisis too weighed the sentiments. While, Hong Kong shares edged lower on Friday, rounding off four successive weeks of losses, as disappointing manufacturing data from China weighed on most cyclical sectors such as materials and mining companies and counterbalanced gains in financials led by buying at lower levels.