Sensex languishes around day’s low in noon trades; IT stocks plunge

Stock markets in India languished around the day’s lows in Friday afternoon trades with the benchmark indices plunging around 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 way below those levels. Sentiments remained uninspiring right from the start of trade as 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 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.

The frontline gauges also 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. The European markets on the other hand have got off to a mixed opening thereby giving no direction to local bourses. Back home, shares from the Auto sector traded lower as auto companies released weaker than expected monthly sales data. However, the scrips from Aviation pocket traded on a sanguine note with Spicejet, Jet Airways and Kingfisher rallying after oil companies reduced the prices of jet fuel prices by 2%. On the BSE sectoral front, investors were seen squaring off hefty positions from the IT counter which got battered by about two percent, being the top laggard in the space. Though largely across the board selling was evident, investors showed some buying interest in the defensive FMCG sector which traded with gains of around half a percent.

Moreover, the broader markets continued to trade on a negative note however, the small cap index outperformed all its larger peers as it traded with marginal losses. The bourses expectedly fell on weak volumes of over Rs 0.5 lakh crore on the first day of a new F&O series while the market breadth on BSE was in favor of declines in the ratio of 1355:951 while 119 scrips remained unchanged.

The BSE Sensex is currently trading at 16,075.21 down by 143.32 points or 0.88% after trading as high as 16,226.19 and as low as 16,056.86. There were 4 stocks advancing against 26 declines on the index.

The broader indices were trading on a negative note; the BSE Mid cap index declined 0.70% and Small cap index dropped 0.17%.

On the BSE sectoral space, FMCG up 0.43% was the only gainer, while IT down 1.97%, TECk down 1.73%, Oil & Gas down 1.56%, Power down 1.33% and Capital Goods down 1.13% were the major laggards in the space.

ITC up 1.32%, Hindalco up 1.03%, Tata Steel up 0.50% and ICICI Bank up 0.38% were the only gainers on the Sensex, while Jindal Steel down 2.37%, Wipro down 2.33%, Infosys down 2.10%, TCS down 1.83% and RIL down 1.70% were the major losers in the index.

Meanwhile, sugar production has already crossed the government’s estimates of 25.2 million tonnes in the current marketing year. As per the Indian Sugar Mills Association (ISMA), sugar mills have already produced 25.5 million tonnes of sugar till May of the 2011-12 which is 8% higher than the previous year’s 24.3 million tonnes.

The marketing year for sugar is from October-September. As per ISMA crushing is still on in the state of Tamil Nadu and will restart in Karnataka in the month of August. For these states sugar production has touched 3.72 million tonnes and 1.8 million tonnes, respectively, so far.  It is expected that they will add another 0.5 million tones and will take sugar production for the current marketing year to around 26 million tonnes. 

Production of sugar in Maharashtra, which is the country’s largest producing state for the sweetener, has increased marginally to 8.96 million tones and for Uttar Pradesh it was up by 18% to 6.95 million tones. Crushing in both the states has finished for the season.

Given the expectation of higher production of sugar, the government has already permitted export of 3 million tonnes in equal tranches this year.

The S&P CNX Nifty is currently trading at 4,877.65, lower by 46.60 points or 0.95% after trading as high as 4,925.00 and as low as 4,871.50. There were 7 stocks advancing against 43 declines on the index.

The top gainers on the Nifty were ITC up 3.35%, JP Associates up 0.88%, Hindalco up 0.86%, Tata Steel up 0.59% and ICICI Bank up 0.45%.

Asian Paints down 3.97%, Cairn down 3.16%, Bank of Baroda down 3.03%, SAIL down 2.94% and IDFC down 2.79% were the major losers on the index.

In the Asian space, Jakarta Composite dropped 0.23%, KLSE Composite declined 0.49%, Nikkei 225 plunged 1.20%, Straits Times Index slipped 0.73%, KOSPI Composite Index shed 0.49% and Taiwan Weighted got decimated by 2.68%.

On the other hand only Shanghai Composite rose 0.02% and Hang Seng added 0.22%.

The European markets got off to a mixed start as France’s CAC 40 added 0.36%, Germany’s DAX eased 0.34% and United Kingdom’s FTSE rose 0.51%.