Sensex trims some losses in noon trades but Metal, Realty stocks weigh

Stock markets in India are showing some signs of recovery in Friday afternoon trades as the benchmark equity indices erased some part of early losses and traded with cuts of around a quarter percent. The frontline equity indices traded in an extremely tight range with a negative bias amid uncertain market conditions. Market participants lacked the conviction to open fresh bets and chose to take profits off the table, lacking any significant triggers to take the markets higher. The psychological 17,500 (Sensex) and 5,300 (Nifty) levels were proving as support levels as the key indices despite repeated attempts refused to go substantially below those levels. Cues from most Asian markets also remained somber however the benchmark in China bucked the pessimistic trend and surged over a percent led by property shares after the recent cut in interest rates by Chinese central bank raised expectations that lower financing costs would boost sales of houses. The European markets too traded on a tepid note as amid waning expectations of further monetary stimulus ahead of a key US jobs report. Besides, market participants globally also fretted over the fact that the policy makers too are concerned about the gloomier economic prospects after the ECB and People’s Bank of China cut their benchmark borrowing costs, while the Bank of England raised the size of its asset-purchase program. On the domestic front, cues from the money market remained pessimistic as Indian rupee extended its depreciating run for the third consecutive session and inched well over the 55 per dollar levels against the US dollar. On the BSE sectoral space, the Metal sector sank by around one and half a percent and remained the top laggard in the space followed by the high beta Realty pocket which plummeted over a percent. Shares from the IT sector too remained dull amid fears that after the US proposed two deals with a mandatory 'no-offshore' clause, many similar deals could be on the anvil which could adversely impact Indian 100 billion dollar IT industry that thrives on offshore revenues. On the other hand, the defensive FMCG counter remained the only index which kept its head above the water with notable gains of over three fourth of a percent.

Moreover, after many days of constant moves, the broader markets showed some weakness as investors took to profit booking in Mid Cap stocks which fell by over one third of a percent. The bourses dropped on weak volumes of over Rs 0.5 lakh crore while the market breadth on BSE was in favor of declines in the ratio of 1219:1372 while 118 scrips remained unchanged.

The BSE Sensex is currently trading at 17,476.72 down by 61.95 points or 0.35% after trading as high as 17,546.04 and as low as 17,425.47. There were 8 stocks advancing against 22 declines on the index.

The broader indices were trading on a negative note; the BSE Mid cap index dropped 0.38% and Small cap index eased 0.10%.

On the BSE sectoral space, FMCG up 0.78% was the only gainer, while Metal down 1.43%, Realty down 1.26%, IT down 1.17%, TECk down 1.03% and Capital Goods down 0.90% were the major laggards in the space.

HUL up 1.47%, Cipla up 1.40%, M&M up 1.07%, HDFC up 0.93% and ITC up 0.86% were the major gainers on the Sensex, while Jindal Steel down 3.04%, Sterlite down 2.60%, Maruti Suzuki down 1.83%, Hindalco down 1.68% and Wipro down 1.62% were the major losers in the index.

Meanwhile, at a time when Asia’s third largest Indian economy is showing signs of deterioration owing to a series of domestic challenges along with weakening international scenario, a recent report from United Nations underscoring global companies perceive India as third most attractive destination for investment after China and the United States, emerged as silver lining amid dark clouds. The report also highlighted that FDI inflows to South Asia turned around as a result of higher inflows to India, the dominant foreign direct investment (FDI) recipient in the region.

According to the World Investment Report 2012 prepared by United Nations Conference on Trade and Development (UNCTAD), a survey of 179 top global firms around the world showed that the companies unanimously saw India only behind China and the United States in their list of top destinations where they planned to invest between 2012 and 2014. However, the survey also highlighted that the transnational companies expected slower FDI growth at the global level in 2012.

India, the largest FDI recipient in South Asia accounting for more than four fifths of total FDI inflows to the region, showed a strong performance as FDI inflows in the country reached $31.6 billion in 2011, surging around 33 percent from previous years’ $24.2 billion levels. Assuming that the present trend of FDI inflow in India continues, the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) chief economist Nagesh Kumar has predicted that the nation is likely to witness 20-25 percent growth in FDI inflows this year while that in the subsequent year would be about 20 percent.

Following declines in 2009 and 2010, FDI inflows to South Asia rose by 23 percent to $39 billion in 2011, of which India accounted for around $32 billion inflows followed by the Islamic Republic of Iran and Pakistan, the second and third largest FDI recipients, amounted to $4.2 billion and $1.3 billion, respectively. Bangladesh also emerged as a major recipient, with FDI inflows increasing to a record high of $1.1 billion.

After three years’ decline, outbound FDI from the South Asian region recovered as well. In 2011, FDI outflows from South Asia rose by 12 percent to $15.2 billion. Outflows from India, the region’s dominant source of FDI, increased to $14.8 billion. The report also pointed that India remained the largest investor in least developed countries (LDCs) from developing and transition economies, followed by China and South Africa.

The S&P CNX Nifty is currently trading at 5,304.40, lower by 22.90 points or 0.43% after trading as high as 5,326.95 and as low as 5,287.75. There were 13 stocks advancing against 37 declines on the index.

The top gainers on the Nifty were HUL up 1.53%, Cipla up 1.34%, M&M up 1.34%, BPCL up 1.13% and Tata Motors up 0.90%.

Jindal Steel down 3.03%, Sterlite down 1.96%, Sesa Goa down 1.95%, Asian Paints down 1.77% and DLF down 1.77% were the major losers on the index.

In the Asian space, Hang Seng dropped 0.23%, Jakarta Composite declined 0.43%, Nikkei 225 sank 0.65%, Straits Times Index fell 0.15%, KOSPI Composite Index plunged 0.92% and Taiwan Weighted slipped 0.26%.

On the other hand Shanghai Composite surged 1.04% and KLSE Composite inched up 0.03%.

The European markets got off to a weak start as France’s CAC 40 shed 0.40%, Germany’s DAX dropped 0.31% and the United Kingdom’s FTSE 100 fell 0.23%.