Selling pressure on Indian bourses eases; benchmarks off day’s lows

The position squaring in Indian markets is showing signs of easing in Monday afternoon trades which is evident from the fact that the frontline indices have pared some of their losses and recovered to some extent from the day’s lows. The benchmarks are currently trading around the psychological 16,200 (Sensex) and 4,850 (Nifty) levels down by over a percent as market participants continued to remain concerned about the prospects of risky asset classes like equities amid signs of slowing global economic growth in Asia and debt crises in the US and Europe. Discouraging developments from both sides of the Atlantic continued to arrest any potential upswing for the domestic bourses. Sentiments were undermined by political bickering in Europe over the ways to avert the sovereign debt debacle and worries that the US is heading for economic crisis after Congressional leaders’ talks on a sweeping deficit agreement were heading for failure. Back home the depreciating rupee continued to adversely impact the importers and dissuaded investors from taking large bets. Meanwhile reports suggest that the RBI has intervened in the currency markets to stall the slide in rupee after the currency hit new 32-month lows against the dollar on Monday. On the BSE sectoral space, market participants punished the Oil & Gas and rate sensitive Bankex counters as they plunged around one and half a percent. Index heavyweight Reliance Industries too failed to make its presence felt as it continued to tumble and traded with around two percent cuts. Some selling pressure was also evident in Power and Consumer Durable counters which lost around one and half a percentage point. Though there appeared no gainer in the sectoral space thanks to the across the board sell-off however, individual stocks like Maruti Suzuki, Coal India and JP Associates traded with some gains.

Moreover, the broader markets too traded in the negative terrain with around half a percent losses but were outperforming their larger peers. The bourses plummeted on large volumes of well over Rs 0.70 lakh core mark and the market breadth on BSE was dominantly in favor of declines in the ratio of 1494:964 while 119 scrips remained unchanged.

The BSE Sensex is currently trading at 16,185.37 down by 186.14 points or 1.14% after trading as high as and 16,297.03 as low as 16,123.37. There were 5 stocks advancing against 25 declines on the index.

The broader indices were trading in the negative zone; the BSE Mid cap index plunged 0.82% and Small cap shed 0.47%.

On the BSE sectoral space there were no gainers while Oil & Gas down 1.63%, Bankex down 1.52%, Power down 1.51%, Consumer Durables down 1.46% and Metal down 1.38% were the major losers in the space.

Maruti Suzuki up 1.57%, Coal India up 0.52%, JP Associates up 0.48%, Sun Pharma up 0.38% and HUL up 0.19% were the only gainers on the Sensex, while BHEL down 3.24%, NTPC down 2.73%, Tata Motors down 2.64%, Sterlite down 2.59% and Bajaj Auto down 2.52% were the major losers on the index.

Meanwhile, Planning Commission Deputy Chairman Montek Singh Ahluwalia accepted that the planning commission went wrong whilst projecting moderation in inflation which has been hovering around two digit marks from almost a year.

Ahluwalia said, “It is true that we were hoping that this (moderation in inflation) will happen earlier, to that extent our credibility becomes a question. You should recognize that short-term forecast is subject to error”. However, he asserted inflation would moderate to 7-7.5% by March, 2012.

The headline inflation measured by Wholesale Price Index (WPI), for the month of October stood at 9.73% which is marginally up by 9.72% in September. On the other hand, country’s weekly food inflation stood at 10.63% for week ended November 5.

The inflation has remained stubbornly high in spite of the repeated assurance by several government functionaries that it would moderate. The Reserve Bank of India (RBI), on many occasions has said that inflation would start moderating from December.

Replying to criticism of India Inc that there was a policy paralysis in the government, Ahluwalia said “Industry has been a lot more focused on decisions that are holding up infrastructure projects and not the (financial) reforms. The government is keen to push (reforms) ahead but needs to develop political consensus and if the measures like GST, DTC and other reforms are delayed, that does not mean that they would not happen”.

Asia’s third largest economy’s inflation has remained above 9% for eleven consecutive months which has added to the woes of Inc’s growth. Although the inflation failed to moderate as per estimates, however, the planning commission maintains a positive stance that one of the nation’s growth stymies will reduce down by March 2012.

The S&P CNX Nifty is currently trading at 4,850.25, lower by 55.55 points or 1.13% after trading as high as 4,873.80 and as low as 4,832.10. There were 10 stocks advancing against 40 declines on the index.

The top gainers on the Nifty were Maruti up 1.64%, Coal India up 0.74%, HUL up 0.63%, R Infra up 0.52% and JP Associates up 0.40%.

SAIL down 3.76%, BHEL down 3.04%, Sterlite down 2.68%, HCL Tech down 2.66% and Ranbaxy down 2.64% were the major losers on the index.

Asian markets continued to trade on a disappointing note, Shanghai Composite dropped 0.56%, Hang Seng sank 1.62%, Jakarta Composite plunged 1.40%, KLSE Composite shed 0.99%, Nikkei 225 declined 0.32%, Straits Times slipped 0.47%, Seoul Composite slumped 1.04% and Taiwan Weighted nosedived 2.64%.