Benchmarks crash in early trade on weak global cues

After witnessing mild pull back in previous session, domestic markets resumed their southward journey on negative global cues and ahead of monthly expiry in the derivatives segment tomorrow. The US markets continued their decline overnight on concern of weakening domestic economy and deepening European debt crisis. Endless eurozone fears, including selling of 3-month bills at a premium yield of 5.11% by Spain, made investors worried while, cues from Asian region too remained subdued with all the Asian equity indices were trading in the negative terrain at this point of time. However, the Indian rupee saw sharp recovery in the early trade as it seems that RBI may have sold dollars to cap the slide. It was trading at 52.07 to the dollar as against 52.30 on Tuesday. The 30-share BSE Sensex and 50- share NSE Nifty fell below their crucial 16,000 and 4,750 mark respectively. All the sectoral indices, led by tech, software and banking stocks, were trading in the negative zone on the BSE. ONGC has dropped 0.8% at Rs 249 after it withdrew the papers it filed for the follow-on public offer while, SKS Microfinance has touched a new low of Rs 105 in opening trades on reports that its founder and chairman may step down. The market breadth has made a negative start; there were 515 shares on the gaining side against 972 shares on the losing side while 56 shares remained unchanged.

The BSE Sensex opened at 15,969.60; about 95.82 points lower compared to its previous closing of 16,065.42, and has touched a low of 15,819.50 while high remain its opening.

The index is currently trading at 15,849.08, down by 216.34 points or 1.35%. There were only 3 stocks advancing against 27 declines on the index.

The overall market breadth has made a subdued start with only 33.38% stocks advancing against 62.99% declines. The broader indices too were bleeding; the BSE Mid cap and Small cap indices were down by 0.71% and 0.51% respectively.

TECk down by 1.97%, IT down by 1.82%, Bankex down by 1.55%, Metal down by 1.35% and Auto down by 1.24% were the top losers on the index. While, there were no gainer on the index.

Bharti Airtel down by 3.13%, Infosys down by 2.36%, Tata Motors down by 2.29%, BHEL down by 2.24% and Jaiprakash Associates down by 1.97% were the top losers on the index. While, Maruti Suzuki up by 0.35%, Cipla up by 0.09% and Tata Power up by 0.05%  remained the only gainers on the index.

Moreover, the government, in a month’s time, is likely to set price for ethanol and mandate a higher quantum to be blended with petrol under the Ethanol Blending Programme (EBP) to promote Bio-fuel. The Renewable Energy Minister Farooq Abdullah said that ' We will shortly decide the pricing of ethanol and take it to the Cabinet in about a month's time. We should move towards 10% blending from next year'.

Currently, the government has fixed a provisional price of ethanol at Rs 27 per litre. At this rate, the Oil Marketing Companies (OMCs) procure ethanol from sugar mills to implement the mandatory 5% ethanol blending with petrol as a part of EBP under national Policy on Bio-fuels. In October 2007, the government had decided for a mandatory 5% ethanol blending with petrol.

However, the sugar mill owners are unhappy with the provisional prices of ethanol, as they can get much higher price if they sell it for rectified spirit, which is also produced from the same feedstock molasses. Sugar millers are of the view that ethanol prices should be at Rs 35-36 per litre. On the other hand, Planning Commission member - Soumitra Chaudhari has suggested linking of ethanol price with international price of petrol, with a discount of 20%.

According to industry data, in the 2011-2012 marketing year (October-September), sugar mills have contracted to supply 600 million litres of ethanol to petrol firms at an ad-hoc price of Rs. 27 per litre. Last year, the sugar mills had contracted 540 million litres however, they were able to supply only 300 million litres.

Indian sugar industry produces 26 million tonne of sugar, 3.5 billion litres of alcohol and 2,300 Mega Watt power and is capable of meeting the demand of potable alcohol and 10% ethanol blending programme.

The S&P CNX Nifty opened at 4,779.50; about 33 points lower compared to its previous closing of 4,812.35, and has touched a low of 4,738.95 while high remain its opening.

The index is currently trading at 4,749.40, down by 62.95 points or 1.31%. There were just 4 stocks advancing against 46 declines on the index.

The only gainers of the Nifty were GAIL up by 1.06%, Maruti up by 0.53%, HUL up by 0.22% and HDFC up by 0.02%.

Siemens down by 3.65%, Infosys down by 2.70%, Bharti Airtel down by 2.56%, RCom by 2.43% and BHEL was down by 2.30%, were the major losers on the index.

All the Asian markets were trading in the red; Shanghai Composite was down 7.83 points or 0.32% to 2,404.80, Hang Seng was down 338.12 points or 1.85% to 17,913.47, Jakarta Composite was down 51.35 points or 1.37% to 3,684.18, KLSE Composite was down 11.09 points or 0.77% to 1,426.90, Straits Times was down 39.73 points or 1.46% to 2,677.47, Seoul Composite was down 36.82 points or 2.02% to 1,789.46 and Taiwan Weighted was down by 145.28 points or 2.08% to 6,854.75.

Moreover, Japanese markets remained closed for the trade on Wednesday on account of Labor Thanksgiving day.