Indian benchmarks prune hefty losses; Auto, Cap Goods' stocks gain

Indian markets are witnessing a trend reversal in Thursday afternoon trading session as the frontline equity indices have managed to prune most losses after hitting intraday lows and are now trading with moderate cuts. Short covering in some rate sensitive Automobile and Capital Goods stocks lent support to the recovery. Sentiments got some support after India’s food inflation moderated sharply to single digit at 9.01% for the week ended November 12, its third straight week of decline. The unexpectedly encouraging weekly inflation data also did its bit in persuading investors to cover their short positions before the November series derivative contract expires later in the day. Sentiments across Asia appeared cautiously optimistic as barring the Japanese and Indonesian markets, all other markets traded in the green territory with markets in South Korea and Taiwan climbing over half a percent. However, cautiousness loomed across the region amid heightened nervousness over the spreading European debt crisis contagion and disappointing US economic reports. On one hand, the poor results of German bond auction, which met with only 60 percent demand, dissuaded investors from taking large bets while on the other, sluggish US consumer spending data coupled with a report of second straight decline in orders for long-lasting manufactured products also played its share of spoilsport. On the domestic front, fertilizer stocks including RCF, National Fertilizers Fertilizers & Chemicals Travancore rallied in the session amid reports that suppliers agreed to cut Di-ammonium Phosphate (DAP) and Nitrogen, Phosphorus, Potassium (NPK) price for Indian fertilizer companies. On the BSE sectoral space, market participants booked profits in the Consumer Durables counters which sank by a percent while the technology and high beta Realty counters also got pummeled by around a percent.

Moreover, the broader markets too trimmed losses with the recovery in benchmarks and traded with moderate cuts of around half a percent, outperforming in tandem with their larger peers. The bourses declined on large volumes of well over Rs 1 lakh core mark on the day of November series F&O contract expiry. The market breadth on BSE was in favor of declines in the ratio of 1574:927 while 107 scrips remained unchanged.

The BSE Sensex is currently trading at 15,614.05 down by 85.92 points or 0.55% after trading as high as 15,729.01 and as low as 15,479.97. There were 11 stocks advancing against 19 declines on the index.

The broader indices were trading on a weak note; the BSE Mid cap index shed 0.37% and Small cap slipped 0.65%.

On the BSE sectoral space, Auto up 0.14% was the only gainer while Consumer Durables down 1.18%, IT down 1.10%, Realty down 1.05%, Metal down 0.85% and TECk down 0.65% were the major losers in the space.

M&M up 2.04%, JP Associates up 1.74%, Wipro up 1.22%, Maruti Suzuki up 1.09% and Bharti Airtel up 0.74% were the major gainers on the Sensex, while Infosys down 1.82%, Hindalco down 1.76%, Hero Moto down 1.63%, Tata Steel down 1.57% and Tata Motors down 1.54% were the major losers in the index.

Meanwhile, India’s external debt increased by 3.4% to $316.9 billion during the April-June 2011, as compared to $306.35 billion in January-March 2011 quarter. “The increase in external debt was largely on account of rise in commercial borrowings and short-term trade credits,” said Namo Narain Meena, Minister of State for Finance.

The prudent external debt management policy being followed by the government lays emphasis on monitoring of long and short term debt, raising concessional sovereign loans and regulating ECBs. As a result, the external debt to Gross Domestic Product (GDP) ratio has declined from 21.1% in 2001-02 to 17.3% in 2010-11.

According to the data, country’s sovereign debt stood at $55.23 billion in 2010-11 up from $51.81 billion in the 2009-10. For the current financial year, the quick estimates for 2011-12 put the sovereign debt on government account at around $62.39 billion.

The S&P CNX Nifty is currently trading at 4,679.40, lower by 27.05 points or 0.57% after trading as high as 4,714.25 and as low as 4,639.10. There were 16 stocks advancing against 32 declines on the index.

The top gainers on the Nifty were GAIL up 3.31%, JP Associates up 1.91%, Axis Bank up 1.70%, M&M up 1.54% and IDFC up 1.07%.

SAIL down 4.27%, R Power down 2.72%, Ambuja Cement down 2.63%, Siemens down 2.05% and Infosys down 1.88% were the major losers on the index.

Asian markets continued to trade on a mixed note, Hang Seng rose 0.07%, KLSE Composite gained 0.21%, Straits Times added 0.05% and Seoul Composite climbed 0.67% and Taiwan Weighted surged 0.85%.

On the flipside, Shanghai Composite dropped 0.11%, Jakarta Composite declined 0.44% and Nikkei 225 plummeted 1.80%.