Pressure continues in market despite positive inflation numbers

The Indian equity markets came off the low point of the day but still remained under a severe selling pressure ahead of key meetings in Europe, where European Central Bank (ECB) was expected to cut the key lending rate by 25 basis points and may also announce additional liquidity measures. The investors were trading cautious on fears about slowing growth of the Indian economy. However, adjournment of Lok Sabha session till noon today following Opposition’s demand for P Chidambaram's resignation over the 2G scam added to the market pressure. Meanwhile, primary articles inflation for week ended November 26 has come in at 6.92% versus 7.74%, food articles inflation at 6.60% versus 8%, while fuel group inflation remains unchanged at 15.53%. India's food price index rose at its slowest pace in nearly 4 months. On sectoral front, all were trading in red. Realty, metal and capital goods stocks were among the worst hit in the sell-off.

On the global front, markets in the Asia-Pacific region were witnessing selling pressures on worries about the financial situation in Europe following Standard & Poor's warning about a possible downgrade of European Union's credit. Back home, the market breadth favoring the negative trend; there were 585 shares on the gaining side against 1,750 shares on the losing side while 81 shares remained unchanged.

The BSE Sensex is currently trading at 16,563.74, down by 313.32 points or 1.86%. The index has touched a high and low of 16,847.82 and 16,487.83 respectively. There were 2 stocks advancing against 28 declining ones on the index.

The broader indices after getting a green start too slipped in red; the BSE Mid cap and Small cap indices declined by 1.56% and 1.43% respectively.

Selling was witnessed across the BSE Sectoral space, so there was no gainer on the BSE sectoral space, while, Realty down by 3.02%, Capital Goods (CG) down by 2.81%, Metal down by 2.66%, Power down by 2.44% and Oil & Gas down by 2.43% topped the list of losers.

The top losers on the Sensex were Jaiprakash Associates down by 3.99%, Sterlite Industries down by 3.74%, Hindalco Industries down by 3.53%, DLF down by 3.38% and L&T down by 3.31%.

On the flip side, Hero MotoCorp up by 0.52% and Cipla up by 0.43% were the top gainers on the index.

Meanwhile, with India’s trade deficit with China, which accounts for 11.5% of India’s total imports, showing little signs of coming down, the government is now planning to diversify the trade basket and focus on manufactured goods, so as to improve the trade situation to ensure greater value addition in their bilateral trade and promote the introduction of additional goods and services in their markets.

Jyotiraditya Scindia, Minister of State for Commerce & Industry said that under-investments in manufacturing and value addition have led to a severe demand-supply mismatch in India. The creation of a market for manufactured and value-added goods from China can help in curbing this mismatch.

India’s imports from China in the fiscal year 2010-11 was $20 billion more than its exports to the world’s second largest economy, leading to a trade deficit of $23.9 billion in the fiscal against $19.2 billion in 2009-10. However, the minister also added that there was an increase in export of some value-added goods to China as compared to the previous year.

The S&P CNX Nifty is currently trading at 4,961.45, lower by 101.15 points or 2.00%. The index has touched a high and low of 5,049.05 and 4,938.85 respectively. There were 4 stocks advancing against 46 declining ones on the index.

The top gainers of the Nifty were Hero MotoCorp up by 0.53%, Cipla up by 0.51%, BPCL up by 0.44% and PNB up by 0.17%.

On the flip side, RCom down by 7.16%, Reliance Infra down by 4.43%, JP Associate down by 4.26%, Sesa Goa down by 4.08% and Hindalco down by 3.81%, were the major losers on the index.

Most of the Asian equity indices were trading in the red; Hang Seng declined 0.94%, Jakarta Composite shrugged off 0.64%, KLSE Composite descended 0.68%, Nikkei 225 knocked off 0.56%, Straits Times plunged 1.67%, Seoul Composite down by 0.16% and Taiwan Weighted plummeted 0.71%.

On the flip side, Shanghai Composite was up by 0.19%.