Benchmarks bludgeon badly in early trade amid global weakness

Extending their previous sessions’ losses domestic markets have witnessed blood bath in early trade on concerns over slowing industrial growth and a weakening trend in the rest of Asia amid renewed worries about the euro zone debt crisis. The US markets suffered a sharp decline overnight while, Asian markets were also trading with a sharp cut after Mario Draghi, President of the European Central Bank, dashed hopes of a large scale purchase of government bonds, as widely expected. Back home, sentiment continued to remain bearish for second consecutive day with Nifty sliding under the 4,900 mark. Metal, power, realty and capital goods stocks declined over 2 percent. However, IT stocks saw relative outperformance, thought the benchmark IT index on the BSE slipped by a percentage point. Meanwhile, the auto stocks too beaten badly in the trade as the Society of Indian Automobile Manufacturers (SIAM) said that car sales in India will likely be almost flat this fiscal year. Last fiscal year, car sales grew at an unprecedented 29.5 percent and SIAM initially pegged sales growth this fiscal year, which ends in March, at 16-18 percent. The broader indices too were struggling to get some traction and were trading in the red at this point of time while, the market breadth has made a subdued start; there were 385 shares on the gaining side against 1,070 shares on the losing side while 32 shares remained unchanged.

The BSE Sensex opened at 16,258.44; about 230 points lower compared to its previous closing of 16,488.24, and has touched a low of 16,153.97 while high remained its opening.

The index is currently trading at 16,200.23, down by 288.01 points or 1.75%. All the 30 stocks were declining on the index.

The overall market breadth has made a somber start with 25.89% stocks advancing against 71.96% declines. The broader indices too were bleeding badly; the BSE Mid cap and Small cap indices were down by 1.03% and 0.95% respectively.

Realty down by 2.50%, Metal down by 2.15%, Auto down by 2.12%, CG down by 2.08% and Bankex down by 1.94%, were the top losers on the index. While, there were no gainer on the index.

BHEL down by 3.27%, Jaiprakash Associates down by 3.16%, Tata Motors down by 3.02%, Sterlite Industries down by 2.96% and DLF down by 2.69% were the top losers on the index. While, there was no gainer in the Sensex.

Meanwhile, at a time when domestic investors are applying the brakes on power sector funding, foreign direct investment (FDI) inflows into the sector could actually be headed for a new record this fiscal. The Cabinet Committee on Economic Affairs (CCEA) has approved the proposals of two power entities for getting in FDI worth Rs 6,500 crore.

The government gave the green signal to Grid Equipment for bringing in FDI to the tune of Rs 4,500 crore. Further, Energy Grid Automation Transformers and Switchgears India's proposal for Rs 2,000 crore FDI too has been approved.

These proposals are for ‘downstream investment’ and transfer of entire equity shares of Grid Equipment and Energy Grid from Areva T&D India and other resident shareholders. Equity shares of the two entities - Grid Equipment and Energy Grid - would be transferred to ‘Alstom Grid Finance and other foreign collaborators and their nominees.’

Alstom, India is mainly into power generation equipment while Areva T&D India is a leading transmission and distribution player. The global business of Areva T&D were acquired by consortium of Alstom and Schneider Electric in June 2010.

The S&P CNX Nifty opened at 4,870.75; about 73 points lower compared to its previous closing of 4,943.65, and has touched a high and a low of 4,872.70 and 4,843.40 respectively.

The index is currently trading at 4,855.60, down by 88.05 points or 1.78%. There were just 3 stocks advancing against 47 declines on the index.

The gainers of the Nifty were BPCL up by 1.03%, Dr Reddy up by 0.89% and Cairn up by 0.23% remained the only gainers. While, Tata Motors down by 3.02%, Sterlite Industries down by 2.96%, SAIL down by 2.91%, Jaiprakash Associates down by 2.86% and BHEL was down by 2.84%, were the major losers on the index.

All the Asian markets were trading in the red; Shanghai Composite was down 14.58 points or 0.63% to 2,315.24, Hang Seng was down 501.89 points or 2.63% to 18,605.92, Jakarta Composite was down 37.10 points or 0.98% to 3,744.66, KLSE Composite was down 14.74 points or 1.00% to 1,458.18, Nikkei 225 was down 132.76 points or 1.53% to 8,531.82, Straits Times was down 33.99 points or 1.25% to 2,694.32, Seoul Composite was down 36.69 points or 1.92% to 1,875.70 and Taiwan Weighted was down by 109.51 points or 1.57% to 6,873.39.