Indian benchmarks plunge around day’s lows in noon trades; depose 2%

Indian equity markets extended their somber run and traded with large cuts of close to two percent in Friday afternoon trades amid comments from the Union Finance Minister in Lok Sabha over India’s slowing growth, elevated inflationary pressure and swelling fiscal deficit. Mukherjee said that India’s fiscal targets would be a challenge in a slowing domestic economy and uncertain global environment and he also went ahead to revise the GDP forecast downwards around 7.5% for the fiscal year ending March 2012, sharply lower than the original estimate of 9%. Meanwhile, investors also overlooked the reports that domestic car sales registered a growth of 7% in November, after seeing negative sales growth for four consecutive months on worries that the automakers will miss out even on the modest growth forecast of 2-4% this fiscal. On the global front, pessimistic sentiments prevailed across the Asian region while the European futures too showed that the markets there would start in the red terrain. Investors globally remained worried after reports of disagreement at the European Union summit. The French President, Nicolas Sarkozy, cautioned that there would be no second chance to rescue the European Union from a downturn amid growing divisions between the Euro-zone and non-euro states like Britain and Poland. Back home, on the BSE sectoral space, Capital goods counter dived close to three percent, being the top laggard in the space followed by the rate sensitive Auto pocket that sank around two and half a percent. On the flipside, only the defensive Healthcare sector managed to keep its head above the water with marginal gains.

Moreover, the broader markets too traded on a pessimistic note with large cuts of under a percent but were outperforming their larger peers. The bourses plunged on strong volumes of over Rs 0.60 lakh core. The market breadth on BSE was in favor of declines in the ratio of 1654:771 while 109 scrips remained unchanged.

The BSE Sensex is currently trading at 16,199.06 down by 289.18 points or 1.75% after trading as high as 16,334.85 and as low as 16,153.97. There was 1 stock advancing against 29 declines on the index.

The broader indices were trading on a pessimistic note; the BSE Mid cap index plunged 0.95% and Small cap sank 0.98%.

On the BSE sectoral space, the Healthcare index added 0.12% was the only gainer while Capital Goods down 2.72%, Auto down 2.52%, Realty down 1.84%, Power down 1.78% and Oil & Gas down 1.74% were the major losers in the space.

Coal India up 0.89% was the only gainer on the Sensex, while Bajaj Auto down 3.54%, Sterlite down 3.39%, JP Associates down 3.24%, Tata Motors down 3.23% and BHEL down 3.11% were the major losers in the index.

Meanwhile, after reporting negative sales number for four consecutive months, domestic car sales posted a growth of 7% in November 2011. According to the data by Society of Indian Automobile Manufacturers (SIAM), car makers sold around 1, 71,131 units during last month compared to 1, 59,939 units in November 2010. However, according to SAIM this increase in growth in car sales is because of lower base for November 2010 and increase in demand. 

“The growth in November is still not enough to revive the industry. We don’t expect to meet our forecast of 2% to 4% growth in car sales for this fiscal and we may revise the forecast in January,” Sugato Sen, senior director at SIAM, said.

Earlier in October, the SAIM has downgraded its growth outlook for car sales to 2%-4% from its earlier projection of 10%-12% in July and 16%-18% in April. This downgrade in projects shows the sector is under pressure due to the surge in fuel prices and high interest rates.

According to SAIM data, in November 2011 overall domestic sale of vehicles saw growth of 22.22% as compared to November 2010 and during April-November 2011, the overall domestic car sales grew by 13.08%.

Segment wise, the Passenger Vehicle segment in month of November grew by 8.30% as compared to November 2010. Despite the slowdown in economic activities the Commercial Vehicles segment saw growth of 34.99%. In November 2011, the Three Wheelers and Two Wheelers sales grew by 5.85% and 25.27% respectively.

The overall Commercial Vehicles segment registered growth of 19.95% during April-November 2011 as compared to the same period last year. While Medium & Heavy Commercial Vehicles (M&HCVs) registered growth of 9.39%, Light Commercial Vehicles grew at 29.26%. Three Wheelers sales recorded marginal growth of 0.37% in April-November 2011. While Passenger Carriers registered decline by -2.95% during April-November 2011, Goods Carriers registered growth of 15.34%. Two Wheelers registered a growth of 16.11% during April-November 2011. Mopeds, Motorcycles and Scooters grew by 10.99%, 14.87% and 23.40% respectively.

In November 2011, the overall automobile exports grew by 38.17%. During April-November 2011, overall automobile exports registered a growth rate of 30.68%. Passenger Vehicles registered growth at 21.15% in this period. Two Wheelers, Commercial Vehicles and Three Wheelers segments recorded growth of 31.09%, 25.95% and 44.21% respectively during the said period.

The S&P CNX Nifty is currently trading at 4,844.65, lower by 99 points or 2% after trading as high as 4,902.10 and as low as 4,841.75. There were 4 stocks advancing against 46 declines on the index.

The top gainers on the Nifty were Dr Reddy’s up 1.38%, Coal India up 0.80%, RCom up 0.53% and BPCL up 0.42%.

SAIL down 4.22%, Sterlite down 3.96%, Bajaj Auto down 3.88%, M&M down 3.82% and JP Associates down 3.76% were the major losers on the index.

Asian markets traded on a discouraging note, Shanghai Composite slipped 0.61%, Hang Seng tanked 2.52%, Jakarta Composite plunged 1.14%, KLSE Composite sank 1.03%, Nikkei 225 dropped 1.48%, Straits Times plummeted 1.50%, Seoul Composite plunged 1.97% and Taiwan Weighted decreased 1.28%.