Sentiment remains bearish in early trade on weak global cues

Extending their previous sessions’ downfall, Indian benchmarks breached their crucial 15,800 mark (Sensex) and 4,750 mark (Nifty) in early trade on concerns over slowing industrial growth amid a weakening trend on other Asian bourses as worries over the euro zone debt crisis continued to dampen the investor sentiment. Back home, Reliance Anil Dhirubhai Ambani Group (ADAG) stocks like Reliance Infrastructure, Reliance Power, Reliance Communications and Reliance Capital were down 2-2.5% as a lawyer representing UK’s financial sector regulator in proceedings before a tribunal claimed that the family of Anil Ambani was the source of funds used by an offshore entity to buy shares of his group companies. The sentiment was also dampened after the rupee breaching the Rs 54 per US dollar-mark for the first time in history. The rupee depreciated by 46 paise to trade at a fresh record low of Rs 54.17 against the dollar in opening trade today. All groups of stocks traded lower but metal, capital goods and consumer durables stocks traded with deep cuts. Metal stocks declined tracking weakness in global commodities. Hindalco, Sterlite and Tata Steel - all stocks were trading with a cut of 2-4 percent. The broader indices too were struggling to get some traction and were bleeding badly at this point of time while, the market breadth has made a subdued start; there were 406 shares on the gaining side against 1,207 shares on the losing side while 64 shares remained unchanged.

The BSE Sensex opened at 15,739.05; about 343 points lower compared to its previous closing of 15,881.14, and has touched a high and a low of 15,795.84 and 15,710.32 respectively.

The index is currently trading at 15,772.23, down by 108.91 points or 0.69%. There were just 6 stocks advancing against 24 declines on the index.

The overall market breadth has made a subdued start with only 24.21% stocks advancing against 71.97% declines. The broader indices too were bleeding badly; the BSE Mid cap and Small cap indices were down by 1.10% and 0.91% respectively.

CD down by 1.71%, Metal down by 1.59%, CG down by 1.41%, Auto down by 1.31% and TECk down by 1.24% were the top losers on the index. While, there were no gainer on the index.

Bharti Airtel down by 3.76%, Maruti Suzuki down by 2.77%, Hindalco down by 2.59%, Sterlite Industries down by 2.11% and Tata Motors down by 1.78% were the top losers on the index. While, HDFC up by 1.02%, Cipla up by 0.66%, Sun Pharma up by 0.37%, Tata Power up by 0.23% and ONGC up by 0.04% remained the top gainers on the index.

Meanwhile, despite growing passenger traffic, the aviation industry is beleaguered with multiple problems which has coerced civil aviation ministry to work on a new civil aviation policy and economic regulatory mechanism for pricing of air tickets.

A Senior Civil Aviation Ministry official said, “We have started fresh work on the new civil aviation policy to meet the challenges of the new decade. It will look into issues of sustainability, viability and human resource of the sector.”

The civil aviation ministry was working on an economic regulatory mechanism for pricing of air tickets as the airlines have been attributing their losses to the pricing of air tickets below their cost price. However, ministry will not regulate the airfares or fix tariff.

“It (pricing of air tickets) is the thrust area. We are also working on an economic mechanism that will look into the issues of legality and others and come up with a report within five months,” the Civil Aviation Ministry official said.

The aviation firms have been reporting losses despite an increase in passenger traffic. In the first half of the April-September 2011 saw increase of 18.8% from the corresponding period of last year. The civil aviation ministry also planning to propose a set of recommendations to ease taxes on aviation turbine fuel to the Prime Minister’s Office (PMO) after PMO wrote to the civil aviation Ministry to examine the tax regime governing the jet fuel.

As per the official the ATF prices and taxes on it would be reviewed in the economic regulatory framework under which the ministry may propose direct import of jet fuel and ease the policy regime in this issue. The ministry will also recommend restructuring of custom and excise duty on jet fuel. The jet fuel accounts for 40% of the operating expenses for an airline. Prices in India are higher that many other countries in the world.

Presently, state governments charges 4% to 30% taxes on ATF. Efforts to get states on board to rationalize taxes have shown no positive results, with states fearing a loss of revenues. In the first six months of 2011-12, Jet Airways, Kingfisher and SpiceJet have lost nearly Rs 1,500 crore.

The S&P CNX Nifty opened at 4,712.80; about 142 points lower compared to its previous closing of 4,763.25, and has touched a high and a low of 4,732.75 and 4,706.35 respectively.

The index is currently trading at 4,726.10, down by 37.15 points or 0.78%. There were just 9 stocks advancing against 41 declines on the index.

The top gainers of the Nifty were BPCL up by 2.99%, HDFC up by 1.05%, Cipla up by 0.47%, Tata Power up by 0.46% and Sun Pharma up by 0.31%.

Bharti Airtel down by 3.64%, Maruti Suzuki down by 2.82%, Sesa Goa down by 2.80%, Hindalco down by 2.55% and RCom down by 2.47%, were the major losers on the index.

All the Asian equity indices were trading in the red; Shanghai Composite was down 24.68 points or 1.11% to 2,203.84, Hang Seng was down 339.73 points or 1.85% to 18,014.70, Jakarta Composite was down 69.52 points or 1.85% to 3,682.08, Nikkei 225 was down 95.87 points or 1.13% to 8,423.26, Straits Times was down 34.59 points or 1.29% to 2,637.80, Seoul Composite was down 37.25 points or 2.01% to 1,820.50 and Taiwan Weighted was down 122.55 points or 1.77% to 6,800.02.