Indian benchmarks prune some losses from day’s lows; hold key levels

After plunging to the lowest point in the session in late hours of morning session, the frontline equity indices are showing signs of some recovery in early afternoon trades. The benchmarks have managed to prune some part of their losses and are holding on to the important psychological 15,700 (Sensex) and 4,700 (Nifty) levels. Some stability seemed to be returning in the markets as the selling pressure eased on the Oil & Gas counter while the defensive pockets like Healthcare and FMCG too pared losses and traded with marginal cuts. Meanwhile, India’s food inflation nosedived to a nearly four-year low of 4.35% during the week ended December 3, thanks to the slew of seasonal factors like new crop arrival in the market, and statistical base effect. The chief economic adviser to finance ministry, Kaushik Basu even went ahead to predict that the food inflation would recede to 3% by the first week of January. However, sentiments remained fragile as the rupee extended its streak of depreciation and plummeted to yet another record low of 54.30 per dollar, taking losses this week to about 4%, on worries that slowing domestic economic growth will dissuade further capital inflows. Moreover, Finance Minister Pranab Mukherjee acknowledging the fact that recent moves by RBI have adversely impacted the nation’s economic growth said that “we must turn our attention now to reviving growth as quickly as possible”. On the global front, pessimistic sentiments prevailed across the Asian region while the European futures too showed that the markets there will extend losses, as economic growth from China to Japan and South Korea slowed. Back home, on the BSE sectoral space, the consumer durables counter bore the maximum brunt of selling pressure and remained the top laggards in the space with around three and half a percent cuts followed by the Capital Goods pocket which traded with close to three percent losses. There appeared no sectoral gainer in the space however, some individual stocks like Coal India and HUL traded with gains of around a percent.

Moreover, the broader markets traded on a discouraging note with large cuts of around two percent, underperforming their larger peers by a fat margin. 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 1885:552 while 113 scrips remained unchanged.

The BSE Sensex is currently trading at 15,707.78 down by 173.36 points or 1.09% after trading as high as 15,795.84 and as low as 15,596.22. There were 6 stocks advancing against 24 declines on the index.

The broader indices were trading on a bleak note; the BSE Mid cap index plummeted 1.63% and Small cap plunged 2.09%.

On the BSE sectoral space, there were no gainers while Consumer Durables down 3.41%, Capital Goods down 2.85%, Auto down 2.10%, Realty down 2.01%, and TECk down 1.87% were the major losers in the space.

Coal India up 1.10%, HUL up 0.98%, Tata Power up 0.86%, HDFC up 0.71% and Cipla up 0.40% were the major gainers on the Sensex, while Bharti Airtel down 3.93%, Tata Motors down 3.93%, L&T down 3.23%, Sterlite down 3.03% and BHEL down 2.92% were the major losers in the index.

Meanwhile, India’s gems and jewellery exports are likely to increase by 15% to $49.5 billion in the current financial year, this healthy growth in exports will be driven by the increase in prices of gold and diamond. According to the Gems and Jewellery Export Promotion Council (GJEPC), during 2010-11, India’s export of Gems and Jewellery stood at $43 billion.

Despite the ongoing debt crisis in the European nations and slowdown in United States, in April-November 2011, India’s gems and jewellery exports has maintained its growth momentum, and export body expects that the industry will maintain the pace in remaining four months of current fiscal year.

The first eight months of current financial year, the gems and jewellery exports grew by 15.5% to $29.1 billion compared to corresponding period of current financial year. India imports gold and rough diamonds in large quantities and re-exports the value added items like jewellery.

Despite of the decline in demand from western markets, the value of exports is growing because of increase in the raw material cost. In last eight months, the prices of gold, diamonds and coloured stones have increased between 12-13%. 'But exports are growing in terms of value. These export figures are reflective of an increase in gold and diamond prices.' GJEPC Chairman Rajiv Jain said maintain that there is not much growth in demand for jewellery exports,

The UAE is the largest market, which accounts for 43% of the India’s total gems and jewellery exports. The UAE is followed by Hong Kong, which accounts for 30% and the United States 17%. However, the gems and jewellery exporters are also trying to tap new markets in countries like Latin America, Russia and Africa.

The S&P CNX Nifty is currently trading at 4,707.20, lower by 56.05 points or 1.18% after trading as high as 4,732.75 and as low as 4,673.85. There were 10 stocks advancing against 40 declines on the index.

The top gainers on the Nifty were BPCL up 2.89%, IDFC up 2.02%, Tata Power up 1.27%, Power Grid up 1.14% and Coal India up 1.10%.

Ranbaxy down 4.63%, Seas Goa down 4.51%, Tata Motors down 4.21%, Cairn down 4.14% and Bharti Airtel down 4.07% were the major losers on the index.

Asian markets traded on a pessimistic note, Shanghai Composite plunged 1.96%, Hang Seng plummeted 2.10%, Jakarta Composite shed 2.17%, Nikkei 225 declined 1.66%, Straits Times fell 1.53%, Seoul Composite dropped 2.08% and Taiwan Weighted nosedived 2.28%.