Weak European market opening halts Sensex’ recovery in noon trades

Indian stock markets are going through a volatile trading session on Tuesday as the benchmark equity indices have slipped-back below the psychological 16,800 (Sensex) and 5,100 (Nifty) levels in early noon trades. The frontline indices had gained steam in late morning trades after hitting the session’s lows and pared almost all the losses to come in close proximity with the previous closing levels. However, nervous market participants resorted to largely across the board profit booking following the disappointing start for European stock markets as the uncertainty over European debt trouble was far from over since Greek leaders were busy in cross-party talks to form a government, and with the chances for a coalition slim, a new set of elections is likely. The Asian markets too failed to prop up sentiments in the domestic markets as after last session’s brutal rout, stock markets in the Asian region showed modest recuperation but investors lacked conviction to take large bests following the overnight consolidation on Wall Street. Back home, marketmen again turned jittery as the anemic rupee slipped back to 53 against the US dollar despite the Finance Minister deferring GAAR by a year and the central bank’s surprise open market operation (OMO) purchase auction of bonds for Rs 12,000 crore on Monday. Meanwhile, the gas related stocks like GAIL (India), Indraprastha Gas and Gujarat Gas surged in the range of 1-3% as nearly a month after the conflict between utility firm Indraprastha Gas and the regulator Petroleum and Natural Gas Regulatory Board (PNGRB), the Delhi High Court is expected to deliver its final verdict later in the day. However, the heavyweight software and technology exporters like Infosys, TCS, HCL tech and Wipro traded on a somber note pressure the frontline gauges after Cognizant announced its quarterly earnings and stunned the markets by lowering its 2012 revenue guidance by 300 basis points (bps) to 20% at $7.34 billion from an earlier 23%, citing drop in demand for its services, and pointing to a lack of improvement in discretionary spending. On the other hand, investors were seen adding positions in the defensive-FMCG and PSU counters which gained around a percent each.

Moreover, the broader markets bucked the weak trend that their larger peers exhibited and traded on a positive note with moderate gains of a quarter percent in the afternoon trades. The bourses declined on higher volumes of over Rs 0.8 lakh crore while the market breadth on BSE was in favor of advances in the ratio of 1341:1028 while 131 scrips remained unchanged.

The BSE Sensex is currently trading at 16,783.23 down by 129.48 points or 0.77% after trading as high as 16,918.31 and as low as 16,742.07. There were 12 stocks advancing against 18 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index added 0.20% and Small cap gained 0.28%.

On the BSE sectoral space, FMCG up 0.98%, PSU up 0.97% and Realty up 0.80% were the only gainers, while IT down 3.07%, TECk down 2.40%, Capital Goods down 1.08%, Auto down 0.84% and Power down 0.77% were the major laggards in the space.

Gail India up 3.53%, DLF up 3.14%, Coal India up 2.64%, Sun Pharma up 1.26% and ITC up 1.16% were the major gainers on the Sensex, while TCS down 4.73%, BHEL down 2.64%, Infosys down 2.46%, Tata Motors down 1.90% and Wipro down 1.89% were the major losers in the index.

Meanwhile, with payment mechanism issues being resolved, sanction hit Iran is keen to enhance trade with India especially with import of agricultural commodities like wheat, rice, tea and sugar, as per the Federation of Indian Export Organisations (FIEO). Pharmaceutical is the other area which is under consideration. India and Iran are looking at increasing the bilateral trade to $25 billion in the next four years from the current level of $15 billion.

A 56-member Iranian trade delegation is currently in India to discuss ways and means to increase trade with the country. It is also expected that exports to Iran will help reduce the trade deficit of the country which currently stands at an all time high of $185 billion.

The exporters body is also keen that the government helps it to increase trade with countries like China and Africa which it believes are still untapped markets. It is of the opinion that prices of manufacturing as well as wages are increasing in China which is making their commodities expensive. Indian commodities are now in a position to effectively compete with them in the global market.

FIEO is also of the view that the Reserve Bank should also be asked to intervene to provide more affordable credit to exporters. It has further observed that efforts to diversify markets and reduce dependence on US and Europe are yielding results. Asia and ASEAN region which accounted for about 35% of India's exports are now accounting for about 50% of the share.

The S&P CNX Nifty is currently trading at 5,081.20, lower by 32.95 points or 0.64% after trading as high as 5,119.95 and as low as 5,062.75. There were 17 stocks advancing against 33 declines on the index.

The top gainers on the Nifty were GAIL up 3.50%, DLF up 2.95%, Coal India up 2.45%, PNB up 2.19% and ITC up 1.38%.

TCS down 4.97%, BHEL down 2.93%, HCL Tech down 2.91%, Infosys down 2.69% and Wipro down 2.45% were the major losers on the index.

In the Asian space, Jakarta Composite plunged 1.81%, KLSE Composite dropped 0.52%, Nikkei 225 got pounded by 2.78%, Straits Times Index got thrashed by 2.27%, KOSPI Composite slumped 1.64% and Taiwan Weighted dived 2.11%.

On the other hand, Shanghai Composite fell 0.37% and Hang Seng declined 0.43%.

The European markets got off to a mixed start as France’s CAC 40 sank 1.12%, Germany’s DAX rose 0.12% and United Kingdom’s FTSE eased 0.06%.