Sensex prolongs weakness on across the board risk aversion in noon trades

Though Indian stock markets continued to trade with significant losses of around a percent, the downslide for frontline equity indices appeared to have got arrested in afternoon trades on Friday. The benchmark gauges at one point in time appeared set to breach the psychological 4,900 (Nifty) and 16,250 (Sensex) levels as investors were ruthlessly squaring off positions across the board on getting the unexpectedly shocking March industrial production data. However, the key indices seem to have stabilized just above those crucial levels. But sentiments continue to remain somber as India's industrial production unexpectedly contracted 3.5% in March for the first time in five months, indicating marked slowdown in Asia’s third largest economy. In addition, market’s mood also got undermined after European counterparts got off to a sedate opening on the back of gloomy global developments. Sharp deterioration in confidence of market participants around the world was evident amid uncertainty over Greece's political outlook, a huge loss from JPMorgan and mounting concerns over Spain's banking sector. Besides, sentiments also were dampened by the disappointing cues from money market where anemic rupee returned to its depreciating ways against the US dollar despite the Reserve Bank’s efforts to check outflow of forex. There appeared absolutely no evidence of buying as investors resorted to across risk aversion after the downbeat domestic and global cues. The defensive counters like Healthcare and FMCG plummeted close to two percent each and were the top laggards in the BSE sectoral space. While investors also were seen booking profits in Metal and Capital Goods pockets which sank around one and half a percent each. Though no sectoral index traded on a positive note, some heavyweight individual names like Tata Motors, Bajaj Auto and BHEL bucked the negative trend and traded with notable gains.

Moreover, the broader markets traded on a pessimistic note with sharp cuts of around a percent in early afternoon trades largely in line with their larger peers. The bourses slumped on good volumes of over Rs 0.8 lakh crore while the market breadth on BSE was in favor of declines in the ratio of 1722:719 while 117 scrips remained unchanged.

The BSE Sensex is currently trading at 16,272.60 down by 147.45 points or 0.90% after trading as high as 16,395.12 and as low as 16,233.76. There were 6 stocks advancing against 24 declines on the index.

The broader indices were trading on a pessimistic note; the BSE Mid cap index plunged 1.22% and Small cap plummeted 1.15%.

On the BSE sectoral space there were no gainers, while Healthcare down 1.71%, FMCG down 1.70%, Metal down 1.62%, Capital Goods down 1.43% and Realty down 1.27% were the major laggards in the space.

Tata Motors up 0.88%, Bajaj Auto up 0.78%, BHEL up 0.64%, Hero Moto up 0.50% and RIL up 0.34% were the major gainers on the Sensex, while Maruti Suzuki down 3.13%, Sun Pharma down 2.83%, Hindalco down 2.64%, ITC down 2.62% and ONGC down 2.12% were the major losers in the index.

Meanwhile, economic growth in India and other Asia Pacific countries is expected to be better as compared to the rest of the world, as per a UN Report. In fact the Asia Pacific region will be an anchor of stability and a new growth pole for the world economy.

Growth for Indian economy has been projected at 7.5% in 2012, up from 6.9% in the last fiscal year. The Indian economy's strong fundamentals, namely high saving and investment rates, rapidly expanding labour force and middle class will ensure a steady economic performance. Infact indicators are pointing to the fact that the economy is turning around and core sectors, including manufacturing, are showing signs of recovery. It may be noted that the government data has pegged the growth for FY’13 to be around 7.6%.

The major impediment to growth will be the reduced demand in the region’s traditional export markets of US and Europe together with higher capital costs and loose monetary policies of some advanced economies. 

Inflation in India is expected to remain around 6.5% in 2012. The slower growth is expected to moderate inflation. The report has further observed that in line with increased prosperity, the food habits of consumers have been changing from cereals to proteins, fruits and vegetables, and to contain food inflation, supply of these items has to be enhanced. As per latest official data, overall inflation at the end of March was 6.89%.

The S&P CNX Nifty is currently trading at 4,920.10, lower by 45.60 points or 0.92% after trading as high as 4,954.05 and as low as 4,906.45. There were 9 stocks advancing against 41 declines on the index.

The top gainers on the Nifty were Tata Motors up 1.09%, Jaiprakash Associates up 0.91%, BHEL up 0.78%, Cairn up 0.75% and Bajaj Auto up 0.64%.

Ranbaxy down 5.03%, Maruti down 3.15%, Sun Pharma down 2.98%, ITC down 2.93% and Hindalco down 2.89% were the major losers on the index.

In the Asian space, Shanghai Composite declined 0.41%, Hang Seng plunged 1.28%, Jakarta Composite slipped 0.77%, KLSE Composite eased 0.22%, Nikkei 225 shed 0.63%, Straits Times Index dropped 0.92%, KOSPI Composite plummeted 1.43% and Taiwan Weighted slumped 1.10%.

The European markets got off to a negative start as France’s CAC 40 sank 0.81%, Germany’s DAX fell added 0.83% and United Kingdom’s FTSE declined 0.56%.