Gloomy IIP data, Euro-zone uncertainty knock 127 points off Sensex

It turned out to be an extremely volatile session for the frontline indices, which showed sharp swings in the dying hours of trade only to eventually quadruple the sorrow of closing in the negative terrain.

The session characterized of high amount of choppiness as the indices tried hard to claw beyond the psychological 5,000 and 16,400 levels but it seemed like the bears had the last say as they stalled the resurgence of the benchmarks and took profits off the table. Sentiments in domestic markets were dampened amid the lingering turbulence in the Europe-zone as the local gauges were largely influenced by the moves in European equity markets.

Local bourses pared all losses in mid noon trades in tandem with European peers as sentiments were buoyed by a rally in heavyweight energy stocks on reports that Qatar's sovereign wealth fund is set to buy a stake in Royal Dutch Shell, whilst hopes for a Greek political deal helped calm investors' nerves. However, the optimism proved short-lived as nervy investors took the opportunity to book profits and drag the benchmarks lower by three fourth of a percent.

The benchmark gauges at one point in time appeared set to breach the psychological 4,900 (Nifty) and 16,200 (Sensex) levels as investors were ruthlessly squaring off positions across the board on getting the unexpectedly shocking March industrial production data. Sentiments 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 on the back of 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.

The defensive Healthcare counter plummeted close to two percent being the top laggards in the BSE sectoral space while investors also were seen booking profits in Power and FMCG pockets, which sank around one and half a percent each. Meanwhile, Airline companies like Kingfisher, SpiceJet and Jet Airways were pressured after DGCA warned them against hiking fares beyond their band, saying the cost of operation has not undergone any major change over the past two months. However, rate sensitive Automobile and Banking sectors managed to keep their head above the water, settling with slight gains and doing their bit to cap market losses.

On the global front, stock markets in the Asian region settled on a somber note with markets in Hong Kong, South Korea and Taiwan plunging over a percent each. Investors at large shrugged the better than expected Chinese inflation data as they lacked conviction to open fresh bets after reports showed that leading US bank JPMorgan suffered a $2 billion trading loss from a failed hedging strategy, as positions in credit securities proved riskier than expected.

European markets trimmed losses as investor appetite for risk grew on hopes that Greek political parties would form a new government, offsetting concerns over intensifying debt crisis.

The NSE’s 50-share broadly followed index Nifty declined by three fourth of a percent to settle above the psychological 4,900 support level while Bombay Stock Exchange’s Sensitive Index - Sensex shed over a hundred and twenty five points to finish below the crucial 16,300 mark. Moreover, the broader markets too finished on a negative note with hefty cuts of under a percent, performing in tandem with their larger peers.

The markets sank on large volumes of over Rs 1.59 lakh crore while the turnover for NSE F&O segment remained on the higher side as compared to that on Thursday, at over Rs 1.23 lakh crore. The market breadth remained pessimistic as there were 981 shares on the gaining side against 1,772 shares on the losing side while 118 shares remained unchanged.

Finally, the BSE Sensex lost 127.07 points or 0.77% to settle at 16,292.98, while the S&P CNX Nifty declined by 36.80 points or 0.74% to close at 4,928.90.

The BSE Sensex touched a high and a low of 16,447.24 and 16,233.76 respectively. The BSE Mid cap index down by 0.83% and Small cap index was down by 0.91%.

The major gainers on the Sensex were Bajaj Auto up by 3.48%, Tata Motors up by 2.66%, BHEL up by 0.84%, DLF up by 0.59%, and SBI up by 0.46% while Tata Power down by 4.89%, Sun Pharma down by 3.87%, Hindalco down by 3.32%, Coal India down by 2.21% and Maruti Suzuki down by 2.10% were the major losers on the index.

The few gainers on the BSE sectoral space were Auto up by 0.58% and Bankex up by 0.02%, while Health Care (HC) down by 1.97%, Power down by 1.40%, FMCG down 1.27%, Metal down by 1.17% and IT down by 1.05% were major losers on the BSE sectoral space.

Meanwhile, the March IIP numbers, which contracted to -3.5%, has sent tremors across the Indian Economy. Although, economists were not expecting a good number, most were working with a 1% industrial growth assumption. The March IIP numbers are against the February numbers of 4.1%.

The IIP number clearly indicates that growth has not bottomed out and there could be surprises in store. C Rangarajan, Chairman of PMEAC has termed the IIP number as ‘very disappointing’. Given the dismal numbers, the GDP growth numbers will also need a downward revision.

The break up of the IIP shows that the capital goods sector has seen a sharp decline of -21.3% and manufacturing has also declined by -4.4%. These two numbers are a dampener on sentiment as they indicate a slowdown in investment and output and are likely to affect future growth. The capital goods sector had seen a growth of 10.6% in February and manufacturing had grown by 4% in the same month.

RBI’s stance on further chopping the interest rates is eyed as inflation will play a major role in that decision. Also, current account deficit of 4% may affect the central bank’s key decision.

The S&P CNX Nifty touched a high and low of 4,976.25 and 4,906.15 respectively.

The top gainers on the Nifty were JP Associates up by 4.31%, Bajaj Auto up by 3.74%, Tata Motors up by 2.80%, Sesa Goa up by 2.40% and IDFC up by 1.77%.

On the flip side, Tata Power down by 5.70%, Grasim down by 3.80%, Sun Pharma down by 3.78%, Ranbaxy down by 3.68%, and Hindalco down by 3.62% were the top losers on the index.

The European markets were trading in red, as France's CAC 40 down by 0.87%, Britain’s FTSE 100 down 0.38%, while Germany's DAX was down by 0.31%.

Stock markets in Asian region continued to reel under pressure and shut shop entirely in the red as investors remained worried over the euro-zone debt crisis Friday as politicians in Greece struggled to form a coalition after pro-austerity parties were lashed in weekend elections. However, the euro held its own in the morning following reports from Athens that the head of Greece’s socialist Pasok party was making tentative progress on building a government, after two other groups had failed. Moreover, in Athens Pasok leader Evangelos Venizelos is in talks with other parties to build a coalition after Sunday’s polls saw almost two-thirds of voters reject austerity policies imposed on the country in return for bailout cash.

Meanwhile, Singapore index Straits Times fell by 0.70 percent, dragged down by casino operator Genting Singapore PLC and investors retreating from risky assets on concerns about global growth. While, Hong Kong shares tumbled for a seventh straight day on Friday, after China’s April inflation figures were largely in line with estimates, further dousing hopes of near-term easing despite signs of a steeper slowdown in the world's second-largest economy. Mainland Chinese markets were also weaker and snapped the day’s trade with a cut of over half a percent.