Domestic bourses slip in early deals; Nifty below 5,700 level

The frontline Indian stock indices have resumed their south-bound journey on Wednesday’s morning deals, after a day of halt, following weakness in global markets amid sluggish economic growth and concerns over Euro-zone. The US markets declined for the third straight day on Tuesday weighed down by sharply lower forecast of slower global growth by IMF while, most of the Asian equity indices were trading in the red at this point of time as concern of China’s economic slowdown and its territorial dispute with Japan were weighing on corporate earnings of both the nations. Japanese market was leading the losers pack after its major auto makers reported drop in China sales.

Back home, Sensex and Nifty lost their crucial 18,450 and 5,700 levels respectively, as investors remained on the sidelines ahead of second quarter earnings season, which starts from October 12, 2012 with Infosys Q2 numbers. The traders also remained cautious on concern of IMF revising India’s growth forecast down to 4.9 percent in 2012, along with the global downgrade. PSU oil marketing companies like BPCL, HPCL and IOC all edged lower as oil ministry ruled out any increase in price of diesel in the near future. Meanwhile, following the footsteps of IOC, BPCL and HPCL too have reduced petrol prices by 58 paisa and 57 paisa a litre, respectively.

The sectoral break up looks in favour of the bears at this point in time, with only healthcare, metal and fast moving consumer goods indices putting up some sort of a resistance. The list of losers among the sectoral plays is being led by realty, capital goods and power indices. Banking and PSU indices too are in the negative terrain. The remaining sectoral indices are marginally lower. The broader indices were struggling to get some traction while, the market breadth on the BSE was negative; there were 777 shares on the gaining side against 839 shares on the losing side while 66 shares remain unchanged.

The BSE Sensex opened at 18,699.19; about 94 points lower compared to its previous closing of 18,793.36, and has touched a high and a low of 18,740.63 and 18,659.77 respectively.

The index is currently trading at 18,740.63, down by 52.73 points or 0.28%. There were 11 stocks advancing against 19 declines on the index.

The overall market breadth has made a negative start with 46.20% stocks advancing against 49.88% declines. The broader indices too were struggling to get some traction; the BSE Mid cap and Small cap indices declined 0.18% and 0.09% respectively.

The few gaining sectoral indices on the BSE were, HC up by 0.50%, Metal up by 0.43% and FMCG up by 0.29%. While, Realty down by 1.79%, CG down by 0.81%, Power down by 0.79%, Bankex down by 0.69% and PSU down by 0.55% were the top losers on the index.

The top gainers on the Sensex were Tata Steel up by 1.26%, Cipla up by 1.06%, Jindal Steel up by 0.89%, Tata Motors up by 1.15% and Sun Pharma up by 1.00%.

On the flip side, BHEL was down by 1.96%, Tata Power was down by 1.73%, Hindalco was down by 1.32%, Wipro was down by 0.85% and RIL was down by 0.71% were the top losers on the Sensex.

Meanwhile, amid peaking inflation rate and slowing economic growth in the country, the Prime Minister's Economic Advisor C Rangarajan has commented that the nation is now facing a critical situation and urged for policy actions to contain expenditures, especially subsidies, to aid the country to gear up to achieve the potential growth rate. He emphasized that curtailing subsidies is to put a control on increasing fiscal deficit, while raising revenue-GDP ratio should also be in focus, to ensure stable revenue for the nation’s development.

The fiscal deficit had dipped to 4.7% of GDP in 2010-11 while the projection was to fall to 4.6% in 2011-12. The present deficit is 5.9% of GDP, albeit it has been forecasted to dip by 5.1% of GDP in the current fiscal. He opined that the present economic growth is only due to the new economic policy, as it removed all the hurdles in the way of economic growth and pointed that it’s different from 1991 slow down.

He also noted that there was three years of high inflation due to certain severe supply constraints, particularly of agricultural products, thus the need for containing inflation and balance of payments has become more vital to trigger the economic growth, while re-emphasized that high growth does not warrant a higher level of inflation. He also stressed on the need for increasing coal production, and a need for strong economic policy.

By adding further, he also pointed out that the farm economy and the power sector are facing major challenges these days, and called for necessary actions to revitalize the traditional crop agriculture which is very much important to food security and farm income and urged to take more aggressive path of capacity creation in the power sector.

The S&P CNX Nifty opened at 5,671.15; about 33 points lower compared to its previous closing of 5,704.60, and has touched a high and a low of 5,679.40 and 5,660.10 respectively.

The index is currently trading at 5,678.00, down by 26.60 points or 0.47%. There were 14 stocks advancing against 36 declines on the index.

The top gainers of the Nifty were HCL Tech up by 1.47%, Grasim Industries up by 1.40%, Tata Steel up by 1.12%, Cipla up by 1.08% and Tata Motors up by 0.65%.

On the flip side, DLF down by 2.77%, NTPC down by 1.33%, L&T down by 1.27%, BHEL down by 1.22% and BPCL down by 1.20%, were the major losers on the index.

Most of the Asian equity indices were trading in the red; Hang Seng lost 75.27 points or 0.36% to 20,862.01, Jakarta Composite was down by 4.19 points or 0.10% to 4,276.75, KLSE Composite was down by 2.78 points or 0.17% to 1,660.41, Nikkei 225 declined by 148.31 points or 1.69% to 8,621.06, Straits Times lost 26.29 points or 0.84% to 3,039.62 and Kospi Composite was lower by 23.24 points or 1.17% to 1,955.64.

On the flip side, Shanghai Composite was marginally up by 2.42 points or 0.11% to 2,117.65.

Taiwan Weighted is closed for trading on account of National Day.