MARKETS CAPITULATE

After three consecutive days of consolidation, sense of weakness finally got trickled in to the local markets with real signs of profit booking emerging on the last trading day of the week. Sanguine global sentiments supported the initial upmove but the optimism met with stern resistance at crucial 5,900 and 19,700 levels which eventually resulted U-turn for benchmarks. Selling pressure in heavyweights gathered force after Brent curde prices surged above $124 per barrel level, adding over a percent point in the session, on reports that fierce fighting in Libya damaged the country's largest oil field emerged. The reports buttressed international oil prices which led to position squaring across the board as prospect of long-term supply cuts in crude oil undermined local mood as India is dependent on imports of oil to the extent of around 80%. Bourses feared that rising oil prices would lead to heightened inflationary pressure which in turn will compel the RBI to take policy actions in its annual monetary policy review meet next month. Cautious investors also speculated that quarterly earnings performances by heavyweight companies in fourth quarter could be in-line with market expectations and may not provide any further direction to the markets. The NSE's 50-share broadly followed index Nifty, settled with losses of around three fourth of a percent, way below the crucial 5,900 level while Bombay Stock Exchange's Sensitive Index, or Sensex slipped by over a hundred points around the psychological 19,450 mark. The broader indices which hogged the limelight by outshining larger peers for five consecutive days too underperformed the benchmarks in today's session. The BSE's Midcap Index went home with losses of 1.25% while the Smallcap Index plunged by 1.40%. On the sectoral front, the Realty pocket languished at the bottom of the table after deposing 2.52% as majors like HDIL and Unitech respectively sulked 4.31% and 2.21%. The Auto counter too witnessed hefty bouts of profit booking as it sank 1.87% on the back of weakness in stocks like Tata Motors and Ashok Leyland which slipped 2.84% and 2.78%. Index heavyweight Reliance Industries too failed to make its presence felt in the session as it shed 1.53% by the end of trade. On the other hand, BSE's FMCG counter added 0.39% helped by gains in Dabur India and ITC which rose 1.71% and 0.88% respectively. Individually, NTPC which shaved off 3.13% in the session after surging 1.78% on Wednesday, along with nasty cuts in the range of 2-3% in shares like Sesa Goa, ONGC and Cairn. Debutant Shilpi Cable had a strong listing but soon came under selling pressure after hitting intraday highs of Rs 85. The stock settled at Rs 47, a huge discount of almost 32% to the issue price.

On the global front, majority of Asian equity indices finished the day's trade in the positive terrain with Japanese benchmark Nikkei 225 being the top gainer in the space after rising around two percent and closing at its highest level since the March 11 earthquake. The European markets are trading on an optimistic note as the France's CAC surged around a percent being the top gainer, followed by Britain's FTSE 100 up 0.79% and Germany's DAX up 0.49%. On the other hand, the screen trading for US index futures indicated that the Dow could open on a positive note.

Earlier on Dalal Street, the benchmark started the day on a flat note with a positive bias tracking supportive leads from the Asian markets were investors overlooked Thursday's 7.1 magnitude aftershock in Japan as they expected that damage due to the natural calamity would be less than initially feared. The markets traded in the green zone for a brief period and drifted into the negative territory sooner than later as the indices met with severe resistance at psychological levels. The bourses made a desperate attempt to rise above the neutral line in the noon trades but failed miserably as they went ahead to make fresh intraday low levels in the late hours. However, late short covering by investors helped the benchmarks to claw back to some extent after touching the low point of the day to eventually snap yet another session in the red terrain with losses of around three fourth percent. Markets registered larger volumes of over Rs 1.12 lakh crore compared to Thursday while the turnover for NSE F&O segment too remained higher at over Rs 0.96 lakh crore. Market breadth turned negative as there were 1002 shares on the gaining side against 1947 shares on the losing side while 89 shares remained unchanged.

Finally, the BSE Sensex declined by 139.73 points or 0.71% to settle at 19,451.45  while the S&P CNX Nifty lost 43.70 points or 0.74% to end at 5,842.00.

The BSE Sensex touched a high and a low of 19,697.21 and 19,388.42 respectively. The BSE Mid-cap and Small-cap indices declined by 1.25% and 1.40%, respectively. 

Bharti Airtel up 1.56%, ITC up 0.88%, L&T up 0.51%, BHEL up 0.18% and Hindustan Unilever up 0.11% were the major gainers on the Sensex.

On the flip side, Jaiprakash Associate down 3.77%, DLF down 3.73%, Hindalco Industries down 2.99%, Tata Motors down 2.84% and Reliance Infra down 2.12% were the Major losers on the index.

India's auto industry continues to remain in a bullish mode despite the high inflation pushing costs and monetary tightening by the Reserve Bank of India (RBI) raising interest rates on auto loans. According to the data released by the Society of Indian Automobile Manufacturers (SIAM), domestic passenger car sales rose 24.37% in March to 1,94,199 units as compared with 1,56,145 units in the same month last year.

Motorcycle sales in the country on the other hand expanded by 18.72% during the month under review to touch 8,40,941 units compared with 7,08,369 units in the same month last year. Overall two-wheeler sales in March 2010 stood at 10,96,233 units as compared with 9,20,154 units a year ago, thereby recording a growth of 19.14%.

Commercial vehicle sales, which are usually considered a good leading indicator of overall economic activity in a country, also remained robust and registered a growth of 15.35% in the month under review to touch 77,688 units as compared with 67,352 units in the year-ago period. Total sales of vehicles across categories registered growth of 19.42% to touch 14,65,909 units in March 2011, from 12,27,511 units in March 20110.

India's auto industry has been beating market expectations for over a year now, hitting record sales numbers every other month. The industry has been going through a dream phase for last several quarters as rising disposable income, strong economic outlook of the country, easy availability of finance and a flurry of new models being launched by aggressive automakers keep the demand high.

There have been apprehensions that some slowdown was unavoidable given the high base effect from last year, but so far none of these have materialised. In fact, the scenario is such that major auto makers are facing serious capacity constraint and capacity expansion plans are being aggressively formulated by most of the established players. Analysts feel that with India's per capita income exceeding $1,000, the size of the Indian economy now seems to have crossed a critical minimum level where the auto demand starts turning around in a big way, as was seen in China in the last decade or the US in 1960s and 1970s. This will in turn keep the industry in bullish zone for an extended period.

FMCG up 0.39% and Capital Goods up 0.15% were the only gainers in the BSE sectoral space. Realty down 2.52%, Auto down 1.87%, Consumer Durables (CD) down 1.48% and PSU down 1.37% and Oil & Gas down 1.33 were the major losers in the BSE sectoral space.

The S&P CNX Nifty touched a high and a low of 5,926.95 and 5,822.00 respectively.

The top gainers on the Nifty were ITC up 1.48%, Bharti Airtel up 1.37%, Cairn India up 0.89%, L&T up 0.86% and Axis Bank Tech up 0.81%.

The top losers on the index were JP Associate down 3.87%, DLF down 3.61%, Reliance Capital down 3.29%, Reliance Power down 3.28% and Hindalco down 3.26%.

Indian Railways managed to achieve the targeted level of earnings in the last financial year despite a number of public protests impacting its operations on several days in North India in the last quarter as a strong economy boosts demand for rail transport.

According to the Railways, total earnings in the last financial year reached Rs 94,742 crores compared to the Budgeted earnings of Rs 94,850 crore. A lot of concerns were expressed that given the stagnant fares and other operational difficulties, railways will fail to meet the target. But according to Railway officials, surging demand, particularly for freight transport in a rapidly recovering economy helped the largest transporter in the country to achieve the financial targets.  

Out of the total earnings of Indian Railways in 2010-11, freight earnings constituted approximately Rs 62,900 crore or 66.3%. This compares with a target of Rs 62,489.33 crore set in the Rail Budget for last year. On the other hand, earnings from and passengers stood approximately at Rs 26,007 as against the target of Rs 26,126.47 crore. The figures however are provisional yet and final data will be released later in the month.

Increase in coal loading as well as that of food grains and fertilizers has helped expand freight earnings of Railways even as the ban imposed by the Karnataka on movement of iron ore for export purposes impacted the revenue. The Railways expect the positive trend to continue in FY12 as well as demand for freight transport, particularly for commodities coal, fertilizer and food grains is expected to remain strong.  

European markets were trading in green on Friday. France's CAC 40 surges by 0.87%, Germany's DAX was inches up by 0.53% and Britain's FTSE 100 increased by 0.81%.

Most of the Asian equity indices closed the day's trade in the positive terrain on last trading day of the week led by Japanese Nikkei, which surged about two percent and closed at its highest level since the March 11 earthquake, with short-covering supported by an outperform rating for under pressured Tokyo Electric. Shares of Tokyo Electric Power Company, which owns the Fukushima plant, soared 13.5 percent. Moreover, Chinese index rose more than half a percent supported by selective buying of metal and steel companies.