Indian frontline indices went through a tumultuous Tuesday as bears' went berserk battering the index heavyweights like country's largest lender SBI and upstream company ONCG by 7.78% and 6.71% respectively. SBI's surprisingly worse earnings did not go down well with the market participants as it got decimated on reporting the unexpected sharp plunge in fourth quarter net profit to Rs 20.9 crore as provisions for bad loans and operating expenses rose. While the speculative reports that ONGC might have to shell out more money in terms of subsidy sharing too weighed on sentiments. Moreover, fears of another fuel price hike and further interest rate increase by RBI prompted panicky investors to take money off the table as they remained apprehensive that higher borrowing costs will eat in to the corporate earnings. Moreover, the markets across the globe too traded on a weak note as Asian markets exhibiting mixed trends while the European counterparts after getting off to a subdued opening on the back of renewed apprehensions over the lingering euro-zone sovereign debt troubles managed to pare some of its losses. While the wilt in international crude oil prices too failed to enthuse the local mood. The NSE's 50-share broadly followed index, Nifty drifted lower by over a percentage points to settle around the 5,450 support level while the Bombay Stock Exchange's Sensitive Index Sensex deposed over two hundred points and ended the day below the psychological 18,150 level. The broader markets too settled in the negative terrain but were in comparatively in better positions than their larger peers. The BSE's midcap index fell by 0.66% and the smallcap index slipped 0.61%. The Oil and Gas counter on the BSE sectoral space languished at the bottom of the table as it took a nasty laceration of 3.23% in the session after reports that the government has increased upstream oil companies' contribution toward fuel marketing firms' subsidy burden to 38.5% of Rs 77,922 crore estimated for FY'11. Stocks of companies like ONGC and OIL got slaughtered by 6.71% and 4.95% respectively. While the Bankex pocket too bore the brunt of hefty profit booking as it sank 2.24% after bellwethers like SBI and Bank of Baroda got pulverized by 7.78% and 4.26% respectively. On the other hand the Consumer Durables pack climbed 0.97% supported by Titan Industries and Bajaj Electricals which accumulated 2.02% and 2.14% respectively. However the over two and half a percent slash in index heavyweight Reliance Industries too exerted further downside pressure on the major indices after reports that RIL may take three years to drill new wells in the nation's largest natural gas block because of commercial and logistical reasons, delaying an increase in output of the fuel. On the result front, stocks like Opto Circuits and Trident got commended by the investors in the session.
On the global front, Asian equity indices concluded the session on a mixed note with bourses in China and Japan finishing around the neutral line with a positive bias while indices in Hong Kong, Seoul and Taiwan traded on a pessimistic note. The European counterparts too exhibited mixed trend as France's CAC 40 added 0.07%, Germany's DAX sank by 0.53% and London's FTSE 100 gained 0.13%. On the other hand, the screen trading for US index futures too indicated that the Dow could open on a flat note.
Earlier on Dalal Street, the benchmark got off to a flat start with a positive bias shrugging weak cues from the Asian markets where sentiments largely remained influenced by Wall Street which plunged on the back of lingering Euro-zone debt crisis and also due to mixed result announcements. Thereafter, the indices witnessed some short covering as investors hunted for some bargains in the badly butchered and undervalued market. However, the frontline indices failed to hold on to the initial momentum and broke the psychological 5,500 and 18,300 levels as selling pressure gathered greater momentum after India's largest lender SBI announced surprisingly worse fourth quarterly earnings which left the door open for further downside pressure. The halfhearted short covering rally in the dying hours of trade too got sold and the indices concluded second straight session with large cuts of a percent around the psychological 5,450 and 18,150 levels. Markets plunged on strong volumes of over Rs 1.45 lakh crore while the turnover for NSE F&O segment remained higher compared to Monday at over 1.32 lakh crore. Market breadth remained negative as there were 1052 shares on the gaining side against 1713 shares on the losing side while 134 shares remained unchanged.
Finally, the BSE Sensex tumbled 207.68 points or 1.13% to settle at 18,137.35 while the S&P CNX Nifty slumped 60.05 points or 1.09% to settle at 5438.95.
The BSE Sensex touched a high and a low of 18,435.80 and 18,084.67, respectively. The BSE Mid-cap and Small-cap indices lost 0.66% and 0.61%, respectively.
The top gainers on the Sensex were Jindal Steel up 1.97%, HUL up 1.60%, TCS up 1.30%, ITC up 0.83% and DLF up 0.64%.
On the flip side, SBI down 7.78%, ONGC down 6.71%, Hero Honda down 3.39%, RIL down 2.53% and Rel Infra down 2.17% were the major losers on the index.
Meanwhile, the Ministry of Finance is planning to set guidelines on the Infrastructure Debt Fund by end of this June. This Infra Debt fund will help to finance the core sector to sustain high economic growth. The Infra Debt Funds are planned to be structured either as a trust or a company, depending upon the nature they would be regulated either by RBI or SEBI.
Department of Economic Affairs' secretary is scheduled to meet all the stakeholders including the central bank RBI, market regulator SEBI and insurance sector watchdog IDRA to discuss the guidelines and the Capital Adequacy Ratio for the companies to be helped also the exposure limits. Matters connecting to regulators, possible debt seekers, and credit rating may also come up in the meeting.
The ministry of finance is of the view that instead of an owned funds for the infra investment, it should be pooled funds, as discussed in internal meeting. Since both companies and trust might be allowed in this space, they would issue bonds and units accordingly & SEBI can regulate companies and RBI can regulate trust.
In this year's union budget, Finance Minister P Mukherjee had announced setting up the funds through special purpose vehicles for attracting foreign investment in the infrastructure sector. In his Budget speech FM said "To attract foreign funds for financing of infrastructure, I propose to create special vehicles in the form of notified infrastructure debt funds,"
Recently, planning commission deputy chief, Montek Singh Ahluwalia had said, "India needs $1 trillion investment in infrastructure creation to continue to grow at 9% over the next five year".
The Finance Ministry and Planning Commission is planning to invest $1trillion in creation of ports, highways, power utilities and telecom infrastructure in next Five Year Plan starting from 2013. An inclusive policy framework for PPP in building Physical infra and social sectors such as health and education is on the list. It will place guidelines for the entry of private players and implementation of infrastructure projects.
The top losers on BSE sectoral space were Oil & Gas down 3.23%, Bankex down 2.24%, PSU down 2.24%, Auto down 1.02% and Capital Goods (CG) down 0.63%.
On the other hand, Consumer Durables (CD) up 0.97%, FMCG up 0.53%, IT up 0.15% and TECk up 0.07% were the only gainers on the BSE sectoral space.
The Indian auto component industry is expected to achieve an annual turnover of around Rs 5 lakh crore by 2020. According to the Automotive Component Manufacturers Association (ACMA), to maintain this growth the industry is expected to invest around Rs. 1.57 lakh crore. However, the rising cost of labour and other inputs, and the non-availability of capital and technology are posing hindrance for the industry.
Auto Parts Industry is an important ancillary industry consisting of a large number of small and medium enterprises (SMEs), serving the original equipment manufacturer (OEM) and the open market segments. The industry is expected to contribute 3.6 per cent of India's GDP by 2020, up from the current 2.1 per cent. In 2010-11 the domestic market for auto components was estimated at Rs 1.35 lakh crore, compared to Rs 1.17 lakh crore in 2009-10. Exports increased to Rs 0.22 lakh crore in 2010-11, from Rs 0.17 lakh crore in 2009-10, an increase of 31 per cent. Imports are also growing, and are currently about Rs 0.01 lakh crore.
The recent growth in the industry was mainly driven by the surge seen in vehicle production, low penetration level, expanding rural sales and growth in exports in the country. According to ACMA and Ernst & Young, India's passenger vehicle market is estimated to grow about 9 million units in 2020, while the commercial vehicle market will cross 2.2 million units. Currently the size of the passenger vehicle market is about 2 million units, and the commercial vehicle market is about 530,000 units. The US auto demand is expected to go up about 10 per cent and this will be a key driver in exports too.
It is also expected that the industry would generate employment opportunities for over 1 million people, especially in tier II and tier III cities, where the major chunk of component makers that supply to original equipment manufacturers OEMs is located. OEM manufactures products or components that are purchased by a company and retailed under that purchasing company's brand name.
Besides the growth seen in the auto industry, there are several challenges faced by the industry, like the rising auto fuel prices, interest rates, input costs, shortage of power and the non-availability of capital and technology. These factors result in low productivity, decreasing operating margins and return on capital. The withdrawal of Duty Entitlement Passbook (DEPB) with effect from June 30, 2011 will affect automotive component manufacturers, and particularly SMEs, which cater to the export market and may make the industry uncompetitive in the global markets. The industry fears that India may lose its export competitiveness to China and Thailand because of it, hence the industry body ACMA has demanded that DEPB or an alternative scheme that provides tax sops should be extended till 2014 to provide a long-term stable environment for exporters.
The S&P CNX Nifty touched high and low of 5523.85 and 5421.05, respectively.
The top gainers of the Nifty were Jindal Steel up 1.94%, HUL up 1.53%, Bajaj Auto up 1.49%, ITC up 0.94% and HCL Tech up 0.87%.
On the flip side, SBI down 8.08%, ONGC down 6.42%, SAIL down 4.60%, Gail down 4.24% and Hero Honda down 3.48% were the major losers on the index.
European markets were trading mixed. France's CAC 40 increased 0.17% and Britain's FTSE 100 added 0.11%, while Germany's DAX dipped 0.69%.
Asian stock markets ended on a mixed note on Tuesday as investors remained cautious after yet another slump witnessed on Wall Street as European policymakers continued to debate about how to help debt-stricken Greece. Moreover, Taiwan stocks ended lower for a third consecutive session today, with glass and ceramics counters the biggest losers, plunging over 6 percent. Seoul Composite edged lower in the trade, pressured by foreign investor selling for a fourth straight session declines in technology issues such as Samsung Electronics too weighed the sentiments. However, Stock markets in Indonesia, Malaysia and Singapore remained closed for the trade today on the back of public holiday.
No comments:
Post a Comment