The penultimate trading session of the month turned out to be another sedate opening to the new week, as investors at large opted to remain on the sidelines ahead of India's fourth quarterly gross domestic product (GDP) numbers expected on Tuesday. The short covering rally of the last two trading session fizzled out completely by the end of session as turbulence returned to the equity market after rampant inflation, interest rates hike fears and slow earnings growth dampened the prospects of the equity markets in the near term. Marketmen also feared that any further hike in interest rates in order to bring down inflation will come at the cost of GDP growth which is likely to lead to further downgrades in the earnings estimates. Though, markets reacted positively in the early session to the reports of early arrival of monsoon rains which prompted participants to speculate that farm output may increase and help cool food inflation however, concerns of hike in diesel, kerosene and LPG prices countered the positive sentiments and put pressure on the indices. Leads from the markets across the globe remained uninspiring as Asian markets settled weak after investors appeared oblivious about the market direction lacking any significant upside triggers across markets. The positive opening for stocks in European markets and decline in international crude oil prices helped the Indian frontline indices to claw back into the green terrain but only for a brief period as disappointing earnings announcement by majors like M&M, BPCL and Hindalco pounded on sentiments and snapped the two straight session winning streak on a flat note with a negative bias. The NSE's 50-share broadly followed index Nifty, shut shop with single digit loss, abovethe crucial 5,450 support level while Bombay Stock Exchange's Sensitive Index, or Sensex closed with marginal losses below the psychological 18,250 mark. The broader markets showed great resilience as they outclassed their larger peers by a big margin. The midcap index gained by 0.85% and the smallcap index climbed 0.55% points. On the sectoral front, hefty position build up was witnessed in Healthcare counter which garnered maximum traction and settled after spurting by 2.24% as majors like Sun Pharma and Cipla accumulated 4.46% and 3.55% respectively. The Consumer Durable pack too remained amid the thick of things as it jumped 2.01% after majors like Titan Industries and Gitanjali Gems soared by 3.29% and 3.72% respectively. On the other hand another rate sensitive Auto pocket once again languished at the bottom of the table with 1.50% losses after bellwether Mahindra & Mahindra registered over five percent losses after the company's earnings missed estimates when it posted just a 6.5% increase in quarterly net profit, as soaring raw material costs partly erased gains from record vehicle sales. The Oil and Gas sector too remained under pressure as it lost 0.64% points after heavyweights like Reliance Industries and ONGC failed to make their presence felt and slipped by 0.70% and 1.63% respectively.
On the global front, majority of the Asian equity indices settled in the negative zone with the Chinese benchmark slipping for the eighth straight session amid mounting investor concerns over a possible domestic economic slowdown in the second half of the year. The European equities are trading on a flat to positive note as France's CAC advanced 0.14%, and Germany's DAX rose 0.40%. 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 got off to an optimistic opening as sanguinity got spilled over into Monday's session after investors continued to look for opportunities to enter into the market and pile up positions in beaten down but fundamentally strong equities. However, the optimism got fizzled out sooner than later as the frontline indices failed to capitalize on the early momentum and drifted into the red terrain. Thereafter it remained a lackluster session throughout as cautious investors remained reluctant to pile up hefty positions lacking decisive triggers. The key indices consolidated around previous closing levels and eventually snapped the thinly traded session on a weak note with tepid losses. Markets registered scanty volumes of over Rs 0.70 lakh crore on the initial day of a new week. The turnover for NSE F&O segment also remained on the lower side compared to Friday at over 0.58 lakh crore. Market breadth remained positive as there were 1629 shares on the gaining side against 1150 shares on the losing side while 122 shares remained unchanged.
Finally, the BSE Sensex slipped by 34.04 points or 0.19% to settle at 18,232.06 while the S&P CNX Nifty fell by 3.00 points or 0.05% to settle at 5,473.10.
The BSE Sensex touched a high and a low of 18,380.17 and 18,199.52, respectively. The BSE Mid cap and Small cap index down 0.85% and 0.55% respectively.
The top gainers on the Sensex were Cipla up 3.55%, Reliance Communication up 2.94%, DLF up 2.58%, HDFC up 1.90% and Bajaj Auto up 1.03%.
On the flip side, Mahindra & Mahindra down 5.34%, Hindalco Industries down 2.33%, ONGC down 1.63%, Jindal Steel down 0.96% and Tata Motors down 0.96% were the major losers on the index.
Meanwhile, the Foreign Direct Investment (FDI) in service sector has decreased by 22.5% in 2010-11, mainly due to slow global recovery and uncertainty in Euro zone. According to Industry Ministry data, FDI in service sector dropped to $3.4 billion in 2010-11. Last year service sector had received FDI worth $4.39 billion. Service sector which contribute more than 50% to the nation's economic growth has the largest share in FDI inflow despite the fall the recent fall.
Experts have cited that the fall in FDI is mainly because of the global financial crisis especially in European market that is making investors cautious of undertaking overseas investments. However, they further opine that investors are gaining their confidence as the global market is recovering and there is good possibility that service sector will attract more FDI in 2011-12.
The FDI in service segment was followed by telecommunication segment ($1.6 billion), automobile ($1.33 billion), power ($1.25 billion), housing and real estate ($1.12 billion) and metallurgical industries ($1.10 billion). Mauritius, Singapore, the US, UK, Netherlands, Japan, Germany and the UAE, among other countries, are the major investors in India.
Falling FDI inflow rate in the economy is alarming for the Indian government. Overall FDI inflow into country has decreased by 25% to $19.4 billion during 2010-11 compared to $25.8 billion in 2009-10. In the same period other emerging economies experienced increase in FDI inflow. To attract more foreign investment in India, government is taking steps like allowing FDI in Limited Liability Bill, permitting the issuance of equity to overseas firms against imported capital goods and machinery, and in latest development government is expected to open its politically sensitive Multi-band retail sector for investment. However, there is still long way to go and the Indian government needs to take a serious policy action, not only in terms of investment friendly policy but also for implementation. There are so many examples of Major FDI project being stuck at implementation stages for years. The well known example is India's largest FDI project worth $12 billion by South Korean steel company Posco, its implementation is delayed by 6 years.
The top gainers on the BSE sectoral space were Health Care (HC) up 2.24%, Consumer Durables (CD) up 2.01%, Realty up 1.77%, Bankex up 0.50%, and Public Sector Unit (PSU) up 0.47%.
On the flip side, Auto down 1.50%, Oil & Gas down 0.64%, Capital Goods down 0.30%, Metal down 0.17% and FMCG down 0.10% were the only losers in the BSE sectoral space.
Exports of Indian apparels climbed higher to touch the $1 billion mark in the month of April 2011, surging by around 13% year-on-year as it got fortified by huge demand from major importing markets like the US and Europe. According to the data provided by the Apparel Export Promotion Council (AEPC), the apparel exports came in at $972 million in April last year.
Apparel Export Promotion Council (AEPC) Chairman Premal Udani opined that 'there is a good demand for our exports from the US. Also, the European market is picking up.' Udani was also positive on the export prospects for the current fiscal year as he expected exports to touch $14 billion in the current fiscal on the back of good orders not only from the western markets, but also from new markets like Latin America.
The US and Europe together account for a large chunk of around 65% of India's total garment exports. The council expects garments exports' growth to continue in 2011-12. During 2010-11, garments exports grew by 4.4% to $11.1 billion compared to the previous fiscal. The garment industry employs about 70 lakh people in the country, out of which almost half are engaged in the export sector.
Though the global economy has faced many difficulties during the past two years, the export of Indian textile and garment products has managed to weather the storm swiftly. International economists expect the textile and garment production to move from Eastern European countries to Asian countries in 3-4 years. China is presently meeting 70% of the clothing demand of the world but is now reducing production. Economists think this is a good time for countries like India, Bangladesh, Pakistan, Vietnam and Cambodia to expand production and exports and be well prepared and equipped to meet the increasing demand.
The S&P CNX Nifty touched high and low of 5,509.30 and 5,458.60, respectively.
The top gainers of the Nifty were Sun Pharma up 4.83%, Ranbaxy up 4.66%, Cipla up 3.67%, DLF up 2.38% and Reliance Communication up 2.18%.
On the flip side, Mahindra & Mahindra down 5.87%, Hindalco down 2.68%, ONGC down 2.14%, Cairn down 2.03% and Ambuja Cement down 1.73% were the major losers on the index.
European markets were trading mix. France's CAC 40 advanced by 0.13%, Britain's FTSE 100 up 0.98%, and Germany's DAX rose 0.44%.
Most of the Asian equity indices finished their trade in the negative terrain on Monday as investors remained cautious on the back of weak global cues. Oil prices hovered above $100 a barrel in light trading volume ahead of the U.S. Memorial Day holiday. Korean shares edged lower in the trade, pressured by foreign selling on global risk aversion and sharp falls in technology stocks including Hynix Semiconductor while, Shanghai shares fell 0.13 percent - an eighth straight loss - amid mounting investor concerns over a possible domestic economic slowdown in the second half of the year. However, Taiwan stocks snapped the day's trade with a gain of 0.16 percent, paced by gains in cement and glass companies.
On the global front, majority of the Asian equity indices settled in the negative zone with the Chinese benchmark slipping for the eighth straight session amid mounting investor concerns over a possible domestic economic slowdown in the second half of the year. The European equities are trading on a flat to positive note as France's CAC advanced 0.14%, and Germany's DAX rose 0.40%. 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 got off to an optimistic opening as sanguinity got spilled over into Monday's session after investors continued to look for opportunities to enter into the market and pile up positions in beaten down but fundamentally strong equities. However, the optimism got fizzled out sooner than later as the frontline indices failed to capitalize on the early momentum and drifted into the red terrain. Thereafter it remained a lackluster session throughout as cautious investors remained reluctant to pile up hefty positions lacking decisive triggers. The key indices consolidated around previous closing levels and eventually snapped the thinly traded session on a weak note with tepid losses. Markets registered scanty volumes of over Rs 0.70 lakh crore on the initial day of a new week. The turnover for NSE F&O segment also remained on the lower side compared to Friday at over 0.58 lakh crore. Market breadth remained positive as there were 1629 shares on the gaining side against 1150 shares on the losing side while 122 shares remained unchanged.
Finally, the BSE Sensex slipped by 34.04 points or 0.19% to settle at 18,232.06 while the S&P CNX Nifty fell by 3.00 points or 0.05% to settle at 5,473.10.
The BSE Sensex touched a high and a low of 18,380.17 and 18,199.52, respectively. The BSE Mid cap and Small cap index down 0.85% and 0.55% respectively.
The top gainers on the Sensex were Cipla up 3.55%, Reliance Communication up 2.94%, DLF up 2.58%, HDFC up 1.90% and Bajaj Auto up 1.03%.
On the flip side, Mahindra & Mahindra down 5.34%, Hindalco Industries down 2.33%, ONGC down 1.63%, Jindal Steel down 0.96% and Tata Motors down 0.96% were the major losers on the index.
Meanwhile, the Foreign Direct Investment (FDI) in service sector has decreased by 22.5% in 2010-11, mainly due to slow global recovery and uncertainty in Euro zone. According to Industry Ministry data, FDI in service sector dropped to $3.4 billion in 2010-11. Last year service sector had received FDI worth $4.39 billion. Service sector which contribute more than 50% to the nation's economic growth has the largest share in FDI inflow despite the fall the recent fall.
Experts have cited that the fall in FDI is mainly because of the global financial crisis especially in European market that is making investors cautious of undertaking overseas investments. However, they further opine that investors are gaining their confidence as the global market is recovering and there is good possibility that service sector will attract more FDI in 2011-12.
The FDI in service segment was followed by telecommunication segment ($1.6 billion), automobile ($1.33 billion), power ($1.25 billion), housing and real estate ($1.12 billion) and metallurgical industries ($1.10 billion). Mauritius, Singapore, the US, UK, Netherlands, Japan, Germany and the UAE, among other countries, are the major investors in India.
Falling FDI inflow rate in the economy is alarming for the Indian government. Overall FDI inflow into country has decreased by 25% to $19.4 billion during 2010-11 compared to $25.8 billion in 2009-10. In the same period other emerging economies experienced increase in FDI inflow. To attract more foreign investment in India, government is taking steps like allowing FDI in Limited Liability Bill, permitting the issuance of equity to overseas firms against imported capital goods and machinery, and in latest development government is expected to open its politically sensitive Multi-band retail sector for investment. However, there is still long way to go and the Indian government needs to take a serious policy action, not only in terms of investment friendly policy but also for implementation. There are so many examples of Major FDI project being stuck at implementation stages for years. The well known example is India's largest FDI project worth $12 billion by South Korean steel company Posco, its implementation is delayed by 6 years.
The top gainers on the BSE sectoral space were Health Care (HC) up 2.24%, Consumer Durables (CD) up 2.01%, Realty up 1.77%, Bankex up 0.50%, and Public Sector Unit (PSU) up 0.47%.
On the flip side, Auto down 1.50%, Oil & Gas down 0.64%, Capital Goods down 0.30%, Metal down 0.17% and FMCG down 0.10% were the only losers in the BSE sectoral space.
Exports of Indian apparels climbed higher to touch the $1 billion mark in the month of April 2011, surging by around 13% year-on-year as it got fortified by huge demand from major importing markets like the US and Europe. According to the data provided by the Apparel Export Promotion Council (AEPC), the apparel exports came in at $972 million in April last year.
Apparel Export Promotion Council (AEPC) Chairman Premal Udani opined that 'there is a good demand for our exports from the US. Also, the European market is picking up.' Udani was also positive on the export prospects for the current fiscal year as he expected exports to touch $14 billion in the current fiscal on the back of good orders not only from the western markets, but also from new markets like Latin America.
The US and Europe together account for a large chunk of around 65% of India's total garment exports. The council expects garments exports' growth to continue in 2011-12. During 2010-11, garments exports grew by 4.4% to $11.1 billion compared to the previous fiscal. The garment industry employs about 70 lakh people in the country, out of which almost half are engaged in the export sector.
Though the global economy has faced many difficulties during the past two years, the export of Indian textile and garment products has managed to weather the storm swiftly. International economists expect the textile and garment production to move from Eastern European countries to Asian countries in 3-4 years. China is presently meeting 70% of the clothing demand of the world but is now reducing production. Economists think this is a good time for countries like India, Bangladesh, Pakistan, Vietnam and Cambodia to expand production and exports and be well prepared and equipped to meet the increasing demand.
The S&P CNX Nifty touched high and low of 5,509.30 and 5,458.60, respectively.
The top gainers of the Nifty were Sun Pharma up 4.83%, Ranbaxy up 4.66%, Cipla up 3.67%, DLF up 2.38% and Reliance Communication up 2.18%.
On the flip side, Mahindra & Mahindra down 5.87%, Hindalco down 2.68%, ONGC down 2.14%, Cairn down 2.03% and Ambuja Cement down 1.73% were the major losers on the index.
European markets were trading mix. France's CAC 40 advanced by 0.13%, Britain's FTSE 100 up 0.98%, and Germany's DAX rose 0.44%.
Most of the Asian equity indices finished their trade in the negative terrain on Monday as investors remained cautious on the back of weak global cues. Oil prices hovered above $100 a barrel in light trading volume ahead of the U.S. Memorial Day holiday. Korean shares edged lower in the trade, pressured by foreign selling on global risk aversion and sharp falls in technology stocks including Hynix Semiconductor while, Shanghai shares fell 0.13 percent - an eighth straight loss - amid mounting investor concerns over a possible domestic economic slowdown in the second half of the year. However, Taiwan stocks snapped the day's trade with a gain of 0.16 percent, paced by gains in cement and glass companies.
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