WEAK TREND

Indian stock markets are struggling to hold on to the psychological 5,400 and 18,050 levels in the Wednesday afternoon session of trade and have drifted to the lowest point of day as investors continue to avoid long positions amid heightened uncertainties over the stability of local markets. Investors have ruthlessly continued to batter the Oil and Gas stocks which have already shaved off a massive 3.23% in the previous session as fears that government will raise prices of other petroleum products soon weighed on the sentiments. While the over two percent laceration in index heavyweights like Reliance Industries and SBI too is not helping the markets. Investors at large are trimming positions in rate sensitive stocks on expectations that higher fuel prices and rising borrowing costs would slowdown the overall demand. The reports from finance ministry that export SOP DEPB is unlikely to be extended beyond June 30 pounded on stocks like Bajaj Auto, TVS Motors and Dr Reddy's. However gains in some information technology stocks like Wipro and TCS and capital goods bellwethers like BHEL and L&T is preventing the markets from losing further ground. Meanwhile, leads from the Asian markets remained supportive while the European counterparts on the other hand have gone on to begin their session on a sanguine note with around a percent gains.

Back home, the broader markets too are exhibiting weak trends and are underperforming their larger peers. The midcap index eased 0.61% and the smallcap index fell 0.41% points. The market breadth on the BSE was in favor of declines in the ratio of 904:1571 while 125 scrips remained unchanged.

The BSE Sensex declined 60.36 points or 0.33% at 18,076.99. The index touched a high and a low of 18,218.20 and 18,073.30 respectively.

The BSE Mid-cap index shed 0.61% and Small-cap index shed 0.41%.

On the BSE sectoral front, IT up 0.75%, Teck up 0.51% and Capital Goods up 0.25% were the only gainers.

While, Oil & Gas down 1.65%, PSU down 1.45%, Healthcare down 1.40%, Realty down 1.39% and Auto down 1.25% were the major laggards in the BSE sectoral space.

The top gainers on the Sensex were Wipro up 2.31%, Hero Honda up 1.57%, HDFC up 1.12%, TCS up 1% and Hindaclo up 0.96%.

On the flip side R Infra down 4.03%, Tata Motors down 3.77%, RIL down 2.11%, SBI down 2.10% and JP Associates down 2.05% were the major losers on the index.

Meanwhile, the European Union (EU), an economic and political union of 27 member states, has indicated that European banks are keen to expand their operations in India and participate in its economy in a greater manner. Nadia Calvino, a Deputy Director General in the Directorate General for Internal Market and Financial of the European Commission (EC), ahead of the discussions with the Union Finance ministry, has urged India to offer European banks a "level playing field" as opening of the Indian banking sector to foreign banks would help them to further increase their presence in India.

The European banks' intention to participate in the world's second-fastest growing major economy in a greater manner came at a time when the Reserve Bank of India (RBI) is already busy in the process of putting together comprehensive guidelines on the mode for foreign banks to have a presence in India. Currently, around 34 foreign banks, including the likes of UK-based Standard Chartered and HSBC, have operations in India. 

India has of late remained vocal over its concerns on huge capital inflows to emerging market economies and has even pointed that the loose monetary policies of developed countries are one of the prime reasons of mounting rate of price rise. However, the visiting officials were of the belief that capital flows should not be blamed for inflation in developing countries and said the governments should not differentiate between domestic and foreign investments.

Thus the meeting which is scheduled to be held on May 17, between Indian officials from the Finance Ministry, RBI and SEBI and the EU delegation comprising Nadia Calvino, Peter Bekx, a Director in the EC's Directorate General for Economic and Financial Affairs, and other officials to discuss financial services in the India-EU macro-economic and financial services dialogue is likely to assume high significance.

The S&P CNX Nifty fell 18.90 points or 0.35% at 5,420.05. The index touched high and low of 5,460.50 and 5,419.80, respectively.

The top gainers on the Nifty were Wipro up 2.61%, Hero Honda up 1.63%, Cairn up 1.34%, TCS up 1.16% and Hindalco up 1.11%.

On the other hand, R Infra down 4.05%, Tata Motors down 3.73%, Dr Reddy's down 2.65%, R Capital down 2.57% and BPCL down 2.54% were the major losers on the index.

On the Asian front Shanghai Composite added 0.51%, Hang Seng up 0.63%, Jakarta Composite up 0.89%, KLSE Composite up 0.17%, Nikkei 225 gained 0.99%, Straits Times advanced 0.20%, Seoul Composite soared 1.59% and Taiwan Weighted climbed 0.68%.

The European markets have opened an optimistic note as the France's CAC 40 surged 1.06%, Germany's DAX soared 1.02% and London's FTSE 100 jumped 1.02%.