Indian equities continued to suffer rigorous pounding in Monday afternoon trades which pummeled the benchmark indices by close to one and half a percentage points. The frontline indices have drifted even below the psychological 17,400 (Sensex) and 5,300 (Nifty) levels and are showing absolutely no signs of recovery, lacking any significant upside triggers. Nervous investors are taking profits off the table a day ahead of results of crucial assembly elections in Uttar Pradesh (UP) and four other states. Market participants fear that Congress' poor showing in UP elections may not prove fruitful for the government at the centre as it may fail to revive stalled reforms. Hefty position squaring was evident in the metal counter which languished at the bottom of BSE sectoral space after being battered by close to three percent, while the rate sensitive Banking and Realty pockets too got thrashed by over two percent in the session. There appeared absolutely no sectoral index which managed to trade with a positive bias however, some scrip specific buying was evident as stocks like Tata Motors and Bharti Airtel climbed close to a percent. Meanwhile, a HSBC survey indicated that India's services sector activity expanded at a slower pace in February while the Composite Index which covers both the manufacturing and service sectors slowed too. Besides, reports also suggested that cement prices are expected to rise by 6.4% in FY'12 (after falling in the last fiscal) and are expected to increase by 3.8% in FY'13. On the global front, Asian markets traded on a somber note while European stock futures too are indicating a lower opening for the markets there after reports that Chinese Premier has cut the nation's target for economic growth.
Moreover, the broader markets too traded on a pessimistic note but the selling pressure was relatively moderate in the counters as compared to their larger peers. The bourses got pounded on good volumes while market breadth on BSE was in favor of declines in the ratio of 1640:932 while 103 scrips remained unchanged.
The BSE Sensex is currently trading at 17,382.09 down by 254.90 points or 1.45% after trading as high as 17,598.42 and as low as 17,376.85. There were 4 stocks advancing against 26 declines on the index.
The broader indices were trading on a negative note; the BSE Mid cap index plunged 1.19% and Small cap declined 0.69%.
On the BSE sectoral space there were no gainers, while Metal down 2.88%, Bankex down 2.44%, Realty down 2.26%, Capital Goods down 2.13% and Consumer Durables down 1.85% were the major losers in the space.
Tata Motors up 0.86%, Bharti Airtel up 0.85%, Cipla up 0.21% and Wipro up 0.06% were the only gainers on the Sensex, while Jindal Steel down 4.67%, Hindalco down 4.47%, DLF down 3.91%, SBI down 3.05% and Tata Steel down 3.03% were the major losers in the index.
Meanwhile, HSBC India Composite Index - which covers both the manufacturing and service sectors - fell from January's nine-month high of 59.6 to 57.8 due to a fall in both the manufacturing as well as the services sector. On a more positive note, the expansion of overall new work intakes accelerated slightly to reach an eleven-month high marking a rise in business activity for the Indian private sector.
The seasonally adjusted HSBC Services Business Activity Index fell to 56.5 in February from 58.0 in January (the 50.0 no-change threshold separates growth from contraction).Even though it has fallen month-on-month, the sector has been growing continuously for the past 4 months. Service companies are also optimistic of work increasing over the next year and confidence levels are at an eight month high, as per the latest survey.
New business received by Indian service providers in Feb 2012 has increased markedly although the rate of growth has remained unchanged from the previous survey period. The rise in business has been attributed to the acquisition of new clients. Higher new work intakes, supported by marketing initiatives and the good quality of services provided, alongside ongoing improvements in market conditions are expected to boost activity in the coming year.
Manufacturing production growth has also come down though it is still marked. Manufacturers reported a marginal strengthening in new order growth. February data has however signaled that employment in the manufacturing sector has fallen slightly in February. Increase in input prices have eased slightly and have risen at the weakest rate in four months. However, the rate of cost inflation has remained marked and above the long-run trend. Manufacturers have also reported a marginal strengthening in new order growth.
Service providers have also registered slower increases in input prices. Overall charge inflation has also eased, with a faster rise in manufacturers' output prices offset by a slower increase in charges in the service sector.
Leif Eskesen, Chief Economist for India & ASEAN at HSBC has cautioned that the Reserve Bank India will have to approach the easing cycle cautiously as inflation is likely to hover above the comfort zone. Prices of oil are likely to impact the timing as well as speed of rate cuts by the apex bank.
The S&P CNX Nifty is currently trading at 5,286.65, lower by 72.75 points or 1.36% after trading as high as 5,344.50 and as low as 5,279.35. There were 9 stocks advancing against 41 declines on the index.
The top gainers on the Nifty were R Infra up 6.35%, R Power up 2.99%, R Com up 1.52%, IDFC up 1.22% and Bharti Airtel up 1.02%.
JP Associates down 6.18%, Hindalco down 4.40%, Jindal Steel down 4.30%, DLF down 3.69% and Tata Steel down 3.08% were the major losers on the index.
In the Asian space, Shanghai Composite declined 0.71%, Hang Seng plunged 1.28%, Jakarta Composite sank 0.73%, Nikkei 225 slumped 0.80%, Straits Times eased 0.09%, Seoul Composite shrank 0.91% and Taiwan Weighted plummeted 1.35%.
On the other hand only KLSE Composite gained 0.42%.
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