What initially appeared to be a lull after the storm in the early hours of trade eventually turned out to be yet another day of mayhem for the Indian stock markets which got brutally trounced by over a percentage points on first trading day of the week. Friday's brutal rout in Indian equity markets got extended in Monday's session as the benchmark equity indices kept searching for a bottom after investors resorted to relentless selling pressure across the board.
Market participants squared off hefty positions from the rate sensitives, Power and Capital Goods counters, dragging the frontline indices closer to the psychological 17,250 (Sensex) and 5,250 (Nifty) levels. However, investors continued to pile up positions in defensive FMCG which surged over 1% gains while some individual names like M&M, Sun Pharma and metal stocks like Hindalco and Jindal Steel managed to go home on appositive note.
After the disappointing federal budget 2012-13, market participants have now set their eyes on RBI's quarterly monetary policy review which are scheduled to be held in April. Investors are hoping for some monetary easing which would ease the tight liquidity situation in the Indian economy.
Sentiments also remained somber in the session since investors squared off positions from most counters after global rating agencies like S&P's and Moody's cautioned that India's budget for the fiscal year ending March 31, 2013, weakens the government's credit profile, citing concerns over a clear roadmap or specific policies to address fiscal constraints.
Moreover, index heavyweight Reliance Industries too exerted pressure on the frontline indices as it plummeted over 2% after reports showed the largest gas fields in its KG-D6 block have hit an all-time low production of about 28 million standard cubic meters per day as the firm shut six wells due to water and sand ingress.
Meanwhile, India's Consumer price inflation, in line with the WPI, quickened in February to 8.83% on account of higher prices of protein based items and edible oil products, dampening investors' morale. Along with the spike up in international crude oil prices which are trading at elevated levels, the sovereign bond yields too went up post rise in inflation numbers which stoked worries among investors.
Besides, Indian bourses were outperformed by the global peers as Asian equity indices settled on a mixed note after IMF opined that the global economy has come out of the brink of danger and signs of stabilization are emerging from the European region and the US, but high debt levels in developed markets and rising oil prices are key risks ahead. While, the European markets got off to a weak opening as the equity indices fell from 8 month high levels hit last week as investors remained on the sidelines, lacking any significant upside triggers to open fresh positions.
Back home, the NSE's 50-share broadly followed index Nifty, got pounded by over a percent to settle above the psychological 5,250 support level while Bombay Stock Exchange's Sensitive Index - Sensex- slumped little under two hundred points and closed below the psychological 17,300 mark. Moreover, the broader markets too settled on a pessimistic note as they succumbed to the selling pressure that was being exerted on their larger peers and plunged around a percent.
The markets dived on large volumes of over Rs 1.53 lakh crore while the turnover for NSE F&O segment remained on the lower side as compared to that on Friday at over Rs 1.31 lakh crore. The market breadth remained pessimistic as there were 1004 shares on the gaining side against 1868 shares on the losing side while 100 shares remained unchanged.
Finally, the BSE Sensex shaved off 192.83 points or 1.10% to settle at 17,273.37, while the S&P CNX Nifty plunged by 60.85 points or 1.14% to close at 5,257.05.
The BSE Sensex touched a high and a low of 17,561.46 and 17,226.43 respectively. The BSE Mid cap and Small cap indices down by 0.96% and 1.08% respectively.
The major gainers on the Sensex were ITC up 2.01%, M&M up by 1.74%, Sun Pharma up by 1.68%, Hindustan Unilever up by 0.72%, Hindalco Industries up by 0.53%. While BHEL down by 4.84%, TCS down by 3.86%, SBI down by 3.07%, Tata power down by 3.03% and Reliance down by 2.21% were the major losers on the index.
The only gainers on the BSE sectoral space was FMCG up by 1.09% and Health Care up by 0.03%, while Realty down by 2.56%, Power down by 2.23%, Capital goods down by 2.14%, Bankex down by 1.95% and PSU down by 1.74% were top losers on the BSE sectoral space.
Meanwhile, Finance Minister Pranab Mukherjee has expressed his optimism of rate cuts and policy reversal by the Reserve Bank of India (RBI) in the wake of moderation in inflation. He said that '... the fact that core inflation has moderated in the past three months and that in coming months we are looking at reversal in the policy rates should help in improving sentiments.' He stated that economic expansion could revive to as much as 7.85 percent in the fiscal year starting on April 1 and that inflation would ease.
However, budget deficit has been projected to exceed 5 percent for a second year and that could hamper the scope of RBI for a series of interest-rate cuts to bolster a slowing economy. The deficit for the year through March 31 is projected at 5.9 percent, wider than the 4.6 percent target set in 2011. RBI has signaled before the budget that better control of the nation's fiscal deficit would boost its scope to lower borrowing costs, which are at the highest level since 2008, at 8.5 percent.
The bank raised the repurchase rate by a record 3.75 percentage points from 2010 to October last year to fight price increases. The monthly inflation figure stood at 6.95 percent. Earlier this month, RBI reduced the cash reserve ratio (CRR) -- the portion of deposits banks require to keep with the central bank -- from 5.5 per cent to 4.75 per cent, pumping Rs 48,000 crore in the economy.
The S&P CNX Nifty touched a high and low of 5,340.70 and 5,238.55 respectively.
The top gainers on the Nifty were M&M up 2.01%, Cairn up by 1.97%, ITC up by 1.92%, Sun Pharma up by 1.70%, ACC up by 1.49%. On the flip side, Reliance Infra down by 6.53%, IDFC down by 5.01%, BHEL down by 4.70%, RPower down by 3.91%, JP Associates down by 3.88% were the top losers on the index.
The European markets were trading in red, as France's CAC 40 was down 0.71%, Britain's FTSE 100 down 0.42%, while Germany's DAX was down by 0.63%.
Asian markets exhibited mixed trend on Monday. The US economy helped in maintaining enthusiasm for riskier assets while a weaker yen improved the outlook for some of Japanese companies. On the other side, rising oil prices dented the outlook for airlines, whose fortunes are closely linked to the cost of fuel. Taiwan's EVA Airways fell 2.5 percent and Korean Air Lines Co. was down 2.4 percent.
Meanwhile, Japanese Nikkei share average rose for the fifth straight session, with investors scooping up straggling blue-chips as they sought further evidence of US economic recovery before pushing the index higher. While, Chinese Shanghai ended up 0.2 percent in see-saw trade on Monday, with strength in small-cap shares outweighing weakness in financial and property stocks. However, the main index for Hong Kong shares was in positive territory for most of the session, but closed 1 percent lower, dragged by Chinese banks on fears that loan growth could fall short of quarterly targets ahead of corporate earnings for the sector that start this week.
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