DISCOURAGING NOTE

Stock markets in India started the fresh week on a discouraging note with the benchmark equity indices collapsing over one and half a percentage points  and slipping below crucial levels.

The frontline indices got off to a gap down opening and never really recovered through the session. The benchmark gauges have extended their declining run for second straight session as investors continued to book hefty profits across the board.

The 50-share Nifty failed to cling on the important psychological 5,250 levels as its southbound journey halted only with the day's close as sentiments not only got undermined by the dismal cues from global markets but also due to lingering uncertainty over the General Anti Avoidance Rule (GAAR) provisions, which meant that foreign liquidity that drove Indian equities higher for the better part of this year has started moderating.

Market participants also lacked conviction to open fresh bets as they await a lot of domestic indicators which are scheduled to come to the fore in the ongoing eventful week. The key events which would remain at the top of the minds of investors this week will be IIP data for February, WPI Inflation numbers for March, Reserve Bank of India's policy stance in its quarterly monetary policy review and IT bellwether Infosys' earnings announcement for the January-March quarter.

Marketmen after an extended weekend squared off hefty positions from the Metal counter tracking the global weakness in commodities while Capital Goods pocket too bore the brunt of hefty selling pressure ahead of IIP data.

The interest rate sensitive Banking shares too sank amid reports that the credit deposit (CD) ratio stood at 78.1% in March 2012. The incremental CD ratio surged to 138% in March 2012 from 76% in December 2011, the highest level touched since 1970s.

On the other hand only the defensive Healthcare sector kept its head above the water with around a quarter percent gains after majors like Ranbaxy Labs and Dr Reddy's Labs surged in the session. Reports showed that Macquarie has put an outperform rating on Ranbaxy with a target of Rs 500.

On the global front, sentiments in the Asian region got undermined amid concerns over the slowdown in the US and lingering debt crisis in Euro-zone, denting the earnings prospects for Asian exporters. Investors lacked conviction as cues from over the weekend US markets remained unsupportive as US employers added fewer jobs than forecast, damping the outlook for a recovery in the world's biggest economy.

Besides, the reports that China's consumer price index (CPI), a main gauge of inflation, exceeded forecasts as it came in at 3.6% year on year in March also undermined investors' morale.

Back home, the NSE's 50-share broadly followed index Nifty, got pummeled by over one and half a percent to settle above the psychological 5,250 support level while Bombay Stock Exchange's Sensitive Index - Sensex tumbled over two hundred and fifty points to finish above the crucial 17,200 mark. Moreover, the broader markets settled on a weak note but the Small Cap index outperformed all its larger peers as it closed with relatively moderate cut.

The markets declined on tepid volumes of over Rs 1.02 lakh crore while the turnover for NSE F&O segment remained on the higher side as compared to that on Wednesday at over Rs 0.78 lakh crore. The market breadth remained negative through the session as there were 1,179 shares on the gaining side against 1,640 shares on the losing side while 113 shares remained unchanged.

Finally, the BSE Sensex lost 263.88 points or 1.51% to settle at 17,222.14, while the S&P CNX Nifty declined by 88.50 points or 1.66% to close at 5,234.40.

The BSE Sensex touched a high and a low of 17,407.66 and 17,199.63 respectively. The BSE Mid cap and Small cap index were down by 1.35% and 0.65% respectively.

The top gainers on the Sensex were Cipla up by 1.34%, HUL up by 1.06%, Bajaj Auto up by 0.95%, DLF up by 0.64%, and Bharti Airtel up by 0.12% while Hindalco down by 5.18%, Sterlite Industries down by 4.34%, BHEL down by 3.71%, L&T down by 3.50%, and Jindal Steel down by 3.46% were the major losers on the index.

The only gainer on the BSE sectoral space was Healthcare up by 0.32% while Metal down by 3.44%, Consumer Goods down by 3.16%, Power down by 2.49%, PSU down by 2.05%, and Bankex down by 1.81% were the top losers on the BSE sectoral space.

Meanwhile, the government is expected to put forth a clear definition of a 'joint venture' (JV) in its consolidated foreign direct investment (FDI) policy, which is to be unveiled shortly. As per the new definition, it would be mandatory for at least two partners to have minimum 25% stake each in the JV Company. The move has been necessitated by the fact that lack of any prescribed definition was leading to cases where companies were entering into partnership without any minimum prescribed investment limit and terming it as a joint venture.

The Department of Industrial Policy and Promotion (DIPP) - which is under the Commerce and Industry Ministry - is the nodal agency on FDI policy. The government in 2010 had decided to come out with consolidated FDI policy paper summarising all the regulations including those of Foreign Exchange Management Act (FEMA) and Reserve Bank of India (RBI) for the benefit of foreign investors. It revises the policy every six months.

The department had last released the consolidated FDI policy on September 30, 2011 in which the conditions for FDI with respect to construction of old-age homes and educational institutions were eased. The latest policy was originally scheduled to be unveiled on March 30, was held up as the then DIPP secretary P K Chaudhery was appointed as Haryana Chief Secretary and the new incumbent is yet to take charge.

India has been attracting increased FDI in to the country. For April-January 2011-12, FDI went up by 53% to $26.19 billion from $17 billion in the corresponding period last year.

The S&P CNX Nifty touched a high and low of 5,287.90 and 5,228.00 respectively.

The top gainers on the Nifty were Ranbaxy up by 4.10%, Dr. Reddy's up by 2.11%, Cipla up by 1.67%, HUL up by 1.52%, and Bajaj Auto up by 1.26%.

On the flip side, Hindalco Industries down by 5.48%, Cairn India down by 5.25%, IDFC down by 5.01%, Sterlite Industries down by 4.57%, and BHEL down by 4.42% were the top losers on the index.

Markets in Hong Kong along with European markets remained closed on Monday on account of Easter holiday.

All the Asian equity indices snapped the day's trade in the negative terrain on Monday as steep slowdown in US jobs growth raised concerns about the strength of the world's largest economy, prompting investors to curb risk exposure ahead of more US data and earnings as well as figures from China this week. Friday's data showed that US payrolls grew by 120,000 in March, far below the expected gain of 203,000 jobs for the smallest rise since October.

Meanwhile, China Shanghai Composite ended down 0.9 percent, led by property shares after inflation came in higher than expected, prompting speculation that Beijing may delay further easing of monetary policy. Moreover, Japanese and Singapore's benchmarks ended with a cut of about 1.50 percent and 0.90 percent respectively after weaker-than-expected US jobs data hit market sentiment.