SIGNS OF RECOVERY

Dalal Street to some extent has stabilized near lower levels after the previous session's euphoria on petrol price steep hike fizzled out in early deals. Tracing the retracement of beleaguered Indian currency sub '56/$' mark on speculated RBI's intervention, barometer gauges, finding some support near the bottom's, halted incurring losses. 30 scrip sensitive index, Sensex, after breaching the psychological 16200 level in early deals, was currently oscillating near the 16100 mark, with loss close to half a percentage points. The index, however, was off its day's low on the back of gains in Capital Goods and Realty counters. On the BSE sectoral front, stocks from Auto, Information Technology (IT) and Oil & Gas counters, were facing maximum heat, closely followed by Technology and Consumer Durable Counters. However, the widely followed 50 share index, Nifty, however, after appearing dangerously close to breaching the 4900 bastion, was trading sub that level. The broader indices, however, continued to trade in fine fettle.

The Reserve Bank of India is speculated for having sold dollars in spot markets via state-run banks near the psychologically key 56-level. However, even the reports of partial rollback of petrol price hike, which has casted doubt about whether the government would take the bolder step of raising other fuel prices to rein in the country's fiscal and economic vulnerabilities, spooked the sentiment earlier at Dalal Street. Further, slew of downgrade on country's GDP from global brokerage firms, viz, Goldman Sachs and Bank of America-Merrill Lynch, also triggered hefty position squaring ahead of the F&O expiry week. Goldman Sachs slashed its gross domestic product forecast to 6.6% from 7.2% for the fiscal year ending in March 2013, citing a weaker investment outlook on the back of domestic policy uncertainties. While, Merrill Lynch downgraded GDP forecast, to 6.5% from 6.8% previously for fiscal 2012-13, citing the fallout from the euro zone crisis as its main rationale.

Gloomy global set-up also kept investor's off the bay, Asian stocks fell to their lowest levels of the year on Friday as early bargain hunting gave way to worries about Europe's raging debt crisis and weak global growth. The pan-Asia stock index was appeared to be on the path for a third consecutive week of losses, its longest losing streak in six months. The US future indices, meanwhile, continued to show downtick in the screen trade.

 The BSE Sensex is currently trading at 16,144.59, down by 77.71 points or 0.48%. The index has touched a high and low of 16,213.24 and 16,126.69 respectively. There were 10 stocks advancing against 20 declines on the index.

The broader indices continued to trade in fine fettle; the BSE Mid cap and small cap index rose 0.26% and 0.50% respectively.

The only gaining sectoral indices on the BSE were, Capital Goods (CG) up by 0.05% and Realty up by 0.03%. On the flip side, Auto down by 0.70%, Information Technology down by 0.69%, Oil & Gas down by 0.62%, Technology and Consumer Durable were down by 0.44%.

The top gainers on the Sensex were Tata Steel up by 1.25%, Sterlite Industries up by 1.15%, Hero MotoCorp up by 1.00%, Sun Pharma up by 0.97% and Bharti Airtel up by 0.42%.

On the flip side, M&M down by 1.49%, ICICI Bank down by 1.36%, Tata Motors down by 1.25%, Jindal Steel down by 1.22% and Maruti Suzuki down by 1.10%, were the top losers on the Sensex.

Meanwhile, the Empowered Group of Ministers (EGoM) are likely to meet soon to decide the increase in prices of diesel, kerosene and LPG. The meeting, if held, will come soon after the recent hike in prices of petrol. The Petroleum Minister, S Jaipal Reddy is also said to have cut short his trip to Turkmenistan to return on May 24 evening to be available for the meeting.

The government is currently subsidizing the use of all three fuels. However with the recent increase in the global prices of crude oil, the subsidy bill has been on the rise. The government has set a target of containing subsidies to 2% of GDP in this fiscal. The fiscal deficit is also expected to be curbed to 5.1% of the GDP as against the 5.9% in 2011-12.

To achieve any of these targeted numbers, the government will have to curb its subsidy outflow. The hike in petrol prices will only serve the purpose of bringing in a positive sentiment, given the fact that petrol is already a deregulated commodity. Fuel subsidies contributed around 0.8% of the GDP in FY12.

State-owned oil companies currently lose Rs 512 crore per day from the sale of diesel, domestic LPG and kerosene. Diesel is currently sold at a loss of Rs 15.35 a litre, kerosene at Rs 32.98 per litre loss and oil firms lose Rs 479 on sale of every 14.2 kg domestic LPG cylinder. The three firms had together lost Rs 138,541 crore in revenue in 2011-12. This year they are projected to lose a record Rs 193,880 crore.

The S&P CNX Nifty is currently trading at 4,895.45, lower by 25.95 points or 0.53%. The index has touched a high and low of 4,915.25 and 4,891.65 respectively. There were 14 stocks advancing against 36 declines on the index.

The top gainers of the Nifty were JP Associates up by 1.85%, Sesa Goa up by 1.42%, Ambuja Cement up by 1.34%, Sun Pharma up by 1.21% and Tata Steel up by 1.19%.

On the flip side, M&M down by 1.83%, ICICI Bank down by 1.59%, Dr Reddy down by 1.52%, ONCG down by 1.44% and ACC down by 1.37% were the major losers on the index.

Most of the Asian equity indices were trading in the red, Shanghai Composite declined 0.40%, Hang Seng Index fell 0.18%, Jakarta Composite plummeted 2.31%, Straits Times Index shed 0.41% and Taiwan Weighted sank 0.65%.

On the flip side, KLSE Composite gained 0.09%, Nikkei 225 added 0.13% and KOSPI Composite was up by 0.37%.