The Indian frontline indices took a gargantuan three percent laceration after all that dilly dallying, to drift to multi-month low levels with highest ever volumes recorded in the history of Indian stock markets. A series of negative events like the ascend in weekly inflation numbers, surge in crude oil prices in global markets and the escalating crisis in Libya marred the local sentiments on the expiry day of February Futures and Option series. The Indian basket of crude, which comprises Oman-Dubai sour grade crude and Brent dated sweet crude in a 62.3:37.7 ratio, breached the psychological $102-per-barrel mark over fears of supply disruption in the wake of the political turmoil in West Asia, which led to the panic selling as India is dependent on imports of oil to the extent of around 80%. Back on street, the benchmarks got dragged for a third day on Thursday as rising global oil prices mounting inflation pressures triggered concerns of more rate hikes while weakness in global markets and geo-political tensions got culminated in today's fall. Markets are now largely banking on the Union Budget 2011 to lift deteriorating Indian sentiment and marketmen are expecting that macro concerns along with fiscal deficit will get addressed on February 28, 2011. The NSE's 50-share broadly followed index, Nifty sank close to two hundred points to settle below the crucial 5,300 level while the Bombay Stock Exchange's Sensitive Index, --Sensex-- got pounded by about five hundred fifty points to end around the psychological 17,600 mark. The broader markets too had a terrible outing today as they got punctured a tad less than three percentage points, thereby marginally outperforming their larger peers. BSE's rate sensitive Bankex pocket remained under tremendous selling pressure on the sectoral front and got hammered by almost 4% being the top laggard for the second straight session, as heavyweights like ICICI and SBI remained under seller's radar and plummeted 5.43% and 3.48% respectively. The consumer durables counter remained another laggard which went home with 3.89% losses as shares of companies like Gitanjali Gems and VIP Industries respectively shaved off 6.24% and 5.69%. While there remained no gainer on BSE sectoral space, Hero Honda remained the only stock which managed to finish in the positive territory after accelerating 1.61% gains on reports that the company's Indian promoter's got the Foreign Investment Promotion Board (FIPB) nod to raise Rs 4,500-crore from overseas investors to finance the buyout of Japanese partner Honda's stake in Hero Honda through a stake sale to private equity and foreign funds.
On the global front, Asian benchmarks got pummeled for yet another day led by the escalating civil upheaval in Libya as crude surged around a two and half year high amid concern that supplies will be disrupted as turmoil spread in the Middle East and North Africa. Malaysian benchmarks, KLSE Composite bear the maximum brunt in the space as it went home with around one and half a percent cut. The European counterparts too could not stand the global weakness and succumbed to profit booking with the DAX slipping around a percent. On the other hand, the screen trading for US index futures indicated that the Dow could open on a pessimistic note.
Earlier on the Dalal Street, the benchmark began the F&O expiry day on a somber note as investors booked profits in early trade tracking discouraging leads from the US markets which continued their decline for a second straight day. The day largely remained characterized by position squaring amid absence of any positive leads that could lift the disintegrating sentiments. The benchmarks appeared to be on a southbound journey all through the day infringing all key technical levels as optimists remained uncomfortable to open any fresh positions ahead of the Union Budget due on Monday. Eventually the bourses went home with around three percent cuts on record volumes of over Rs 2.99 lakh crore while the turnover for NSE F&O segment too remained at elevated levels at over Rs 2.77 lakh crore on Thursday. The market breadth on the BSE was extremely abysmal as there were 651 shares on the gaining side against 2217 shares on the losing side while 93 shares remained unchanged.
On Charts: The S&P CNX Nifty today took a support around 5,242.50 levels, if it break this levels the next support for the Nifty will be around 5171 and 5040 mark While resistance will be around 5,410 and 5438 mark .If Nifty breaks 5,171 mark, downtrend may continue, while if it manages to cross 5,410 mark it may move further.
Finally, the BSE Sensex flumped 545.92 points or 3% to settle at 17,632.41 while the S&P CNX Nifty crash-dived 174.65 points or 3.21% to end at 5262.70.
The BSE Sensex touched a high and a low of 18,135.12 and 17,559.70, respectively.
The top losers on the Sensex were Tata Motors down 7.54%, JP Associates down 6.20%, ICICI Bank down 5.43%, Jindal Steel down 5.37% and L&T down 4.94%; while Hero Honda up 1.61% was the lone gainer on the index.
The BSE Mid-cap and Small-cap indices plunged 2.91% and 2.77%, respectively.
Meanwhile, food inflation in the country inched up marginally over the week-ended Feb 12, breaking its downward trajectory seen in previous two weeks. Overall trend in the food inflation however continues to remain on the downside probably as the food prices index itself went down. This signals that the strong Rabi harvest expected this year should help the pace of rising prices in this space to come down in coming weeks and months.
According to the data released by the ministry of commerce and industry on Thursday, food price index rose 11.49% on annual basis during week-ended Feb 12, marginally higher compared with 11.05% recorded in the previous week. However, and more importantly, on a sequential or week-on-week basis, the index for food goods decreased by 0.27% to 182.4 from 182.9 for the previous week, mainly due to lower prices of fruits and vegetables (5%). This was third consecutive decline in food prices index, indicating that supply side scenario was improving.
The index for 'Non-Food Articles' group however increased substantially by 3.2 % to 187.1 compared with 181.3 in the previous week. As a result, the broader 'Primary Articles' index, which has a weight of 20.12% in the overall wholesale price index (WPI), also increased by 0.5% to 189.4 compared with 188.5 for the previous week. The annual rate of inflation, calculated on point to point basis, for this group also increased to 15.77% from 14.59% for the previous week.
The index for 'Fuel and Power' with a weight of 14.91% in overall WPI on the other hand increased by 0.2% to 152.4 compared with 152.1 in the previous week due to higher prices of furnace oil and naphtha (2% each). The annual rate of inflation for this group too inched up marginally to 12.14% compared with 11.92% in the previous week.
Even as the food inflation has increased marginally over the latest reported week, the important thing to be watched here is that food prices index has continued to go down on a sequential basis, albeit at a slower pace compared with last couple of weeks. What this indicates is that food prices are coming down following a very strong Kharif harvest and likely to surge in the Rabi harvest.
This will provide the much needed comfort to the Reserve Bank of India (RBI) which has been accused to be 'behind the curve' in fighting inflation and has seen a lot of pressure to take more bolder steps than the 25 basis points hike in short term lending rates it has been implementing since the start of the current fiscal. If the declining trend in food prices continues in coming weeks as well, it will ease the pressure on central bank to impermanent another hike of at least 25 bps in forthcoming policy mid-quarterly review in March.
All the BSE sectoral indices were trading in the red with deep cuts. Bankex down 3.97%, Consumer Durables (CD) down 3.89%, Capital Goods (CG) down 3.77%, Auto down 3.52% and Realty down 3.48% were the major losers.
India's trade deficit is likely to surge sharply over the next three years unless the growth in exports pick up further and is maintained at higher levels, reveals a latest report prepared by the ministry of commerce and industry. Exports will have to pick up rapidly if the deficit is to be kept manageable, it concluded.
According to the current rate of growth in exports and imports, by the year 2014, India's exports are likely to lag behind by over $250 billion of GDP. Deficit as a result will increase from presently 7% of GDP to around 13% of GDP, which can have highly negative impact on India's current account deficit. Already the CAD has become a concern and is likely to be around 3-3.5% of the GDP in current financial year.
The commerce ministry report itself accepted that such a high level of trade deficit was unviable and cannot be sustained. 'The projected BoT (balance of trade) deficit on merchandise account of 13% is clearly cause for serious concern because it can lead to an unsustainable CAD,' the report released on Wednesday stated.
In order to bring down the deficit, the ministry has also prepared a four pronged strategy that will help it boost the country's exports to $450 billion by 2014. Commerce minister Anand Sharma on Wednesday released the draft strategy paper that aims at doubling exports in three years and expressed confidence that the strategy will help keep the trade deficit within manageable limits. 'One of the major reasons to take this initiative and put it in place on urgent basis is because of the widening balance of trade,' the minister said.
With the new strategy, the government expects that the CAD will continue to remain under 10%. "We hope to close the balance of trade and bring the trade imbalance to below 10% of the GDP," said Sharma adding that by the end of the financial year, merchandise exports would cross the $200-billion target set earlier and end the year at around $225 billion. He however cautioned that for doubling the exports, the global economic scenario will have to remain supportive.
The S&P CNX Nifty touched a high and a low of 5423.40 and 5242.50, respectively.
The top losers on the Nifty were Tata Motors down 6.43%, JP Associates down 6.21%, Sesa Goa down 5.75%, Reliance Capital down 5.64% and L&T down 5.31%.
On the flip side, Suzlon Energy up 1.44% and Cairn India up 1.31% were the only gainers on the index.
European markets were trading in the red on Friday. France's CAC 40 lost 0.34%, Germany's DAX plunged 1.14%, while Britain's FTSE 100 shed 0.29%.
Asian equity indices finished the day's trade mostly in the negative terrain on Thursday as Libyan turmoil continued to drive oil prices higher, prompting worries that the economic recoveries in the US and Europe could get disrupted, and potentially hurt Asian growth. London Brent crude rose as high as $116 a barrel for the first time since September 2008, having gained about 10% in the past four sessions. US crude last traded at around $106 a barrel. Most of the Asian counterparts lost more than one percent in the trade today. While, Chinese Shanghai Composite rose more than half a percent as coal shares increased on expectations that surging oil price may lift demand for alternative energy sources.
Earlier on the Dalal Street, the benchmark began the F&O expiry day on a somber note as investors booked profits in early trade tracking discouraging leads from the US markets which continued their decline for a second straight day. The day largely remained characterized by position squaring amid absence of any positive leads that could lift the disintegrating sentiments. The benchmarks appeared to be on a southbound journey all through the day infringing all key technical levels as optimists remained uncomfortable to open any fresh positions ahead of the Union Budget due on Monday. Eventually the bourses went home with around three percent cuts on record volumes of over Rs 2.99 lakh crore while the turnover for NSE F&O segment too remained at elevated levels at over Rs 2.77 lakh crore on Thursday. The market breadth on the BSE was extremely abysmal as there were 651 shares on the gaining side against 2217 shares on the losing side while 93 shares remained unchanged.
On Charts: The S&P CNX Nifty today took a support around 5,242.50 levels, if it break this levels the next support for the Nifty will be around 5171 and 5040 mark While resistance will be around 5,410 and 5438 mark .If Nifty breaks 5,171 mark, downtrend may continue, while if it manages to cross 5,410 mark it may move further.
Finally, the BSE Sensex flumped 545.92 points or 3% to settle at 17,632.41 while the S&P CNX Nifty crash-dived 174.65 points or 3.21% to end at 5262.70.
The BSE Sensex touched a high and a low of 18,135.12 and 17,559.70, respectively.
The top losers on the Sensex were Tata Motors down 7.54%, JP Associates down 6.20%, ICICI Bank down 5.43%, Jindal Steel down 5.37% and L&T down 4.94%; while Hero Honda up 1.61% was the lone gainer on the index.
The BSE Mid-cap and Small-cap indices plunged 2.91% and 2.77%, respectively.
Meanwhile, food inflation in the country inched up marginally over the week-ended Feb 12, breaking its downward trajectory seen in previous two weeks. Overall trend in the food inflation however continues to remain on the downside probably as the food prices index itself went down. This signals that the strong Rabi harvest expected this year should help the pace of rising prices in this space to come down in coming weeks and months.
According to the data released by the ministry of commerce and industry on Thursday, food price index rose 11.49% on annual basis during week-ended Feb 12, marginally higher compared with 11.05% recorded in the previous week. However, and more importantly, on a sequential or week-on-week basis, the index for food goods decreased by 0.27% to 182.4 from 182.9 for the previous week, mainly due to lower prices of fruits and vegetables (5%). This was third consecutive decline in food prices index, indicating that supply side scenario was improving.
The index for 'Non-Food Articles' group however increased substantially by 3.2 % to 187.1 compared with 181.3 in the previous week. As a result, the broader 'Primary Articles' index, which has a weight of 20.12% in the overall wholesale price index (WPI), also increased by 0.5% to 189.4 compared with 188.5 for the previous week. The annual rate of inflation, calculated on point to point basis, for this group also increased to 15.77% from 14.59% for the previous week.
The index for 'Fuel and Power' with a weight of 14.91% in overall WPI on the other hand increased by 0.2% to 152.4 compared with 152.1 in the previous week due to higher prices of furnace oil and naphtha (2% each). The annual rate of inflation for this group too inched up marginally to 12.14% compared with 11.92% in the previous week.
Even as the food inflation has increased marginally over the latest reported week, the important thing to be watched here is that food prices index has continued to go down on a sequential basis, albeit at a slower pace compared with last couple of weeks. What this indicates is that food prices are coming down following a very strong Kharif harvest and likely to surge in the Rabi harvest.
This will provide the much needed comfort to the Reserve Bank of India (RBI) which has been accused to be 'behind the curve' in fighting inflation and has seen a lot of pressure to take more bolder steps than the 25 basis points hike in short term lending rates it has been implementing since the start of the current fiscal. If the declining trend in food prices continues in coming weeks as well, it will ease the pressure on central bank to impermanent another hike of at least 25 bps in forthcoming policy mid-quarterly review in March.
All the BSE sectoral indices were trading in the red with deep cuts. Bankex down 3.97%, Consumer Durables (CD) down 3.89%, Capital Goods (CG) down 3.77%, Auto down 3.52% and Realty down 3.48% were the major losers.
India's trade deficit is likely to surge sharply over the next three years unless the growth in exports pick up further and is maintained at higher levels, reveals a latest report prepared by the ministry of commerce and industry. Exports will have to pick up rapidly if the deficit is to be kept manageable, it concluded.
According to the current rate of growth in exports and imports, by the year 2014, India's exports are likely to lag behind by over $250 billion of GDP. Deficit as a result will increase from presently 7% of GDP to around 13% of GDP, which can have highly negative impact on India's current account deficit. Already the CAD has become a concern and is likely to be around 3-3.5% of the GDP in current financial year.
The commerce ministry report itself accepted that such a high level of trade deficit was unviable and cannot be sustained. 'The projected BoT (balance of trade) deficit on merchandise account of 13% is clearly cause for serious concern because it can lead to an unsustainable CAD,' the report released on Wednesday stated.
In order to bring down the deficit, the ministry has also prepared a four pronged strategy that will help it boost the country's exports to $450 billion by 2014. Commerce minister Anand Sharma on Wednesday released the draft strategy paper that aims at doubling exports in three years and expressed confidence that the strategy will help keep the trade deficit within manageable limits. 'One of the major reasons to take this initiative and put it in place on urgent basis is because of the widening balance of trade,' the minister said.
With the new strategy, the government expects that the CAD will continue to remain under 10%. "We hope to close the balance of trade and bring the trade imbalance to below 10% of the GDP," said Sharma adding that by the end of the financial year, merchandise exports would cross the $200-billion target set earlier and end the year at around $225 billion. He however cautioned that for doubling the exports, the global economic scenario will have to remain supportive.
The S&P CNX Nifty touched a high and a low of 5423.40 and 5242.50, respectively.
The top losers on the Nifty were Tata Motors down 6.43%, JP Associates down 6.21%, Sesa Goa down 5.75%, Reliance Capital down 5.64% and L&T down 5.31%.
On the flip side, Suzlon Energy up 1.44% and Cairn India up 1.31% were the only gainers on the index.
European markets were trading in the red on Friday. France's CAC 40 lost 0.34%, Germany's DAX plunged 1.14%, while Britain's FTSE 100 shed 0.29%.
Asian equity indices finished the day's trade mostly in the negative terrain on Thursday as Libyan turmoil continued to drive oil prices higher, prompting worries that the economic recoveries in the US and Europe could get disrupted, and potentially hurt Asian growth. London Brent crude rose as high as $116 a barrel for the first time since September 2008, having gained about 10% in the past four sessions. US crude last traded at around $106 a barrel. Most of the Asian counterparts lost more than one percent in the trade today. While, Chinese Shanghai Composite rose more than half a percent as coal shares increased on expectations that surging oil price may lift demand for alternative energy sources.
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