NEGATIVE TERRAIN

The Indian equity markets are trading in a negative terrain after making a flat start tracking weak cues from Asian counterparts. All the Asian peers were trading in the red at this point of time on worries over rise in commodity prices. Back home, sustained selling in almost all the key heavyweights kept the momentum on the negative side. BSE's Sensex and NSE's Nifty were trading below their crucial 19,500 and 5,850 level, respectively. On the sectoral front, oil and gas remained the only gainer in trade; on the other hand software, metal and auto were the major losers on the BSE sectoral space. The broader indices were trading on a flat note. Meanwhile, PSU oil companies like Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL) and Indian Oil Corporation (IOC) were trading with a gain of more than one to two percent as international crude prices declined on Monday, after dollar recouped its losses and traders looked to lock in profits. The market breadth on the BSE was positive; there were 561shares on the gaining side against 492 shares on the losing side while 62 shares remained unchanged. Trade may remain volatile this week, being the expiry week for the April F&O series.

The BSE Sensex opened at 19,596.32; about 12 points lower compared to its previous closing of 19,584.31, and has touched a high and a low of 19,600.79 and 19,477.36, respectively. The index is currently trading at 19,477.36, down by 106.95 points or 0.55%. There were 28 stocks declining against just 2 advances on the index.

The overall market breadth started in the positive terrain, with 50.31% stocks advancing against 44.13% declines. The broader indices were trading on a flat note; the BSE Mid cap index was up by 0.03% while, Small cap index was down by 0.03%.

Oil and Gas up by 0.02% was the lone gainer on the BSE sectoral indices while, IT down by 0.65%, Metal down by 0.55%, Auto down by 0.54%, CD down by 0.51% and Bankex down by 0.49%, were the major losers on the index.

The only gainers on the Sensex were ONGC up by 0.61% and Bharti Airtel was up by 0.52%.

Sterlite Industries down by 1.88%, HDFC down by 1.31%, Maruti Suzuki down by 1.25%, Jaiprakash Associates down by 1.04% and HDFC Bank down by 0.99% were the top losers on the index.

Meanwhile, as the country is grappling with the problem of inflation, rising interest rates and high fiscal deficit, foreign direct investment (FDI) too has shown a negative trend. The overall FDI inflows into the country dropped significantly. According to the statistics released by India's Ministry of Commerce and Industry, the country has received only $18.35 billion in FDI in the first 11 months (April-February) down by 25% against $24.62 billion in the year ago period. Country-wise, the highest FDI of $6.63 came from Mauritius contributing about 36 percent of the total FDI, followed by Singapore ($1.64 billion), Japan ($1.52 billion), Netherlands ($1.13 billion) and the US ($1.12 billion). Mauritius is preferred for directing FDI into India mainly because most of the investors want to take advantage of the double taxation avoidance agreement between Mauritius and India and Mauritius-based investors do not have to pay capital gains tax in India.

FDI in the services sector (financial and non-financial services) declined by about 22% to $3.27 billion (Rs 14,958 crore) during April-February 2010-11 compared with $4.18 billion (Rs 20,015 crore) during April-February, 2009-10.  However, the services sector topped the chart in attracting maximum investment. Telecommunications segment, including radio paging and cellular mobile, was the second best sector attracting investments at $1.41 billion, followed by automobile ($1.32 billion), power ($1.23 billion), housing and real estate ($1.10 billion) and metallurgical industries ($1 billion) during the period.

Though, the government is making a lot of efforts towards attracting more FDI by doing away with the requirement for a foreign partner to seek no-objection certificate from its Indian partner before starting a new business in the same field and involving stakeholders in policy formation, to make the investment regime more attractive and investor friendly. The main reason behind this decline is slow recovery in European nation from the recession which is making the players cautious of making overseas investments. However, the government has said that trend will be reversed as it has received a few proposals for FDI but the present scenario surely poses a reason to worry for.

The S&P CNX Nifty opened at 5,876.85; flat compared to its previous closing of 5,887.45, and has touched a high and a low of 5,878.25 and 5,821.95, respectively.  The index is currently trading at 5,830.15, down by 44.35 points or 0.75%. There were 9 stocks advancing against 41 declines on the index.

The top gainers of the Nifty were BPCL up by 1.71%, RCom up by 1.19%, Grasim up by 0.74%, Jindal Steel up by 0.40% and Ambuja Cement up by 0.26%.

The top losers of the index were Kotak Bank down by 2.20%, SAIL down by 2.12%, Jaiprakash Associates down by 1.84%, HUL down by 1.78% and Sterlite Industries was down by 1.77%.

All the Asian equity indices were trading in the red; Shanghai Composite was down 27.22 points or 0.92% to 2,937.73, Hang Seng was down 272.40 points or 1.13% to 23,865.91, Jakarta Composite was down 35.24 points or 0.93% to 3,753.30, KLSE Composite was down 1.20 points or 0.08% to 1,522.85, Nikkei 225 was down 125.37 points or 1.30% to 9,546.59, Straits Times was down 14.32 points or 0.45% to 3,173.40, Seoul Composite was down 9.83 points or 0.44% to 2,206.17 and Taiwan Weighted was down by 42.40 points or 0.47% to 8,908.35