MARKET BLEEDS

Turbulence just doesn't seem to die down any time soon for the Indian stock markets which are being slaughtered session after session as marketmen continue to shun riskier assets on mounting concerns that the euro zone debt crisis is spreading to much larger countries like Italy and Spain. The European counterparts faltered for third straight session as debt crisis contagion woes stoked fears that the aid from international lenders may not be enough to stop a broad deterioration of the European economy. Markets in Asia too prolonged their somber run, undermining mood of local investors. Apart from the gloomy global leads, plenty of developments from the domestic front did rest of the damage by spooking sentiments. India's first quarterly corporate earnings season officially kicked off on an unimpressive note as IT bellwether Infosys came up with lower than expected numbers and followed it up with muted guidance. Then came the extremely disappointing IIP numbers for the month of May which unexpectedly slowed to 5.6% from a year earlier, confirming the signs that the economy is losing steam after a string of interest rate hikes by RBI. Rate sensitive counters like Realty, Auto and Bankex suffered sharp plunge in the second half of trade. On the political front the much anticipated Cabinet reshuffle to give the ruling UPA an image makeover ended up as a low key affair as relatively minor changes are unlikely to restore confidence in a government that is tainted by allegations of corruption scandals and mismanagement. Nevertheless, the only positives for the markets were that on one hand international crude oil prices which plunged overnight, extended their southbound journey for the third straight session while on the other, the international investors continued to be net buyers of Indian equities in the session, despite the demoralizing IIP data from the economic front. Foreign funds have bought shares worth over $2.52 billion in last 12 sessions till date.
Earlier on the Street, the benchmark got off to a gap down opening on the back of unsupportive local as well as global developments. The laceration widened after the consistent slow down in industrial output. Eventually a bit of short covering in the dying minutes of trade helped the frontline indices to pare some part of their huge losses. The NSE's 50-share broadly followed index Nifty, shaved off over one and half a percent and settled just above the crucial 5,500 support level while Bombay Stock Exchange's Sensitive Index, Sensex suffered a nasty over three hundred point laceration and managed to closed above the psychological 18,400 mark. The broader markets which showed some resilience by trading with moderate losses succumbed to the selling pressure by the end of trade. The midcap index plunged by 1.09% while the smallcap index shed 0.94%. On the sectoral front, the IT pocket languished at the bottom of the table with 2.74% losses as majors like Infosys and Wipro plummeted by 4.27% and 1.36% respectively. The high beta Real Estate pocket too took a severe cut of 2.68% led by hefty profit booking in majors like DLF, HDIL and Unitech. The markets plunged on strong volumes while the breadth remained extremely negative as there were 946 shares on the gaining side against 1848 shares on the losing side while 137 shares remained unchanged.
Finally, the BSE Sensex plunged by 309.77 points or 1.65% to settle at 18,411.62, while the S&P CNX Nifty lost 89.95 points or 1.60% to settle at 5,526.15.
The BSE Sensex touched a high and a low of 18,589.19 and 18,326.42, respectively. The BSE Mid cap and Small cap indices were down by 1.09% and 0.94% respectively.
The only gainers on the Sensex were ONGC up 0.32% and Hindustan Unilever up 0.17%.
On the flip side, Infosys down 4.27%, DLF down 3.84%, Mahindra & Mahindra down 3.02%, Jindal Steel down 2.99% and Reliance Infra down 2.89% were the top losers on the index.
There was no single gainer on the BSE sectoral space, While IT down 2.74%, Realty down 2.68%, TECk down 2.41, Auto down 2.25 and Consumer Durable (CD) down by 2.19% were top losers on the BSE sectoral space.
Meanwhile, expressing the slowdown in May's industrial output as 'not encouraging', Finance Minister Pranab Mukherjee said the government will take all necessary steps to enhance the productivity of the manufacturing sector. He said, 'I do not always take into account the monthly and weekly figures as the real trend-setter. At least quarterly figures will have to be taken into account. Otherwise, there are problems, of course.'   However, Finance Minister said, 'we are having discussion with various people, chambers of commerce and others and we are working out how to improve the manufacturing sector,' he added. The government also aims to increase the contribution of manufacturing to the GDP to 25% in coming years from about 16% at present.
India's Index for Industrial Production (IIP) registered nine month low level of growth, this moderation in industrial output had raised the concerns of policy makers and industry. The industrial output rose to 5.6% in May from 8.5% in the same month of last year, and cumulative growth of IIP for April-May 2011 was at 5.7% from 10.8% in the same period of pervious year. This moderation in IIP is due to increasing interest rate and high inflation, combined with the volatility in global commodity prices. There is buzz in market that central bank will maintain its stance on inflation and another hike in the policy is expected on July 26.
On the issue of government borrowing, Finance Minister said, government will not expand its 2011-12 borrowing programme. Central government plans to borrow Rs 4.17 trillion in present financial year, out of which Rs 2.5 trillion scheduled between first half of 2011-12.
The S&P CNX Nifty touched high and low of 5,580.25 and 5,496.95, respectively.
The top gainers of the Nifty were Dr Reddy up 0.55%, ONGC up 0.27%, Axis Bank up 0.15%, Hindustan Unilever 0.14% and grasim up 0.03%.
On the flip side, Infosys down 4.62%, DLF down 3.96%, M&M down 3.54%, L&T down 3.48% and Jindal Steel down by 3.44% were the top losers on the index.

The European markets were trading in a negative territory. France's CAC 40 plunged 2.31%, Britain's FTSE 100 lost by 1.56% and Germany's DAX down by 2.22%.

All the Asian equities finished the day's trade in the negative terrain on Tuesday as investors remained concerned that the euro zone's debt woes may spread to big economies like Italy and Spain. The Japanese Nikkei declined about one and a half percent in its biggest fall in a month, slipped below its support 10,000 level as financial stocks tumbled while, Chinese main stock index -- Shanghai Composite -- ended over a cut of one and a half percent on Tuesday, the worst percentage loss in seven weeks, as financial and property stocks badly hit by deepening concerns over the euro zone debt crisis. Other indices like Seoul Composite, Taiwan Weighted and Hang Seng snapped the trade with a cut of over 2-3 percent.