Weak IIP numbers (industrial growth slowed to 3.6% in February 2011 as compared to an axpansion of 15.1% in the year-ago perios) and rising crude prices, which may result in a fiscal strain on the economy, exerted pressure on the bourses, as the Sensex and Nifty, both, ended almost at the day's lows of 19,263 down 189 points and 5,786 off 56 points respectively. Oil and gas exploration major Reliance Industries, along with HDFC, HDFC Bank and Tata Motors dragged the Sensex down today.
The markets, which opened in the red today, gained marginally during the initial hour of trade. The Sensex touched its peak of 19,426, but, rampant selling in auto and realty stocks, along with slipping heavyweights, saw the bourses dip into the red. Negative movements continue ever since.
The broader markets also ended in the red, after a rally seen in the sectors last week. The Mid-cap index was at 7,124 while the Small-cap index was at 8,710, both off 0.7% each. Sunteck Realty was the top loser on the mid-cap index, down 10% at Rs 344. S Kumar Nation at Rs 64 and JM Financial at Rs 27, both down 6%, were the other major losers. In the small-cap space, Oriental Hotels at Rs 32, Nouveau Multi at Rs 22 and Gravita India at Rs 367 slipped 6% each.
Amongst the sectoral indices, healthcare and FMCGstocks managed to stay afloat in positive terrain, but both the indices clocked in negligible gains at 6,126 and and 3,638 respectively. Divis Lab at Rs 707 was the top gainer on the Healthcare index up 3%, followed by Cadila Health at rs 845 and Sun Pharma at Rs 450, both up 2%. Sun Pharma gained on newspaper reports the home-grown pharma firm is eyeing a marketing alliance for the Indian market with the US-based drugmaker Merck & Co.
Conversely, the Realty, Auto and Consumer Durables indices were the major laggards in trade, with the Realty index at 2,402 off almost 3%, and the Auto at 9,195 and Consumer Durables indices at 6,306 both down 2% each. Sunteck Realty tumbled 10% to Rs 344 on the Realty index, while Sobha Developers at Rs 298 shed 4% and Unitech at Rs 45 slipped over 3%.
Another rate-sensitive sector, auto, lost out as crude prices, simmering near 2.5-year highs (Brent crude touched $126 in trade today), threatened to stoke inflation, even as commodity prices rose to fresh 2.5-year highs, due to a weak dollar, and robust trade data from China. Commenting on rising oil prices, Vikas Khemani, Executive VP & Head – Institutional Equities, Edelweiss Securities, said, "Crude at $122/bbl and other commodities trending upwards is a cause of concern for the fiscal and current account deficit."
In the auto space, Tata Motors declined 3% to Rs 1,219, while Bajaj Auto at Rs 1,378 lost more than 2.5% and Mahindra & Mahindra at Rs 710 slipped 2%. Tata Motors contributed 17 points to the total loss on the Sensex today.
Oil & gas exploration major Reliance Industries at Rs 1,007 shed 2% and added 38 points to the benchmark's loss today, as the firm came under pressure from clients, which demanded the company make good for the shortfall in its gas supply due to lowered production from its expansive KG-D6 basin. Non-banking financial company HDFC declined 3% to Rs 690, while HDFC Bank at Rs 2,296, also down more than 2%, accounted for losses of 31 and 26 points, respectively, on the Sensex.
Market breadth was negative; of 2,973 stocks traded today, 1,134 advanced, while 1,746 declined.
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In the Asian markets, the Nikkei slipped 0.5% to 9,720 as Citigroup downgraded automakers to 'sell' status, and the bourses were closely watched before earnings announcements were made by the end of the month, in order to ascertain the full extent of the damage the March 11 earthquake and tsunami caused in the world's third largest economy. The Shanghai Composite ended down 0.3% at 3,022, while the Hang Seng declined 0.4% to 24,303.
The Seoul Composite at 2,122 closed down 0.3%, and the Taiwan Weighted ended in the red at 8,880. Singapore's Straits Times closed off nearly 1% at 3,160.
At 1700 hrs, the France's CAC 40 was trading down 0.6% at 4,037, while Germany's DAX was flat at 7,218. The UK's FTSE 100 was also quoting flat at 6,061.