Persistent weakness in all sectors indicates the possibility of a further downtrend
Implications of the effects of spiralling crude prices on interest rates resulted in profit booking, pulling the markets down this morning. Concerns over the escalating violence in Libya and weak economic news across Asia also put pressure on the market. Trade was range-bound and the indices stayed in the negative zone through the day.
Even a fall in the food inflation figure for the week ended 26th February failed to enthuse investors. Today's dip after impressive gains last week, led 12 of the 13 sectoral indices on the BSE into the red.
The Sensex and the Nifty traded below yesterday's closing figures, tracking weak markets across Asia. The Sensex and the Nifty opened with a negative gap at 18,431 and 5,516, respectively. This was the day's high. Within an hour, the benchmarks hit their intra-day lows of 18,261 and 5,468. The Sensex fell 142 points to 18,328 and the Nifty fell 37 points to 5,494. The advance-decline ratio on the National Stock Exchange was 551:819. The market is still directionless with a strong possibility of breaking down.
The market breadth on the key indices weighed on the losers as the Sensex closed with 21 declining stocks and nine advancing stocks, whereas 30 stocks on the Nifty closed in the red, 19 were in the green and one remained unchanged. Among the broader indices, the BSE Mid-cap index fell 0.07% and the BSE Small-cap index declined 0.25%.
Baring realty, all other sectoral indices on the Bombay Stock Exchange ended lower. BSE Metal (down 1.30%), BSE Bankex (down 1.16%), BSE TECk (down 0.54%), BSE IT and BSE Consumer Durables (down 0.53% each) were the top losers. Outside this overall negative picture, BSE Realty (up 0.67%) was the lone gainer.
The major gainers on the Sensex were ONGC (up 1.62%), DLF (up 1.42%), Wipro (up 0.69%), Reliance Infrastructure (up 0.66%) and Reliance Communications (up 0.45%). The main losers were Tata Power (down 2.91%), Tata Steel (down 2.59%), ICICI Bank (down 1.87%), Hindalco Industries (down 1.72%) and State Bank of India (down 1.63%).
After a gap of nearly three months, food inflation eased to 9.52% for the week ended 26th February, from 10.39% in the previous week. The rate of price rise of food items has fallen to a single-digit figure for the first time since the week ended 4th December 2010, when it was 9.46%.
The decline in food inflation is expected to give the government some breathing space, after being under severe criticism for not controlling inflationary pressure caused by high food and crude oil prices.
Markets in Asia closed with deep cuts on negative economic triggers from across the region, coupled with rising crude prices. China reported a trade deficit of $7.3 billion in February, against expectations of a surplus, which the government attributed to the long holiday period for the Lunar New Year celebrations in February. Also, Japan's gross domestic product fell at an annualised 1.3% in the December quarter, more than the 1.1% contraction reported last month. Also today, the Bank of Korea hiked its benchmark base rate to 3% from 2.75%, for the second time in three months, in a bid to curb rising prices.
Meanwhile, April crude oil futures on the Nymex rose 48 cents to $104.86 per barrel, after settling lower on Wednesday, as violence escalated in Libya and reports mentioned about damage to key oil facilities.
The Shanghai Composite tumbled 1.47%, the Hang Seng declined 0.82%, the Jakarta Composite slid 0.31%, the KLSE Composite fell by 0.44%, the Nikkei 225 tanked 1.46%, the Straits Times slipped 0.56%, the Seoul Composite fell 0.99% and the Taiwan Weighted was 1.22% down in trade today.
Back home, institutional investors, both foreign as well as domestic, were net buyers of equities on Wednesday. Foreign institutional investors pumped in funds worth Rs131.17 crore and domestic institutional investors bought stocks worth Rs112.99 crore.
Tata Steel (down 2.59%) today said that its expenses on key raw materials are likely to go up by $1 billion in the current fiscal to $7 billion, due to a rise in input costs. The costs on inputs would further escalate by around 15% next fiscal, over the 2010-11 levels. This was mainly due to higher iron ore and coking coal prices, which went past $300 a tonne as a result of a global scarcity in the wake of floods in Australia.
Mahindra & Mahindra's (down 0.19%) commuter segment bike Stallio's production fell sharply by 81% in the last three months to just 139 units in February, while sales plummeted to just 46 units during the month on account of problems in the product.
Mahindra Two Wheelers produced 716 units of Stallio in December 2010. However, after problematic parts started pinching the company, the production started to fall. In January, the production of the 110cc entry-level bike came down to 421 units and it further fell to 139 units last month.
Dhunseri Petrochem & Tea (up 0.34%) has acquired the Sona Assam Tea Factory from Sona Assam Tea Company. The capacity of the acquired factory is 7 lakh kg per annum. Dhunseri will expand the factory's capacity to 10 lakh kg per annum during this season.
Asian Development Bank has approved a $300-million loan to Madhya Pradesh for a three-year road improvement project, which will involve upgradation of 1,000km of the state’s roadways
The Asian Development Bank (ADB) has approved a $300-million loan to Madhya Pradesh for a three-year road improvement project, which will involve upgradation of 1,000km of the state's roadways.
"ADB is extending a $300 million loan for road improvements...The ADB Board of Directors today approved the loan for the Madhya Pradesh State Roads Project-III, which will upgrade over 1,000 km of highway in poor eastern and west central areas of the state," the bank said in a statement.
It said the project falls under the state government's ongoing state road rehabilitation programme, a project in which ADB had previously assisted. The state government is the executing agency for the project which will run for three years, and is due to be completed in December, 2013.
The loan will have a 25-year term with a five-year grace period and the Madhya Pradesh government will provide counterpart funds of $75 million.
"About 38% of Madhya Pradesh's 77 million people live below the official poverty line and upgrading state highways which link to major national routes will sharply improve connectivity to markets and social services, increasing livelihood opportunities and incomes for the poor, particularly women," ADB South Asia Department Transport Specialist Lee Ming Tai said.
The multi-national agency said secondary highways in Madhya Pradesh are in poor condition, resulting in congestion, high costs and increased accidents. "About 7,400km of the more than 10,000km of state highways have been improved, and the new work will help complete the state road rehabilitation programme," it said.
The project will expand existing highways into two-lane routes, besides constructing and strengthening bridges, culverts, and cross-drainage structures, using environmental-friendly and climate-proof designs. The work will also be taken up to provide green cover near the roads.
"The Madhya Pradesh Road Development Corporation, set up with earlier ADB assistance, will get further support for road safety initiatives including an accident emergency response system," it said.
Japan Bank for International Cooperation will provide guarantee to the proposed Rs1,095 crore bond issuance from Exim Bank in the Japanese market
Japan Bank for International Cooperation (JBIC) said it will provide guarantee to the proposed 20 billion yen (Rs1,095 crore) bond issuance from Exim Bank in the Japanese market.
JBIC will provide guarantee for bonds equivalent to 20 billion yen, issued by Exim Bank in Japan's bond market and these funds will be utilised in India, the Japanese bank said in a statement.
Exim Bank is a state-owned financial institution which provides credit facility for import and exports. The guarantee will cover the principal and part of the interest of privately placed Samurai bonds by Exim Bank, it said.
Samurai bonds are yen-denominated and issued by a foreign government or company in the Tokyo bond market. The guarantee was extended under JBIC's Guarantee and Acquisition toward Tokyo market Enhancement (GATE) facility.
As part of efforts to fulfil its mission of maintaining and improving the international competitiveness of Japanese industries, JBIC supports Samurai bond issues by foreign entities in the Tokyo bond market by providing credit enhancement, it said.
This is the first guarantee for Samurai bonds issued by a government agency under the GATE facility as well as the first guarantee for Samurai bonds provided for an Indian issuer.