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Friday, November 26, 2010

Benchmarks slip back into red; nervousness persist across the board

The Indian equity markets after trimming all their losses to trade positive in the afternoon session of trade, now while approaching the last hour of trade have again slipped into red taking cues from mostly weak global markets, with banking and realty sector on the radar as the latest domestic corruption scandal continued to keep investors cautious. On the global front, European markets and Asian index were all dipped in red, while, US future indices traded in a somber mood. The investors' mood globally was vigilant as resource-related stocks slipped on concerns about the euro zone debt problem and on market talk of further rate hikes by China. Back home, on the sectoral space, bulls remained under the control of bears as among 13 indices, only 2 sectors managed to escape the hammering of latest domestic corruption scandal on the markets, namely, Bankex, Information Technology. Stocks from Realty, Consumer Durables, Metal, Fast Moving Consumer Goods and Auto counter were battered down. Boarder indices continued to underperform as it faced intense selling pressure. The market breadth on the BSE was in favour of declines; the losers outnumbered the gainers in a ratio of 2532:435 while 65 shares were unchanged.

The BSE Sensex was down by 100.75 points or 0.52% at 19,217.41. The index touched a high and a low of 19,417.61 and 18,954.82, respectively.

The BSE Mid-cap and Small-cap indices were down by 2.58% and 3.80 %, respectively.

The main losers in the BSE sectoral space were Realty down 4.44%, Consumer Durables (CD) down 2.69%, Metal down 2.21%, Fast Moving Consumer Goods (FMCG) down 1.80% and Auto down by 1.48%.

On the other hand, Information Technology (IT) up 0.66 %, Bankex up 0.35%, were the only gainers in the BSE sectoral space.

Meanwhile, In a move that can put some pressure on the Indian currency in the medium term, the current account deficit (CAD) of the country is likely to top 3% of the gross domestic product (GDP) in the current fiscal, said the former Reserve Bank of India (RBI) Governor Y V Reddy in an interview.

Reddy added that while it was not a major issue which could derail the Indian economy, one should certainly watch the matter with caution. He did accept that there would not be any difficulty in financing the deficit this fiscal but cautioned that the CAD should not be allowed to rise significantly further going forward.

India's current account deficit widened sharply for the June quarter due to higher gap in merchandise trade and lower surplus in the services account. According to the Balance of Payments (BoP) data compiled by the RBI, current account deficit widened nearly three times to $13.7 billion in the first quarter of 2010-11, compared with just $4.5 billion in the same period last year.

The major gainers on the Sensex were SBI up 1.94%, Cipla up 1.88%, TCS up 1.80%, Tata Power up 1.40% and ICICI Bank up 0.92%.

The major losers on the index were Jaiprakash Associates down 8.43%, Reliance Infra down 5.23%, RCom down 4.57%, Sterlite Inds down 4.52% and Jindal Steel down down 4.48%.

The probe into the fake housing loans scam that was unearthed on Wednesday is set to be widened with the market regulator Securities and Exchange Board of India (SEBI) jumping into the foray to probe the possible front running and insider trading instances involving the entities named in the scam.

The regulator is understood to have initiated these problems in stocks of at least 20 companies. This may include the companies whose names were prominent in the housing loans scam like the LIC Housing Finance. Equity market in the country has seen excessive volatility ever since the top investigatory agency revealed it was enquiring into instances of bribery and corruption in issuing loans by some public sector financial institutions.

A reason for the SEBI to join the probe could be that the central Bureau of investigation (CBI) had added in its allegations that some sensitive information relating to many companies was traded by officers of some public sector institutions. This could mean that such information, which is not public in nature, was used in stock treading, an angle that the market regulator will be probing.

The S&P CNX Nifty shed 23.85 points or 0.41 % to 5,775.90. The index touched a high and a low of 5,838.50 and 5,690.35, respectively.

The top gainers on the Nifty were SAIL up 3.80 %, HCL Tech up 2.66%, TCS up by 2.26%, SBI up 2.44% up 2.09% and Cipla up 2.07%.

The top losers on the index were Jaiprakash Associates down 8.08 %, Sesa Goa down 4.33%, Reliance Infra down 4.27%, Sterlite Industries down 4.13% and Cairn India down 3.71%.

Among other Asian peers, Shanghai Composite shed 0.92%, Hang Seng dipped 0.77%, Jakarta Composite slipped 1.61%, KLSE Composite slid 0.30%, Nikkei 225 dropped 0.40%,Seoul Composite trimmed 1.34% and Taiwan Weighted was down by 0.45%. Meanwhile, Straits Times up by 0.14% was the sole gainer in the Asian pack.

All the European markets have dipped in red.CAC 40 declined 1.13%. DAX shed 0.22% and FTSE 100 was down by 0.44%.

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