MARKET INSIGHTOn Monday 11 April 2011 Indian equity indices started the new week on a depressing note after plunging around a percentage point as leads remained weak not only locally but globally as well. Investors resorted to broad based profit booking following the disappointing February IIP numbers which grew at a tepid pace of 3.6%. The lower than expected numbers sparked apprehensions over the capital goods sector which failed to perform for third consecutive month. While the marginal wilt in international crude oil prices which spiraled at uncomfortable levels too failed to enthuse the local mood as prospect of long-term supply cuts in crude oil undermined sentiments. Marketmen feared that rising oil prices would lead to heightened inflationary pressure which in turn will compel the RBI to take stern policy actions in its annual monetary policy review meet next month. Meanwhile reports of another strong 7.1 magnitude earthquake rattling Japan's northeast coast and a fresh tsunami alert in the late hours of the session too weighed on investor mood. Cautious investors also speculated that earnings performances by heavyweight companies in fourth quarter could be in-line with expectations and may not provide any further direction to the markets.
BSE Sensex plunged by 188.91 points or 0.97% to settle at 19,262.54 while the S&P CNX Nifty lost 56.30 points or 0.96% to end at 5,785.70. The broader indices too failed to show any kind of resilience and succumbed to the selling pressure. The BSE's Midcap Index went home with losses of 0.70% while the Smallcap Index shed 0.71%. On the sectoral front, the high beta Realty pocket once again languished at the bottom of the table after deposing 2.52% and Auto counter too witnessed hefty bouts of profit booking as it sank 2.15%. On the other hand, BSE's Healthcare & FMCG sectors ended with marginal gains of 0.05% & 0.02% respectively.
On the global front, majority of Asian equity indices finished the day's trade in the negative terrain with Malaysian benchmark KLSE Composite being the top laggard in the space after declining around a percent. The European markets were trading mixed. France's CAC 40 slipped by 0.43%, Germany's DAX was gained by 0.03% and Britain's FTSE 100 surges by 0.17%. On the other hand, the screen trading for US index futures indicated that the Dow could open on a positive note.
Industrial production in India continues to remain week as the high base effect from last year and rising interest rates weighs on growth. According to the data released by the central statistical office (CSO) growth in the IIP came down to 3.6% in February 2010 compared with 3.9% (revised) in the previous month. There was a slowdown across the board if one looks at year-on-year comparisons. Manufacturing sector which has the highest weight in IIP expanded by just 3.5% compared with 16.1% growth seen in the same month a year ago. Mining was another poor performer expanding at just 0.6% as against 11% growth a year ago. Electricity was the only sector that performed well with growth of 6.7% compared with 7.3% growth in February 2010.
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