Markets Trading Weak; IT, Pharma Continue Gains

As expected in our morning update, the Indian markets opened in the negative territory today. At present, both the indices are trading lower, with the Sensex down by 77 points to 17074 and Nifty down by 23 points to 5165. The rupee also opened weaker by 0.63 per cent today, and is trading at Rs 53.75 against the USD, creating further concerns for the economy. Among the sectors, the Capital Goods, Realty, Consumer Durables, Bankex and Power indices are trading lower by more than 1% each, while Healthcare, IT and Teck are trading higher on the bourses.

As for the other Asian markets, the Hang Seng is trading lower while Shanghai is trading marginally in the green. The Japanese market is closed for the day. The markets are looking nervous after Australia’s central bank cut its economic growth forecast on the back of an uncertain macro environment. Also, the US service industries' data came in below the street expectations, raising concerns that the US economy is not able to get back onto the growth track.

Back home, Capital Goods heavyweight BHEL is the leading index loser, down 3.35% to Rs 217.65. DLF is trading lower by 2.75% at Rs 182.30. Auto stocks like Hero MotoCorp and Bajaj Auto are trading lower by 2.53% and 1.95% respectively. Metals continues to slide, with stocks like Hindalco, Tata Steel, Sterlite Industries, etc. down in the range of 1%-2%. Other stocks like Coal India, NTPC, RIL, Tata Power, etc. are trading marginally in losses.

On the other hand, the IT stocks continue to rise after being beaten down quite heavily in the past couple of weeks. Stocks like Wipro, TCS and Infosys are trading in the positive territory. Pharma stocks, which are considered defensive bets as they perform well during uncertain times, are trading higher today. Cipla and Sun Pharma are up by 3% and 0.51% respectively. HUL is trading higher by 0.51% at Rs 435.80.

VIP Industries continued yesterday’s losses, trading down 3.34% at Rs 83.85 after giving a weaker growth guidance of around 15% against the previous guidance of 17%-20%. Marico Industries also continued it losses after reporting dismal Mar 2012 quarter numbers. The stock is currently trading down 1% to Rs 177.25. IRB Infra is down 4.64% to Rs 142.07 after news broke that the chairman of the company is under CBI investigation on the possibility of involvement in a murder case. The stock has plunged by almost 16% in the last two trading sessions.

The market breadth, which indicates the overall health of the market, is weak. On the BSE, 1247 shares declined and 812 shares rose. 73 shares remained unchanged.

For the rest of the day, we expect the market to remain volatile with a negative bias.