Bloodbath On D-Street; Sensex Below 17k, Nifty Below 5100

The Indian markets saw a blood bath in its trading sessions today, resulting the broader markets to close down by almost 2% by end of day. The Nifty breached the psychological 5100 mark, while the Sensex plunged below 17000, creating further speculations that the markets may move southwards going ahead. The markets are currently at its lowest level in the last 3 months. This was after the weakening rupee and media reports which said that the government plans to review the tax treaty with Mauritius, which dampened investor sentiment.

Among the sectoral indices, Capital Goods and Bankex plunged by more than 3% each, which led the markets to a free fall. Healthcare was the only index that closed the day in the positive territory.

The peer Asian markets closed with mixed results, with Hang Seng in the red zone and Shanghai in positives. The Japanese market was shut 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 and the US service industries data, which came in below the street expectations. This raised concerns that the US economy is not being able to get back onto the growth track.

European markets currently are trading weak, as investors await the elections in France, Greece, Italy and other countries and also the US payrolls reports, which will further help them take cues.

Dow Jones Futures is currently trading 20 points or 0.15% down at 13123, indicating a negative sentiment in the US markets.

Back home, the Capital Goods heavyweights were among the leading index losers. BHEL and L&T closed down 5% and 4.3% respectively. Auto stocks like Hero MotoCorp and Bajaj Auto continued to trading weak for the entire trading day, closing down 4.42% and 3.76% respectively. The Metals stocks showed a lacklustre performance, as stocks like Tata Steel and Sterlite Industries closed down by 3.29% and 3.21% respectively. The banking space too was beaten down heavily, with SBI, HDFC Bank and ICICI Bank closed lower in the range of 2.75%-4.39%. Other stocks like TCS, Tata Power, etc. closed marginally in the red zone.

The list of index gainers in today’s trade is very short. Pharma heavyweight, Cipla, closed the day 2.46% up at Rs 325.20 after the news that the company has slashed the prices of cancer drugs by up to 76% to remain competitive in the market. Sun Pharma also closed the day 0.15% higher at Rs 600.75. Others like Wipro, HUL and Tata Motors closed the marginally in the green.

Bank of Baroda plunged 6% to Rs 687.05 after it reported its Mar 2012 quarter results. The bank reported a net profit with more than 17% growth at Rs 1518 crore. In March 2012, the bank's Net NPA increased to 0.54% from 0.51% on a sequential basis. IRB Infrastructure closed 14% lower at Rs 128.75 after the CBI summoned its chairman in connection with a murder case. The stock had plunged around 13% yesterday, resulting in a combined two-day loss of around 27% on the counter.

The market breadth, which indicates the overall health of the market, was negative. Out of the 3241 stocks traded on the BSE, 2364 declined, 778 advanced and 99 remained unchanged.

Investors should watch out for stocks like Bank of India, HDFC, GIC Housing, Tata Coffee, IRB Infra, GVK Power, Ranbaxy Labs, Cipla, Lupin, etc., which are going to post their Q4 results next week. These stocks may see some price movement.

In conclusion, we expect the markets to remain volatile for the next week too, as investors are jittery in this uncertain environment. We advise our readers to play with caution.