Markets Extend Losses On Weak March IIP Numbers

After opening on a weak note, the Indian markets have extended their morning losses. This was following the release of weak IIP numbers for Mar 2012, which stood at -3.5% versus that of 4.1% in Feb 2012. The figure has come below the market expectation of 1.5%. The Sensex and Nifty are down by 0.1% and 0.07% respectively.

Manufacturing, which constitutes 76% of the Indian industrial output, was down by 4.4% from last year. The Capital Goods segment shrank by 21.3%. All the sectors are trading in the negative territory. Pharma, Metals and FMCG are among the major losers, down by 1.84%, 1.51% and 1.47% respectively.

The European markets opened on a negative note today. Uncertainty over the political outlook in Greece had investors worried. Further, weak Mar quarter numbers by JP Morgan as well as rising concerns over Spain's banking sector led to a sharp decline in market confidence. The major indices, FTSE, CAC and DAX, are down by 0.69%, 1.16% and 0.72% respectively.

The other Asian markets are still trading on a negative note. Nikkei is trading down 0.63%, Hang Seng is down 1.32%, and Shanghai is lower by 0.64%. As mentioned earlier, weak trade data from China raised concerns over the growth of the economy. Further, the concerns on Greece persist in the minds of investors, and has kept sentiments weak.

Back home, most of the shares on the 30-share Sensex are trading on a negative note. Of the major losers, Hindalco, Sun Pharma and Tata Power are down by 2.21%, 3.99% and 2.57% respectively. In the few gainers, Bajaj Auto, BHEL and SBI are trading higher by 1.42%, 1.57% and 0.94% respectively.

From the individual stocks, JSW Steel is down by almost 6% at Rs 634 post reports that the Supreme Court has asked the CBI to probe the company’s role in procuring iron ore from illegal mines in Karnataka.

Most of the Capital Goods companies fell today after news that production had slumped by 21.34% in Mar 2012 from a year earlier, compared with a 10.17% increase in Feb 2011.

Ranbaxy fell by 3.86% to Rs 477.70 after many broking firms gave a negative rating on the company’s future earnings.

The market breadth, which indicates the overall health of the market, is weak. On the BSE, 1714 shares declined, 857 shares rose and 114 shares remained unchanged.

We expect the markets to remain negative for the day on the back of weak IIP data numbers, weak global sentiments and a poor earnings season.