Weak Trading Day Ends In Red

The Indian markets remained weak for the entire trading session today. Weak global sentiments and negative IIP data dampened the investor’s sentiments. The IIP number for Mar 2012 has surprised the markets, coming in at negative 3.9% as compared to 4.1% in Feb 2012. The Capital Goods output came down drastically by -22.3%, while manufacturing, which constitutes 76% of the index, came in at -4.1%. The Sensex and Nifty closed with losses of 0.77% and 0.74% respectively.

The other Asian markets closed the day negative, which has been the case continuously over the last four trading sessions. The Nikkei, Hang Seng and Shanghai closed down with losses of 0.63%, 1.32% and 0.64% respectively. Weak trade data from China for Apr 2012 raised concerns over the growth of the economy. Further, concerns on Greece kept the mood sombre.

European markets have plummeted, and are trading on a weak note. Weak financial numbers from JP Morgan and rising concerns over Spain's banking sector have led to a sharp decline in market confidence. The FTSE, CAC and DAX are down by 0.58%, 0.94% and 0.50% respectively.

Dow Jones Futures is currently trading 72 points or 0.56% down at 12762, indicating a negative sentiment in the US markets.

Among the BSE sectoral indices, Capital Goods closed down by 0.96%. Of the other major losers, Pharma, Power and FMCG closed with losses of 1.97%, 1.40% and 1.27% respectively. Auto and Bankex were only indices that closed in the positive zone, up with gains of 0.58% and 0.02% respectively.

In individual stocks, Dr. Reddy's Labs closed with losses of 2.24% after reporting muted numbers for the Mar 2012 quarter. The net sales of the company grew by 34.21% on a YoY basis to Rs 2638 crore, but the net profit grew by a mere 2% YoY to Rs 342.70 crore.

Federal Bank rose by 1.40% to Rs 414 after the company reported decent quarterly numbers. The total income of the company grew by 32% to Rs 1639 crore, while its net profit grew by 38.36% YoY to Rs 237.60 crore.

JSW Steel ended the day with losses of 5.19% at Rs 627.05 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.

The market breadth, which indicates the overall health of the market, was negative today. Out of the 3201 stocks traded on the BSE, 2007 declined, 1073 advanced and 121 remained unchanged.

Investors should watch out for stocks like Amtek Auto, Divi's Labs, Chambal Fertilisers, etc., which are going to post their Q4 results. These stocks may see some price movement.

In conclusion, we expect the markets to remain lacklustre on the back of weak global markets and domestic issues such as rupee depreciation and a muted earnings season. We advise investors to play with caution.