Markets See Largest Daily Decline In 2 Months

The markets opened in the red today and closed even lower, gradually declining through the trading session. Factors from all over the world haunted the Indian markets today, with the US expecting a fast approaching recession, to increased trouble in Spain and the slowdown in China. These factors have even put oil at a new low of USD 103/barrel.

The benchmark index lost 281.09 points, closing at 16877.35, which was 1.64% lower. The Nifty dropped 87.15 points, closing 1.67% lower at 5117.95.

This negative trend and a more than 1% decline has been seen across markets worldwide. The Asian markets, Hang Seng, Nikkei and Shanghai Composite closed 2.99%, 1.86% and 1.26% down today. The European markets also opened more than 1% below last week's closing, and are currently trading in the range of a negative 1.73%-2.09%. This was on the back of increasing Spanish bond yields and growing fears of a Spanish bailout, with two Spanish regions seeking aid.

To add to the global pressures, even the rupee declined against the dollar, reaching close to 56. The currency currently stands at 55.92 against the US dollar.

All of the sectoral indices were in negatives today. Healthcare was down by 0.23% and Metals were down by 3.43%. Sectors like Auto, Realty and Power saw significant and consistent selling throughout the day. Metals were affected due to pricing pressures caused by a strong dollar and weak economic data, while Auto has been cautious over the anticipated diesel hike.

L&T announced its Q1 FY13 results today. The net revenue and net profit of the firm grew by 26% and 15.81% respectively. However, its EBITDA margins fell to 9.1% compared to the corresponding quarter in the previous year, which caused the stock to plunge by about 3%.

Indian Bank too announced its results for the quarter under review, with higher net profit (up by 14% YoY), increased Net Interest Income and improved asset quality. The stock prices rose by 3.32% today on the back of the strong results.

Colgate Palmolive took a small upside post the company's result announcement, but closed flat by the end of the day. The firm saw an increase in the market share in both toothbrushes and toothpastes. In Q1 FY13, the volume growth for the company was up by 11%, while the net sales went up by 20%. The net profit too saw a marked improvement, rising 127% YoY.

We expect the markets to remain volatile with a negative bias tomorrow as well, unless there are some reformist steps taken by the government. The PM had earlier mentioned his desire to take steps after the Presidential elections. It is time that the markets see some optimism from growth-boosting policy measures.