Global sell-off cut winning streak

Today's major news

FY10 fiscal deficit at 6.6% of gross domestic product

Maruti Suzuki sales hit record high in May; the stock surges 1.80%

Lanco Infratech FY10 net profit jumps 84%, the stock closes 0.08% higher

Post-market summary

Global signals

European shares fell on Tuesday, as slowing Chinese factory output fuelled pessimism over global economic recovery and banks slid after the European Central Bank said Euro zone lenders face another wave of potential write-down. The key benchmark indices in France, Germany and UK fell by 1.61% to 2.43%.

The Asian indices closed in the red as Chinese manufacturing growth slowed. SGX Nifty closed 126 points lower.

The US stock index futures indicate a drop of more than 1% at the open on Tuesday as a slowdown in Asian manufacturing added to doubts about the pace of an economic recovery.

Indian indices

The worries across the globe got erupted after the Fitch Ratings on May 28, 2010 cut Spain's credit rating by one level to AA+ from AAA, saying that the country's debt burden is likely to weigh on growth. There was lack of support from the UK and US markets as they were shut overnight. The key benchmark index was keenly depended on Asian indices.

The Asian markets were down on the woes that Chinese economy may slow down as China's Purchasing Managers Index fell to 53.9 in May from 55.7 in April.

The Nifty again broke its psychological 5000 levels. However, the selling pressure across the sector indices dragged the benchmark indices.

Taking cues from Asian markets, the 30-share index, Sensex, opened mere two points lower at 16943 and this was also its day's high. The Sensex traded lackluster till the mid-session. Post lunch, the Sensex witnessed a sharp intraday fall of over 600 points due to some freak trades in the index heavyweight Reliance Industries. Ths European equities opened almost 2% lower, this also dragged the index further to touch the day’s low of 16318.

The India's exports rose 36% to $16.9 billion and the imports surged 43% to $27.3 billion in April 2010. The gross domestic product (GDP) readings for Q4FY2010 came in at 8.6% and FY2010 stood at 7.4%. The fiscal deficit stood at Rs4.12 lakh crore or roughly 6.6% of the GDP in 2009-10, as compared to a revised target of Rs4.14 lakh crore. The auto companies reported decent sales numbers for the month of May. These positive triggers could have bought some positive momentum in the domestic market today. But that failed to cheer the market and the Sensex extended its losses, with sell-off across the globe. The Sensex ended the day at 16572, 373 points lower. The Nifty closed below the 5000 levels at 4970, 116 points lower.

Market sentiment

The market breadth was unconstructive. Of the 2,898 shares traded on the BSE, 1,796 shares (61%) declined whereas 1,005 shares (35%) advanced. Ninety seven shares remained unchanged.

Sectoral & stock screening

All in red for the sector indices. The metal sector topped the losers’ list posting losses of 3.86% after downbeat Chinese economic data sparked concerns about demand for metals, which led to huge profit booking on sell-off in the metal stocks. The second, which was hit the most, was realty that fell by 2.95% due to selling pressure.

The defensive sectors — healthcare (HC) and fast moving consumer goods (FMCG) — saw some buying interest. But at last that too ended in red, with BSE HC and BSE FMCG down 0.02% and 0.63% respectively.

The top-3 gainers — Chambal Fertilisers and Chemicals that rose by 6.42%, Container Corporation of India that surged by 3.18% and Shree Renuka Sugars that was up by 2.27%. The top-3 losers — Jaiprakash Associates that slid by 6.04%, Fortis Healthcare that was down by 5.89% and Sesa Goa that declined by 5.19%.

Viewing volumes

Industrial finance company — IFCI saw highest trading with over 1.14 crore shares changing hands on the BSE, followed by Anil Dhirubhai Ambani Group firm — Reliance Natural Resources (0.66 crore share), wind turbine major — Suzlon Energy (0.66 crore shares), construction company — Unitech (0.55 crore shares) and sugar manufacturer — Shree Renuka Sugars (0.46 crore share).