Sensex slides below 16k...Nifty ends under 4850

Indian markets started off June on a terrible note on Friday as investors continued to fret about grim prospects for the domestic economy amid no sign of relief from policy inaction. A raft of disappointing global economic statistics added to the gloom. The bloodbath today was an extension of May's mayhem, which was sparked off by political turmoil in Greece, banking woes for Spain, slowdown in China, sluggish growth in USA and further deceleration in the Indian economy. It was a complete sea of red on Dalal Street today, as the BSE Sensex and NSE Nifty closed below crucial levels of 16,000 and 4850, respectively. After opening nearly at day’s high, markets seemed to behave like a falling knife; every upswing or consolidation was used to short the market, dragging the main indices to session lows in the last few minutes of trade. The Indian bourses witnessed relentless selling, with heavy offloading in Capital Goods, Power, Oil & Gas and Auto stocks. Only the FMCG index ended with smart gains, thanks to sustained strength in industry titan ITC. Even the Mid-Cap and the Small-Cap stocks were badly battered. The BSE Sensex ended at 15,940, losing by 1.7% or 273 points. It had earlier touched a day’s high of 16,226 and a day’s low of 15,933. It opened at 16,217. The NSE Nifty settled at 4841 losing by 83 points or 1.7%. It touched a day’s low of 4,831 and day’s high of 4,925. Asian Paints, Cairn, Siemens, Bank of Baroda, Ranbaxy, Reliance Infra, HCL Tech, Tata Motors and SAIL were among the notable losers on the Sensex and the Nifty. ITC, GAIL, Sun Pharma and Hindalco were the notable gainers on both the indexes. The INDIA VIX on the NSE gained by 6% to close at 26.77. It hit days high of 26.77. It hit a low of 24.88. Losses on broader markets were also steep, with the BSE Mid-Cap index down 1.5% and the BSE Small-Cap index losing 1.2%. All sectoral indices on BSE, barring the FMCG index, were down led by Capital Goods index, which lost 3%. Other losing indices were Power, Auto, Oil&Gas, IT, Bankex, Teck, Metals, Realty, and PSU. The FMCG index gained 0.4%. The market breadth was negative, 1830 stocks declined and 850 stocks advanced. Indian indices sank after data on manufacturing PMI, exports and auto sales failed to allay concerns about the broad slowdown in the Indian economy. India's output of the crucial manufacturing sector largely maintained its momentum in May even as domestic orders slowed, a survey by HSBC showed on Friday. The purchasing managers’ index (PMI) slipped marginally to 54.8 in May from 54.9 in April, HSBC Holdings Plc and Markit Economics said in a statement. India's merchandise exports rose by 3.2% to US$24.45bn in April while imports rose by 3.83% to US$37.94bn, Government data showed on Friday. The figures are in line with the provisional numbers given by the then Trade Secretary Rahul Khullar on May 10. In rupee terms, exports were up 20.5% year-on-year in April this year while imports grew by 21.25% from April last year. India's trade deficit stood at US$13.48bn in April versus US$13.91bn in March, the Ministry of Commerce & Industry said. The trade gap in April was higher than the deficit of US$12.85bn during April 2011. The already glum sentiment worsened due to weak global cues where manufacturing PMI data from China to Europe left investors disappointed. Asian indices pared their losses after data pointing to further slowdown in China spurred hopes for more stimulus measures. European stock indices which had opened flat, fell sharply as manufacturing PMI data from across the region confirmed further deepening of the debt crisis. Manufacturing sector activity across the debt-stricken eurozone contracted at the fastest pace in three years in May, according to the Markit survey. The Markit purchasing managers' index for the sector fell to 45.1 last month from 45.9 in April and was little changed from a preliminary estimate of 45.0. Manufacturing activity in the UK plummeted last month at the fastest rate since the height of the 2008-09 global financial crisis. Data from Markit showed that headline Purchasing Managers’ Index (PMI) in the UK fell to 45.9 in May compared to a revised down reading of 50.2 in April. Shares of Indraprastha Gas, Gujarat Gas, Gujarat State Petronet (GSPL), Petronet LNG and Gail India jumped after the Delhi High Court struck down the tariff order of sector regulator PNGRB. The Delhi High Court said that the PNGRB does not have the power to fix network tariff or the power to decide any component of the retail price. IGL had approached the Delhi High Court over the constitutionality and legality of the powers of the PNGRB to fix network tariffs. Investors continue to reel under the after-effects of shocking fourth-quarter GDP data and bleak prospects for the Indian economy in the coming quarters. The Indian markets kick-started June on a negative note after two consecutive monthly falls in April and May. They had advanced in the first three months of 2012 on the back of strong FII inflows. However, the overseas capital flows have turned negative in the wake of the controversy over GAAR, Vodafone tax dispute and weak economic fundamentals. From India’s point of view, the rupee’s weakness continues to be a big headache. Improvement in capital flows and fall in current account gap can lift the rupee. Positive policy prescriptions can also go a long way in addressing the governance deficit. All eyes are now on the monthly US jobs report due out before the opening bell on Wall Street. Even that data is unlikely to reveal anything drastically positive. Job additions by US employers is likely to be lackluster amid a growing view that the world's largest economy is losing momentum.