Indian Markets: China Cheers Fade Away

Markets moved deeper into the red during the final hour of trade as weakness intensified in heavyweights from the realty, metal, and power sectors. Pressure was also seen in stocks from the energy, software, and banking sectors. As regards global markets, the Asian markets closed in the red while the European markets are also trading in the negative currently.

The BSE Sensex closed 700 points lower, while the NSE Nifty closed lower by 210 points. The BSE Midcap and Smallcap indices also ended lower, down 3.6% and 2.5% respectively. The rupee was trading at 47.99 to the dollar.

After the cheers brought about by the Chinese economic stimulus plan yesterday, the Indian markets were left high and dry today. They mirrored the weak sentiment globally, and opened the day's proceedings in the negative territory. Steady selling activity was witnessed in the ensuing hours of trade. Although there was some buying activity during the afternoon session, the indices continued their downward slide. The overall breadth was negative with losers outnumbering gainers by a ratio of 4.2 to 1 on the NSE. While ITC was the only gainer, Jaiprakash Associates (down 13%), Sterlite Industries (down 12%), Tata Steel, BHEL and Hindalco (each down 11%) led the pack of losers on the BSE Sensex today.

As per a leading business daily, the Andhra Pradesh government has made a decision to restructure the equity participation in the Krishna-Godavari Gas Network (KGGNL) to include Reliance Gas Corporation (RGC), a subsidiary of RIL, as a majority partner of the consortium. KGGNL, was set up in September 2006 to develop a network of pipelines to distribute natural gas from the Krishna-Godavari basin to all the districts in the state.

According to the restructured equity pattern, RGC will hold 67% in the venture. It may be noted that that RIL has been able to carve out a role for itself in the natural gas transport space edging out pure play transporters on the back of its gas finds. It will be interesting to note if this trend continues in the future thereby impacting midstream players GAIL. Energy stocks ended the day on a weak note. The stock of RIL ended lower by 8%, while its peer GAIL ended lower by 2%.

Maruti is looking forward to the launch of its new model, 'A-Star', by year-end to stimulate it sagging car sales. Maruti expects that the novelty factor associated with its new model will help it to overcome the slowdown in sales by bringing in some amount of excitement to the market.

Customers are known to visit showrooms to see new models only to end up purchasing existing models. The company aims to sell about 50,000 units in the Indian market and 100,000 units for export. It will be manufactured at its Manesar plant. While the price of the new car has not been announced, it is expected to be priced around Rs 4,00,000. The stock of Maruti ended lower by 4%, while its peer M&M ended lower by 9%.