Global cues pull Sensex 310 pts down

Indian equity benchmarks slaughtered on Tuesday following weak global cues, tracking endless European debt crisis. Lower than expected Infosys' first quarter numbers and consistent slow down in industrial output added more fuel to the fire. Fresh shorts were seen in heavyweights today.

The market has seen sell-off for the third consecutive session, with the 30-share BSE Sensex shed more than 650 points in three days. The index fell 309.77 points, to close at 18,411.62 and the 50-share NSE Nifty tumbled 89.95 points or 1.6%, to settle at 5,526.5, after seeing recovery of about 30 points from day's low of 5496.95.

Sensex sinks on European debt crisis

The benchmark indices continued trading weak. Selling pressure triggerd across the sectors on the back heavy sell off seen in early trade of European markets. The BSE IT index has underperformed to all other sectoral indices; it was down over 3% on the back of disappointing Infosys Q1 results. The BSE realty, auto, capital goods, metal and bankex were down 1-2%.

It’s been third trading session of loosing streak since Friday trade; since then the BSE Sensex has lost almost over 600 points. Even analyst feels that there is no reason to be bullish on Indian equity market.

Out of BSE Sensex 30 stocks, only three Tata Power, ONGC and HUL were trading in positive terrain.

Reliance, Infosys, ICICI Bank, L&T and TCS were negative contributors to the bourses.

At 12.56 hrs IST, the Sensex was down 299.71 points or 1.60% at 18436.43, and the Nifty was down 78.40 points or 1.40% at 5537.70.

About 847 shares advanced, 1762 shares declined, and 1055 shares remain unchanged.

Executive Director & Co Head of Kotak Institutional Securities Sanjeev Prasad says that he expects huge global uncertainty to keep the market to in a 5% range on both sides.

“Indian macro data continues to look bad. Until there is a series of positive macro economic data, there is no reason to be bullish on Indian equity market”, he tells CNBC-TV18 in an exclusive interview.

Top losers on the Sensex were Infosys at Rs 2,779.05 down 4.79%, Tata Motors at Rs 1,013.25 down 3.92%, DLF at Rs 221.30 down 3.43%, L&T at Rs 1,784.25 down 2.51% and Wipro at Rs 410.40 down 2.38%.

Most active shares on NSE were Infosys, SKS Microfince, Rushil Decor, SBI and Coal India.

Top percentage gainers on the NSE - Weizmann Forex, Rushil Decor, BPL, Savita Oil Tech and Tainwala Chem were down 8-20%.

IIP growth slowdown

Industrial growth has sharply fallen for the month of June. The Index of Industrial Production (IIP) has come in at 5.6% as compared to 6.3% on a month-on-month (MoM), much below expectations of 8.6%, according to a CNBC-TV18 poll.

Dr Samiran Chakrabarty, Head of Research at Standard Chartered Bank was astonished at how low the numbers came in at. “The IIP series has been baffling us for a while with its volatility. “Particularly I want to bring to your notice to the intermediate goods growth which has come at 0.9% and this is now a trend emerging on intermediate goods growth of steady decline.”

With the RBI’s credit policy review fast approaching on July 26, Abheek Baruah, Chief Economist of HDFC Bank tells CNBC-TV18 that these numbers are unlikely to influence the apex bank’s action. “They have their eye on controlling inflation right now so I don’t think one set of IIP data will necessarily change their decision,” he says.

Infosys net down 5.4%

India's second largest software firm Infosys announced its results for the quarter ended June 30, 2011. Its consolidated net profit stood at Rs 1,720 crore, down 5.4% as compared to Rs 1,818 crore in previous quarter.

The company’s revenues rose 3.2% in the quarter to Rs 7,485 crore. On a full year basis, net profit rose 15.72% from Rs 1,488 crore and revenues rose 21% from Rs 6,198 crore in the year-ago period.

In an interview with CNBC-TV18, IT bellwether’s management including managing director and chief executive officer S Gopalakrishnan, chief operating officer SD Shibulal and chief financial officer V Balakrishnan, spoke about the quarter gone by and gave their outlook going forward. The management said the company had achieved upper end of the guidance.

The company, they say, added 26 new clients in Q1. “We won three large deals, three transformational deals in Q1. We signed five platform deals in Q1.” The impact of platform deals will be seen in long-term, they added.

According to them, currency impact on margins stood at 0.4%. They see 2.5% fall in FY12 margins, earlier they had guided 3% fall.

Also read: Infosys sees FY12 sales rise 15.5-17.5%, EPS view tad up

June car sales slowest in more than 2 years

Car sales in India rose 1.6% in June, their slowest pace of growth in more than two years, as rising interest rates, fuel prices and vehicle costs shrunk demand in the world's second-fastest growing auto market.

Indian auto sales, which grew at a breakneck pace of 30% in fiscal year 2011, are driven by a burgeoning aspirational middle class that relies mainly on bank loans for its purchases.

But the Reserve Bank of India (RBI) has raised interest rates ten times since March last year in an effort to battle stubbornly high inflation, a move that has forced consumers to tighten their purse strings.

"This was expected. Rising interest rates and inflation are contributing to slowing sales. Also, ahead of the monsoons, demand for cars typically slows down," Kishor Ostwal, chairman at brokerage CNI Research, said.

Sales at top car maker Maruti Suzuki India fell 8.8% to 80,298 vehicles in June, marking the first fall since December 2008.

Production at Maruti, majority-owned by Japan's Suzuki Motor, was hurt by a strike last month that led to a production loss of about 16,000 cars.

Sales at Tata Motors , India's largest maker of trucks and buses and the manufacturer of the Nano, touted as the world's cheapest car, fell 1%. Sales of the Nano plunged 29%.

Indian automakers sold 143,370 cars in June, their slowest pace since March 2009, according to data from the Society of Indian Automobile Manufacturers (SIAM) released on Monday.

Sales of trucks and buses however, a key barometer of economic health, rose 17.8% to 62,009 vehicles in June.

SIAM earlier this year said it expected car sales growth to drop to 16% this fiscal year, a sharp cut from the 30% growth seen last year.