While the market is on a declining trend, there is no clarity about which way it is headed

The market opened in the red, tracking weak global cues on escalating tensions in West Asia. Half-hearted attempts to lift the indices into the green a couple of times were shot down by sellers. An increase in IIP numbers for January also did not help matters. Then, as news broke of a huge earthquake in Japan in the late morning session, investors were nervous, leading to a further fall in the indices.

The key indices touched the day's low shortly after noon and moved sideways after that till the end of the session.

The Sensex and the Nifty opened with a negative gap at 18,248 and 5,456, respectively, following a sharp decline in the US markets on Thursday and the Asian markets early Friday. However, after initial weakness the indices recovered significantly, and even crawled into the green.

The Sensex hit intra-day highs of 18,368 and the Nifty at 5,503, after which selling resumed. Around noon, the news of the earthquake in Japan took the indices to intra-day lows of 18,063 and 5,412. But the market recovered half its losses from there onwards. In the end, the Sensex fell 154 points to close at 18,174 and the Nifty ended at 5,445, lower by 49 points. The advance-decline ratio on the National Stock Exchange was 472:1241. While the market has been weak, there is still no panic. The direction will be clear in a few days.

The market breadth on the key indices was negative today. The Sensex closed with 25 stocks in the red and five gainers and the Nifty had 40 declining stocks and 10 in the advancing list. In the broader markets, the BSE Mid-cap index declined 1.07% and the BSE Small-cap settled 1.12% lower.

With the exception of oil & gas and fast moving consumer goods sectors, all other sectoral gauges settled lower. BSE Metal (down 1.91%), BSE TECk (down 1.61%), BSE IT, BSE Power (down 1.49% each) and BSE Capital Goods (down 1.42%) were the top losers. On the other hand, BSE Oil & Gas (up 0.81%) and BSE Fast Moving Consumer Goods (up 0.03%) were the only gainers in the sectoral space.

ONGC (up 2.14%), Reliance Industries (up 0.73%) and Tata Power (up 0.55%) were the noteworthy gainers on the Sensex. The major losers on the benchmark were BHEL (down 3.64%), Reliance Communications (down 3.46%), Reliance Infrastructure (down 3.19%), Sterlite Industries (down 3.06%) and Jaiprakash Associates (down 2.90%).

Industrial growth, as measured by the Index of Industrial Production (IIP), slowed to 3.7% in January 2011 compared to a 16.8% expansion in the year-ago period, dragged down by the poor performance of the manufacturing sector, particularly capital goods.

However, growth in factory output in January was better than the 2.53% expansion (revised upward from 1.6%) in the previous month.

Adding to the woes of the markets, the news of the strong earthquake in Japan resulted in the Asian markets closing lower today. After the earthquake hit, the Nikkei 225 extended its losses to close at its lowest level since 31st January.

Besides, China's February consumer price index stood at 4.9%, unchanged from the January figure, but exceeded analysts' predictions of a 4.8% rise. China's producer price index, a measure of pipeline inflation pressures, rose 7.2% from a year earlier, up from 6.6% in the previous month.

In volatile foreign exchange trade, the yen fell sharply immediately after the news of the earthquake, but bounced back against the dollar as the Bank of Japan said it would do all that was necessary to ensure financial stability.

The Shanghai Composite declined 0.73%, the Hang Seng tanked 1.55%, the Jakarta Composite slid 1.27%, the KLSE Composite fell 1.40%, the Nikkei 225 plunged 1.72%, the Straits Times declined 1.04%, the Seoul Composite tumbled 1.31% and the Taiwan Weighted fell 0.87%.

Back home, foreign institutional investors were net sellers of equities worth Rs97.19 crore on Thursday, whereas domestic institutional investors were net buyers worth Rs108.98 crore.

State Bank of India (down 0.70%), India's largest lender, is looking to buy banks in Africa and Southeast Asia to expand its overseas operations. It has earmarked around $200 million for the proposed acquisitions.

SBI has been on the lookout for large acquisitions, but after the global financial meltdown it has been focusing on smaller deals. It is aiming to increase the contribution from its international operations to 25% over the next five years, from about 16% currently.

Infosys Technologies (down 1.07%) has bagged three big transformational deals ranging between $50 million and $200 million. The deals, extending over a period of four to five years, are with companies in the manufacturing, retail, and banking, financial services and insurance space. The customers are based in the US and Europe.

Pharma major Nectar Lifesciences (up 1.67%) has received the approval of the Japanese Ministry of Health for Cefuroxime Axetil. The approval marks a significant achievement for the company and demonstrates further progress made towards entering highly regulated and strong markets like Japan. Last September, the company was granted 'Certificate of Suitability' for its key molecule Cefuroxime Axetil in the European Union.