Persistent weakness in all sectors indicates the possibility of a further downtrend

Implications of the effects of spiralling crude prices on interest rates resulted in profit booking, pulling the markets down this morning. Concerns over the escalating violence in Libya and weak economic news across Asia also put pressure on the market. Trade was range-bound and the indices stayed in the negative zone through the day.

Even a fall in the food inflation figure for the week ended 26th February failed to enthuse investors. Today's dip after impressive gains last week, led 12 of the 13 sectoral indices on the BSE into the red.

The Sensex and the Nifty traded below yesterday's closing figures, tracking weak markets across Asia. The Sensex and the Nifty opened with a negative gap at 18,431 and 5,516, respectively. This was the day's high. Within an hour, the benchmarks hit their intra-day lows of 18,261 and 5,468. The Sensex fell 142 points to 18,328 and the Nifty fell 37 points to 5,494. The advance-decline ratio on the National Stock Exchange was 551:819. The market is still directionless with a strong possibility of breaking down.

The market breadth on the key indices weighed on the losers as the Sensex closed with 21 declining stocks and nine advancing stocks, whereas 30 stocks on the Nifty closed in the red, 19 were in the green and one remained unchanged. Among the broader indices, the BSE Mid-cap index fell 0.07% and the BSE Small-cap index declined 0.25%.

Baring realty, all other sectoral indices on the Bombay Stock Exchange ended lower. BSE Metal (down 1.30%), BSE Bankex (down 1.16%), BSE TECk (down 0.54%), BSE IT and BSE Consumer Durables (down 0.53% each) were the top losers. Outside this overall negative picture, BSE Realty (up 0.67%) was the lone gainer.

The major gainers on the Sensex were ONGC (up 1.62%), DLF (up 1.42%), Wipro (up 0.69%), Reliance Infrastructure (up 0.66%) and Reliance Communications (up 0.45%). The main losers were Tata Power (down 2.91%), Tata Steel (down 2.59%), ICICI Bank (down 1.87%), Hindalco Industries (down 1.72%) and State Bank of India (down 1.63%).

After a gap of nearly three months, food inflation eased to 9.52% for the week ended 26th February, from 10.39% in the previous week. The rate of price rise of food items has fallen to a single-digit figure for the first time since the week ended 4th December 2010, when it was 9.46%.

The decline in food inflation is expected to give the government some breathing space, after being under severe criticism for not controlling inflationary pressure caused by high food and crude oil prices.

Markets in Asia closed with deep cuts on negative economic triggers from across the region, coupled with rising crude prices. China reported a trade deficit of $7.3 billion in February, against expectations of a surplus, which the government attributed to the long holiday period for the Lunar New Year celebrations in February. Also, Japan's gross domestic product fell at an annualised 1.3% in the December quarter, more than the 1.1% contraction reported last month. Also today, the Bank of Korea hiked its benchmark base rate to 3% from 2.75%, for the second time in three months, in a bid to curb rising prices.

Meanwhile, April crude oil futures on the Nymex rose 48 cents to $104.86 per barrel, after settling lower on Wednesday, as violence escalated in Libya and reports mentioned about damage to key oil facilities.

The Shanghai Composite tumbled 1.47%, the Hang Seng declined 0.82%, the Jakarta Composite slid 0.31%, the KLSE Composite fell by 0.44%, the Nikkei 225 tanked 1.46%, the Straits Times slipped 0.56%, the Seoul Composite fell 0.99% and the Taiwan Weighted was 1.22% down in trade today.

Back home, institutional investors, both foreign as well as domestic, were net buyers of equities on Wednesday. Foreign institutional investors pumped in funds worth Rs131.17 crore and domestic institutional investors bought stocks worth Rs112.99 crore.

Tata Steel (down 2.59%) today said that its expenses on key raw materials are likely to go up by $1 billion in the current fiscal to $7 billion, due to a rise in input costs. The costs on inputs would further escalate by around 15% next fiscal, over the 2010-11 levels. This was mainly due to higher iron ore and coking coal prices, which went past $300 a tonne as a result of a global scarcity in the wake of floods in Australia.

Mahindra & Mahindra's (down 0.19%) commuter segment bike Stallio's production fell sharply by 81% in the last three months to just 139 units in February, while sales plummeted to just 46 units during the month on account of problems in the product.

Mahindra Two Wheelers produced 716 units of Stallio in December 2010. However, after problematic parts started pinching the company, the production started to fall. In January, the production of the 110cc entry-level bike came down to 421 units and it further fell to 139 units last month.

Dhunseri Petrochem & Tea (up 0.34%) has acquired the Sona Assam Tea Factory from Sona Assam Tea Company. The capacity of the acquired factory is 7 lakh kg per annum. Dhunseri will expand the factory's capacity to 10 lakh kg per annum during this season.