Post session - Quick review

A day after gaining some ground, Indian equities once again followed the gloomy global developments as worries about the global economic outlook tapered the appeal of inexpensive stock valuations. The trade at Dalal Street mainly mirrored the gloominess spread across the globe post flat trade of US markets and Sweden’s financial regulator statement that banks aren’t prepared for a freeze in money markets. This global route sent the benchmark indices cracking below their 52 week lows. Meanwhile, the development back at home also could not do much to soothe the nervy investor’s, as despite weekly food inflation moderating to 9.03% for the week ended August 6, from 9.90% in the previous week, investor’s failed to drew any sense of comfort as the fears of RBI continuing with its anti inflationary stance in its upcoming monetary policy review continued to haunt investors. “The Reserve Bank of India (RBI) continues to focus on controlling inflation even as inflation has shown some signs of easing”, RBI Deputy Governor KC Chakrabarty on Wednesday said. Meanwhile, political jitters also kept investor’s on the bay as there was couple of reports stating the Indian activist Anna Hazare would launch public fast. Popular Indian anti-graft campaigner won a bitter fight against Prime Minister Manmohan Singh to hold a two-week public fast from Thursday, stepping up the pressure on the government to show a restive nation it can tackle rampant corruption.

On the global front, in the US markets, the Dow and S&P closed near the neutral line overnight, after moving between small gains and losses for most of the afternoon in light volume trading. However, the Nasdaq fell half a percent, as tech stocks dragged the market. Tech shares fell on Wednesday after Dell's disappointing sales outlook fanned worries of weak economic growth will hurt earnings in the third quarter. Meanwhile, the Asian stock markets were down in jittery trade on Thursday as global economic uncertainty shook confidence and Japan's strong yen continued to bite.  Moreover, European shares were down 2.3 percent, with heavyweight miners among the heaviest losers as nagging fears about the outlook for the global economy prompted investors to sell recent gains from the market's tentative recovery rally started last week. While, stock index futures pointed to a sharply lower start on Wall Street on Thursday with investors bracing for a raft of US macro data, including weekly jobless claims, existing home sales and the Philadelphia Federal Reserve Bank's business activity index, suggesting only modest activity growth.

 Back on Dalal Street, reports from brokerage firm-Morgan Stanley too weighed on Indian equity markets sentiments as it stated that the global economy is 'dangerously close to a recession'. The brokerage firm not only slashed its global gross domestic product growth forecast to 3.9 percent from 4.2 percent for 2011, and to 3.8 percent from 4.5 percent in 2012, citing recent policy errors in the US and Europe and the prospect of further fiscal tightening in 2012. But it also slashed India GDP forecast from 7.4% to 7.2% for FY12. Bears ran berserk all over the space; however, hammered the most on the BSE Sectoral space were the stocks belonging to the Information Technology, Bankex and TECk counters. Bank stocks saw an across the board decline on concerns of higher interest rates that may crimp loan growth. India's largest private sector bank by net profit ICICI Bank lost 5.03% and slid to a 52-week low. Meanwhile, other interest rate sensitive auto stocks too fell on concerns of higher interest rates. Moreover, Software pivotal were under pressure on concerns that a likely economic slowdown in the US and Europe will take a toll on technology spending by overseas clients. The US and Europe are the two biggest markets for Indian IT firms.

At the close, the thirty scrip sensitive index-Sensex-tanked over 300 points to finish off the trade below the 16500 level. Similarly, the 50 share broadly followed index-Nifty-after shedding over 100 points closing sub 5000 mark. The market breadth on the BSE surprise ended negative; advances and declining stocks were in a ratio of 673:2172 while 108 scrips remained unchanged.

The BSE Sensex lost 377.66 points or 2.24% and settled at 16,463.14. The index touched a high and a low of 16,916.81 and 16,433.31 respectively. 4 stocks advanced against 26 declining ones on the index (Provisional)

The BSE Mid-cap index lost 2.03% while Small-cap index was down by 2.64%. (Provisional)

On the BSE Sectoral front, there were no gainers.On the flip side, IT down 3.96%, Bankex down 3.64%, TECk down 3.12%, Metal down 2.90% and Consumer Durables down 2.54% were the top losers.

The gainer on the Sensex were DLF up 2.48%, HUL up 0.76%, JP Associates up 0.69% and Hero MotoCorp up 0.63%. (Provisional)

On the flip side, Wipro down 5.45%, ICICI Bank down 5.06%, Sterlite Industries down 4.80%, Jindal Steel down 4.79% and SBI down 4.63% were the top loser on the index. (Provisional)

Meanwhile, India’s weekly food inflation measured by the wholesale price index moderated to 9.03% for the week ended August 6, from 9.90% in the previous week, which was at four and half month high level. This moderation in food inflation is due to decline in prices of food items such as wheat, pulses, milk, egg, meat and fish and vegetables.

According to the data released by Ministry of Commerce and Industry, the index for Food Articles group declined by 1.7% to 191.9 (Provisional) from 195.3 (Provisional) for the previous week due to lower prices of fruits and vegetables and fish-marine (5% each), fish-inland (4%), urad, bajra and arhar (2% each) and wheat and moong (1% each).  However, the prices of ragi (5%), gram and maize (2% each) and jowar (1%) moved up.

The index for Non-Food Articles group rose by 1.5% to 178.4 (Provisional) from 175.8 (Provisional) for the previous week due to higher prices of flowers, raw cotton and safflower (7% each), gingelly seed, cotton seed and linseed (2% each) and soyabean and castor seed (1% each).  However, the prices of sunflower (4%), niger seed (3%), groundnut seed (2%) and gaur seed (1%) declined.

As a result, the index for primary articles group which has the highest weightage of 20.12% in WPI declined by 0.9% to 197.5 (Provisional) from 199.3 (Provisional) for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 11.64% (Provisional) for the week ended August 6 compared to 12.22% (Provisional) for the previous week.

Meanwhile, the index for Fuel & Power group which has the weightage of 14.91% in WPI rose by 0.9% to 167.2 (Provisional) from 165.7 (Provisional) for the previous week due to higher prices of furnace oil (7%), naphtha (5%), light diesel oil (4%), aviation turbine fuel (3%) and bitumen (2%). The annual rate of inflation, calculated on point to point basis, stood at 13.13% (Provisional) for the week ended August 6 as compared to 12.19% (Provisional) for the previous week.

India's central bank has raised interest rates 11 times since March 2010 to tame headline inflation, which stood at 9.22% in July from 9.44% in June. Although the headline inflation numbers for July have shown signs of moderation, the central bank is unlikely to take a breather on its monetary tightening policy as there is no respite in the rate of price rise. On the other hand, food inflation has declined for the week under observation. However, the numbers are still above RBI’s comfort zone, which paves way for RBI to continue its anti-inflationary stance. Last week RBI Governor Duvvuri Subbarao said it was important to bring down inflation to sustain growth and that it was too early to signal a change in monetary stance, suggesting the central bank may not be done with monetary tightening

India VIX, a gauge for market’s short term expectation of volatility gain 7.73% at 27.45 from its previous close of 25.48 on Wednesday. (Provisional)

The S&P CNX Nifty lost 120.00 points or 2.37% to settle at 4,936.60. The index touched high and low of 5,078.60 and 4,932.15 respectively. 6 stocks advanced against 44 declining ones on the index. (Provisional)

The top gainers on the Nifty were DLF up 3.02%, RCOM up 1.00%, JP Associates up 0.78%, Hero MotoCorp up 0.67% and HUL up 0.38%. (Provisional)

On the other hand, Reliance Infra down 7.44%, HCL Tech down 6.92%, Wipro down 5.61%, Reliance Capital down 5.57% and IDFC down 5.56% were the top losers. (Provisional)

The European markets are trading in red, with the France's CAC 40 down 2.95%, Germany's DAX down 3.70% and FTSE 100 down 2.11%.