Post session - Quick review

Indian equity markets were in shambles on Wednesday as slew of negative reports across the globe pounded investor’s sentiment, which in turn chose to cash in their profits with a view to avoid further downturn of the bourses in absence of positive catalyst. Reiteration of rating agency’s S&P negative outlook on India, which underscored 1 in 3 likelihood of India's ratings downgrade in the next 24 months, combined with the depreciation of rupee past psychological ‘53/$’ level, mainly injected strength in snoozing bears, which after taking a breather in the previous session, stroke back with vigor. S&P, back in April, roiled domestic markets when it slashed India's sovereign outlook to 'negative', putting at risk the country's current rating of 'BBB-', the lowest investment-grade rating by the agency. However, today’s warning was a bolt out of the blue for Dalal Street in light of slew of measures undertaken by the UPA led government. Additionally, even investor’s cautious approach ahead of the official start of the earning season and ahead of the release of IIP numbers on Friday, also added to the downside chances of benchmark equity indices. Meanwhile, Indusind Bank results got utterly ignored, as after reporting good set of Q2 numbers, the stock suffered a cut of over 2%. Private sector lender IndusInd Bank’s net profit grew by 30 percent year-on-year to Rs 250.25 crore in the quarter ended September 2012, which was slightly higher than expectations of Rs 241 crore.

Thus, in the choppy session of trade, 30 share barometer index of Bombay Stock Exchange (BSE), Sensex, offloaded over 3/4 percent to conclude below the psychological 18650 level, while 50 shares widely followed index of National Stock Exchange (NSE), Nifty, despite knocking off close to a percent concluded above the 5650 crucial mark. Additionally, broader indices too witnessed nasty laceration of over a percent.

Besides gloomy domestic developments, bleak global set-up, also sapped investor’s risk appetite for equities. Asian pacific shares fell, on concern China’s economic slowdown and its territorial dispute with Japan are weighing on corporate earnings. While, a stark warning from the IMF about the global growth outlook and the prospects for Spain and Greece sent European stocks tumbling lower for third consecutive session.

Closer home, much of the selling pressure which was witnessed in the closing deals took the frontline equity indices tumbling to their lowest point by the close of the trade. Although selling was broad-based, much of the pressure crept in from stocks belonging to Realty, Power and Bankex counters. On the flip side, FMCG stocks only managed to keep their heads above the water for the entire trading session, to emerge as the sole gainer on BSE sectoral chart. Meanwhile, Auto stocks too witnessed profit booking after industry-body, SIAM, too reasoning ‘high interest rates and slowing economic growth’, lowered forecast of Car sales in India to 1-3% from 9-11% earlier. Further, industry body has slashed its motorcycle sales growth for the year to 5-7% from 11-13%, and commercial vehicle sales growth to 3-5%, from 6-8%.

The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 974:1924 while 129 scrips remained unchanged. (Provisional)

The BSE Sensex lost 171.09 points or 0.91% and settled at 18,622.27. The index touched a high and a low of 18,740.63 and 18,614.37 respectively. 4 stocks were seen advancing while 26 stocks were declining on the index (Provisional)

The BSE Mid-cap index was down by 1.40% while Small-cap index was up 1.55%. (Provisional)

On the BSE Sectoral front, FMCG up 0.08% was the sole gainer, while Realty down by 4.77%, Power down by 2.09%, Bankex down by 1.37%, PSU down by 1.30% and TECk down by 1.19% were the top losers in the space.

The top gainers on the Sensex were ITC was up 0.39%, Hero MotoCorp up 0.27%, Reliance Industries up by 0.26% and Bajaj Auto up 0.03%, while, SBI down by 2.46%, Hindalco Industries down by 2.23%, BHEL down by 2.10%, Tata Power down by 2.00% and M&M down by 1.92% were the top losers in the index. (Provisional)

Meanwhile, Indian government’s all recent reform measures that were said to be aimed to avert any rating downgrade might get a jolt, as the ratings agency Standard & Poor's (S&P) has warned that India still faces a one-in-three chance of a credit rating downgrade within the next 24 months despite a new drive for economic reform. Reiterating its earlier stance, the rating agency has said that if growth prospects and external position worsen, or fiscal reforms slow, there is significant chance of downgrading India's credit rating.

In a report released on Oct 10, it said that ‘a downgrade is likely if the country's economic growth prospects dim, its external position deteriorates, its political climate worsens, or fiscal reforms slow.'

S&P had downgraded India's rating outlook to negative from stable in April, which presently stands at BBB-, one notch above junk grade and the lowest investment rating in the BRIC economies. However, it said that India's outlook can be revised back to stable, if the government goes ahead with steps to reduce structural fiscal deficits, improve the investment climate, and increase growth prospects.

The rating agency further projects the current account deficit for the financial year to be 3.5 percent of GDP, below last year's 4.5 percent, given the inflow of foreign direct investment, and portfolio investments. However, S&P expects the government's fiscal deficit to be higher than the government's budgeted estimate, at 6 percent of GDP for the financial year ending in March

India VIX, a gauge for markets short term expectation of volatility gained 0.17% at 16.83 from its previous close of 16.80 on Tuesday. (Provisional)

The S&P CNX Nifty lost 55.25 points or 0.97% to settle at 5,649.35. The index touched high and low of 5,686.50 and 5,647.05 respectively. 7 stocks advanced against 43 declining ones on the index. (Provisional)

The top gainers on the Nifty were JP Associates was up 2.45%, HCL Tech up 1.11%, PNB up 0.86%, Hero MotoCorp up 0.64% and ITC was up 0.48%. On the other hand, DLF down 5.40%, Siemens down by 3.98%, IDFC down by 3.43%, Reliance Infrastructure down by 2.94% and SBI down by 2.70% were the top losers. (Provisional)

The European markets were trading in red with, France’s CAC 40 down 0.36%, Germany’s DAX down 0.42% and the United Kingdom’s FTSE 100 down 0.51%.

Most Asian markets ended with red mark tracking losses on Wall Street after the IMF cut its global growth forecast, anticipating the slowest rate in three years. Japanese Nikkei ended with sharp losses by the strengthening yen, with selling fuelled by report that the country's leading carmakers sales in China declined in September because of diplomatic squabble between Tokyo and Beijing. However, markets in mainland China went home with green mark after posting big gains on expectation that Chinese authorities will take important steps to help reverse the decline in growth in the world's second-largest economy. Taiwan Weighted remained closed for trading on account of National Day.