Post session - Quick review

Bourses witnessed catastrophic session of trade as weakness plagued across the board, in absence of any positive catalyst in home markets amidst depressing global leads, provided investor’s with no incentives for pouring their money into risky equities.  Diminishing hope of Reserve Bank of India taking rate cut call in the much awaited second quarterly monetary policy review mainly played the evil behind the sharp plunge of Equity markets.  Markets already factoring a CRR cut saw no rewards for taking risky position ahead of dreaded RBI’s policy meet on October 30.  Besides the appalling session of trade, Indian equity markets also witnessed a subdued week. For the week, both Nifty and Sensex ended with cut of over 0.40%, while broader indices underperformed their frontline indices by fat margins, with both Midcap and SmallCap index, easing over a percentage points. For the Session, Sensex, offloading over century of points finished sub psychological 18700 level. Similarly, widely followed index, Nifty, too trimming over 3/ 4 percent ended below the crucial 5700 level. A degree of underperformance was exhibited by broader indices yet again on the final session of the week, with both Midcap and Smallcap index suffering nasty laceration of over 0.75%.

Some of investors were also wary of taking position ahead of Cabinet reshuffle meet, scheduled to be held on October 28, 2012, with the lingering suspense over Congress General Secretary Rahul Gandhi joining the government. On the global front, Asian shares ended in red terrain as investors shunned risk on concerns over corporate earnings, with the region's exporters struggling against shrinking global demand. Additionally, European shares too were in red, weighed by a fresh batch of gloomy corporate outlooks with demand for everything from cars to building materials hit by the euro zone crisis.

Closer home, slew of negative earnings added to the investor’s glum. Although selling witnessed was broad based, major pounding came from Consumer Durable, Fast Moving Consumer Goods, and Health Care counters. However, sole Auto counter managed to put forth an exceptional show thanks stellar M&M‘s Q2 earnings.

The session was a complete washout in terms of corporate’s earning, as more misses were reported. Major disappointment came with the stocks of Public sector lender Punjab National Bank (PNB) which slumped over 6% after reporting a drop in net profit by 11.6% year-on-year to Rs 1,065 crore in the July-September quarter of current financial year 2012-13 due to jump in non-performing assets. Yet another miss belonged from banking space, as Public sector lender Indian Overseas Bank 's (IOB) stocks too tanked 6% after the bank’s net profit fell by 23.7% year-on-year to Rs 158.4 crore in the second quarter of financial year 2012-13 due to increase in non-performing assets (NPAs).  Additionally, ICICI Bank too got punished despite reporting highest ever quarterly profit rising of 30 percent bolstered by strong loan growth and higher fee-based income.

Meanwhile, stocks belonging from Fast Moving Consumer Goods too failed to put forth an impressive show. Country’s largest fast moving consumer goods maker Hindustan Unilever’ stock too ended in tailspin on volume disappointment. The company although reported higher than expected profit for the July to September quarter at Rs 807 crore from Rs 689 crore a year ago mainly on account of price hikes effected earlier, failed to impress on volume front. HUL reported a volume growth of 7 per cent against expectations of 8-8.5 per cent. Meanwhile, Dabur India too dropped over one and half percent despite reporting in line with expectation 6.4% rise in net profit for the July-September quarter at Rs 202.37 crore compared with Rs 173.86 crore reported in the corresponding quarter last fiscal year, helped by strong growth in personal care and foods businesses and higher other income.

On the flip side, stocks of GAIL (India), a largest gas transmission and marketing company in India, delighted investor’s on reporting in line with estimates, 10% fall in net profit for the quarter ended September 30, 2012. The company’s net profit for the quarter stood at Rs 985.38 crore as compared to Rs 1094.41 crore for the same quarter in the previous year. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1045:1786 while 130 scrips remained unchanged. (Provisional)

The BSE Sensex lost 136.60 points or 0.73% and settled at 18,622.03. The index touched a high and a low of 18,729.53 and 18,558.05 respectively. 9 stocks were seen advancing while 21 stocks were declining on the index (Provisional)

The BSE Mid-cap index was down by 0.85% while Small-cap index was down by 1.07%. (Provisional) On the BSE Sectoral front, Auto up by 1.00% was the sole gainer, while Consumer Durables down by 3.09%, FMCG down by 1.92%, PSU down by 1.11%, Health Care down by 1.07% and Bankex down by 1.01% were the top losers in the space.

The top gainers on the Sensex were M&M up 2.73%, Bajaj Auto up 1.72%, Hero MotoCorp up by 1.46%, Gail India up by 1.10% and BHEL up 0.67%, while, HUL down by 2.69%, ITC down by 2.09%, Cipla down by 2.02%, Sun Pharma down by 1.46% and HDFC down by 1.44% were the top losers in the index. (Provisional)

Meanwhile, in light of subdued manufacturing sector performance, Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan lowered the growth projection for the current fiscal to 6 per cent from 6.7 per cent estimated earlier. The PMEAC, in its 'Economic Outlook for 2012-13' report released in August pegged Indian economy’s growth rate at 6.7 per cent.

However with the hope that economy would pick-up in second half, the Prime Minister's key advisor, estimated the growth rate of 6%. Rangarajan said the economic growth in July-September quarter would be around 5.5 per cent, ditto to first quarter, as the recent set of factory output data failed to show any improvement. Industrial output in the April-August period this fiscal was at 0.4 per cent, way lower from 5.6 per cent in the same period in 2011-12.

Further, reasoning good agriculture produce and some pick-up in industrial activities in the key infrastructure areas, PMEAC’s chairman, is expecting some recovery in economy’s growth rate in the second of the current fiscal. Rangarajan said, “I see a strong pick up in the growth of key manufacturing sectors like coal, power, road and railways. The monsoon has turned out to be little better than what was expected, therefore agriculture production may do better than what was originally expected.”

He further underscored that since the growth in manufacturing production was lower in the second half of 2011-12 fiscal, the benefit of lower base which would be accrued in the current fiscal, could push up the growth. Furthermore, the chairman emphasized the need of strong action at the ground level to achieve production and capacity creation targets, as a catalyst to higher growth.

India VIX, a gauge for markets short term expectation of volatility gained 5.10% at 14.21 from its previous close of 13.52 on Thursday. (Provisional)

The S&P CNX Nifty lost 41.45 points or 0.73% to settle at 5,663.85. The index touched high and low of 5,697.20 and 5,641.75 respectively. 15 stocks advanced against 35 declining ones on the index. (Provisional)

The top gainers on the Nifty were M&M was up 3.00%, Hero MotoCorp up 2.11%, Bajaj Auto up 1.98%, Ambuja Cement up 1.38% and Asian Paints was up 1.23%. On the other hand, PNB down 6.72%, JP Associates down by 5.40%, HUL down by 2.72%, ITC down by 2.23% and Reliance Infrastructure down by 2.15% were the top losers. (Provisional)

The European markets were trading in red with, France’s CAC 40 down 0.45%, Germany’s DAX down 0.36% and the United Kingdom’s FTSE 100 down 0.55%.

Asian shares went home with a deep red mark on Friday dragged down by China shares after regional media reported domestic fund managers were not optimistic on the fourth quarter. Meanwhile, South Korea’s Kospi Index closed in negative territory after Bank of Korea data showed the nation’s gross domestic product expanded 1.6% in the three months through September from a year earlier, the slowest pace in three years. Japan’s Nikkei also ended lower despite the dollar sitting close to four-month highs against the yen, which has been pushed down by expectations for fresh monetary easing by the Bank of Japan and upbeat US data.

Indonesian Jakarta Composite, Malaysia’s KLSE Composite and Singapore’s Straits Times remained closed on account of public holiday.