Benchmarks make lackluster start of new F&O series tracking global weakness

Stock markets in India started the new Futures and Options series on a daunting note with the benchmark equity indices getting pummeled by over half a percent and slipping below crucial technical levels amid weakness in global markets. The frontline equity indices traded in a narrow range for most part of morning trades but a sharp wave of selling pressure emerged in late morning trades around the psychological 5,650 (Nifty) and 18,650 (Sensex) levels, which pushed the key gauges into a downslide.

Market’s south bound journey only came to a halt with the close of trade as sentiments remained uninspiring right from the start of trade as traders stayed away from piling up positions in equities ahead of Reserve Bank of India (RBI) monetary policy slated to be announced on October 30, 2012. Some 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. The selling got intensified in second half of trade as banking space lost about a percent on reports that the central bank is unlikely to ease key policy rates at its second quarter monetary policy review in wake high inflation. Banking stocks like HDFC Bank, ICICI Bank, SBI, Axis Bank and PNB all edged lower in the trade.

Cues from global front too remain subdued as European markets traded in the red in the early deals weighed down by a fresh batch of gloomy corporate outlooks. So far 40 percent of European companies have missed third-quarter profit expectations, compared with around 30 percent in the United States. Meanwhile, all the Asian equity indices ended the session in the negative trajectory as disappointing earnings from large corporations raised worries over economic growth slowdown. Shares in Japan witnessed profit taking after they recently touched four-week highs.

Back home, sentiments remain dampened after FMCG pack tumbled about two percent as companies like HUL and Dabur India failed to excite investors with their second quarter result. Though, Dabur India, on consolidated basis, reported 16.42% rise in second quarter net profit at Rs 202.37 crore as compared to Rs 173.83 crore for the same quarter in the previous year while, HUL registered rise of 17.13% in its Q2FY13 net profit at Rs 806.92 crore as compared to Rs 688.92 crore in Q2FY12. 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. However, the downsides remain capped up to certain extent as Auto shares went up by a percent on hopes that sales growth would pick up ahead of the festive season.

The NSE’s 50-share broadly followed index Nifty fell by over forty points ending below its psychological 5,700 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex tumbled by over one hundred and thirty points to finish below the psychological 18,650 mark. The broader markets witnessed bloodbath and ended the session with a cut of about a percentage point. The market breadth remained in favor of declines as there were 1,030 shares on the gaining side against 1,802 shares on the losing side while 131 shares remain unchanged.

Finally, the BSE Sensex lost 133.29 points or 0.71% to settle at 18,625.34, while the S&P CNX Nifty declined by 41.00 points or 0.72% to end at 5,664.30.

The BSE Sensex touched a high and a low of 18,729.53 and 18,558.05, respectively. The BSE Mid-cap index was down by 0.84% and Small-cap index was down by 1.05%.

Mahindra & Mahindra up 2.57%, Bajaj Auto up 1.72%, Hero MotoCorp up 1.68%, Gail India up 0.83% and BHEL up 0.73% were the major gainers on the Sensex. On the flip side, Hindustan Unilever down 2.14%, ITC down 2.00%, Cipla down 1.84%, Dr Reddys Lab down 1.59% and Reliance down 1.39% were the major losers on the index.

The only gainer on the BSE sectoral space was Auto up 0.81%, while Consumer Durables (CD) down 2.84%, FMCG down 1.78%, Health Care (HC) down 1.20%, PSU down 1.15% and Power down 1.06% were top losers on the BSE sectoral space.

Meanwhile, India’s natural gas production declined by about 15% in September at 3.36 billion cubic meters (bcm) in September, which was lower than 3.95 bcm achieved a year ago according to the latest data released by the Ministry of Petroleum. Output from Reliance Industries’ eastern offshore KG-D6 field continued to decline at 1.15 bcm lower by 34.3% - one of the major reasons for the downfall.

India’s crude oil production declined 1.7% to 3.06 million tonnes in September with ONGC reporting a 7.8% decline in Mumbai High output at 1.24 million tonnes. Mumbai High output was lower because of less than projected oil gain from development wells in addition to less than expected oil gain from Vasai East field.

During April-September, natural gas production was down 12.5% at 21.35 bcm while crude oil output was marginally lower at 19.08 million tonnes as compared to 19.22 million tonnes a year ago. However, India’s 20 refineries production were up 11.4% at 14.13 million tonnes from 12.68 million tonnes production in September a year ago. RIL and Essar refineries operated at 109.1% and 108% of their installed capacities. During April-September, refinery output was up 5.4% at 88.17 million tonnes.

The S&P CNX Nifty touched a high and a low of 5,697.20 and 5,641.75 respectively.

The top gainers on the Nifty were M&M up 3.00%, Hero MotoCorp up 2.11%, Bajaj Auto up 1.98%, Ambuja Cement up 1.38% and Asian Paints up 1.23%.

The top losers on the index were PNB down 6.72%, JP Associates down 5.40%, HUL down 2.72%, ITC down 2.23% and Reliance Infra down 2.15%.

European markets were trading in red. France’s CAC 40 down 0.49%, Germany’s DAX down 0.50% and Britain’s FTSE 100 down by 0.69%.

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.