Post session - Quick review

It was a complete wash-out session at Dalal Street after the much awaited ‘RBI’s second quarterly monetary policy review’ event turned out to nothing short of night mare, with Apex Bank, singing its anti-inflationary tune yet again, left the key policy rates unchanged. Although central bank, in a much anticipated move, slashed CRR rates by 25 bps, released Rs 17,500 crore of primary liquidity into the banking system to pre-empt potentially tightening of liquidity, this token easing failed to impress investor’s, also leading to disappointment in bond markets.

Reversal of trend took place after the World’s most aggressive central bank, RBI failing to Quid pro quo with Finance Ministry, submissively preferred to fight against the inflation monster, which in turned triggered brutal pounding in rate sensitive counters, factors responsible for the downturn of equity markets. Overlooking positive global leads and slew of good earnings, investors also squared their position after RBI raised its baseline projection for headline WPI inflation for March 2013 to 7.5 per cent from 7.0 per cent indicated in July. Further, no relief was immediate to sight in equity markets, even after RBI indicated monetary policy easing from the fourth quarter of the current fiscal.

In the highly disappointing session of trade, 30 share barometer index of Bombay Stock Exchange (BSE) -Sensex -- offloaded over 200 points, to settle above 18400 level, with an intra-day high level of the long held psychological 18700 mark. Similarly, widely followed index of National Stock Exchange (NSE) -- Nifty - too witnessing a nick of over a percentage shut shop sub 5600 crucial level. A similar fashioned trend was witnessed among broader indices, which were hammered down over percent points.

On the global front, Asian pacific shares managed to showcase session of outperformance in presence of a giant, powerful storm that hit eastern United States. Asian pacific shares eked out modest gains after Bank of Japan easing monetary policy on Tuesday for the second straight month, expanded its asset-buying and lending programme by 11 trillion yen ($137.82 billion) to 91 trillion yen with 10 trillion of the increase split evenly between longer-term government bonds and treasury bills. Additionally, European shares rose on Tuesday, led by Swiss bank UBS, which confirmed it will slash 10,000 jobs, and by oil major BP after it raised its dividend for the second time in less than a year. However, volumes were expected to remain thin, with the effects of a massive storm hitting the eastern United States were set to keep Wall Street closed for a second day.

Closer homer, only Information Technology and Technology showcased mettle amidst sluggish trade. While rate sensitive along with high beta Consumer Durable counters too concluding lower in the trade. Lenders, especially state-owned ones, were beaten blue after the RBI increased the amount of provisioning against restructured loans to 2.75 per cent from 2 per cent, effective immediately, as part of its monetary policy review. Down and out with substantial cuts were shares of SBI, PNB, IDBI Bank. With no surprises, RBI’s anti-inflationary stance also led to the sharp slide in Bank Nifty which slipped over 2 per cent in trade to hit its lowest level since September 21.

Meanwhile, tyre stocks accelerated amidst sluggish trade, after Competition Commission of India (CCI) gave a clean chit to the tyre manufacturing companies, which were off lately being probed for alleged cartelisation. The anti-trust regulator issued order for probe on allegations of cartelisation among tyre manufacturers following a compliant.

On result front,  earnings of most corporate were complete delight for investors at D-Street; Q2 earnings of country’s No. 2 drug-maker, Dr Reddy's Laboratories, was a complete hit amongst investor’s after the company, beating the estimates, reported better-than-expected 32 percent rise in quarterly net profit as four new generic drugs drove sales in North America -- its biggest market. Additionally, shares of IRB Infrastructure Developers, too emerged on buyer’s list after the company reported higher-than-expected PAT numbers in the July-September quarter of financial year 2012-13. Consolidated net profit grew by 9 percent year-on-year to Rs 121 crore in the July-September quarter of financial year 2012-13 due to lower than expected depreciation. Moreover, shares of Shriram Transport Finance shares too met with good response after the company registered a rise of 12.74% in its net profit at Rs 337.56 crore for the quarter ended September 30, 2012 as compared to Rs 299.41 crore for the same quarter in the previous year. Furthermore, Maruti Suzuki shares too rallied over 2% after the company reported less than expected 5% fall in Q2 net profit at Rs 227.45 crore for the quarter ended September 30, 2012. Meanwhile, trade of over Rs 1.04 lakh crore was done in terms of volume turnover (Provisional). The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1000:1795 while 121 scrips remained unchanged. (Provisional)

The BSE Sensex lost 231.14 points or 1.24% and settled at 18,404.68. The index touched a high and a low of 18,718.28 and 18,393.42 respectively. 6 stocks were seen advancing while 23 stocks were declining while 1 stock remained unchanged on the index (Provisional)

The BSE Mid-cap index was down by 1.00% while Small-cap index was down by 1.26%. (Provisional)

On the BSE Sectoral front, IT up by 0.43% and TECk up by 0.31% were the only gainers, while Bankex down by 2.50%, Realty down by 2.34%, Consumer Durables down by 2.26%, Capital Goods down by 2.16% and PSU down by 1.80% were the top losers in the space.

The top gainers on the Sensex were Maruti Suzuki up 1.79%, Dr. Reddy’s Lab up 1.29%, Infosys up by 0.93%, HUL up by 0.74% and Wipro up 0.64%, while, SBI down by 4.70%, Tata Motors down by 3.66%, L&T down by 3.06%, Hindalco Industries down by 2.46% and Hero MotoCorp down by 2.39% were the top losers in the index. (Provisional)

Meanwhile, extending its battle against inflation, the Reserve Bank of India (RBI) in Second Quarter Review of Monetary Policy 2012-13, left key policy rates, viz. repo and reverse repo, unchanged at 8 per cent and 7 per cent respectively. Meanwhile, the marginal standing facility (MSF) rate and the Bank Rate too stand unchanged at 9.0 per cent. However, the apex bank, in a much anticipated move, slashed cash reserve ratio (CRR), the proportion of deposits banks have to park with RBI, by 25 basis points from 4.50 per cent to 4.25 per cent, a move which would inject Rs 17,500 crore of primary liquidity into the banking system to pre-empt potentially tightening of liquidity.

RBI has kept the policy repo rate at 8.00 percent since April despite growing clamor for rate cuts from members of the government and industry for the revival of the country's flagging economic growth. In its last policy review in September, RBI held interest unchanged, though it had lowered CRR by 0.25 per cent to infuse Rs 17,000 crore liquidity into the system.

Failing to do Quid pro quo with Finance Ministry, RBI submissively preferred to fight against the inflation monster, which has remained its topmost priority. On Oct 29, Finance Minister P Chidambaram unveiled a five-year road map for fiscal consolidation to promote investments, contain inflation and reduce fiscal deficit to about three percent to take India onto the high growth trajectory.

As per the apex bank, since April 2012, the monetary policy stance has sought to balance the growth-inflation dynamic through calibrated easing. Moving on to inflation, headline WPI inflation remained sticky, at above 7.5 per cent on a y-o-y basis, through the first half of the current year. Furthermore, in September there was a pick-up in the momentum of headline inflation owing to the increase in fuel prices and elevated price levels of non-food manufactured products.

However, as per the country’s central bank, the baseline projection for headline WPI inflation for March 2013 is raised to 7.5 per cent from 7.0 per cent indicated in July. Importantly, inflation is expected to rise somewhat in the third quarter before beginning to ease in the fourth quarter. Thus in view of this, the RBI, in its guidance, has estimated a reasonable likelihood of further policy easing in the fourth quarter of this fiscal year.

India VIX, a gauge for markets short term expectation of volatility gained 0.33% at 15.17 from its previous close of 15.12 on Monday. (Provisional)

The S&P CNX Nifty lost 73.40 points or 1.30% to settle at 5,592.20. The index touched high and low of 5,689.90 and 5,589.90 respectively. 11 stocks advanced against 39 declining ones on the index. (Provisional)

The top gainers on the Nifty were Maruti Suzuki was up 1.75%, Dr. Reddy’s Lab up 1.14%, IDFC up 0.88%, HUL up 0.82% and Infosys was up 0.79%. On the other hand, Bank of Baroda down 5.13%, SBI down by 4.60%, JP Associates down by 4.35%, Tata Motors down by 3.68% and PNB down by 3.62% were the top losers. (Provisional)

 The European markets were trading in green with, France’s CAC 40 up 0.82%, Germany’s DAX up 0.85% and the United Kingdom’s FTSE 100 up 0.68%.

Most of the Asian stock markets ended in green on Tuesday as the Bank of Japan announced monetary easing that was marginally higher than market forecasts and cut its growth outlook. Hong Kong markets went home with red mark as local developers continued to decline following recent measures introduced to cool down the property market. Japan’s Nikkei closed lower after the central bank expanded its asset-purchase fund by 11 trillion yen to 66 trillion yen.