Benchmarks plunge further; Sensex sinks over 500 points

Indian equity indices are trading in red on a subdued note in absence of buying among investors who are reluctant to pick shares due to twin fears of US recession and a banking crisis brought on by Europe's sovereign debt woes coupled with the disappointing Chinese PMI factory data which gave further evidence that the global economy is in bad situation. In the meantime, local market participants even went on to overlook the food inflation numbers which dropped to 8.84% for the week ended September 10 as compared to 9.47% in the previous week. Market participants were seen selling in Realty, Metal and Oil & Gas sector. Stocks like Eros International, Nitin Fire Protection, Eicher Motors, Residency Projects, Hindoostan Mills, Surana Industries, Prism Informatics, Gravita India and Tree House hit new high while stocks like Nitesh Estate, Rupa & Company and Brooks Laboratories hit new low. Shares of metal company like Sterlite Industries, SAIL, JSW Steel, Hindalco Industries, Tata Steel, Sesa Goa, Bhushan Steel, Jindal Steel, Hindustan Zinc, NALCO and NMDC were trading in red due to weak economic data in China, which is the world's largest consumer of aluminum and copper.

In other scrip specific development, Jet Airways was firm on reports that the civil aviation ministry is in favour of allowing foreign airlines to invest in domestic carriers as it would help the cash-crunch industry to raise equity. Borosil Glass Works rose on reports that the meeting of the board of directors of the company will be held on September 23, 2011, to consider buy-back of shares. Astral Poly Technik is trading near upper circuit limit on reports that US-based Lubrizol Corporation is planning to set up a chlorinated polyvinyl chloride manufacturing plant in Gujarat in joint venture with the Astral group. Multiplex cinema operators like PVR, Inox Lesiure and Eros International were in green as recent hit movies and an impressive line up of releases lured investors who are starring of better box office show ahead.

Hectic activity was noticed along with heavy volumes in counters of Indiabulls Wholesale Services, GVK Power, Gokaldas Export, Farmax India, Entegra and Bata India due to fund based activity as of yesterday. Fidelity Investment Trust Fidelity Emerging Markets Fund sold 555,272 shares of Indiabulls Wholesale Services while SVS Securities bought 708,080 shares. G Indira Krishna Reddy sold 40,950,000 shares of GVK Power while Vertex Infratech bought 40,950,000 shares. SSM Securities bought 867,000 shares of Gokaldas Export while Vinamra Universal Traders sold 867,000 shares. Lotus Global Investment bought 1,735,000 shares of Farmax India while Regent Finance Corporation sold 1,279,847 shares. MW Infra Developers sold 6,000,000 shares of Entegra while Orange Mauritius Investments bought 6,000,000 shares. Fidelity Investments Management (Hong Kong) A/C Fid Inv sold 344,415 shares of Bata India.

On the global front, Asian markets were trading in red while the European markets were also trading in red on pessimistic note in the wake of a bond-swap program announced by the U.S. Federal Reserve, which also warned of sharper risks to its economic outlook. Also, a downgrade of several Italian bank ratings by Standard & Poor’s kept alive investor concerns over Europe’s sovereign-debt situation. Data showed China's manufacturing sector contracted for a third straight month in September. The world's second-biggest economy, known as the factory to the world, is especially vulnerable to fading demand from the United States and Europe. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,000 and 16,600 levels, respectively. The market breadth on the BSE was negative in the ratio of 604:2110 while, 79 scrips remained unchanged.

The BSE Sensex is currently trading at 16,517.70 down by 547.45 points or 3.21% after trading as high as 16,833.61 and as low as 16,512.76. There was no stock advancing against 30 declines on the index.

The broader indices were trading on a negative note; the BSE Mid cap index plunged 2.38% while Small cap sank 2.38%.

On the BSE sectoral space there were no gainers while Realty down 4.32%, Metal down 3.77%, Oil & Gas down 3.29%, Bankex down 3.17% and Capital Goods down 3.14% were the major losers on the index.

There were no gainers on the Sensex, while JP Associates down 6.76%, Sterlite down by 5.89%, DLF down 5.07%, Tata Motors down 4.86% and Bharti Airtel down 4.71% were the major losers on the index.

Meanwhile, India’s food inflation, measured by the Wholesale Price Index (WPI) continued its moderating trend for the third week, and fell below 9% mark after a record of six weeks high level. Inflation slowed to 8.84% for the week ended September 10 from 9.47% in the week ended September 03. This moderation in food inflation has come on the back of decline in prices of onion, potato, vegetables and fruits. However, for the week under observation, the index for fuel and power surged by almost a percent points. The index for Fuel & Power surged to 13.96% in week ended on September 10 from 13.01% in last week.

According to the data released by Ministry of Commerce and Industry, the index for Food Articles group rose by 0.2% to 195.7 (Provisional) from 195.4  (Provisional) for the previous week due to higher prices of poultry chicken (8%), fish-marine (6%), gram and urad (2% each) and egg, tea, barley, fish-inland, arhar and moong (1% each).  However, the prices of maize (4%), jowar and fruits and vegetables (2% each) and bajra, ragi and wheat (1% each) declined.

The index for Non-Food Articles group rose by 0.1% to 185.4 (Provisional) from 185.2 (Provisional) for the previous week due to higher prices of raw cotton (4%), raw jute (2%) and raw silk, gingelly seed, soyabean, copra (coconut) and groundnut seed (1% each). However, the prices of flowers (16%), castor seed (5%) and linseed and gaur seed (1% each) declined. The index for Minerals group declined by 1.4% to 306.3 (Provisional) from 310.8 (Provisional) for the previous week due to lower prices of crude petroleum (3%).

As a result, the index for primary articles group which has the highest weightage of 20.12% in WPI declined by 0.1% to 201.9 (Provisional) from 202.0 (Provisional) for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 12.17% (Provisional) for the week ended September 10 as compared to 13.04% (Provisional) for the previous week.

Meanwhile, the index for Fuel and Power group which has a weightage of 14.91% in WPI, rose by 0.8% to 168.2 (Provisional) from 166.8 (Provisional) for the previous week due to higher prices of electricity (industry) (7%), electricity (agricultural) (6%), electricity (domestic) (4%) and electricity (commercial) and electricity (railway traction) (3% each).

The moderating trend in the weekly food inflation is expected to provide some relief to the government and policy makers. The Prime Minister’s Economic Advisory Council (PMEAC) chairman C Rangarajan on September 21, had stated that the Reserve Bank of India’s stance on inflation depends on the inflation scenario in the coming three week. Last week the Reserve Bank of India increased its short term leading and borrowing rates for the 12the time in last 18 months to curb the sticky inflation.

The S&P CNX Nifty is currently trading at 4,968.75, lower by 164.50 points or 3.20% after trading as high as 5,059.85 and as low as 4,965.65. There were 1 stocks advancing against 49 declines on the index.

The top gainer on the Nifty was BPCL up 0.44% while JP associates down 6.77%, RCOM down 6.27%, Sterlite down 5.93%, SAIL down 5.37% and DLF down 5.04% were the major losers on the index.

Asian markets were trading in red, Shanghai Composite plunged 2.78%, Hang Seng shed 4.85%, Jakarta Composite sank 8.90%, KLSE Composite slipped 1.99%, Nikkei 225 plummeted 2.07%, Straits Times dived 2.59%, Seoul Composite deposed 2.90% and Taiwan Weighted got pounded by 3.06%.

The European markets were trading in red with, France’s CAC 40 plunged 3.89%, Germany's DAX plummeted 4.02% and Britain’s FTSE 100 nosedived 3.73%.