Post session - Quick review

Bears fully dominated the trade at Dalal Street for yet another session and the cut this time was graver and deeper as investors took fright at a warning from the Federal Reserve that the United States faced a grim economic outlook with ‘significant downside risks’. Stung by the Federal Reserve’s pessimistic assessment of the US economy and the perceived ineffectiveness of measures taken to kick start growth of the world’s largest economy again. The Fed said it will increase its share of longer-term Treasuries by $400 billion by June 2012 by selling shorter-dated holdings, a program dubbed 'Operation Twist.' But investors were left broadly disappointed that there was no surprise announcement of a third round of quantitative easing, and questioned the effectiveness of 'Operation Twist'.  Reacting to this, US stocks suffered their worst one-day drop in a month, with the S&P 500 index falling nearly 3 percent.

However, besides, this the bloodbath at Asian market too flawed the trade at Dalal Street as Asian pacific stocks tumbled reacting to HSBC's China Flash PMI survey that showed factory sector contracted for a third consecutive month in September. The reading of 49.4 for the index released by HSBC Holdings Plc and Markit Economics compared with a final 49.9 for August and 49.3 for July. The gauge was below 50, the level that separates expansion from contraction, for eight months through March 2009, according to previously released figures.

Back home, trade at Dalal Street just went bad to worse as the front line benchmark 30 share Index- Sensex- after starting the trade above 16800 level drifted far away from it.  Even the fall in the weekly food inflation numbers failed to cast some positive impact. India’s food inflation, measured by the Wholesale Price Index (WPI) continued its moderation 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. Meanwhile, the negative start of the European markets too added to the investor’s angst and investor’s preferred took a safe flight off Dalal Street.

Bears were active across the board, however, stocks from Realty, Metal , Oil & Gas, Capital Goods and  Banking counters suffered colossal damages. Interest rate sensitive banking stocks fell on fears that elevated interest rates would hurt borrowers' ability to repay loans and increase delinquencies. Meanwhile, Auto stocks extended recent losses on worries of higher interest rates and the latest petrol price hike may adversely impact sales of cars and two-wheelers during the festive season. However, airline stocks survived the market slide as crude oil fell. Kingfisher Airlines, Jet Airways and SpiceJet before surrendering to the selling pressure rose in the early trade. Aviation turbine fuel, or jet fuel constitutes more than 50% of operating cost for airliners. Brent crude lost more than $1 on Thursday on concerns oil consumption may fall, as steps announced by the US Federal Reserve were seen as insufficient. Besides, this Index heavyweight Reliance Industries (RIL), Infosys and ICICI Bank extended initial losses. However, the much hyped stock- Maruti Suzuki-fell 3% despite hiring the first batch of 100 new regular workers to meet the manpower requirement at its Manesar plants. Production at Maruti Suzuki's Manesar plant came to a halt on August 29 after the company suspended and dismissed 21 employees on charges of sabotaging production and deliberately causing quality problems in the vehicles manufactured at the plant. It also asked all workers to sign a 'Good Conduct Bond.

The 30 share volatile index -Sensex- tanking over massive 700 points settled below the 16400 level. Meanwhile, the 50 share index -Nifty- suffering its biggest loss since October 2008 and biggest percentage fall since August 2009 settled sub 5000 mark with a loss of over 200 points. The broader indices showcasing no exceptional trend pummeled over 3%.  The market breadth on the BSE ended in negative; advancing and declining stocks were in a ratio of 728:2088 while 106 scrips remained unchanged.

The BSE Sensex plunged by 722.73 points or 4.24% and settled at 16,342.42. The index touched a high and a low of 16,833.61 and 16,316.03 respectively. 0 stocks advanced against 30 declining ones on the index (Provisional)

The BSE Mid-cap index lost 3.19% while Small-cap index was down by 3.18%. (Provisional)

On the BSE sectoral front, there were no gainers while, Realty down 5.96%, Metal down 4.51%, Oil & Gas down 4.49%, Capital Goods down 4.17% and Bankex down 4.10% were the top losers.

JP Associates down 9.80%, DLF down 7.84%, Sterlite Industries down 7.49%, RIL down 6.87% and Tata Motors down 5.89% were the top loser on the index. (Provisional). On the flip side, there were no gainers on the Sensex.

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.

India VIX, a gauge for market’s short term expectation of volatility gained 22.44% at 33.88 from its previous close of 27.67 on Wednesday. (Provisional)

The S&P CNX Nifty lost 214.40 points or 4.18% to settle at 4,918.85. The index touched high and low of 5,059.85 and 4,907.75 respectively. 0 stocks advanced against 50 declining ones on the index. (Provisional)

There were no gainers on the Nifty.On the other hand, JP Associates down 9.81%, RCOM down 8.26%, DLF down 7.83%, Sterlite down 7.27% and RIL down 6.85% were the top losers. (Provisional)

The European markets are trading in red, with France's CAC 40 down 4.16%, Germany's DAX down 3.79% and FTSE 100 down 4.06%.

All the Asian equity indices were butchered during the trade and ended the session on subdued note on Thursday as the US Federal Reserve’s latest multi-billion-dollar move to shore up the American economy led to worldwide disappointment. Moreover, weak Chinese data also weighed on market sentiments, as HSBC’s preliminary China Manufacturing Purchasing Managers’ index (PMI), fell to a two-month low in September, indicating a broadening slowdown in the Chinese economy. Meanwhile, Hong Kong index ended the day’s trade with a cut of about five percent, dragged lower by mainland energy and property counters as investors reacted to different policy signals from Beijing. Jakarta Composite remained the major loser among the Asian peers losing about nine percent in the trade as overseas investors cut holdings in riskier assets amid concern global economic growth will slow.