Post session - Quick review

Indian equity market, extending the previous session’s largest single day fall since 2008, after a faltering US recovery and Europe's debt crisis drove world equities into a bear market, ended on an absolutely abysmal note on Friday. Local equity markets tumbled amid fears of a global recession, even after Group of 20 nations pledged to tackle rising risks to the global economy. Alarmed at the US Federal Reserve's dire outlook for the world's biggest economy at its two-day policy meeting this week investors shed risky assets from portfolios and scurried to safer havens. However, volatility remained at the fore for the entire trading session at Dalal Street and the front line indices for couple of times gyrated in and out of losses; in the mid afternoon trade even broke out in green. However, bears remaining in their best contour, dominated the trade at Dalal Street, declining 4 out of 5 session in the week.

Local equity markets succumbed to profit booking at higher levels owing to lack of positive trigger amidst daunting global leads. Overnight, on the Wall Street, US stocks ended sharply lower, extending a selloff to fourth day, as a failure of policymakers to arrest global economic stagnation sent markets spiraling downward. Meanwhile, Asian shares too fell, driving regional indices toward the biggest weekly drop in almost three years amid widespread risk aversion on fears of a recession globally. However, the European shares rebounded after hitting 26-month lows in the previous session in early trade.

Back home, buying witnessed across the board was fierce and unrelenting, however, stocks from defensive FMCG-counters trading against all the odds, emerged victorious.  Down and out with major wounds were the stocks from Metal counters followed by stocks from Capital Goods, Auto and Bankex counters. Metals continued to underperform the benchmark indices, trading with over 2 per cent losses due to the fall in manufacturing activity in China, which is the biggest consumer of commodities.  Besides, Fears of weak Q2 September 2011 corporate earnings are also weighed on sentiment as nearly a quarter of top 100 companies paid lower advance tax in Q2 September 2011, reflecting the slowdown in growth and pressure on margins because of rising input costs and higher interest rates.

The 30 share sensitive index- Sensex-after touching a high of 16,368.41 tanked close to 200 points settling above the 16100 level. Meanwhile, the 50 share index- Nifty- shedding over 50 points settled sub 4900 mark. The broader indices too participating in global route went home with loss of over 0.75% each. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 970:1821 while 103 scrips remained unchanged.

The BSE Sensex lost 194.58 points or 1.19% and settled at 16,166.57. The index touched a high and a low of 16,368.41 and 16,052.47 respectively. 10 stocks advanced against 20 declining ones on the index (Provisional)

The BSE Mid-cap index lost 0.87% while Small-cap index was down by 1.13%. (Provisional)

On the BSE Sectoral front, FMCG up 0.16% and Power up 0.05% were the only gainers while, Metal down 2.10%, Capital Goods down 1.77%, Auto down  1.65%, Consumer Durables down 1.50% and Oil & Gas down 1.48% were the top losers.

The top gainers on the Sensex were Cipla up 1.98%, Tata Power up 1.90%, SBI up 1.21%, NTPC up 1.03% and JP Associates up 0.97%.On the flip side, Tata Motors down 5.39%, Hindalco down 3.69%, HDFC Bank down 2.69%, L&T down 2.59% and HDFC down 2.52% were the top loser on the index. (Provisional)

Meanwhile, to fill the regulatory gap in the real estate sector, the government is drafting a comprehensive bill, which will improve governance and transparency in the real estate sector. The number of reality scam, judgements by the CCI and controversies on land acquisition for projects across the country has raised concerns over the governance and transparency. Minister for Housing and Urban Poverty Alleviation, Kumari Selja said ‘the legislation would emphasize self-disclosure, transparency, fair play and dispute resolution.’

The ministry was aiming to get cabinet approval before the winter session of Parliament.  Kumari Selja said, ‘there is an immense need to improve the regulatory environment, governance and transparency in the sector. The central legislation envisages a regulator at the central level and in states. Besides, there will be an appellate body. Protection of the interest of consumers will be of prime importance.’ However, the minister accepted that there is a need to improve regulatory and approval procedures. She said a task force headed by the ministry’s secretary was looking at the issues. ‘The task force will seek suggestions from states and members of the realty industry, the minister added.

Many established companies like Housing Development Finance Corporation and Tata Housing have made strong argument for the regulator in the sector, for transparency and a level playing field to safeguard the interests of consumers. The reality sector’s image had suffered because of the recent housing loan scams. Selja said ‘the players in the sector need to come together and take action for overhauling the image of the sector.’ On the issue of land acquisition challenges, she said the recent unfortunate events in some states had put the sector in a bad light.  

‘Land acquisition challenges need to be overcome for the growth of the real estate sector. I am sure the new central land acquisition Bill presented in Parliament would be passed after taking all the concerns on board. The thrust on making the land owner a partner in urbanization and adequately compensating all the persons dependent on land being acquired would give a humane face to the acquisition and would make development more inclusive, hassle-free and sustainable,’ Selja said.

On the issue of low-cost housing, the minister advocated a certain percentage of land in all housing developments need to be reserved for poorer sections. ‘We are working with the states to see that the reservation does not affect the bottom line of the sector,’ she said. On the impact of RBI’s continuous interest rate hike on the sector, the minister said she had already taken up the issue with the Prime Minister and the Finance Minister

India VIX, a gauge for market’s short term expectation of volatility gained 3.77% at 35.16 from its previous close of 33.88 on Thursday. (Provisional)

The S&P CNX Nifty lost 58.30 points or 1.18% to settle at 4,865.35. The index touched high and low of 4,930.25 and 4,829.60 respectively. 21 stocks advanced against 29 declining ones on the index. (Provisional)

The top gainer on the Nifty were, Reliance Power up 3.37%, Cipla up 2.09%, Grasim up 2.02%, Reliance Capital up 1.61% and Tata Power up 1.47%.

On the other hand, Tata Motors down 5.37%, Hindalco down 4.02%, SAIL down 3.48%, HDFC Bank down 3.45% and Cairn down 3.42% were the top losers. (Provisional)The European markets are trading in red, with France's CAC 40 down 1.17%, Germany's DAX down 0.58% and FTSE 100 down 0.37%.

All the Asian equity indices barring Jakarta Composite continued their downfall for second straight day amid growing fears that the global economy is on the verge of slipping back into recession. The sell-off followed heavy losses in the United States and Europe overnight, which were caused by the Federal Reserve’s comments on Wednesday that the US economy faced ‘significant downside risks’, with the economy struggling with slow growth, high unemployment and a depressed housing market. However, most markets were off their earlier lows after G20 finance chiefs meeting in Washington promised to take collective action to stabilize the financial system. Moreover, Hong Kong shares had their worst week since October 2008, losing 9.2 percent as escalating fears of a global recession caused investors to cut riskier holdings.