Post session - Quick review

Just when the faith appeared to be returning back to Dalal Street is when the bourses took a jolt, as the bourses once again dipping their heads into the water, ended fourth consecutive session in red. Forlorn over downgrade of Italy's credit rating overshadowed signs that Europe may reach consensus on measures to shield its banks from the sovereign-debt crisis, led investors to abandon risky assets, thereby sending the benchmark indices lower for the fourth consecutive session. Earlier in the trade, signs of European leaders stepping up efforts to prevent the region's sovereign debt crisis from triggering a full-blown banking crisis, led the Indian equity markets too scoop up some gains, however, later the gloomy scenario across the Asian pacific markets, too dusted the picture at Dalal Street. Further, even the seasonally adjusted HSBC Markit Business Activity Index, based on a survey of around 400 firms, which plunged in September to 49.8 -- its lowest reading since April 2009 -- and below the 50 mark which separates growth from contraction, confirmed the fears that the economy was slowing in light of global uncertainties.

On the global front, the S&P 500 brushed up against a bear market on Tuesday as investors rushed in to buy technology and other beaten-down sectors and stocks.  Meanwhile, Asian shares ended modestly higher on Wednesday, but buyers lacked conviction despite Wall Street's final-hour rally on Tuesday, as caution over the euro-zone debt crisis persisted. The US future indices pointed towards a disappointing close.

Back home, Aviation Stocks took off a safe flight following reports of the Department of Industrial Policy and Promotion (DIPP) writing to the aviation ministry asking the latter to allow foreign airlines to pick up stakes in domestic airlines. Jaunty with this news were shares of Kingfisher Airlines, Spicejet and Jet Airways India. Followed the similar suit were the stocks from Healthcare, Realty and Fast Moving Consumer Goods counters. However, biggest disappointment on Dalal Street were shares of Bankex, Consumer Durables and Public Sector Undertaking counters which taking a deep plunge were down and out with substantial loss. The 30 scrip sensitive index- Sensex- on BSE shedding close to 50 points ended sub 16k level. Meanwhile, the broadly followed 50 share index- Nifty-on NSE ended with the light shade of red, sub 4800 level. The broader indices had allured more losses than the frontline indices as they 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 1063:1652 while 128 scrips remained unchanged.

The BSE Sensex lost 79.82 points or 0.50% and settled at 15,785.04. The index touched a high and a low of 16,044.91 and 15,760.53 respectively. 15 stocks advanced against 15 declining ones on the index (Provisional)

The BSE Mid-cap index lost 1.06% while Small-cap index was down by 0.90%. (Provisional)

On the BSE Sectoral front, Health Care up 0.89%, FMCG up 0.65%, Realty up 0.49% and IT up 0.11% were the only gainers while, Bankex down 2.66%, PSU down 0.76%, Oil & Gas down 0.69%, Consumer Durables down 0.63% and Metal down 0.59% were the top losers.

The top gainers on the Sensex were JP associates up 4.08%, DLF up 3.11%, Tata Power up 1.81%, Sun Pharma up 1.71% and Coal India up 1.64%.

On the flip side, SBI down 4.23%, Hindalco down 4.13%, BHEL down 3.33%, Jindal Steel down 3.12% and ICICI Bank down 2.93% were the top loser on the index. (Provisional)
Meanwhile, the service sector, which account for India’s Gross Domestic Production (GDP), declined to its two year lowest level because of decline in new business orders and expectations weakened on the back of the sluggish global economic environment, a survey showed on October 5.

The HSBC India Composite Index, which include the manufacturing and service sectors, declined to 50.2 in September compare to 54.5 in August, which is lowest level of headline index since November 2008. Meanwhile, the seasonally adjusted Service Sector Business Activity Index also declined to the below 50 mark, to 49.8 in September compare to 53.8 in August. The below 50 level of service sector activity indicate a broad stagnation in the sector’s activity.

Commenting on the India’s Service PMI survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said, “The slowdown in growth has continued to broaden with the service sector seeing a further slowdown in economic momentum, especially for financial intermediation. Business activity was broadly unchanged from the previous month and new business is growing at a slower pace. Backlogs of work are still rising, however pace is slow and employment fell in response to the deceleration in new order growth as well as staff leaving because of unmet wage demands.”

The slowdown in global economy and increased cost of capital along with inflation have affected the pace of the new business orders in the manufacturing and service sectors, thus the growth rate of composite index is easing to the slowest from April 2009.

As per the survey, the employment during the month of September declined in both the sectors because of the weaker growth in output and new business orders. Input prices also surged in month of September. However, the rate of cost inflation was slowest compared to August. But the overall output prices surged for 28 successive months, while the rate of charge inflation slowed slightly, it was the second-strongest in over three years. The increase in service sector charges outpaced the rise in costs for the first time in the series history, survey showed.

The headline inflation measured by wholesale price index (WPI), has been hovering around the two digit mark, and for the month of August it surged to 9.78% compare to 9.22% in July. The current level of inflation is almost twice the comfort level of the Reserve Bank of India (RBI). To bring inflation back into its comfort zone, the RBI, have increased its key policy rates for 12 times since March 2010, as a result, the cost of capital have increased which is adversely affecting the pace of investment in economy.

However, inflation pressures remain firmly in place. While both input prices and prices charged grew at a slower pace, they stayed above the historical standards. “We are getting close to the end of RBI's tightening cycle, but we are not quite there yet”, Leif Eskesen added.

India VIX, a gauge for market’s short term expectation of volatility lost 4.89% at 35.37 from its previous close of 37.19 on Tuesday. (Provisional)

The S&P CNX Nifty lost 19.80 points or 0.41% to settle at 4,752.35. The index touched high and low of 4,827.80 and 4,741.00 respectively. 24 stocks advanced against 26 declining ones on the index. (Provisional)

The top gainer on the Nifty were, JP Associates up 4.38%, DLF up 3.24%, Sun Pharma up 2.48%, Dr. Reddys up 2.27% and Tata Power up 2.27%.

 On the other hand, SBI down 4.22%, Hindalco down 3.80%, BHEL down 3.40%, Jindal Steel down 3.23% and ICICI Bank down 2.82% were the top losers. (Provisional)

The European markets are trading in green, with France's CAC 40 up 2.60%, Germany's DAX up 1.95% and FTSE 100 up 1.46%.