Post session - Quick review

Local bourses, biting into most of the recent rally, ended in red as investors chose to remain on sidelines at higher levels. “Risk aversion” remained the theme of the day as the investor’s hesitated from fresh buying after witnessing bourses best in 6 weeks performance in the previous session. Although the previous session’s optimism spilled over in the fresh week as investors waded into local equities, early in trade after Group of 20 officials over the weekend endorsed parts of a plan to contain Europe’s crisis.  But the rally soon fizzled out as lack of conviction from investor’s drove them away from the risky equity markets. Worries about Europe’s debt problems eased following a meeting of Group of 20 finance chiefs over the weekend in Paris. The group opened the door for the International Monetary Fund to play a bigger role in fighting the escalating debt troubles among countries that use the euro common currency. It also said euro zone ministers will “decisively address the current challenges through a comprehensive plan” to be unveiled on October 23.

Brushing aside the positive global cues, local bourses showcased disconnected trend. On the global front, US stocks scored their first back-to-back weekly gains since early July on Friday, on strong Google earnings, and as investors kept riding the optimism for a solution to the euro zone's debt crisis. Sentiment at Wall Street also brightened after stronger retail sales data in the U.S. Retail sales, a key barometer of consumer spending, recorded the biggest gain in seven months in September and double what economists were expecting. The data added to signs that the world’s biggest economy may avoid another recession. Meanwhile, Asian shares too keeping the uptrend alive, posted the biggest weekly gain since March amid rising confidence that European policy makers would act to tame the region’s debt crisis amidst speculation that China would boost support for its equity market.

However, even the European markets failed to provide any impetus to the Indian equity markets despite opening in green. European stocks rose early on Monday, extending their brisk rally into a third week as investors rushed back into equities on mounting expectation that a bold plan to fight the euro zone debt crisis would be sketched  next weekend's European Union summit.

Back home, what sucked into the gains of the bourses was the drag of the Index heavyweight- Reliance Industries- which dropped over 2% after unveiling its Q2 results on Saturday. Energy major Reliance Industries posted its highest ever quarterly net profit on Saturday on higher refining margins and other income, but analysts focused on slowing gas output and said refining margins were still below expectations. The company’s net profit for the second quarter rose 15.84% at Rs 5703.00 crore as compared to Rs 4923.00 crore for the corresponding quarter last year. Stocks of the Market bellwether were also seen in pressure post Asia's leading brokerage and investment group downgraded its rating. CLSA downgraded Reliance Industries to 'outperform' from 'buy' and cut target price to Rs 950 from Rs 960 citing premium to global peers and weak gross refining margins (GRM). Meanwhile, shares of country's largest commercial vehicle maker Tata Motors bucked the trend, gained nearly 6% on the back of fund based buying. Tata Motors turned biggest gainer among large caps, post very strong global sales data in September due to new launches like Land Rover Evoque and Jaguar XF doing well in main market of UK. Among financial stocks, ICICI Bank and SBI rose 1% each. Axis Bank jumped 2%, while HDFC Bank gained 0.44%. Buying was also witnessed in stocks from Auto, Consumer Durable and Realty counters.  However, the major pocket of weakness remained the stocks of the Oil & Gas, Capital Goods and  Power counters, which tumbling over 1.50%, yanked the bourses lower.

On the result front, two biggies reported their numbers. Firstly, the Television channel operator --Zee Entertainment Enterprises-reported its Q2 results. The stocks of the company gained close to 1% after the company reported 27% surged in to Q2 consolidated net profit which came at Rs 159.97 crore as compared to Rs 126.30 crore for the similar quarter of 2010. However, the company’s standalone net profit after tax for the quarter declined by 24.72% at Rs 118.60 crore as compared to Rs 157.56 crore for the quarter ended September 30, 2010.

Secondly, India's biggest mortgage company --Housing Development Finance Corporation (HDFC), reported unaudited results for the quarter ended September 30, 2011.The Company ‘s profit after tax for the quarter ended September 30, 2011 soared by 20.20% at Rs 970.70 crore as compared to Rs 807.54 crore for the quarter ended September 30, 2010.

The 30-share Bombay Stock Exchange benchmark Sensex despite surrendering over 50 points ended over 17k level. The Meanwhile, the 50-share National Stock Exchange benchmark-ending in the red zone, settled near to its neutral line which no substantial losses or gains. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1309:1438 while 120 scrips remained unchanged.

The BSE Sensex lost 59.47 points or 0.35% and settled at 17,023.22. The index touched a high and a low of 17,188.55 and 16,928.38 respectively. 18 stocks advanced against 12 declining ones on the index (Provisional)

The BSE Mid-cap index lost 0.03% while Small-cap index was up 0.19%. (Provisional)

On the BSE Sectoral front, Auto up 1.54%, Consumer Durables up 1.31%, Realty up 0.60%, Bankex up 0.49% and FMCG up 0.19% were the top gainers while, Oil & Gas down 2.31%, Capital Goods down 1.43%, Power down 1.24%, PSU down 0.71% and TECk down 0.51%.

The top gainers on the Sensex were Tata Motors up 4.34%, Maruti Suzuki up 2.71%, DLF up 1.68%, Sterlite Industries up 1.39% and Bajaj Auto up 1.29%.

On the flip side, RIL down 4.00%, NTPC down 2.89%, JP Associates down 2.31%, BHEL down 2.20% and L&T down 2.05% were the top losers on the index. (Provisional)

Meanwhile, the finance ministry is considering raising the limit of foreign investment in bonds of infrastructure companies from the current $5 billion after a new liberal rule prompted a rush for such paper at an auction early this month. The ministry, which had earlier reduced the lock-in-period for foreign institutional investors (FIIs) in August, is now likely to take up the proposal with the Reserve Bank of India (RBI) soon as it wants to push up capital inflows when other sources of funds are fast drying up on the back of the global crisis.

FII bids for Rs 22,500 crore ($5 billion) worth of bonds of infrastructure companies had crossed Rs 35,000 crore at an auction on October 7, the first after the introduction of the new rules. On this a finance ministry official said, ‘the response has been spectacular, it shows that there is desire for such paper and the changes made in the framework have helped.’

In the 2011-12 budget, limit for FII investment in long-term bonds issued by infrastructure companies were raised from $5 billion to $25 billion. However, FIIs invested just Rs 600 crore by August, prompting a revamp of the scheme. In the revised scheme, the government has set aside $5 billion for bonds floated by infrastructure companies on more liberal terms than those available for investment in regular corporate bonds. The lock-in period and residual maturity was reduced to one year from three years and FIIs were allowed to trade among themselves even in that one-year lock-in period.

In addition, $3 billion was set aside for infrastructure debt funds while leaving $17 billion for others. Foreign investors may have been hesitant to block funds in the current uncertain global scenario despite the attraction of high interest rates and the probability of rupee appreciating from the current levels. So the shorter lock-in and investment horizon seems to have clicked.

34 bidders staged up the entire limit with bids going from 8.01 basis points to 13 basis points. A total of 65 FIIs had put in bids worth Rs 34,711 crore. Since the government caps foreign investment in debt, capital market regulator allocates the entire limit among FIIs through a competitive bidding, limiting one bidder to a maximum of Rs 2,000 crore.

India needs a projected $1 trillion for infrastructure during the 12 five-year plan. The finance ministry is eager to raise more funds for infrastructure and increase capital inflows amid worries over a possible rise in the current account deficit. The government had earlier raised the limit for FII investment in long-term bonds of infrastructure companies to open new channel of funding for the infrastructure sector and to facilitate the emergence of a vibrant corporate bond market.
India VIX, a gauge for market’s short term expectation of volatility lost 2.11% at 25.43 from its previous close of 25.98 on Friday. (Provisional)

The S&P CNX Nifty lost 14.05 points or 0.27% to settle at 5,118.25. The index touched high and low of 5,160.20 and 5,084.50 respectively. 22 stocks advanced against 27 declining ones while 1 stock remained unchanged on the index. (Provisional)

The top gainer on the Nifty were, Tata Motors up 4.42%, Cairn up 3.73%, Ambuja Cement up  2.65%, Maruti up 2.38%  and DLF up 2.12%.

 On the other hand, RIL down 3.90%, BPCL down 2.97%, SAIL down 2.96%, NTPC down 2.89% and BHEL down 2.43% were the top losers. (Provisional)

The European markets are trading in green, with France's CAC 40 up 0.37%, Germany's DAX up 0.79% and FTSE 100 up 0.77%.

All the Asian equity indices finished the day’s trade in the positive terrain on Monday where major indices snapped the session with a gain of over a percentage point led by improved US retail sales and news that Europe vowed to its G20 partners at the weekend to take swift action on tackling its debt crisis. Meanwhile, Nikkei rose to a six-week high, with a gain of one and a half percent, helped by hopes for corporate earnings and expectations that Europe will come up with a plan to contain its debt crisis. Moreover, Hong Kong remained the biggest gainers among the Asian peers up by over two percent, with some of the more battered issues leading the recovery from the rout in the last quarter as investors took on more risk, underpinned by hopes that China GDP data expected on Tuesday would dent fears of a slowdown in the world's second-largest economy.