Post session - Quick review

Local equity markets prolonged the previous session’s melancholic mood on Tuesday as investors shied away from riskier equities after Greek Prime Minister George Papandreou reportedly said that a referendum will be held on the latest aid proposals for the debt-laden country, which in turn, fanned concerns over about the viability of a much-heralded plan to contain Europe's debt crisis, thereby quivering investor’s confidence across the board. The tattered confidence drove investor’s away from the equity market and prompted them to resort to the security of safe heaven instruments. Both barometer indices after squandering away listlessly in the red zone slipped further into red by the close of the session, although some short covering thereby led to marginal recuperation but the closing of the bourses remained heartrending. However, in earlier deals, although some positive came in the form of India’s manufacturing data but the attempt of revival by the barometer indices thereafter remained lackadaisical. Indian manufacturing after having virtually stalled in September, rebounded for the first time in six months during October, boosted by rising domestic orders for new business. The HSBC Markit India Manufacturing PMI rose to 52.0 from 50.4 in September, comfortably above the 50 mark which divides growth and contraction.

On the global front, overnight on Wall Street, US stocks ended October with steep losses as investors worrying about the collapse of the brokerage MF Global and missing details in Europe's plan to contain the Greek debt crisis scurried out of equities. Last week, MF Global’s debt was downgraded to junk status by ratings agencies concerned about its large holdings of European government debt. However, the Asian equities tumbled, with the regional benchmark index posting its biggest two-day drop in a month, as China’s manufacturing grew at a slower pace. Data on Tuesday showed that China's official Purchasing Managers Index fell to 50.4 in October compared with 51.2 in September, and undershot the median forecast of 51.7. The reading helped dampen sentiment in the region, as it placed an end to two consecutive months of increases, likely indicating that growth in manufacturing activity continued to slow as a result of Beijing's tightening measures and slowing global growth. Additionally, much in line with the expectation, the European too indices plunged on Tuesday, with banks taking a battering and the euro slumping as news that Greece will hold a referendum on the country's bailout package casted doubt over the deal's approval. Banks were hammered, as investors worried about the sector's exposure to sovereign debt. Disappointing earnings from Credit Suisse also weighed on the sector. The stock fell 9% after the bank reported net profit of 683 million Swiss francs for the third quarter, falling far short of analysts' expectations for 1.08 billion francs. The bank also said it will cut 3% of its work force and shrink its investment bank after revenue at the unit collapsed in the third quarter.

Back on the home turf, stock -specific activity wise, FMCG giant Hindustan Unilever, triggered by strong Q2 results extended Monday’s rally to hit a fresh record high on Tuesday. Meanwhile, Index heavyweight Reliance Industries also fell after the company refuted speculation that it is considering acquiring Valero Energy, Inc.  However, on the result front, Punjab National Bank rose over 3% on reporting decent earnings in Q2 September 2011. India's No. 2 state-run lender, posted a 12% rise in quarterly profit, handsomely beating estimates, as the bank earned more in interests. Bank’s net profit for the second quarter of the current fiscal stood at Rs 1205.03 crore as compared to Rs 1074.54 crore for the corresponding quarter of the previous fiscal. Meanwhile, stocks of cement major ACC- fell over 0.50% despite the company reporting decent Q3 numbers mainly on the back of EBITDA margin erosion. Group, on consolidated basis, clocked in a growth of 84.58% in its Q3FY12’s net profit at Rs 159.31 crore whereas the same stood at Rs 86.31 crore for the corresponding quarter of the previous fiscal.

Meanwhile, auto stocks hogged the limelight as the sector reported Q2 numbers. However, top car marker Maruti Suzuki ended in green despite the company sold less than half the cars in October as it did a year previously as labour unrest that cost around $500 million in lost production compounded a demand slowdown in Asia's third-largest economy. Maruti, ended almost two months of strikes last month, after losing production of over 80,000 cars and seeing its market share shrink to 40% from over 50% a year ago. Car market leader - Maruti Suzuki (India) sold a total of 55,595 vehicles, down by 53.20% as compared to 118,908 vehicles in October 2010. This includes 4,137 units of exports during the month. Although selling was witnessed across the board but the counters that remained the weakest links in the trade besides, Auto, were Realty, Bankex and Metal.

30 share barometer index- Sensex-tanking over 200 points ended tad above 17700 level. Meanwhile, 50 share index- Nifty- declining over 50 points concluded the trade way below the 5300 mark. The broader indices too ended in red with cuts of over 0.50% each. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1175:1626 while 104 scrips remained unchanged.

The BSE Sensex lost 213.97 points or 1.21% and settled at 17,491.04. The index touched a high and a low of 17,661.78 and 17,422.47 respectively. 7 stocks advanced against 23 declining ones on the index (Provisional)

The BSE Mid-cap index lost 0.69% while Small-cap index was down 0.57%. (Provisional)

On the BSE Sectoral front, there were no gainers while Realty down 1.80%, Auto down 1.80%, Bankex down 1.56%, Metal down 1.52% and Oil & Gas down 1.10% were the top losers.

The top gainers on the Sensex were HUL up 3.64%, Wipro up 2.39%, Bharti Airtel up 0.93%, Tata Power up 0.85% and Maruti Suzuki up 0.83%.

On the flip side, ICICI Bank down 3.82%, M&M down 3.38%, Sterlite down 3.33%, Tata Motors down 2.37% and Tata Steel down 2.25% were the top losers on the index. (Provisional)

Meanwhile, India’s manufacturing sector in October recovered for the first time in last six months on the back of improved conditions in the sector, which reflected rise in domestic orders for new business. The HSBC Markit India Manufacturing Purchasing Managers’ Index (PMI) increased to 52 in October from 50.4 in September. However survey said that the rate of growth was modest, but stronger than in last survey period.

The new order index, an indicator of future output increased after six successive declines. The factor output index also surged to 52.7 in October after declining for five consecutive months to 51.1 in September. As per the survey, the purchasing activities in manufacturing sector also increased in October compared to previous month. This increase in purchasing was in line with the strong growth of new orders and output.

However, in October, the input prices faced by the manufacturing in India increase considerably. The rate of cost inflation was broadly unchanged since September and strong in the context of historical data. Higher raw material and transport costs were the main drivers of the increase in costs. Output prices rose markedly, although the need to remain competitive limited the extent of the increase, the survey said.

Leif Eskesen, Chief Economist for India & ASEAN at HSBC said 'The Indian manufacturing sector rebounded in October, with rising orders pulling up output. Tight capacity is evident from rising backlogs of work, lengthening supplier delivery times and reported difficulties filling vacancies. Not surprisingly, input and output prices continued to rise at a rapid pace.'

The headline inflation measured by the Wholesale Price Index (WPI) stood 9.72% in September, which is marginally less from 9.78% in August. The headline inflation has hovering around two digit marks from December 2010 despite the Reserve Bank of India’s anti inflationary monetary policy stance. Since March 2010, the RBI has increased its repo and reverse repo rates for 13 times. But this non-stop hike in RBI’s key policy rates has affected the pace of investment into economy, hence the growth of industrial sector.

India VIX, a gauge for market’s short term expectation of volatility gained 6.00% at 24.02 from its previous close of 22.66 on Monday. (Provisional)

The S&P CNX Nifty lost 72.85 points or 1.37% to settle at 5,253.75. The index touched high and low of 5,310.85 and 5,238.30 respectively. 12 stocks advanced against 38 declining ones on the index. (Provisional)

The top gainer on the Nifty were, HUL up 3.13%, PNB up 2.06%, Wipro up 1.81%, BPCL up 1.42% and Maruti up 1.13%.

 On the other hand, ICICI Bank down 3.87%, M&M down 3.75%, Reliance Infra down 3.73%, Dr. Reddys down 3.69% and HCL Tech down 3.55% were the top losers. (Provisional)

The European markets are trading in red, with France's CAC 40 down 3.64%, Germany's DAX down 3.50% and FTSE 100 down 2.10%.

Renewed worries over the European debt crisis and a steep fall on Wall Street overnight dragged the Asian markets lower on Tuesday while the euro remained under pressure after suffering heavy losses overnight. After a shock announcement that Greece will hold a referendum on a new EU bailout deal for the debt-ridden country threw efforts to resolve the euro zone’s debt crisis into fresh doubt. Moreover, weaker-than-expected pick-up in China’s factory activity provided another excuse for selling, sending Hong Kong’s benchmark Hang Seng index down by about two and a half percent. The Purchasing Managers’ Index fell to 50.4 in October from 51.2 in September. Chinese manufacturing index in October was its slowest since February 2009, reminding investors of the risks to the world's second largest economy from sagging global growth.