Post session - Quick review

Barometer gauges after squandering away the entire session listlessly in red managed to gain some traction by the end of the trade thanks to the bargain buying which emerged at lower levels. Blue chip stocks which were available at attractive valuations post the four day’s slither of the bourses, mainly allured market men for enlarging their positions at the dying hours of the trade, which in turn pumped some strength into the frontline indices. Benchmarks managed to stage a modest close despite global jitters over the possibility of Greece exiting the euro zone, which prompted the investor’s to take a flight of safety across the board.

German and French leaders holding emergency talks on the eve of a Group of 20 summit in Cannes, France, withheld 8 billion Euros ($11 billion) of assistance. They warned Greece will surrender all European aid if it votes against a bailout package agreed last week to contain the crisis.

However, some market men also preferred to stay at the bay ahead of the G20 summit and a rate decision by the European Central Bank as they awaited Friday's key non-farm payrolls report after data released overnight showed U.S. private employers added more jobs than expected last month. Distress enveloped the local bourses right from the early deals after Federal Reserve on Wednesday slashing its forecast for growth, raised projections for unemployment and said it was mulling the possibility of buying more mortgage debt to spur a struggling recovery. At a news conference after a two-day meeting, Bernanke said buying more mortgage-backed securities was an option to help the economy and added that the U.S. central bank was still looking for ways to give clearer guidance on its policy path.

Indian equity markets put up a tough mask of resilience even after India's service sector contracting for a second straight month, tumbled to a 2 and a half month low in October, as new business grew at its weakest pace since May 2009. Dragged by sagging global demand and tight monetary policy, the seasonally adjusted HSBC Markit Business Activity Index, based on a survey of around 400 firms, slumped to 49.1 in October, below the 50-mark which separates growth from contraction. It was at 49.8 in September.

However, just when the market men felt that they digested all the negative news, India’s food inflation spiked up at a 9-month high in late October. India’s weekly food inflation measured by Wholesale Price Index (WPI), jumped to nine month high level at 12.21% for the week ended on October 22, compared to 11.43% in the last week. According to the data released by the Ministry of Commerce and Industry, the index for ‘Primary Articles’ which accounts for 20.12% of the WPI rose by 0.2% to 205.0 (Provisional) from 204.5 (Provisional) for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 12.08% (Provisional) for the week ended October 22 over as compared to 11.75% (Provisional) for the previous week. 

For the investors who indulged in bottom fishing, added the exposure of equities in their portfolio after reports stated that Greek Finance Minister Evangelos Venizelos opposed holding a referendum on the country's euro zone bailout package. Venizelos originally supported Papandreou's plan. His change of mind came after he attended an emergency summit in Cannes on Wednesday when the leaders of France and Germany made clear Greece would have to leave the euro zone if voters rejected the 130 billion euro loan package.

French President Nicolas Sarkozy and German Chancellor Angela Merkel indicated Greece's surprise referendum on the bailout plan, set for December 4, is also essentially a vote on whether it wants to remain in the eurozone.

Overnight on Wall Street, US stocks closed higher on Wednesday, after the Federal Reserve noted that the economy strengthened in the third quarter, while an industry report that stated better-than-expected jobs growth in October overshadowed brewing concerns over the euro zone debt crisis. Meanwhile, Asian shares too concluded the trade on an appalling note. In line with the expectation, European shares fell on Thursday after France and Germany told Athens it would not receive its next aid tranche until the referendum had passed, sparking fears Greece could default and the crisis could spread to larger economies.

Back home, volatility was witnessed to the fore during the dying hours of the trade as the benchmarks approaching the closing bell swung between red and green, however, last shot of short covering yanked the benchmarks higher, thereby snapping their three day’s losing streak. On the BSE Sectoral front, stocks from Power, Realty and Oil & Gas counters mainly led to the turnaround show. However, stocks from Information technology, Consumer Durables and Auto counters remained the laggards.

30 share barometer index- on Bombay Stock Exchange (BSE)-Sensex-despite adding over 15 points concluded the trade below 17500 level. Similarly, 50 share index-Nifty-on NSE puffing up marginal gains finished in the green zone. However, the broader indices settled on mixed note as stocks from midcap index preferred the downward trajectory, while that of Smallcap Index preferred the upward one. The overall market breadth on BSE was in the favour of advances which pounded declines in the ratio of 1119:862, while 116 shares remained unchanged. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1343:1458 while 120 scrips remained unchanged.

The BSE Sensex gained 47.79 points or 0.27% and settled at 17,512.64. The index touched a high and a low of 17,513.44 and 17,278.03 respectively. 16 stocks advanced against 14 declining ones on the index (Provisional)

The BSE Mid-cap index lost 0.02% while Small-cap index was up 0.05%. (Provisional)

On the BSE Sectoral front, Realty up 1.89%, Power up 1.71%, Oil & Gas up 1.21%, Capital Goods up 0.74% and PSU up 0.66% were the top gainers. On the flip side Consumer Durables down 0.65%, IT down 0.60%, Auto down 0.25%, FMCG down 0.19% and Metal down 0.16% were the top losers.

The top gainers on the Sensex were DLF up 4.71%, BHEL up 4.35%, Tata Power up 2.74%, JP Associates up 2.48% and Bharti Airtel up 2.26%.

On the flip side, HUL down 2.14%, Tata Motors down 1.59%, Sterlite down 1.46%, Tata Steel down 0.99% and Wipro down 0.92% were the top losers on the index. (Provisional)

Meanwhile, India’s service sector Purchasing Managers’ Index (PMI) moderated for the second successive month in October, as new business grew at its slowest pace since May 2009, on the back of slowdown in the global economy and tight monetary policy. The seasonally adjusted HSBC Markit Business Activity Index declined to 49.1 in October from 49.8 in September. October’s reading is the lowest reading in last two and half years and below the 50-mark which separates growth from contraction. On the other hand, manufacturing output improved slightly from September’s 30-month low.

Commenting on India services PMI survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said, ‘the momentum in the services sector eased further in October with business activity declining sequentially and new orders expanding at a slower clip. This reflects the lagged impact of the monetary policy tightening undertaken so far, although partly also reported strike action. By sector, the deceleration was led by financial services, renting and business services, and the broader 'other services' category.

The Reserve Bank of India (RBI), in order to control inflation, increased its key policy rates by 350 basis points or 3.5% since March 2010, which has increased the interest rates hence the cost of capital. However, headline inflation measured by Wholesale Price Index (WPI) has been hovering around two digit mark, for September inflation stood at 9.72% compared to 9.78% in August.

‘On the inflation front, there was some relief with both prices charged and input costs rising less rapidly, although the former are still climbing fast by historical standards. The numbers confirm some re-balancing between growth and inflation risks, supporting RBI's decision to signal a pause in the near term,’ Leif Eskesen said.

However, banks have been slow on passing the interest rate increase to borrowers, in a bid to help businesses which is worried that the debt crises in Europe which is one of the important export destination. However, in spite of slowdown in western economies, the survey showed that Indian service providers were more optimistic regarding coming year than last month as business expectations saw a rebound.

India VIX, a gauge for market’s short term expectation of volatility lost 0.92% at 24.66 from its previous close of 24.89 on Wednesday. (Provisional)

The S&P CNX Nifty gained 21.45 points or 0.41% to settle at 5,279.90. The index touched high and low of 5,281.60 and 5,201.85 respectively. 34 stocks advanced against 16 declining ones on the index. (Provisional)

The top gainer on the Nifty were DLF up 5.16%, BHEL up 4.83%, ACC up 2.81%, Reliance Infra up 2.73% and Tata Power up 2.69%. (Provisional)

 On the other hand, SAIL down 2.66%, IDFC down 2.34%, HUL down 1.87%, Tata Motors down 1.69% and Sterlite down 1.38% were the top losers. (Provisional)

The European markets are trading in green, with France's CAC 40 up 1.30%, Germany's DAX up 0.44% and FTSE 100 up 0.24%.