Weakness mounts up at Dalal Street; broader indices buck the negative trend

Barometer gauges prolonging the southbound journey to the fourth consecutive session on Thursday have puffed up losses as worries that Europe's debt crisis could unleash financial chaos impelled investors to continue shedding riskier assets in favour of the relative safety of the dollar. Concerned over the reports stating the possibility of Greek voters rejecting the 130 billion euro bailout package, conditional on harsh austerity measures, which could lead to a disorderly default, with the fallout affecting European banks and ripple across the global financial system, mainly prompted the investor’s abandon risky equities. The leaders of France and Germany, angered at Greece's shock move to call a referendum on its latest bailout plan negotiated last week, told Prime Minister George Papandreou on Wednesday that Athens would not receive another cent in EU aid until it decides whether it wants to stay in the euro zone. 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. However, the Federal Reserve on Wednesday slashed 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. Meanwhile, the Asian shares too were depicting subdued trend. The US future indices continued to show a downtick in the screen trade.

Back home, market men also squared off their position post India’s service sector contracted for a second straight month 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, its lowest reading in two-and-a-half years and below the 50-mark which separates growth from contraction. It was at 49.8 in September. On the BSE Sectoral front, stocks from Realty, Power and Public Sector Undertaking counters staged optimistic moves, while stocks from Information Technology, TECk and Metal counters illustrated the underlying weakness of the bourses. 30 share barometer index- on Bombay Stock Exchange (BSE)-Sensex-declined over 50 points to trade below 17500 level. Similarly, 50 share index-Nifty-on NSE edging lower over 15 points was trading under 5300 level. However, the broader indices outpacing the frontline peers were up with gains of 0.15% each. 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 BSE Sensex is currently trading at 17,401.29, down by 63.56 points or 0.36%. The index has touched a high and low of 17,447.32 and 17,364.33 respectively. There were 11 stocks advancing against 19 declines on the index.

The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices gained 0.24% and 0.18% respectively.

The top gaining sectoral indices on the BSE were, Realty up by 0.75%, Power up by 0.66%, Public Sector Undertaking (PSU) up by 0.39%, Oil & Gas up by 0.26% and Healthcare (HC) up by 0.08%.

On the flip side, Information Technology down by 0.92%, TECK down by 0.56%, Metal down by 0.42%, Fast Moving Consumer Goods (FMCG) down by 0.33% and Auto down by 0.31% were the top losers on the index.

The top gainers on the Sensex were BHEL up by 2.12%, Tata Power up by 1.27%, SBI up by 0.97%, DLF up by 0.83%, and Jaiprakash Associates was up by 0.59%.

On the flip side, HUL down by 1.99%, Hero MotoCorp down by 1.78%, HDFC Bank down by 1.42%, Sterlite Industries down by 1.42% and TCS down by 1.20% were the top losers on the Sensex.

Meanwhile, with increasing pressure on the financial health of state-owned Oil Marketing Companies (OMCs), the Petroleum Minister, S Jaipal Reddy, has sought a meeting of the Empowered Group of Ministers (EGoM) to decide on increasing the prices of diesel, domestic LPG and kerosene due to the growing under-recoveries from the sale of the subsidized fuels.

Reddy said, the OMCs losses on the sale of diesel, domestic LPG and kerosene were increasing. The EGoM meeting would take place before the winter session of Parliament. The Parliament’s winter session is scheduled to start from November 22. The EGoM on fuel chaired by Finance Minister Pranab Mukherjee will need to review the prices of diesel, kerosene and domestic cooking gas.

Reddy said that the financial capacity of the oil retailers should not be overestimated. By adding further he said that their revenue losses because of selling petroleum products below the market price is expected to be around Rs 1,30,000 crore for this fiscal. However, oil minister agreed that the decision on pricing of LPG and diesel may not be easy.

In June 2010, the government decontrolled petrol prices, however, government kept its control on prices of diesel, kerosene and LPG, in order to protect common man from the impact of volatility in international crude and product prices. Whereas, diesel is used as primary fuel for transportation and any changes in diesel price will have impact on the inflation. On the sidelines, G.C. Chaturvedi, Petroleum Secretary said, ‘Oil companies are free to decide on petrol price.’ The OMCs are planning a possible increase in petrol prices. Oil companies are losing around Rs 1.5 a litre on petrol, to make up for this loss; oil companies are considering increasing petrol’s retail price by minimum of Rs 1.82 a litre. Currently, OMCs are losing around Rs 9.27 per litre on diesel, Rs 26.94 a litre on kerosene and Rs 260.5 on every LPG cylinder.

The S&P CNX Nifty is currently trading at 5,237.35, lower by 21.10 points or 0.40%. The index has touched a high and low of 5,253.2 and 5,226.70 respectively. There were 19 stocks advancing against 31 declines on the index.

The top gainers of the Nifty were RCom up by 2.44%, BHEL down by 2.31%, Reliance Infrastructure down by 1.43%, Tata Power up by 1.32% and PNB up by 1.11%.

On the flip side, SAIL and HUL were down by 1.91%, Hero MotoCorp down by 1.89%, HDFC Bank down by 1.55% and Sterlite Industries down by 1.42%, were the major losers on the index.

Most of the Asian counterparts were trading in the red; Hang Seng down by 0.98% to 19,540.28, Jakarta Composite down by 0.65%, KLSE Composite down by 0.65%, Straits Times down by 1.22%, Seoul Composite down by 1.36% and Taiwan Weighted down by 1.55%.

On the other hand, Shanghai Composite up by 1.04% remained the lone gainer among the Asian peers. However, stock markets in Japan remained closed for trade today in observance of a national holiday.