Post session - Quick review

Local equity markets prolonging previous session’s somber mood traded weak on Wednesday, however this session, volatility and losses both were magnified.  The initial optimism seen at the dawn of the trade after humiliated Italian Prime Minister announced his resignation, which paved way for the euro zone's third-biggest economy to enact much-needed reforms aimed at quelling its debt debacle, vanished rapidly off Dalal Street. Berlusconi is the second political casualty of the European debt crisis. In Greece, a new interim government -that won’t be led by the current Prime Minister George Papandreou-was to be announced on Wednesday. New leadership was needed for the passage of a controversial austerity plan in Parliament that would entitle debt-riddled Greece to a Euro 130 billion ($179 billion) European rescue package. 

Back home, Investor’s being more apprehensive about the grim outlook engulfing both Greece and Italy and with those countries' borrowing costs showing no signs of easing, pressed sales on every small uptake. The barometer gauges after getting a lackadaisical start to the truncated week, lost some more ground on the second trading session of the week despite positive global developments, however, this time around it was the country’s macro-economic story that haunted the bourses to crack. Some optimism to the bourses also came to the bourses at the dawn of the trade from China, with the release of data showing the country's stubbornly high inflation fell in October as rapid rises in food costs eased. The decline was seen positively by investors as it gives Beijing more room to stimulate China's economy. China's annual inflation rate eased to 5.5% in October from 6.1% in September for a third straight month of decline from July's three-year peak.

However, the bourses slipped back into the red zone as Moody's Investor Service on Wednesday downgraded its outlook for India's banking system to "negative" from "stable", as it warned of slowing growth at home and overseas hitting asset quality, capitalization and profitability. "With asset quality, given the tightening environment, we anticipate that it will deteriorate over the next 12-18 months, thereby causing an increase in provisioning needs for the banks in FY2012 and FY2013," Vineet Gupta, Moody's vice-president and senior analyst, was quoted as saying in the statement. To a knee jerk reaction to this, banking shares dived into the sea of red, thereby drowning the entire banking barometer gauge to the bottom with grave loss of over 2.50%. However, followed the suite were the stocks from another rate sensitive- Realty, Metal and Oil & Gas.

Meanwhile, corporate earnings also took some sheen off the market. As stocks of country's top lender, SBI which initially too the markets by surprise by posting a growth of 12% in its September quarter of FY12, however, the stocks plunged over drastic 6% after a rise in non-performing assets battered investor confidence. Net non-performing assets at SBI, which controls about a quarter of Indian bank loans and deposits, increased to 2.04 percent of total assets at the end of September from 1.7 percent a year earlier.

However, Godrej Industries too tripped off by 0.05% on profit booking. The stocks after standing tall for the almost entire session succumbed to selling pressure in the dying hours of trade. Godrej Industries reported 20% growth in profit at Rs 93 crore for the quarter ended September 30, compared to the corresponding quarter last year as all verticals of the Group did healthy business.

Meanwhile, stocks of Glenmark Pharmaceuticals too surrendered over 0.50% as the group’s net profit for the second quarter of the current fiscal decreased by 35.17% at Rs 55.86 crore as compared to Rs 86.17 crore for the corresponding quarter of the last year. Additionally, shares of Ranbaxy Laboratories too were a big disenchantment as the stock lost over 4% after the company reported net loss in its Q3. The group reported a consolidated net loss of Rs 464.6 crore in Q3 September 2011 compared with net profit of Rs. 307.9 crore in Q3 September 2010. Ranbaxy Laboratories' consolidated sales rose 7.82% to Rs. 2028 crore in Q3 September 2011 over Q3 September 2010. In a press release Ranbaxy said that the company's profitability below EBITDA line was impacted adversely owing largely to the requirement to mark-to-market (MTM) the long dated derivative transactions entered into by the company in earlier years and which remain currently outstanding as well as on the forex denominated loans.

On the global front, overnight on Wall Street, US markets ended higher for second day on Tuesday. The Dow Jones industrial average gained 101.79 points, or 0.84 percent, to 12,170.20. The Standard and Poor’s 500 closed higher by 14.80 points, or 1.17 percent, to 1,275.92, while the Nasdaq composite gained 32.24 points, or 1.20 percent, to 2,727.49. Meanwhile, most of the Asian shares too staged a positive close. However, the European indices dropped on Wednesday following a short-lived rally that had been sparked by Italian Prime Minister Silvio Berlusconi's pledge to step down, as simmering fears over the country's debt pile kept investors on edge.

 The 30-share BSE index sinking over 200 points concluded the trade above the 17500 level.  In the similar fashion, the wide-based National Stock Exchange Nifty Index too losing over 50 points finished the trade sub 5300 level. Meanwhile, the broader indices too surrendering to the selling pressure were down and out with substantial cuts. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1041:1810 while 123 scrips remained unchanged.

The BSE Sensex lost 229.37 points or 1.31% and settled at 17,340.16. The index touched a high and a low of 17,658.34 and 17,331.23 respectively. 5 stocks advanced against 25 declining ones on the index (Provisional)

The BSE Mid-cap index lost 1.36% while Small-cap index was down 1.13%. (Provisional)

On the BSE Sectoral front, FMCG was up 1.19% and IT was up 0.42% were the only gainers while Bankex down 2.85%, Realty down 2.83%, Metal down 2.72%, Oil & Gas down 2.30% and PSU down 2.22% were the top losers.

The top gainers on the Sensex were HUL up 2.84%, Wipro up 2.07%, TCS up 1.68%, Hero MotoCorp up 0.77% and ITC up 0.76%.

On the flip side, SBI down 7.24%, Tata Steel down 4.27%, Hindalco down 4.22%, DLF down 3.94% and Maruti Suzuki down 3.74% were the top losers on the index. (Provisional)

Meanwhile, the slowdown in economic activities has affected the revenue collection of the government. The indirect tax collections during October 2011 declined by 2.5% to Rs 30,278 crore compared to Rs 31,058 crore in October 2010. As per the finance ministry official, during October 2011, collections from customs plunged by 11.6% to Rs 11,357 crore from Rs 12,849 crore in October 2010. The central excise collections also declined by 5.3% to Rs 10,527 crore in October 2011 from Rs 11,120 crore in same period of last year.

Earlier in June 2011, the government had slashed customs and central excise duties to give relief to common man from the hike in petrol prices. The slash meant an annual loss of Rs 49,000 crore to the government. It was reported that the decline in the total indirect tax collection in October would have been much sharper but for the 18.4% growth in realization from service tax. During October 2011, the service tax collection increased to Rs 8,394 crore to Rs 7,089 crore in October 20120.
 
However, in the first seven months of the current financial year, indirect tax collection increased by 17.8% to 2.01 lakh crore from 1.70 lakh crore in April-October 2010. The surge in revenue collections was on the back of higher collections from customs, central excise and service tax which increased by 16.6%, 10.6% and 33.6%, respectively. In April-October 2011, custom collection was Rs 86,156 crore compared to Rs 76,895 crore in the corresponding period of last fiscal, central excise at Rs 69,511 crore from Rs 62,838 crore and service tax surged to Rs 45,391 crore from Rs 33,977 crore. 

The government is aiming an 18% y-o-y increase in indirect tax collection at Rs 3.98 lakh core for 2011-12. However, experts are of the view that in the remaining months of current financial year, indirect tax collections may experience decline because of the slowdown in industrial activities and the government’s decision of reducing duties on petroleum products to partly offset the impact of increase in price on consumers. 
India VIX, a gauge for market’s short term expectation of volatility gained 2.48% at 24.30 from its previous close of 23.71 on Tuesday. (Provisional)

The S&P CNX Nifty lost 74.45 points or 1.41% to settle at 5,214.90. The index touched high and low of 5,317.50 and 5,211.75 respectively. 7 stocks advanced against 42 declining ones while 1 stock remained unchanged on the index. (Provisional)

The top gainer on the Nifty were, HUL up 3.30%, Wipro up 1.81%, TCS up  1.79%, Hero MotoCorp up 0.73%  and ITC up 0.59%.

 On the other hand, SBI down 7.20%, BPCL down 5.71%, Tata Steel down 4.40%, DLF down 4.39% and Hindalco down 4.29% were the top losers. (Provisional)

The European markets are trading in red, with France's CAC 40 down 1.94%, Germany's DAX down 1.48% and FTSE 100 down 1.14%.

Most of the Asian equity indices snapped the day’s trade in the positive terrain on Wednesday as investors cheered plans by Italian Prime Minister Silvio Berlusconi to resign as a step toward resolving crippling debt problems in Europe. Moreover, cooling inflation in China gave some banking and property shares a boost and also underpinning Hong Kong shares. Consumer Price Index, showed inflation in the world second largest economy rose 5.5% in October from a year earlier, slower than a 6.1% on-year rise in September. Lower inflationary pressure leaves room for further policy fine-tuning. The People Bank of China has already marginally loosened liquidity by open market operations in October.