Post session - Quick review

Indian equity markets prolonged its slothful trend even after taking a day’s break as slew of negative reports slaughtered the spirit of Dalal Street. Indian equity markets reacting indifferent to positive developments on the global front, continued to reel under intense selling pressure. However, this time around it was the macro-economic story of the country that bothered investor’s, who lacking conviction into the momentum of the bourses pressed sales amidst lack of any significant upside trigger.  Meanwhile, investor’s on the global front were in celebration mood following signs of progress in debt-plagued Europe - a successful bond sale in Italy and the naming of a leader in Greece. Investors were calmed by news that Greece - which is struggling to pull back from the brink of bankruptcy - had named Lucas Papademos, a respected economist, as its new prime minister on Thursday. Another sign of stability came after Italy was able to borrow $6.8 billion at lower interest rates than analysts expected. On Wednesday, Italy’s 10-year bond yields shot up alarmingly, stoking panic in financial markets that the country was heading toward a Greece-style debt crisis. Confidence was also boosted by the prospect of economist Mario Monti replacing Italian Premier Silvio Berlusconi, who has been viewed as an obstacle to meaningful economic reform.  Back home, sentiment at Dalal Street in early trade was also spooked by the result of India’s biggest steel producer-Tata Steel- which reported 89% drop in fiscal second-quarter group profit at Rs 212.43 crore as compared to Rs 1978.81 crore for Q2FY11 on the back of waning demand, foreign-exchange losses and higher raw material costs at its European operations.  Meanwhile, shares of airline Kingfisher Airlines also rattled Dalal Street as the stocks of the Airline Company dropped more than 17% after media reports stated that 130 of company’s pilots had resigned after the cash-strapped carrier cancelled over 35% of its scheduled flights on Thursday. Additionally, Investors also dumped DLF, India's largest listed real estate developer, after the company reported an 11% fall in profit for the quarter to end-September.

However, benchmark indices mainly turned jittery post India’s industrial output after growing at its slowest pace in two years, sagged to 1.9% in September as against 4.1% in August, thereby providing further evidence of deceleration in the economy and raising the odds of a pause in the RBI's 20-month-old policy tightening cycle. The drag in the index of industrial production was led by a contraction of nearly 6 percent in mining, 7% in capital goods and 1.3% in consumer non-durables. Meanwhile, the weekly inflation numbers too could not tranquil the worried nerves. India’s weekly food inflation measured by the Wholesale Price Index (WPI), eased to 11.81% for week ended on October 29 compared to 12.21% in the last week. This decline in food inflation after four successive increases came mainly on the back of decline in prices of decline in vegetables, wheat, onion and poultry products.

However, just when the market seemed to have digested all odds, India’s Deputy Chairman of India's Planning Commission Montek Singh Ahluwalia, post the release of September IIP data said that he was concerned about a recent growth slowdown. He stated that, “India's economy could grow between 7.6% and 8% in the fiscal year to March 2012”.

On the global front, overnight on Wall Street, US equity markets saw some buying post US jobless claims fell to lowest in seven months. Jobless claims fell by 10,000 to 390,000 in the week ended November 5, against expected 400,000. However, the European shares drifted higher on Friday on expectations that some political developments in highly-indebted Italy and Greece could pave the way for tough austerity measures that are crucial to contain the region's two-year-old debt crisis. The Italy's Senate is set to vote on the package later in the day, with former European Commissioner Mario Monti emerging as favourite to replace Prime Minister Silvio Berlusconi. Meanwhile, in Greece, Prime Minister designate, Lucas Papademos, will name a new crisis cabinet to roll out austerity plans.

Back on the home turf, 30 share barometer index on BSE-Sensex- did see slight recovery in the dying hours of trade as some short covering emerged at lower level, however, the index tanking over a 150 points shut shop below 17200 marks.  In a similar fashion, 50 share barometer index on NSE-Nifty- plunging over 50 points concluded the trade above 5100 mark. The broader indices too witnessed some destruction.

The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 955:1903 while 103 scrips remained unchanged.

The BSE Sensex lost 150.75 points or 0.87% and settled at 17,211.35. The index touched a high and a low of 17,279.23 and 17,096.84 respectively. 11 stocks advanced against 19 declining ones on the index (Provisional)

The BSE Mid-cap index lost 1.07% while Small-cap index was down 1.55%. (Provisional)

On the BSE Sectoral front, Oil & Gas was up 0.96%, Auto up 0.69%, Health Care up 0.23% and FMCG was up 0.08% were the gainers while Bankex down 2.94%, Realty down 2.32%, Metal down 2.29%, Capital Goods down 2.23% and Consumer Durables down 1.45% were the top losers. (Provisional)

The top gainers on the Sensex were M&M up 2.88%, Sun Pharma up 2.72%, RIL up 2.45%, Bajaj Auto up 2.11% and Hero MotoCorp up 2.01%. (Provisional)

On the flip side, Hindalco down 4.35%, Tata Steel down 4.06%, ICICI Bank down 3.90%, SBI down 3.62% and L&T down 3.23% were the top losers on the index. (Provisional)

Meanwhile, India’s Index of Industrial Production (IIP) for month of September 2011 grew at its slowest pace in last two years, confirming the slowdown in economic activities because of the high inflation and continuous hike in Reserve Bank of India’s (RBI’s) key policy rates. As per the data released by the Ministry of Statistics & Programme Implementation, growth in industrial production measured by the IIP stood at 1.9% in September 2011 compared to 6.1% in September 2010. During the first half of current financial year, IIP growth stood at 5% compared to 8.2% in the April to September 2010.

The Indices for the Mining, Manufacturing and Electricity sectors for the month of September 2011 stood at 111.0, 175.7 and 144.1 respectively, with the corresponding growth rates of (-)5.6%, 2.1% and 9.0% as compared to September 2010. The cumulative growth in the three sectors during April-September, 2011-12 over the corresponding period of 2010-11 has been (-)1.0%, 5.4% and 9.4% respectively, which moved the overall growth in the General Index to 5.0%.

During September, in terms of industries, 15 out of the 22 industry groups in the manufacturing sector have shown positive growth as compared to the corresponding month of the previous year. The industry group ‘Radio, TV and communication equipment & apparatus’ has shown the highest growth of 25.0%, followed by 19.0% in ‘Other transport equipment’ and 16.6% in ‘Office, accounting & computing machinery’. On the other hand, the industry group ‘Electrical machinery & apparatus n.e.c.’ has shown a negative growth of 27.7% followed by 8.2% in ‘Furniture; manufacturing n.e.c.’ and 8.1% in ‘Wearing apparel; dressing and dyeing of fur’. As per Use-based classification, the growth rates in September 2011 over September 2010 was 4.5% in Basic goods, (-) 6.8% in Capital goods and 1.5% in Intermediate goods. The Consumer durables and Consumer non-durables have recorded growth of 8.7% and (-) 1.3% respectively, with the overall growth in Consumer goods being 3.5%.  Some of the important items of capital goods showed high negative growth during the current month,contributing to the low growth of the overall index for the month include ‘Cement Machinery’  (-) 70.4%, ‘Sugar Machinery’ (-) 63.8%, ‘Cable, Rubber Insulated’ (-) 45.3% and ‘Relays, Fuses and Switchgears’ [(-) 30.0%]. However, some important items of the capital goods are also showing significant growth. These are:  ‘Conductor, Aluminium’ (45.0%), ‘Earth Moving Machinery’ (44.9%), ‘X-ray equipment’ (35.0%) and ‘Tractors’ (30.4%). The other important items showing growth during the month are: ‘Fruit Pulp’ (90.6%), ‘Paraxylene’ (64.0%), ‘Stainless/ alloy steel’ (63.3%), ‘Woollen Carpets’  (61.9%), ‘Linear low density polyethylene’ (58.9%), ‘Tanned or Chrome Skins and Leathers’ (58.1%), ‘Steel Castings’ (48.0%), ‘Petroleum Coke’ (44.6%), ‘Scooter and Mopeds’ (33.0%), ‘Marble Tiles/Slabs’ (32.3%), ‘Polythene Bags including Hdpe & Ldpe Bags’ (31.5%) and ‘Telephone Instruments Including Mobile Phone And Accessories’ (31.1%).   Meanwhile the government ha also revised the IIP growth figures for August. After the downward revision it stood at 3.6% from the provisional estimate of 4.1%. This downward revision has raised concern for policy makers and industry. Experts are of the view that IIP growth may further decrease as the global economic condition remains unfavorable, while high inflation had made RBI to maintain its anti-inflationary stance.    

However, the RBI expects inflation to start subsiding from December and to moderate to 7% by the end of the March 2012, which may help it to take a pause in rate tightening cycle after increasing interest rates for 13 times since March 2010 to control headline inflation which is hovering above 9% for nearly a year.

India VIX, a gauge for market’s short term expectation of volatility gained 1.81% at 24.74 from its previous close of 24.30 on Wednesday. (Provisional)

The S&P CNX Nifty lost 46.05 points or 0.88% to settle at 5,175.00. The index touched high and low of 5,198.60 and 5,142.25 respectively. 19 stocks advanced against 30 declining ones while 1 stock remained unchanged on the index. (Provisional)

The top gainer on the Nifty were M&M up 3.20%, Sun Pharma up 2.74%, RIL up 2.64%, Bajaj Auto up 1.81% and Hero MotoCorp up 1.63%. (Provisional)

On the other hand, Axis Bank down 5.06%, Hindalco down 4.31%, ICICI Bank down 4.19%, Tata Steel down 3.81% and SBI down 3.59% were the top losers. (Provisional)

The European markets are trading in green, with France's CAC 40 up 0.58%, Germany's DAX up 0.41% and FTSE 100 up 0.32%.

A day after suffering a huge sell-off over Italy’s growing debt crisis, a successful bond auction in Rome provided some respite to the investors’ sentiments and most of the Asian stock markets ended modestly higher on Friday. Rome was also able to complete a successful sale of five billion Euros ($6.81 billion) of 12-month treasury bills, suggesting there was still some confidence in the economy. Moreover, better-than-expected US unemployment report too underpinned sentiments. Data on Thursday showing US jobless claims fell to a 7-month low contributed to some easing of risk aversion.

Hong Kong shares closed about a percent higher, with traders welcoming signs of progress in Europe on addressing the debt crisis and on bargain hunting after the previous day's huge losses while, Taiwan stocks ended up 0.80 percent, led by tech heavyweights Hon Hai and TSMC following strong sales results for October.