Selling at Dalal Street accelerates on back of brewing Italy debt woes

Selling at Dalal Street has gained momentum as barometer indices after opening on a sedate note, have knocked off additional points. Traders reluctance to invest in risky equities mainly on the back of simmering concerns over Italy’s ability to ever grow robustly enough to repay its massive debts, has mainly led to the lull into the equity markets. However, Asian pacific stocks too are toiling under pressure amidst concern Italy’s new government will struggle to trim its debt and keep Europe’s crisis from spreading as Italian Prime Minister-designate Mario Monti prepared to form a new government to tame the debt crisis after the country’s 10- year bond yields resumed a climb above 7 percent. Italian government on Monday sold five-year bonds at 6.29 percent interest - the highest interest rate since 1997. Italy paid a much lower rate of 5.32 percent at a similar auction only last month. Overnight, on Wall Street, US stocks markets closed marginally higher on Tuesday after data on retail sales showed Americans spending more on autos, electronics and building supplies in October -the fifth straight month of increases. Sales increased 0.5 percent from the previous month, a faster rate than economists expected and the latest indication that the U.S. economy is likely to avoid another recession. However, Europe's debt woes continued to weigh on markets. Back home, selling was witnessed across all the 13 sectoral indices, however, stocks from Capital Goods, Oil & Gas and Power played the major malice behind the downfall of the bourses. Stocks from TECk, FMCG and CD, however, were the counters that were down with mild losses. Aviation Stock- Kingfisher Airlines was flying high over 3% after chief financial officer of UB Group, Ravi Nedungadi, reported that it had been approached by strategic investors. However, Reliance Industries who is much in speculation for picking up a stake through a preferential offer by the carrier, refuted the same. 30 share barometer sensitive index-Sensex- on BSE crushed over 150 points to trade below 16900 level. While the 50 share widely followed index- Nifty-on NSE-lost over 50 points to trade sub 5100 mark. However, the broader indices were down with intense cuts of over 1%. The overall market breadth on BSE was in the favour of declines which thumped advances in the ratio of 1619:621, while 77 shares remained unchanged.

The BSE Sensex plunging by 152.57 points or 0.90% is currently trading at 16,730.10. The index has touched a high and low of 16,872.30 and 16,706.11 respectively.  9 stocks were advancing against 21 declining ones on the index.

The broader indices too lost substantial traction; the BSE Mid cap and Small cap indices declined by 1.20% and 1.26% respectively.

Selling was witnessed across the space, however, stocks from Capital Goods down by 3.87%, Oil & Gas and Power down by 1.96%, Public Sector Undertaking down by 1.19% and Metal down by 1.06% featured in the worst list of the performers.

M&M up by 2.04%, Cipla up by 1.08%, Bharti Airtel up by 1.07%, SBI up by 0.96% and ONGC up by 0.79% were the top gainers on 30 share index- Sensex.

On the flip side, BHEL down by 5.14%, L&T down by 4.03%, Jaiprakash Associates down by 3.28%, Hero MotoCorp down by 2.93% and Wipro down by 2.84% were the top losers on the index.

Meanwhile, Indian companies’ foreign direct investments (FDI) outflow declined by 40% in the month of October to $2.06 billion compared to the $3.46 billion outflow in September, as per the data released by Reserve Bank of India (RBI). The RBI release also showed that as many as 330 overseas investment transactions were carried out by various companies in October and Cox and Kings and Tata Communications emerged as the major overseas investors.

Cox and Kings India, which committed $280.56 million in its UK-based wholly owned subsidiary (WoS) -- Prometheon Holdings (UK), also made five other investments worth a total of over $8.05 million in its WoSs, based in Honk Kong, Singapore, the UK and Japan. Also, Tata Consultancy Services has committed $48.92 million in its UK-based joint venture Diligenta while another Tata Group firm, Tata Communications committed $162.5 million in its Singapore-based WoS, VSNL International Pte.

In the period between April and October, the outward FDI stood at $21.07 billion. While Indian companies are spreading their overseas footprints, the FDI inflows in the April-September (latest data available), too, went up by a huge 74% to $19.13 billion from $11 billion in the corresponding period last year.

The S&P CNX Nifty is currently trading at 5,018.15, lower by 50.35 points or 0.99%. The index has touched a high and a low of 5,059.10 and 5,010.55 respectively.  There were 11 stocks advancing against 39 declining one’s on the index.

The top gainers of the Nifty were M&M up by 2.02%, RCom up by 1.36%, Bharti Airtel up by 1.10%, SBI up by 0.99%, and Cipla up by 0.93%.

On the flip side, BHEL down by 5.30% SAIL down by 5.00%, BPCL down by 4.41%, L&T down by 4.06% and GAIL down by 4.06%, were the major losers on the index.

All the Asian equity indices were trading in the red; Shanghai Composite plunged 1.73%, Hang Seng lost 1.94%, Jakarta Composite declined 0.83%, KLSE Composite down by 0.10 points, Nikkei 225 descended 0.68%, Straits Times was down by 0.60%, Seoul Composite shed 0.85% and Taiwan Weighted plummeted 1.16%.