Post session - Quick review

Indian equity markets once again witnessed mayhem as the bears holding the fort for six consecutive sessions refused to budge. Distressed by the lingering euro zone debt crisis, investors for yet another session dumped equities as lack of concrete measures to stem Europe's sovereign-debt crisis pounded investor’s confidence. Meanwhile, US stocks that dropped sharply on Wednesday after ratings firm Fitch Ratings warned of trouble for US banks as Europe's debt trouble worsens also sent jitters across Dalal Street. Fitch came out with a report on US bank exposure to Europe, while it described current exposure as 'manageable,' they also noted that 'unless the euro zone debt crisis is resolved in a timely and orderly manner, the broad credit outlook for the US banking industry could worsen. The ratings agency warned that the contagion effects on US banks were “potentially large” if the crisis spreads beyond Greece, Ireland, Italy, Portugal, and Spain. It pointed to the risks in France, where banks are being weakened by their own Euro zone exposure, while Paris is trimming spends to avert loss of AAA credit rating.

The negative impact of worsening global environment even offset the little relief that came to local equity markets with the Weekly inflation data, which albeit easing for second consecutive week remained in double digits at 10.63% for week ended November 05 compared to 11.81% in the last week. The index for ‘Primary Articles’ which accounts for 20.12% of the WPI declined by 0.8% to 203.0 (Provisional) from 204.7 (Provisional) for the previous week. Meanwhile, the index for ‘Fuel and Power’ group, which accounts for 14.91% of WPI, rose by 1% to 171.5 (Provisional) from 169.8 (Provisional) for the previous week.

On the global front, Asian shares which plummeted for the six straight sessions on Thursday over the Europe contagion fears too contributed to the investor’s angst. Meanwhile, European shares which plummeted in early trade ahead of Spain and France government held bond auctions, only added to hostility.

Back home, bulls ran berserk on the bourses as every small attempt of recovery was reciprocated by equal and forceful downfall, which in turn led to massive losses. However, the benchmark indices after loosening substantial ground concluded the trade near the day’s low.  This could be sensed by the downfall of all the 13 sectoral indices on BSE, however, stocks from Oil & Gas, Power and Metal counters were among the one’s which led to bloodcurdling losses.

30 share barometer index-Sensex- plummeting over 300 points shut shop the trade far below the 16800 crucial level. Meanwhile, 50 shares index -Nifty- declining over a century too finished sub 5000 level. The broader indices showcasing no exceptional trade went home with loss of over 1%.The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 880:1942 while 120 scrips remained unchanged.

The BSE Sensex lost 313.20 points or 1.87% and settled at 16,462.67. The index touched a high and a low of 16,807.15 and 16,408.50 respectively. 3 stocks advanced against 27 declining ones on the index (Provisional)

The BSE Mid-cap index lost 1.35% while Small-cap index was down 1.25%. (Provisional)

On the BSE Sectoral front, there were no gainers while Oil & Gas down 3.44%, Power down 2.85%, Metal down 2.56%, Realty down 2.39% and Capital Goods down 2.25% were the top losers.

The top gainers on the Sensex were Sun Pharma up 0.72%, Cipla up 0.63% and Hero MotoCorp up 0.62%.

On the flip side, JP Associates  down 6.26%, Maruti Suzuki down 4.76%, RIL down 4.53%, Sterlite Industries down 4.37% and BHEL down 4.18% were the top losers on the index. (Provisional)

Meanwhile, on the back of rupee hitting to a new 32-month low against the US dollar, Finance Minister Pranab Mukherjee has said that the Reserve Bank of India (RBI) is monitoring the situation and will intervene in the forex market if required. The rupee dropped as worries about Europe's debt crisis and a worsening domestic economy raised demand for the US currency. He said, ‘as RBI has already mentioned, it is watching the situation. As and when it is necessary, they will intervene.’

On the same time, the RBI Deputy Governor, Subir Gokarn said that the bank would intervene in the forex market in case of extreme volatility only and the objective would be to smooth that volatility and not fix a rate. However, experts are of the view that central bank’s intervention in the forex market at this juncture could raise concerns over liquidity as bank’s dollar purchase could potentially suck out rupee liquidity from the market.

The rupee breached the Rs 51 per US dollar-level after a 32-month gap on good dollar demand from banks and importers in view of the strong dollar overseas amid depreciation of the euro due to the intensifying debt crisis in the euro-zone nations. The rupee is already Asia's worst performing major currency this year, having fallen over by close to 12% against the dollar so far in 2011 and the fourth most depreciated currency in the world.

Gokarn had further said that the RBI would decide on for open market operations to manage liquidity in the system only if there is a stress and not to influence government bond yields. A weaker rupee is a matter of concern for India as it depends on imports for over 70% of its oil and gas requirements and the depreciation in the local currency have made imports expensive.

India VIX, a gauge for market’s short term expectation of volatility gained 7.50% at 26.92 from its previous close of 25.04 on Wednesday. (Provisional)

The S&P CNX Nifty lost 103.25 points or 2.05% to settle at 4,927.20. The index touched high and low of 5,036.80 and 4,919.45 respectively. 5 stocks advanced against 45 declining ones on the index. (Provisional)

The top gainers on the Nifty were Reliance Infra up 1.14%, Hero MotoCorp up 0.94%, Sun Pharma up 0.73%, Cipla up 0.18% and TCS up 0.07%.

On the other hand, JP Associates down 6.43%, Ranbaxy down 5.29%, Sesa Goa down 4.90%, RIL down 4.85% and Maruti down 4.68% were the top losers. (Provisional)

The European markets are trading in red, with France's CAC 40 down 1.27%, Germany's DAX down 1.02% and FTSE 100 down 0.98%.

Turmoil of Asian region continued for yet another session and most of the Asian peers witnessed downfall on Thursday after two ratings agencies sounded alarm bells over the potential impact of the Euro zone debt crisis on major banks. However, most of the Asian equity indices pared their earlier losses, with some indexes finished in the positive territory. Meanwhile, Fitch ratings agency warned that the contagion effects on US banks were “potentially large” if the crisis spreads beyond Greece, Ireland, Italy, Portugal, and Spain. It pointed to the risks in France, where banks are being weakened by their own Euro zone exposure, while Paris is trimming spends to avert loss of AAA credit rating.

Hong Kong shares fell for a third-straight session on Thursday, with mainland property names among the hardest hit in weak turnover. However, Nikkei edged higher in the trade ahead of data which could showed the US economy is weathering Europe’s debt storm, but the 8,500 level remained elusive amid fears of what news might come next out of the Euro zone.