Post Session: Quick Review

The trauma of the Indian markets got extended on Monday, with major indices declining for the second consecutive day on concerns of the looming debt ceiling and shutdown of the US government by midnight. Traders also remained cautious ahead of the CAD data to be released by RBI later in the day, which may have widened to 4 percent of GDP in the first quarter due to a surge in gold imports and a deteriorated trade gap.

The markets remained in a bearish mood as most of the Asian markets were trading with deep cut on US concern; though the Chinese market bucked the trend after HSBC China Purchasing Managers' Index (PMI) in September indicated that operating conditions improved fractionally since the previous month, coming at 50.2 in September compared to 50.1 in August. However, the weak start of the European markets weighed heavily on the domestic markets.

Back home, the markets got a gap down start amid the uncertainty from the US and lacking any supportive cues from the domestic front, on the contrary there was cautiousness ahead of the June quarter (Q1 FY14) current account deficit (CAD) data, which has likely peaked up  due to higher gold imports. However, based on the latest data, the finance ministry expects the CAD for the current year at 2.6% of GDP or $48.2 billion, much below its August estimate of $70 billion or 3.7% of GDP and a big improvement over the record 4.8% posted last fiscal.  Meanwhile, the markets also remained under pressure due to the persistent weakness in rupee. However, the IT sector was the only sectoral gauge that managed a green close, as rupee depreciated and also as the global IT giant Accenture reported strong quarterly numbers in the fourth quarter. Accenture's net income rose to $727.3 million. The non sectoral gauge of oil marketing trio (BPCL, HPCL and IOC) too remained in limelight and gained over half a percent after a panel headed by Kirit Parikh suggested continuation of the current system of calculating revenue losses on the basis of trade parity and has asked to deregulate diesel prices in two years with an increase in its retail price by Rs 4 per litre “immediately” and the remaining subsidy recovered from consumers through a monthly price hike of Re 1 per litre. The worst performers were the capital goods, banking and metal sector.

The market breadth remained weak as there were 896 shares on the gaining side against 1393 shares on the losing side while 131 shares remained unchanged. (Provisional)

The BSE Sensex lost 400.36 points or 2.03% to settle at 19326.91.The index touched a high and a low of 19651.31 and 19320.73 respectively. Among the 30-share Sensex pack, 3 stocks gained, while 27 stocks declined. (Provisional) The BSE Mid cap and Small cap indices ended lower by 0.34% and 0.45% respectively. (Provisional)

On the BSE Sectoral front, Bankex down by 3.02%, Capital Goods down by 2.98%, Metal down by 2.68%, Realty down by 2.40% and PSU down by 2.30%, were the top losers, while there were no gainers in the space. (Provisional)

The top gainers on the Sensex were Hindustan Unilever up by 0.83%, Infosys up by 0.15% and Sun Pharma up by 0.04%, while, Tata Steel down by 5.37%, ICICI Bank down by 4.60%, Coal India down by 4.33%, BHEL down by 4.20% and L&T down by 3.64% were the top losers in the index. (Provisional)

Meanwhile, amid rising concerns over the prevailing economic slowdown, Planning Commission, in its mid-term review of the five year policy document, is likely to cut Indian annual average economic growth rate target to around 6 to 6.5 percent for the 12th Five-Year Plan (2012-17) from 8 percent projected earlier.

Planning Commission is of the view that owing to the ongoing economic downturn, it would be difficult to achieve the 8 percent average economic growth in the 12th Plan period. The Indian economy grew by average rate around 5 percent in first two years of the Plan, therefore, the country has to maintain a rate of around 10 percent in remaining three financial years of policy period to achieve the targeted 8 percent, which is almost impossible. Earlier, in its last mid-term review for the 11th Five-Year Plan, the Commission had cut the annual average growth rate target of 9 percent to 8.2 percent. However, only 8 percent average annual economic growth was achieved during the previous five-year plan.

At present, Indian economy is struggling with slowdown and first April-June quarter growth slowed down to four year low at 4.4 percent. Further, all macro-economic indicators have deteriorated with current account deficit (CAD) widened to a record high of 4.8 per cent of GDP in the previous fiscal. Further, rupee value has depreciated over 13 percent against dollar in 2013, which has become a cause of concern for the country, as India is structurally an import intensive country.

India VIX, a gauge for markets short term expectation of volatility gained 10.76 % at 26.65 from its previous close of 24.06 on Friday. (Provisional)

The CNX Nifty lost 111.55 points or 1.91% to settle at 5,721.65. The index touched high and low of 5,810.20 and 5,718.50 respectively. 9 stocks advanced against 41 declining on the index. (Provisional)

The top gainers on the Nifty were ACC up by 1.13%, Hindustan Unilever up by 0.97%, HCL Tech up by 0.86%, BPCL up by 0.52% and Lupin up by 0.20%. On the other hand, NMDC down by 5.33%, Tata Steel down by 5.24%, JP Associate down by 4.64%, ICICI Bank down by 4.59% and Coal India down by 4.27%.

The European markets were trading in red; France’s CAC 40 down by 1.17%, Germany’s DAX down by 0.88% and the United Kingdom’s FTSE 100 down by 0.81%

Most of the Asian markets barring Shanghai Composite concluded Monday’s trade in red as a possible government shutdown in the US loomed large in Asia. Indonesia’s rupiah is leading declines in emerging markets this quarter as the currency headed for its worst three-month performance since 2008 due to a record current-account deficit. The manufacturing activity at China's private and export-oriented companies expanded a bit faster in September from that in August, indicating modest improvement of the world's second largest economy. The HSBC Purchasing Managers' Index, a comprehensive gauge of operating conditions at private and export-oriented industrial companies, settled at 50.2 in September, compared with 50.1 a month earlier.

Housing starts in Japan fell unexpectedly in the last quarter. The Ministry of Land, Infrastructure and Transport stated that Japanese Housing Starts fell to a seasonally adjusted 8.8%, from 12.0% in the preceding quarter. Industrial production in Japan fell more-than-expected last month. The Ministry of Economy, Trade and Industry reported that industrial production fell to a seasonally adjusted -0.7%, from 3.4% in the preceding month. Japanese retail sales rose more-than-expected to a seasonally adjusted annual rate of 1.1%, from -0.3% in the preceding month.

The Korea National Statistical Office stated that South Korean Retail Sales rose to a seasonally adjusted annual rate of 0.4%, from 1.2% in the preceding month whose figure was revised up from 1.1%. Industrial production in South Korea rose more-than-expected last month. The Korea National Statistical Office reported that South Korean Industrial Production rose to a seasonally adjusted annual rate of 3.3%, from 0.9% in the preceding month. Thailand’s trade balance rose more-than-expected to a seasonally adjusted 2.21B, from 0.30B in the preceding month, as per National Statistical Office Thailand.