Post session - Quick review

Benchmark equity indices extended their disillusionment with a poignant start to the fresh week as growing skepticism over deteriorating macroeconomic conditions dissuaded investors from building fresh positions, thereby curbing their appetite for risky equities. Worries about out-of-control government debt on both sides of the Atlantic swept across financial markets again on Monday, knocking stocks sharply lower and pushing up prices of bonds, deemed to be safe havens. Market jitters were evident a day after Spain voted in a new government - the third time in as many weeks that Europe’s debt crisis has toppled an administration. Spain dumped its ruling Socialist government on Sunday for the conservative leadership of Mariano Rajoy, who inherits an economy wracked by debt and an unemployment nightmare - which at more than 21 percent is the highest among the 17 nations that use the euro. However, investors were rattled after the US congressional deficit-reduction committee, which was set to formally announce its three-month-long effort to bridge partisan differences over taxation and spending failed. This development besides sending the European shares to a 6 week low also pounded the sentiment at the home turf.

Investor confidence also took a hit when China and Singapore painted a bleak picture of the global economy, with uncertainty over deficit-reduction negotiations in the US adding to the gloom. A Financial Times report cited that Chinese Vice Premier Wang Qishan said the world will enter a long-term recession. Additionally, Singapore government said on Monday that the country's economic growth is likely to weaken in 2012 compared to this year amid 'deteriorating external macroeconomic environment'. Negative spell also emerged from regional counterparts which ended the session on a grave note post an unexpected trade deficit for Japan weighed on exporter shares in Tokyo. Japan fell into a trade deficit in October as a stubbornly strong yen, softening global demand and disruption from deadly floods in Thailand helped slow its post-quake recovery. October exports dropped off while imports kept soaring, leaving a deficit of 273.8 billion yen ($3.6 billion). Meanwhile, gains were muted on Wall Street too on Friday. Back home, “deficit woes” accentuated the selling pressure at Dalal Street after India’s planning Commission deputy chairman Montek Singh Ahluwalia told that India's fiscal deficit in the current fiscal year will exceed 4.6 percent of the gross domestic product target, though the final figures would depend on the actual expenditure. On Sunday, Ahluwalia reportedly said that economic growth for the current fiscal year would likely be about 7-7.5%. He also added that it was 'not impossible' that the fiscal deficit could swell to 5.5 percent, against the government's target of 4.6 percent for the year. Besides this, depreciating rupee, which was near to striking an all time low, too dissuaded investors from taking large bets.

Sentiment on the home turf were spooked with the slippage of the Index heavyweight-Reliance Industries- which tanked over 2% on reports that government could recover any amount indicated by CAG in its subsequent audits from RIL, as field-life of the D6 block is more than 20 years. However, Mukhesh Ambani-led Reliance Industries (RIL) has been granted a clean chit for capital expenditure amounting to $2.5 billion, spent up to the year 2007-08 in developing the KG-D6 gas fields as the CAG's audit did not quantify any loss to the exchequer. Meanwhile, downfall of Bharti Airtel too added to the Monday blues. The stock of the company slipped over 2% after CBI raided the office premises of the company in Gurgaon as part of an investigation into alleged irregularities in the allocation of the nation's airwaves.

Although selling was witnessed across the space, however, stocks from Metal, Bankex and Realty counters were the worst hit for the day. 30 share barometer index on BSE-Sensex-offloaded over massive 400 points to shut shop below the crucial psychological level of 16000. Similarly, 50 share index- Nifty-on NSE-shrugged off over a century to conclude the trade below the 4800 level. The broader indices too were clobbered out of shape and went home with loss of over 1%.The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 839:1911 while 145 scrips remained unchanged.

The BSE Sensex lost 419.07 points or 2.56% and settled at 15,952.44. The index touched a high and a low of 16,297.03 and 15,900.30 respectively. 3 stocks advanced against 27 declining ones on the index (Provisional)

The BSE Mid-cap index lost 1.95% while Small-cap index was down 1.72%. (Provisional)

On the BSE Sectoral front, there were no gainers while Realty down 3.43%, Metal down 3.31%, Bankex down 3.29%, IT down 3.01% and TECk down 2.88% were the top losers.

The top gainers on the Sensex were Maruti Suzuki up 0.67%, Sun Pharma up 0.65% and Coal India up 0.10%.

On the flip side, DLF down 5.16%, Tata Motors down 4.49%, Sterlite down 4.48%, ICICI Bank down 4.27% and BHEL down 4.17% were the top losers on the index. (Provisional)Meanwhile, the Planning Commission Deputy Chairman Montek Singh Ahluwalia accepted that the planning commission went wrong whilst projecting moderation in inflation which has been hovering around two digit marks from almost a year.

Ahluwalia said, “It is true that we were hoping that this (moderation in inflation) will happen earlier, to that extent our credibility becomes a question. You should recognize that short-term forecast is subject to error”. However, he asserted inflation would moderate to 7-7.5% by March, 2012.

The headline inflation measured by Wholesale Price Index (WPI), for the month of October stood at 9.73% which is marginally up by 9.72% in September. On the other hand, country’s weekly food inflation stood at 10.63% for week ended November 5.

The inflation has remained stubbornly high in spite of the repeated assurance by several government functionaries that it would moderate. The Reserve Bank of India (RBI), on many occasions has said that inflation would start moderating from December.

Replying to criticism of India Inc that there was a policy paralysis in the government, Ahluwalia said “Industry has been a lot more focused on decisions that are holding up infrastructure projects and not the (financial) reforms. The government is keen to push (reforms) ahead but needs to develop political consensus and if the measures like GST, DTC and other reforms are delayed, that does not mean that they would not happen”.

Asia’s third largest economy’s inflation has remained above 9% for eleven consecutive months which has added to the woes of Inc’s growth. Although the inflation failed to moderate as per estimates, however, the planning commission maintains a positive stance that one of the nation’s growth stymies will reduce down by March 2012.

India VIX, a gauge for market’s short term expectation of volatility gained 7.63% at 28.61 from its previous close of 26.58 on Friday. (Provisional)

The S&P CNX Nifty lost 126.95 points or 2.59% to settle at 4,778.85. The index touched high and low of 4,873.70 and 4,764.80 respectively. 4 stocks advanced against 46 declining ones on the index. (Provisional)

The top gainers on the Nifty were Maruti up 0.79%, Coal India up 0.45%, Sun Pharma up 0.28% and HUL up 0.04%.

 On the other hand, SAIL down 6.57%, Sesa Goa down 5.99%, Cairn down 5.96%, DLF down 4.92% and Tata Motors down 4.76% were the top losers. (Provisional)

The European markets are trading in red, with France's CAC 40 down 2.50%, Germany's DAX down 2.66% and FTSE 100 down 2.00%.

Carnage continued in the Asian region on fifth straight session as Europe’s debt crisis continued to undermine sentiment, with banks and commodity plays leading the region's decline, while an unexpected trade deficit for Japan further hurt exporter shares in Tokyo. Moreover, uncertainty over debt crisis and an apparent failure by US politicians to agree on deficit reduction too hurt the sentiment. The US congressional deficit-reduction committee was set to formally announce its three-month-long effort to bridge partisan differences over taxation and spending has failed.

Investor confidence also dampened when China and Singapore painted a bleak picture of the global economy, with uncertainty over deficit-reduction negotiations in the US adding to the gloom. Markets also reacted to news Japan logged an unexpected trade deficit in October, while business hub Singapore predicted sharply lower economic growth next year and warned a weaker global economy could worsen the situation.