Post Session: Quick Review

Underperforming the global markets and snapping five straight sessions’ winning streak, Indian equity markets settled in red with a cut of close to half a percent on Tuesday. Higher retail inflation data, which increased the odds of Reserve Bank of India hiking interest rates in its upcoming monetary policy review on October 29, pounded the markets, which squandering a positive start, settled near day’s lowest point despite positive global set-up. However, the correction of Indian equity markets did not came as a surprise as profit-booking was inevitable given the run-up rally of the bourses against the backdrop of disappointing macro-economic indicators, viz, snail-paced IIP growth and seven months inflation growth. Nevertheless, selling pressure witnessed during the last hour of trade mainly dragged the equity markets in red, which led Sensex and Nifty ending with a cut of close to half a percent, near the crucial 20,500 and 6,050 levels respectively. Meanwhile, broader indices witnessing nasty laceration, ended with a sharp plunge of over a percent.

On the global front, Asian pacific shares rose to their highest in nearly five months, while European shares were trading at two and year high level on growing expectations of an imminent deal to re-open the US government and avert a possible debt default, though the squabbling in Washington kept markets on edge ahead of Thursday's deadline. Closer home, the drag of the bourses was led by banking stocks, which lost steam on growing expectation of rate hike post the dismal set of inflation data. Following the suite were the stocks from Realty and Consumer Durable counters. Realty stocks succumbed to profit-booking even as the reports suggested of government soon decide upon relaxing foreign direct investment (FDI) guidelines for the sector, with an aim of attracting more  foreign investments into the housing sector. However, bucking the trend, were stocks from Metal, Information Technology and Technology counters on BSE.  IT stocks were in demand on account of Rupee’s weakness, while TCS gains ahead of its Q2 earnings, also augured well for the sector. Nevertheless, the market breadth on the BSE ended in red; advances and declining stocks were in a ratio of 983: 1436, while 143 scrips remained unchanged. (Provisional)

The BSE Sensex lost 89.58 points or 0.43% to settle at 20517.96.The index touched a high and a low of 20759.58 and 20446.73 respectively. Among the 30-share Sensex, 12 stocks gained, while 18 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended lower by 1.40% and 1.00% respectively. (Provisional)

On the BSE Sectoral front, Metal up by 1.02%, IT up by 0.69%, Teck up by 0.64% and FMCG up by 0.17%, were the top gainers, while Bankex down by 2.91%, Realty down by 1.83%, Consumer Durables down by 1.40%, PSU down by 1.11% and Capital Goods down by 0.91% were the top losers in the space. (Provisional)

The top gainers on the Sensex were Tata Steel up by 2.83%, Wipro up by 1.82%, Bharti Airtel up by 1.77%, Hindalco Industries up by 1.72% and NTPC up by 1.22%, while, HDFC Bank down by 2.88%, SBI down by 2.68%, Hero MotoCorp down by 2.48%, ICICI Bank down by 2.13% and Tata Power down by 1.98% were the top losers in the index. (Provisional)

Meanwhile, as per the Confederation of Indian Industry (CII) survey, Indian economic growth is likely to remain below 5 percent in the current fiscal. CII survey, based on the assessment of CEOs, indicated that ongoing economic slowdown has weighed down the confidence of India Inc as 42 percent of the respondents expected the economy to grow in the range of 4.5 to 5 percent. Further, 65 percent of the respondents expect that economic growth recovery will not take place before the second quarter of next fiscal.

Indicating that Indian economy is moving towards a situation of stagflation, the survey added that majority of the respondents (42 percent of CEOs) expected inflation to increase moderately in the second half of the year. Referring to the domestic currency, 53 percent of the respondents expected the rupee to prevail below 62 per dollar by the end of the current fiscal with current account deficit easing. Moreover, political uncertainty was ranked as the highest risk factor in coming future, affecting the business confidence of India Inc.

Regarding the country’s infrastructure sector, 56 percent of the respondents did not feel that the recently set up Cabinet Committee on Investment (CCI) had raised investments so far at the ground level. Meanwhile, in order to revive investment demand, industry body expressed the need for strengthening policy intervention by both the government as well as RBI, adding that the government should focus on stepping up capital expenditure whereas RBI should adopt a softer monetary stance.

India VIX, a gauge for markets short term expectation of gained 1.70% at 23.24 from its previous close of 22.85 on Monday. (Provisional)

The CNX Nifty lost 32.80 points or 0.54% to settle at 6,079.90. The index touched high and low of 6,156.30 and 6,056.55 respectively. Out of the 50 stocks on the Nifty, 14 ended in the green, while 35 ended in the red and one stock remains unchanged.

The major gainers of the Nifty were JP Associate up 4.78%, Tata Steel up by 3.05%, Wipro up by 1.77%, Hindalco up by 1.72% and Asian Paint up by 1.66%. The key losers were IndusInd Bank down by 4.91%, PNB down by 3.93%, IDFC down by 3.84%, Bank of Baroda down by 3.80% and HDFC Bank down by 2.91%. (Provisional)

Most of the European markets were trading in green with, France’s CAC 40 up by 0.52%, the United Kingdom’s FTSE 100 up by 0.78% and Germany’s DAX up by 0.76%.

The Asian markets barring Shanghai Composite concluded Tuesday’s trade in green to their highest level in nearly five months on heightened hopes for a deal in Washington to reopen the US government and avert a possible debt default. Markets in Indonesia, Malaysia and Singapore remained closed for the trade today on account of holiday. Chinese banking stocks moved higher following central-bank data showing financial institutions issued 787 billion yuan ($128.8 billion) in new loans in September, more than the 674.5 billion yuan in loans expected.

Japan’s industrial output in August fell a seasonally adjusted 0.9% compared with July, downgraded 0.2% point from the initial 0.7% fall. The Indonesian government hopes the nation’s consumers can spend their way out of the worst of the economic slowdown currently affecting emerging market. The President’s office stated that government is now optimistic that the nation will book at least 5.7% growth by the end of 2013.