Post session - Quick review

Indian benchmark equity indices halting eight consecutive session’s losing streak emerged triumphant on Tuesday. The relief rally came amid extreme pessimism that took the barometer gauges near 52-week lows in the previous session. Covering up of short by market participants two days prior to the monthly derivative contracts expiry mainly led to the recuperation amidst eye of storm as fears about the ability of politicians on either side of the Atlantic to tackle huge debt burdens sapped investors' confidence. The failure on Monday of a 'super committee' of U.S. lawmakers to reach agreement on a deficit-cutting plan was another blow to market confidence already hammered for weeks by Europe's inexorably worsening sovereign debt crisis mainly led to downfall of Asian bourses for the umpteenth time. US stocks also fell around 2 percent on Monday, following sharp fall in Europe, on concerns that the chances of global recession are rising.

Back home, however, investors' jangled nerves were soothed somewhat when Standard and Poor's and Moody's, two of the big three ratings agencies, said the deficit committee's failure would not trigger an immediate downgrade of the US credit rating. Meanwhile, value-buying that emerged near crucial support levels in large cap stocks bought respite to the bourses after a sharp correction in the past few sessions, which many experts named nothing short of technical respite.  Index heavyweight such as Reliance Industries, Infosys and ICICI Bank which occupy weightage of 10.86%, 9.64% and 7.37% on 30 share barometer index Sensex- on Bombay Stock Exchange gained in the range of 1-2% standing tall against the downtrend. Optimism revisited Dalal Street with the sanguine European equities as stocks of European region bouncing back from steep sell-off in the previous session rose in early trade on Tuesday, although gains were set to be capped by worries over high euro zone and U.S. debt level.

Of late, however, even the turmoil of the money markets have been a blessing in disguise for D-Street as the rupee striking fresh all time low against the dollar on Tuesday aided the recuperation of IT stocks, thereby yanking the barometer gauge higher over a percent and half. A weaker rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports. The partially-convertible rupee was trading at 52.33/34, as against Monday's close of 52.155/165. Following the path to glittering gains were stocks belonging from the Metal and Auto counters, while that of  TECk and Healthcare too followed the suite. However, stocks from Consumer Durable (CD), Fast Moving Consumer Goods (FMCG) and Power remained the weak spell.

The 30-share BSE index, which lost nearly 1,600 points in the past eight sessions, recovered over 100 points to end above its crucial psychological level of 16k. In a similar fashion, the wide-based National Stock Exchange Nifty index shot up by over 25 points to shut shop above the 4800 mark. However, the broader indices after getting a negative start too followed the jubilation. The market breadth on the BSE ended neutral; advances and declining stocks were in a ratio of 1375:1392 while 122 scrips remained unchanged.

The BSE Sensex gained 113.38 points or 0.71% and settled at 16,059.48. The index touched a high and a low of 16,212.95 and 15,970.11 respectively. 18 stocks advanced against 12 declining ones on the index (Provisional)

The BSE Mid-cap index gained 0.45% while Small-cap index was up 0.14%. (Provisional)

On the BSE Sectoral front, IT up 1.92%, Metal up 1.72%, Auto up 1.16%, TECk up 1.11% and HealthCare up 0.98% were the top gainers while Consumer Durables down 2.89%, FMCG down 1.43% and Power down 0.27% were the top losers.

The top gainers on the Sensex were Tata Motors up 7.28%, JP Associates up 4.61%, Tata Steel up 2.97%, Infosys up 2.28% and DLF up 2.25%.

On the flip side, Tata Power down 2.24%, Bharti Airtel down 2.23%, ITC down 1.91%, M&M down 1.34% and HUL down 1.20% were the top losers on the index. (Provisional)

Meanwhile, stating the sharp decline of Indian rupee against American dollar as 'disruptive', the Reserve Bank of India (RBI) Deputy Governor Subir Gokarn said any action to arrest the fall will be guided by medium-term considerations. The rupee plunged to nearly 33-month low level of Rs 52.73 against the US currency on sustained dollar demand amid weak trends in stock markets and deepening euro-debt crisis.

This historical decline is due to persistent demand for US dollar from banks and importers such as oil refiners to meet month-end requirements amid expectation of a further increase in dollar value overseas because of the ongoing debt crisis in euro-zone. 

'We don't really have a target or a rate in mind. It's moving as per market dynamics. It (fall in the value of the rupee) is disruptive, there is no question. There (will be) impact on our import bill, particularly for energy. It's having an impact on companies and it is a problem,' Gokarn said.

On market intervention by the RBI to control decline in rupee, Gokarn said, 'any action we take now (will) have to take into account the fact that these actions might have consequences a little further down the road. So we have got to balance out actions with risks or a potential increase in vulnerability later on.' By adding further he said, ‘actions have to be weighed in terms of their medium-term risks'.

The sharp decline in rupee is expected to push inflation rate, which is already hovering nearby two digit mark from several months. Gokarn said that ‘we should not be looking at only the short-term when we make these judgements. Every action that has been suggested... that has been debated also has potentially adverse consequences down the road. So we have got to balance out those too. ‘

Though the RBI has been maintaining that the exchange rate should be market determined, but the volatility in rupee has raised its concern. On this Gokarn said, ‘volatility is another thing. This is the sharpness and speed of the movement that is obviously creating some disruptions. We don't know where it is going to go, but it is something we need to watch out for.’

Earlier finance minister on the role of RBI controlling the volatility said that ‘the central bank would have been helpful if the fall was due to domestic factors. However, he expects that there will be a self correction in market.

The rupee had dropped past 52 a dollar, closing at a record low of 52.15, on strong dollar demand from importers amid worries that foreign investors may flee riskier assets and markets due to the global economic instability. The previous all-time closing low of the currency was 51.97 registered on March 3, 2009. The rupee is now among the top three worst performing currencies globally and has fallen by a whopping 15 per cent since July this year.  It is the worst performing currency in Asia, falling 14 per cent through the year.

India VIX, a gauge for market’s short term expectation of volatility lost 4.40% at 27.35 from its previous close of 28.61 on Monday. (Provisional)

The S&P CNX Nifty gained 31.10 points or 0.65% to settle at 4,809.45. The index touched high and low of 4,854.00 and 4,782.55 respectively. 32 stocks advanced against 18 declining ones on the index. (Provisional)

The top gainers on the Nifty were Tata Motors up 7.40%, JP Associates up 4.77%, BPCL up 3.70%, Tata Steel up 3.50% and Cairn India up 3.28%.

On the other hand, Siemens down 2.80%, Bharti Airtel down 2.39%, Kotak Bank down 2.09%, Tata Power down 2.08% and ITC down 1.91% were the top losers. (Provisional)

The European markets are trading in green, with France's CAC 40 up 0.55%, Germany's DAX up 0.31% and FTSE 100 up 0.39%.

After witnessing steep sell-off in previous five sessions, Asian equity indices bounced back with Jakarta Composite and Straits Times garnered the decent gains as investors went for fresh position in fundamentally strong stocks after the recent slaughter. However, the Asian markets were in red for most part of the day on growing worries over France’s credit rating and after a US committee responsible for finding a deal to cut the nation’s huge deficit said it had failed.

Meanwhile, Hong Kong shares edged higher in the trade supported by buying in some globally exposed companies, with ports operator Cosco Pacific up 1.8%, Li & Fung gaining 3.4%, and Tsingtao Brewery rising 1.6%. In Seoul, Hyundai Motor rose 0.9%, while tech heavyweights Samsung Electronics and Hynix Semiconductor gained 1.4% and 1.5%, respectively, pulled index in green territory.