Indian benchmarks erase previous session’s gains; sink by 1%

Indian markets finished last trading session of the week on a daunting note as the frontline equity indices were back to square one after surrendering all the gains garnered in the previous session. The benchmarks failed to extend the winning momentum with the start of a new series of futures and options contract as undermining leads from the markets across the globe pummeled domestic investors’ conviction. Sentiments in domestic markets got spooked in the first half of trade following the sustained sell-off in European markets which extended their losing streak for the tenth straight session after borrowing costs for Italy’s sovereign bonds touched an euro-era record and as a meeting between the eurozone's three biggest economies highlighted their differences on finding a solution to the region's debt crisis. However, the markets showed signs of consolidation earlier in the session as some policy reform announcements by the government overnight prevented the key gauges from drifting to lower levels. The reports that cabinet allowed foreign retailers to own a 51% stake in the multi-brand retail sector, and also approved a 100% FDI in single-brand retail, encouraged not only domestic retailers but also global groups such as Walmart, Carrefour and Tesco. The downside for the bourses was also capped as investors continued to pile hefty positions in the Capital Goods counter while the high beta Realty pocket too rallied in the session on speculations that foreign direct investment in multi-brand retail would bring big-ticket projects for real estate players in India. The aviation stocks also kept buzzing in the session on reports that the Prime Minister Manmohan Singh will meet all the chiefs of different airlines on Saturday to discuss ways to support the cash-strapped carriers and also to look into other industry issues, during the meet. The cabinet also approved the Companies Bill 2011 which proposes to formally introduce corporate social responsibility with companies having to set aside 2% of average profit of preceding three years for the purpose. Meanwhile, SEBI fixed Rs. 5 cr floor for anchor investors in public issues. This imposes a minimum allotment size to such investors.

Earlier on Dalal Street, the benchmark got off to a sedate opening as sentiments were largely influenced by pessimistic cues from Asian markets. The benchmarks showed some fervor and rebounded to touch the highest point in the session in mid morning trades. Thereafter the indices showed signs of consolidation and gyrated in a tight band for most part of the session. However, just when it looked like that the bourses would settle on a quite note, investors resorted to hefty position squaring and dragged the benchmarks to the lowest point in the session from where the indices failed to recuperate. Eventually, the NSE’s 50-share broadly followed index Nifty, got thrashed by around a percent. Moreover, sentiments in the broader markets remained upbeat thanks to the policy reform announcement by the government overnight, which helped the indices to settle in the positive terrain and outperform their larger peers. On the BSE sectoral space, market participants booked hefty profits in the Information Technology counter which got hammered by two percent while the Metal and Oil & Gas counters also got butchered by over one and half a percent. On the other hand, the hefty short covering was seen in the beaten down Capital Goods counter which remained the top gainer in the session with over two and half a percent gains followed by the high beta Real Estate pocket which managed to snap the session with over a percent gains. The markets plummeted on lower volumes of around Rs 1 lakh crore while the turnover for NSE F&O segment too remained on the lower side as compared to Thursday at over 0.8 lakh crore as it was the first day of a new series of F&O contract. The market breadth remained optimistic as there were 1550 shares on the gaining side against 1218 shares on the losing side while 110 shares remained unchanged.

Finally, the BSE Sensex plunged by 163.06 points or 1.03% to settle at 15,695.43, while the S&P CNX Nifty shaved off 46.40 points or 0.98% to close 4,710.05.

The BSE Sensex touched a high and a low of 15,891.05 and 15,645.78 respectively. The BSE Mid cap and Small cap index were up by 0.38% and 0.84% respectively.

The top gainers on the Sensex were BHEL up 3.45%, L&T up 3.40%, DLF up 3.24%, SBI up 2.27% and Coal India up 1.51%. While, Maruti Suzuki down 3.89%, Hindalco Industries down 3.73%, Sterlite Industries down 3.29%, Tata Steel down 2.82% and Hero MotoCorp down 2.70% were the major losers on the index.

The top gainers on the BSE sectoral space were Capital Goods (CG) up 2.64%, Realty up 1.32%, PSU up 0.59%, Consumer Durables (CD) up 0.58% and Power up 0.37%. While IT down 2.06%, Metal down 1.65%, TECk down 1.63%, Oil & Gas down1.62% and Auto down 1.29% were the top losers on the BSE sectoral space.

Meanwhile, India’s imports of sensitive items registered an increase of 42.2% in the April-August period this year and reached Rs 40,281 crore compared to Rs 28,317 crore in the same period last year. The government monitors the import of items like food grains, automobiles, milk and beverages, which fall in the sensitive category in order to keep a check on its implications on the domestic industry.

India, which is the net importer of pulses, saw inward shipments of the commodity to the tune of Rs 3,342.95 crore during the first five months of the current fiscal, from Rs 3,280 crore in April-August 2010. Imports of edible oils, of which India is the world's largest importer and one of the largest consumer, too surged to Rs 18,243.88 crore in the period under consideration, a rise of 66% from Rs 10,998.28 crore in the year-ago period.

In the period under consideration, the import of alcoholic beverages and spices also went up by 47.5% and 68.3%, respectively while imports of products of small-scale industries such as umbrellas, locks, toys and glassware rose by 48.6% to Rs 839.84 crore, compared to the year-ago period. Automobile imports spurted by a massive 103.5% in April- August 2011, to Rs 1606.5 crore from Rs 789.67 crore in the same period last year.

But on the contrary, imports of foodgrain, milk and milk products, and tea and coffee declined by 93.4%, 28.4%, and 10.2%, respectively during the first five months of the current fiscal. Milk and dairy product imports declined to Rs 282.9 crore in the review period from Rs 395 crore in April-August 2010.

The S&P CNX Nifty touched a high and low of 4,767.30 and 4,693.10 respectively.

The top gainers on the Nifty were Ranbaxy up 3.73%, BHEL up 3.53%, L&T up 3.33%, BPCL up 2.99% and DLF up 2.12%. On the flip side, SAIL down 3.19%, Reliance Power down 2.61%, ACC down 1.84%, Hero MotoCorp down 1.58% and Ranbaxy down 0.62% were the top losers on the index.

The European markets were trading in red. France's CAC 40 down 0.90%, Britain's FTSE 100 down by 0.58%, and Germany's DAX down by 0.74%.

After yesterday’s rally, investment sentiments in Asian region vanished as all the Asian equity indices hammered badly in Friday’s session after German Chancellor Angela Merkel ruled out issuance of common euro bonds and a bigger role for the ECB to combat the worsening credit crisis in the euro area. European policymakers continue to struggle to break the current logjam over how to resolve the ongoing fiscal crisis, forcing investors to avoid risky assets. Fitch Ratings, citing Portugal’s large fiscal imbalances, its high indebtedness across all sectors and an adverse macroeconomic outlook, reduced the country's credit rating to BB+. That means Portugal is considered non-investment grade by Fitch, making it even more difficult for the struggling country to return to the bond markets. Adding to the pain was Hungary, which was downgraded to junk by Moody’s Investors Service late Thursday.

Meanwhile, Japan’s consumer prices fell for the first time in four months in October, an indication that slowing global demand and the yen’s strength are weighing on the world's third-biggest economy. Japan's core consumer price index fell 0.1% in October. Chinese shares ended down by 0.70 percent on Friday, weighed down by property and financial shares amid uncertainty over the timing of policy easing measures and volatility in global markets. While, Nikkei remained near two and a half year low as leaders were no closer to a consensus on how to contain the euro-zone debt crisis.