Post session - Quick review

Following the global indices, Indian equity markets too capitulated to the selling pressure and concluded the trade in negative territory on Wednesday. However, this time around, domestic woes more than global uncertainties, perturbed local investor’s. Barometer gauges after taking a breather in the previous session, resumed their southbound journey and in a slapdash way tumbled below their crucial bastions of 16000 mark (Sensex) and 4800 (Nifty) respectively.

What really worried the Indian investor’s was the domestic growth story. As barometer indices in a knee-jerk reaction to the November months’ headline inflation data tripped down to their lowest point. India’s headline inflation, as measured by the Wholesale Price Index (WPI), despite easing from previous month, came above the street expectation at 9.11% for the month of November 2011 against 9.73 in October. The disappointment acted as track changer for Indian equity markets, which earlier showcased a tough face of resilience even after participants across the globe ate their heart out of Fed’s policy meeting on Tuesday ', which was a letdown for the many investors looking for any change in policies.

Fed, in a much disappointing move, left its policy rate unchanged and decided against any further additional stimulus measures for now.  Reacting to it Asian pacific markets too fared miserably in trade. Meanwhile, European shares showcased no different move. News of German opposition for raising the Euro 500 billion lending limit for the planned European Stability Mechanism weighed on sentiment, as investors fretted about the divisions in Europe that's preventing a credible fix to the region's debt woes.

Back home, stocks from rate sensitive counters i.e. Realty, Banking along with Power and Consumer durable space were the worst hit. Rate sensitive’s collapsed in trade post inflation data that remained above 9% for the 12th consecutive month, complicating policy options for central bank whose series of interest-rate increases over the past 21 months have strangled economic growth.

Additionally, Airline stocks extended losses as a weak rupee heightened concerns about its impact on operating costs. SpiceJet, Jet Airways and Kingfisher Airlines fell between 1 to 3%. A weak rupee impacts aviation sector adversely as almost a third of operational expenses of aviation firms are dollars denominated.  On the flip side, however, defensive FMCG stocks rose on buying in a choppy market, with the FMCG pivotal featuring as the lone gainer on the BSE sectoral front. Colgate-Palmolive (India), ITC, Dabur India, Tata Global Beverages, Hindustan Unilever, Ruchi Soya Industries and Nestle India all gained.

Shares of broadcasting companies and cable service providers gained after a bill aimed at digitisation of cable TV was passed by the Lok Sabha on Tuesday, 13 December 2011. Wire & Wireless India, Hathway Cable, and Dish TV all rose. Although tender recovery was seen in the dying hours of trade but that failed to show any impact. Thus, by the end -Sensex-losing over 100 points ended below 15900 level, while 50 share index-Nifty- receding over 25 points ended sub 4800 mark. Meanwhile, the broader indices too ended down with a sharp cut of over 0.75%. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1050:1648 while 140 scrips remained unchanged.

The BSE Sensex lost 124.42 points or 0.78% and settled at 15,878.09. The index touched a high and a low of 16,133.41 and 15,855.12 respectively. 5 stocks advanced against 25 declining ones on the index (Provisional)

The BSE Mid-cap index lost 0.97% while Small-cap index was down by 0.82%. (Provisional)

On the BSE Sectoral front, FMCG up 0.19% was the lone gainer while Realty down 2.22%, Metal down 2.21%, Power down 2.14%, PSU down 1.64% and Consumer Durables down 1.55% were the top losers.

The top gainers on the Sensex were Sun Pharma up 1.41%, ITC up 1.24%, Bharti Airtel up 0.75%, JP Associates up 0.66% and Wipro up 0.47%.

On the flip side, Tata Power down 4.03%, Tata Steel down 3.94%, M&M down 3.83%, DLF down 3.22% and Coal India down 3.05% were the top losers on the index. (Provisional)

Meanwhile, India’s headline inflation measured by the Wholesale Price Index (WPI) for the month of November 2011 fell to its lowest level in last 12 months, stood at 9.11% as compared to 9.73% in last month. The decline in headline inflation is on the back of the sharp decline in prices of primary articles and food articles. However, in the month of November, manufactured products and fuel and power article, showed surge in prices, it increased to 7.7% and 15.48% as compared to 7.66% and 14.79% respectively.

According to the data released by the ministry of commerce and industry, the WPI for 'All Commodities' for the month November, 2011 rose by 0.1% to 156.9 (Provisional) from 156.8 (Provisional) for the previous month. Build up inflation in the financial year so far was 4.95% compared to a buildup of 5.50% in the corresponding period of the previous year.

On the month-on-month basis the primary articles declined by 1.6% to 201.1 (Provisional) from 204.3 (Provisional) for the previous month. The index for ‘Food Articles’ group declined by 2.0% to 196.9 (Provisional) from 200.9 (Provisional) for the previous month due to lower prices of fruits and vegetables (7%), poultry chicken (6%), fish-inland and moong (4% each), urad (3%), masur (2%) and condiments and spices, rice and wheat (1% each).  However, the prices of tea (5%), fish-marine and egg (4% each), gram and coffee (3% each) and pork, jowar, mutton and ragi (1% each) moved up.

The index for ‘Non-Food Articles’ group declined by 1.5% to 176.3 (Provisional) from 178.9 (Provisional) for the previous month due to lower prices of logs and timber (17%), mesta (11%), raw rubber (9%), raw silk and raw jute (5% each), groundnut seed (4%), niger seed and raw cotton (3% each) and coir fibre (2%). However, the prices of gingelly seed (5%), soyabean (4%), flowers, fodder and gaur seed (3% each) moved up.

The index for ‘Minerals’ group rose by 1.1% to 310.5 (Provisional) from 307.0 (Provisional) for the previous month due to higher prices of barytes (8%), bauxite (4%), crude petroleum (3%), chromite (1%). However, the prices of zinc concentrate (6%), sillimanite and copper ore (3%) and dolomite, manganese ore and iron ore (1% each) declined.

The index for the Fuel and Power, which has weight of almost 15% in the WPI, rose by 0.9% to 171.6 (Provisional) from 170.0 (Provisional) for the previous month due to higher prices of aviation turbine fuel, furnace oil and naphtha (6% each) and bitumen and petrol (1% each).  However, the prices of light diesel oil (1%) declined.

The index for Manufactured Products, which has weight of almost 65% in the WPI, rose by 0.5% to 139.8 (Provisional) from 139.1 (Provisional) for the previous month. Under this segment, the index for Beverages, Tobacco & Tobacco Products, Textiles, Paper & Paper Products, Leather & Leather Products, and Chemicals & Chemical Products saw increase in prices in November 2011. However, the index for Food Products, Wood & Wood Products, and Rubber & Plastic Products registered decline in prices in November compared to month of October.

Despite the marginal decline in headline inflation, it has remained above 9% mark for straight 12 months, which indicates that the Reserve Bank of India (RBI) has failed to control inflation by its anti-inflationary stance. The government also has done upward revision of inflation for the month of September, which stood at 10% as compared to 9.72%. The data further revealed that moderating prices of essential food items like onions, potatoes and milk have pulled down inflation marginally to 9.11% in November, a development that may prompt the RBI to halt its monetary tightening strategy at its policy review on December 16.

Since March 2010, the RBI has increased its key policy rates for 13 times, this non-stop increase in key policy rates has increased the interest rates, which have affected the investment in the industrial sector.   India’s industrial production in the month of October declined to -5.1%, which is its lowest level in last two years. However, the high inflation, weak economic growth, decline in industrial production and declining rupee, has left RBI with difficult policy choices.

India VIX, a gauge for market’s short term expectation of volatility gained 2.41% at 28.79 from its previous close of 28.11 on Tuesday. (Provisional)

The S&P CNX Nifty lost 38.55 points or 0.80% to settle at 4,762.05. The index touched high and low of 4,839.55 and 4,750.40 respectively. 12 stocks advanced against 38 declining ones on the index. (Provisional)

The top gainers on the Nifty were Sun Pharma up 1.55%, ITC up 1.44%, Ambuja Cement up 0.86%, Bharti Airtel up 0.84% and JP Associates up 0.75%.

On the other hand, Tata Steel down 4.46%, Reliance Infra down 4.19%, Tata Power down 4.14%, M&M down 3.94% and BPCL down 3.88% were the top losers. (Provisional)

The European markets are trading on a mixed note, with France's CAC 40 down 1.12%, Germany's DAX down 0.45% and FTSE 100 up 0.65%.

Continuing their southbound journey Asian stocks once again made a dismal closing after the Federal Reserve failed to take any new steps to stimulate growth and offset the chilling effects of Europe’s still-unresolved debt crisis. Adding to the poor sentiment was Germany’s opposition to raising the limit for Europe’s bailout fund, highlighting cracks in the region’s leadership. Moreover, fears of mass downgrades by credit rating agencies for European sovereigns too pressured equity markets. Japanese benchmark Nikkei declined about 0.40 percent as export shares remained under pressure as the yen strengthened against a shaky euro. Sharp Corp. dropped 3 percent, Toshiba Corp. lost 1.7 percent while, Honda Motor Corp. slid 2.6 percent on Wednesday. Moreover, Chinese property shares dropped after the government signaled that it would maintain price curbs on real estate.