Post session - Quick review

Rattled investors continued exiting out of riskier assets for the second consecutive session as mounting worries of a full-blown financial crisis in Europe, increased the appeal of safe heaven dollar and treasuries. Extending their weakness in bear market, Indian equity indices once again staged a distressing performance. The dour mood in markets was also reinforced by a weak business sentiment report in Japan and contraction in China's manufacturing activity. Investor concerns over a darkening outlook for the global economy turned true, with the Bank of Japan's tankan survey showing that business sentiment among major Japanese manufacturers had deteriorated more than expected in the three months to December. China's December HSBC manufacturing PMI, remained in contraction mode below the 50 threshold.

Back home, local barometer gauges although covered moderate losses approaching the early noon deals with the support of easing food inflation, however, the respite proved short lived. India's food inflation, showing its lowest reading since late February 2008, eased to 4.35 percent in the year to December 3 -from an annual 6.60 percent rise in the previous week. Building further hopes, Kaushik Basu, chief economic adviser to finance ministry, said that he expects the food inflation to drop to 3 percent in the first week of January.

Indian equity markets also failed to draw much respite from European markets, which rebounding from a two-week low, rallied in early deals as investors shifted their focus on a crucial bond issue in Spain. However, the mood set by the Asian pacific markets was perceived to be the final one by the market participants. Asian markets fell for a third straight session on growing doubts over last week's European debt deal as Germany warned the crisis would last for years. However, US future indices continued to show a negative start of trade for Wall Street on Thursday.

Besides global uncertainties, mounting worries about the health of domestic economy amidst fears that weakening currency would raise overseas borrowing costs for companies also prompted risk aversion on Dalal Street. Indian rupee plummeted to a fresh record low on Thursday as investors increasingly grew bearish about the outlook for both the domestic and global economies, raising the prospect of further capital outflows from emerging markets. Meanwhile, with the mid-quarterly monetary policy review around the corner, the milieu remained highly vigilant.

Stocks from Capital Goods, Consumer Durable and auto counters bore the maximum brunt of profit taking however, stocks from Fast Moving Consumer Goods (FMCG), Power and Oil & Gas counters negated the losses of the barometer gauges to some extent. 30 share index of BSE- Sensex-losing close to 50 points ended below the 15900 mark. While, widely followed 50 share index of NSE-Nifty-sliding around 15 points ended sub 4800 level.

The broader indices too nursed heavy losses and went home with a cut of over 1%. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 949:1741 while 152 scrips remained unchanged.

The BSE Sensex lost 29.84 points or 0.19% and settled at 15,851.30. The index touched a high and a low of 15,908.02 and 15,596.22 respectively. 15 stocks advanced against 15 declining ones on the index (Provisional)

The BSE Mid-cap index lost 1.11% while Small-cap index was down by 1.41%. (Provisional)

On the BSE Sectoral front, Power up 0.81%, FMCG up 0.70%, Oil & Gas up 0.58%, PSU up 0.28% and Metal up 0.07% were the top gainers while Capital Goods down 1.94%, Consumer Durables down 1.59%, Auto down 1.06%, Bankex down 0.85% and TECk down 0.75% were the top losers.

The top gainers on the Sensex were Coal India up 4.38%, Tata Power up 4.20%, HUL up 3.11%, NTPC up 2.61% and JP Associates up 1.73%.

On the flip side, Sterlite Industries down 3.91%, BHEL down 2.83%, Bharti Airtel down 2.82%, Wipro down 2.33% and SBI down 2.28% were the top losers on the index. (Provisional)

Meanwhile, India’s weekly food inflation, measured by the Wholesale Price Index (WPI), fell to a nearly four-year low of 4.35% for the week ended December 3, the fifth successive decline and the lowest rate of food inflation since the week ended February 23, 2008. The decline was mainly on the back of reducing prices of onion, potato, vegetables and egg, meat and fish. The easing of food inflation is in line with the government’s expectations.

According to the data released by the Ministry of Commerce and Industry, the index for ‘Food Articles’ group  declined by 1.0% to 191.9 (Provisional) from 193.8 (Provisional) for the previous week due to lower prices of fruits and vegetables (4%), poultry chicken and urad (3% each) and ragi, gram, barley, tea, condiments and spices and arhar (1% each). However, the prices of pork (6%), beef and buffalo meat and jowar (2% each) and bajra, fish-inland and maize (1% each) moved up.

The index for 'Non-Food Articles' group rose by 0.4% to 178.4 (Provisional) from 177.7 (Provisional) for the previous week due to higher prices of flowers (6%), gaur seed and linseed (5% each), raw rubber (4%), niger seed and raw silk (3% each), rape and mustard seed (2%) and sunflower (1 %). However, the prices of gingelly seed and castor seed (3% each), fodder (2%) and coir fibre, soyabean, copra and groundnut seed (1% each) declined.

As a result the index for ‘Primary Articles’ which accounts for 20.12% of the WPI declined by 0.6% to 198.1 (Provisional) from 199.3 (Provisional) for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 5.48% (Provisional) for the week ended December 3, as compared to 6.92% (Provisional) for the previous week.

Meanwhile, the index for ‘Fuel and Power’ group, which accounts for 14.91% of WPI, rose by 0.3% to 172.4 (Provisional) from 171.8 (Provisional) for the previous week due to higher prices of aviation turbine fuel and bitumen (4% each) and naphtha and light diesel oil (3% each). However, the prices of petrol and furnace oil (1% each) declined. The annual rate of inflation, calculated on point to point basis, stood at 15.24% (Provisional) for the week ended December 3 as compared to 15.53% (Provisional) for the previous week.

Further, Chief Economic Adviser Kaushik Basu had expressed hope that food inflation may fall below 3% in a month’s time. The fall in food inflation comes as a silver lining for the government at a time when the economy is experiencing a slowdown, with GDP growth dipping to 6.9% in the second quarter, the lowest rate of expansion in over two years. Industrial production has also witnessed a contraction, with output shrinking by 5.1% in October.

Just a day before the Reserve Bank of India’s monetary policy review, weekly food inflation coming less than 5% mark is a big relief to the government and the policy maker, who have been facing criticism from all quarters for persistently high prices. The RBI, in its second quarter review of the monetary policy last month, had said it expects inflation to remain elevated till December on account of the demand-supply mismatch before moderating to 7% by March 2012

India VIX, a gauge for market’s short term expectation of volatility gained 0.06% at 28.81 from its previous close of 28.79 on Wednesday. (Provisional)

The S&P CNX Nifty lost 11.20 points or 0.24% to settle at 4,752.05. The index touched high and low of 4,768.65 and 4,673.85 respectively. 21 stocks advanced against 29 declining ones on the index. (Provisional)

The top gainers on the Nifty were Tata Power up 4.90%, Coal India up 4.18%, IDFC up 3.80%, Power Grid up 3.17% and HUL up 3.03%.

On the other hand, Ranbaxy down 4.44%, Sterlite down 3.91%, Sesa Goa down 3.59%, Bharti Airtel down 2.91% and SBI down 2.60% were the top losers. (Provisional)

The European markets are trading in green, with France's CAC 40 up 0.12%, Germany's DAX up 0.33% and FTSE 100 up 0.23%.

Asian stock markets prolonged their downfall for yet another day on Thursday as Japanese business confidence dropped and higher borrowing costs for Italy sparked worries over the ability of European governments to get a grip on their ever-burgeoning debts. Meanwhile, Japanese Nikkei declined over one and a half percent after the Bank of Japan’s “tankan” survey of business sentiment fell to minus 4. The figure represents the percentage of companies saying business conditions are good minus those saying conditions are unfavourable, with 100 representing the best mood and minus 100 the worst. Japan's strong yen has hit multiple historic highs this year against the dollar, making business conditions difficult for Japan’s export-reliant economy.

Moreover, Shanghai Composite tumbled over two percent after a preliminary reading of HSBC’s China Purchasing Managers Index showed the level of activity at mainland Chinese factories contracted again in December, though the rate of decline was slower than in November. Seoul shares too fell over two percent, with buying appetite weak on rising risk aversion amid fears that Europe's debt crisis continues to worsen.