Post session - Quick review

Local equity markets clobbered out of shape in Friday’s trade with benchmarks ending the session with a cut of over half a percent, thrashed majorly by technology stocks after disappointing showings by Software bellwether Infosys. The combination of domestic as well as global factors led to the brutal butchery across the board, which led to local bourses snapping the session below their crucial 5,700 (Nifty) and 18700 (Sensex) levels. IT major, Infosys, also remained the top loser, pummeled nearly 6% on providing weaker than expected guidance for financial year 2012-13, even as Q2 numbers were in line with the street’s expectation. Additionally, the IT bellwether’s result overshadowed a higher than expected rise in August industrial output, which rose an annual 2.7 per cent, with the growth driven by consumer goods. Though, the August IIP numbers undermined themselves after investor’s analyzed that modest rise in August industrial output was not enough to end a long slump in Asia's third largest economy, which in turn got benchmarks into tailspin.

Benchmark 30 share index, Sensex, knocked off over massive century of points to shut shop below the 18700 level, while 50 share index, Nifty, to losing over half a percentage points, concluded sub psychological 5700 level. However, broader indices, showcasing resilience for the entire trading session, went home with gains albeit slender. Meanwhile, for the week, Sensex and Nifty both lost over a percentage points. Meanwhile, CNX Midcap index too concluded with slender loss of over 0.15%. Trade of over 1.07 lakh crore was done in terms of volume turnover. (Provisional)

On the global front, Asian markets got mixed close on Friday as investors adopted a cautious stance before the beginning of China's data deluge, as trade data is slated to come out on Saturday, with inflation numbers due on Monday. Meanwhile, third-quarter growth figures, due out Thursday, are the main data point and will be used to assess the state of the slowing Chinese economy.  Moreover, European shares dropped on Friday on persistent concerns about the outlook for the third-quarter earnings season that is expected to keep regional markets within a tight near-term range.

Closer home, stocks from defensive Health Care, Fast Moving Consumer Goods along with Consumer Durables emerged to the top performers on the BSE sectoral chart amidst sluggish trade. On the flip side, Information Technology, along with rate sensitive’s such as Auto, Realty and Bankex stocks were also beaten blue. Rate sensitive’s lost steam after persistently higher inflation, continued weakness in industrial sector showings strengthened the case of RBI not going ahead with rate cut in its Second Quarter Review of Monetary Policy 2012-13 on October 30. Reading that showed that September Consumer Price Index (CPI) inflation, rose to 9.73% year-on-year, up 10.03% month-on-month, also contributed the downside of the bourses. On the flip side, Sugar stocks like Shree Renuka Sugar, Balrampur Chini, Bajaj Hindustan surged over 2 per cent in trade after the Rangarajan panel came out with its sugar decontrol report. The Rangarajan Committee today recommended deregulation of the sugar sector by giving freedom to mills to sell sugar in the open market, a move seen positive for sugar industry. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1352:1533 while 134 scrips remained unchanged. (Provisional)

The BSE Sensex lost 146.74 points or 0.78% and settled at 18,658.01. The index touched a high and a low of 18,844.35 and 18,638.34 respectively. 11 stocks were seen advancing while 19 stocks were declining on the index (Provisional)

The BSE Mid-cap index was up by 0.08% while Small-cap index was up 0.05%. (Provisional)

On the BSE Sectoral front, Consumer Durables up by 0.72%, Health Care up by 0.45% and FMCG up by 0.14% were the only gainers, while IT down by 2.81%, TECk down by 2.44%, Realty down by 0.93%, Auto down by 0.76% and Bankex down by 0.54% were the top loser in the space.

The top gainers on the Sensex were Gail India was up 1.20%, Cipla up 1.04%, HUL up by 0.65%, HDFC Bank up by 0.59% and NTPC up 0.54%, while, Infosys down by 5.58%, Bharti Airtel down by 2.68%, BHEL down by 2.60%, Wipro down by 2.22% and Hero MotoCorp down by 1.86% were the top losers in the index. (Provisional)

Meanwhile, in a positive surprise, India’s index of industrial production (IIP), a key measure of industrial output registered decent growth of 2.7 per cent in August 2012 at 165.7, lower than the growth rate of 3.4 percent in the corresponding period last year, but way above the consensus estimates of sub 1 percent growth figure. Further, the number was also higher than July month’s negligible growth figure of 0.1 per cent, which was later revised to -0.2 per cent. Meanwhile, the cumulative growth for the period April-August 2012-13 over the corresponding period of the previous year stands at 0.4 per cent.

The industrial output has remained fragile in the past few months as growth in all three sectors viz. mining, manufacturing and electricity got dampened. However, this time around, exhibiting expansion, the manufacturing sector, which constitutes about 75.53 percent of industrial production, grew at 2.9 per cent as against a contraction of (-) 0.2per cent in July. Nevertheless, even mining sector, which constitutes about 14.6 percent of industrial production, grew at 2 per cent emerging from its contraction of (-) 0.7 per cent in July. However, growth in electricity sector dropped to 1.9 percent versus a growth figure of 2.8 percent in July. The cumulative growth in the three sectors during April-August 2012-13 over the corresponding period of 2011-12 has been (-) 0.6 per cent, 0.0 per cent and 4.8 per cent respectively.

However, Capital goods output, a key investment indicator, clearly continued to be a disappointment as capital goods production witnessed a decline of  1.7 percent on y-o-y basis highlighting that companies are still wary of making investments in high-interest and uncertain economic climate. Consumer goods, on the other hand, grew at 5 per cent, driven by robust growth of 4 percent and 5.8 per cent in consumer durables and non consumer-durables, respectively.

Industrial output, which accounts for a little over 15 percent of gross domestic product (GDP), despite beating street expectation, highlights continuing weakness for the economy, which languished near a three-year low of 5.5 percent annually in the three months to June. 

What comes as the disappointment is the September Consumer Price Index (CPI) inflation, which has risen to 9.73% year-on-year, up 10.03% month-on-month. Thus, with this inflation going high and industrial sector showing continued weakness, the economy seems to be well placed in a typical stagflationary situation, which reduces the chances of RBI reducing its key policy rates, viz, repo and reverse repo. Further, the RBI, in its Second Quarter Review of Monetary Policy 2012-13 on October 30, is expected to go ahead with its tried and tested method of reducing CRR (cash reserve ratio), that helps banks lower their cost of funds and increase lending.

India VIX, a gauge for markets short term expectation of volatility remained unchanged at 16.49 from its previous closing on Thursday. (Provisional)

The S&P CNX Nifty lost 36.60 points or 0.64% to settle at 5,671.45. The index touched high and low of 5,725.00 and 5,659.35 respectively. 20 stocks advanced against 30 declining ones on the index. (Provisional)

The top gainers on the Nifty were ACC was up 3.92%, Lupin up 2.89%, Ambuja Cement up 2.80%, JP Associates up 1.43% and Grasim Industries was up 1.37%. On the other hand, Infosys down 5.65%, BHEL down by 2.64%, Bharti Airtel down by 2.53%, Wipro down by 2.32% and IDFC down by 2.27% were the top losers. (Provisional)

The European markets were trading in red with, France’s CAC 40 down 0.31%, Germany’s DAX down 0.44% and the United Kingdom’s FTSE 100 down 0.27%.

Asian markets closed on mixed note as earlier gains post foreboding US jobs figures and hopes for upcoming Chinese economic data were countervail by global economic worries. Japan’s Nikkei extended losses with drop in telecom giant, Softbank and Fast Retailing, a company behind the Uniqlo chain of clothing shops. However, China's Shanghai Composite ended higher, despite cautions ahead of trade and inflation numbers due to be released on Saturday and Monday. Snapping a four-session losing streak, Kospi index ended marginally up on Friday, while Korean stocks closed almost unaltered.