Post session - Quick review

Indian equity markets extended the celebration mood on Friday as investors witnessed firework across the space after European leaders put forward a plan to contain the regions sovereign-debt and banking crisis that included a 50% write down on Greek government debt held by private bondholders and a boost to the region's bailout fund. Local equity markets after getting a lukewarm response from the traders at the Mahurat Trading session. However, risk appetite got a further boost after the talk of world’s largest economy US slipping into recession got a halt with its quarterly data illustrating largest jump for the US economy in more than a year. The US economy grew at its fastest pace in a year in the third quarter as consumers and businesses stepped up spending, creating momentum that could carry into the final three months of the year.

Overnight, US markets surged on Thursday, to near three-month highs, lifting the S&P 500 back into positive turf for 2011. Meanwhile, Asian shares too snapped the session near an 8 week high tracing EU Progress. Hong Kong’s Hang Seng Index added 3.3%, its highest close in more than a month post brokerages including Guotai Junan Securities Company, Mizuho Securities Asia and Barclays Plc said China may cut banks’ reserve requirements before the end of this year. In Seoul, gains were underpinned by Samsung Electronics which advanced 2.3%.  The European shares extended the previous session's rally on Friday, as investors remained buoyant over a deal struck by euro zone leaders early on Thursday to help end the bloc's two-year-old debt crisis.

Back home, as bulls ran berserk over the bourses, none of the sectoral indices were left in red. Stocks from Metal, Realty and Bankex scored prominent gains. Followed closely were the stocks from Capital Goods, Auto counters.  Metal and mining shares jumped after LMEX, a gauge of six metals traded on the London Metal Exchange, vaulted 4.76% on Thursday, 27 October 2011. While, Sterlite Industries and Hindalco Industries galloping over 10 percent were the top gainers of the metal pivotal. Interest rate sensitive realty stocks rose after RBI hinted that a pause in interest rate hikes is likely at its December meet. Reacting to this, HDIL, Unitech, DLF, DB Realty and Indiabulls Real Estate rose between 0.25% to 6%.  Bears running over intensely for shorts fuelled a whopping 500 points rally at the 30 share barometer index-Sensex- which settled above 17800 mark. Meanwhile, 50 share index -Nifty-accumulating over 150 points ended the trade above 5300 level. The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1618:1220 while 121 scrips remained unchanged.

The BSE Sensex gained 499.96 points or 2.89% and settled at 17,788.79. The index touched a high and a low of 17,908.13 and 17,671.86 respectively. 27 stocks advanced against 3 declining ones on the index (Provisional)

The BSE Mid-cap index gained 1.50% while Small-cap index was up 0.84%. (Provisional)

On the BSE Sectoral front, Metal up 5.93%, Realty up 5.20%, Bankex up 3.70%, Capital Goods up 3.57% and Auto up 2.70% were the top gainers while Consumer Durables down 0.06% was the only loser.

The top gainers on the Sensex were Hindalco up 10.72%, Sterlite Industries up 7.98%, DLF up 7.65%, JP Associates up 7.62% and Jindal Steel up 7.61%.

On the flip side, Maruti down 1.99%, Bharti Airtel down 0.65% and Bajaj Auto down 0.25% were the only losers on the index. (Provisional)

Meanwhile, India’s food inflation inched up to 11.43%, breaching the psychological barrier for the week ended October 15 from 10.60% in the previous week. The weekly food inflation measured by the Wholesale Price Index (WPI) is at 6-month high, sustaining the pressure on overall inflation and the Reserve Bank of India (RBI). The surge was mainly on the back of relentless rise in prices of vegetables, fruits, milk and protein-rich items.

According to the data released by the Ministry of Commerce and Industry, the index for ‘Food Articles’ group rose by 0.2% to 200.8 (Provisional) from 200.3 (Provisional) for the previous week due to higher prices of condiments and  spices (3%), gram, fish-marine and maize(2% each) and pork (1%).  However, the prices of poultry chicken, (5%), bajra(2%) and egg, ragi and urad (1% each) declined. But the index for ‘Non-Food Articles’ group declined by 0.1% to 179.7 (Provisional) from 179.8  (Provisional) for the previous week due to lower prices of flowers (7%), gaur seed (6%), raw jute (3%), castor seed, groundnut seed and niger seed (2% each). However, the prices of gingelly seed (3%), raw silk, fodder, and soyabean (2%each) and raw cotton, raw rubber and copra (1% each) moved up.

On the other hand, the index for ‘Minerals’ group rose by 1.8% to 309.2 (Provisional) from 303.6 (Provisional) for the previous week due to higher prices of steatite (19%), barites (13%) and crude petroleum (6%). However, the prices of zinc concentrate (13%), sillimanite and copper ore (7%each) and manganese ore and iron ore (3% each) declined.

As a result the index for ‘Primary Articles’ groups which account for 20.12% of the WPI rose by 0.3% to 204.5 (Provisional) from 203.8 (Provisional) for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 11.75% (Provisional) for the week ended October 15 as compared to 11.18% (Provisional) for the previous week. 

Meanwhile, the index for ‘Fuel and Power’ group, which account for 14.91%, remained unchanged at its previous week’s level of 170.1. The annual rate of inflation, calculated on point to point basis, stood at 14.70% (Provisional) for the week ended October 15 as compared to 15.17% for the previous week.

The stubbornly high food inflation is really a serious matter of concern for the government and policy makers. Experts from the industry are of the view that the food inflation is less likely to come below 10% in short term, as there is a mismatch between demand and supply.

However, because of the base effect, the food inflation is expected to decline as it has shot up around 20% in December 2010. If food inflation is not softening by the December 2011, then it may lead to a situation of stagflation that is high inflation and low growth. The rise in food inflation, which has a significant share in the overall price spiral, vindicates the rate hike and the policy stance taken by the RBI, which has increased its key policy rates for 13 times since March 2010. In its annual review, the apex bank had estimated headline inflation to remain high till December this year before tapering down to about 7% by the end of the fiscal year in March, 2012.

India VIX, a gauge for market’s short term expectation of volatility lost 7.93% at 20.89 from its previous close of 22.69 on Wednesday. (Provisional)

The S&P CNX Nifty gained 152.00 points or 2.92% to settle at 5,353.80. The index touched high and low of 5,399.70 and 5,322.80 respectively. 43 stocks advanced against 7 declining ones on the index. (Provisional)

The top gainer on the Nifty were, Hindalco up 10.72%, DLF up 8.23%, JP Associates up  8.04%, Reliance Infra up 8.03%  and Sterlite up 8.02%.

On the other hand, BPCL down 3.15%, Maruti down 1.63%, GAIL down 0.65%, Bharti Airtel down 0.52% and Sesa Goa down 0.49% were the top losers. (Provisional)

The European markets are trading in green, with France's CAC 40 up 0.31%, Germany's DAX up 0.46% and FTSE 100 up 0.16%.

Asia pacific stocks, extending an advance that started on Thursday, surged to an eight week high on Friday, after European leaders put forward a plan to contain the regions sovereign-debt and banking crisis that included a 50% write down on Greek government debt held by private bondholders and a boost to the region's bailout fund. Asian shares rallied for a second day on Friday with many regional markets hitting highs as investor confidence grew after the talk of world’s largest economy, US slipping into recession got a halt after the quarterly data illustrated the largest jump for the US economy in more than a year, which also sparked a overnight gain at Wall Street.

The U.S. economy grew at its fastest pace in a year in the third quarter as consumers and businesses stepped up spending, creating momentum that could carry into the final three months of the year. Hong Kong’s Hang Seng Index after surging to its highest close in more than a month settled with gains of over 1.5%. Brokerages including Guotai Junan Securities Company, Mizuho Securities Asia and Barclays Plc said China may cut banks’ reserve requirements before the end of this year. In Seoul, gains were underpinned by Samsung Electronics which advanced 2.3%. The firm said that its third-quarter net profit fell 23% due to weakness at its display unit, but the results weren't as weak as analysts had forecast. Samsung's third-quarter loss was offset by strength in the tech major's mobile-phone business, which unseated Apple Inc. last quarter as the world's largest seller of smart phones by unit.