Indian equities plunge for second straight session as rate sensitives tank

Indian stock markets concluded second straight session on a disappointing note as the benchmark equity indices extended their southbound journey on the back of daunting global developments as well as unsupportive domestic economic reports. Hefty position squaring from the rate sensitive Automobile, Banking and Realty counters dragged the frontline gauges by over a percentage points around the psychological 5,250 (Nifty) and 17,500 (Sensex) levels. Marketmen lacked fervor as little clarity emerged over how the Euro-zone sovereign debt trouble will be tackled. Sentiments globally got butchered after the Greek Prime Minister George Papandreou’s call for a confidence vote and a referendum on last week’s deal, injected a lot of uncertainty in the minds of investors. Investors’ took to risk aversion post the Greek PM’s statement and trimmed hefty positions from risky asset classes like equities. Also reports that the Chinese manufacturing activity, South Korean exports and Taiwan’s economy are all growing at the weakest pace since 2009; did not go down well with market participants as it indicated that the global economy is still not firm on its road to recovery. On the domestic front, automobile companies announced monthly sales numbers and market leader Maruti Suzuki’s dispiriting sales numbers triggered selloff in the auto stocks. Also the shares of airline companies like Kingfisher and Jet Airways bore the brunt of selling pressure after government owned oil marketing companies hiked the price of aviation turbine fuel by 3.8%. Meanwhile government released India’s September Core industries’ growth reading which showed that sharp decline in key sectors of coal, natural gas and fertilizer pulled down the index of eight core industries on the back of rising input costs and high interest rates. In the meantime investors overlooked India’s PMI reading which showed that manufacturing sector in October recovered for the first time in last six months on the back of improved conditions in the sector, which reflected rise in domestic orders for new business.

Earlier on Dalal Street, the benchmark got off to a dismal opening, following the weak Asian markets but showed signs of recovery and hit intraday highs in early hours of trade. Despite coming closer to the neutral line the frontline indices failed to capitalize on the early momentum and soon drifted into a southbound journey. The indices slowly but steadily kept losing steam and hit the lowest point in the session in dying hours of trade post which some short covering ensured that the bourses snap the session off the day’s low. Eventually the NSE’s 50-share broadly followed index Nifty, plunged by over one and a quarter percent and settled above the crucial 5,250 support level while Bombay Stock Exchange’s Sensitive Index Sensex deposed over two hundred points and closed below the psychological 17,500 mark. Moreover, the broader markets too finished on a pessimistic note with cuts of over half a percent but managed to outclass their larger peers. On the BSE sectoral space, the Automobile counter settled as the top laggard in the space after suffering nasty lacerations of around two percent after auto companies failed to show impressive growth in the festive season. While the rate sensitive realty and bankex indices too went home with large cuts of over one and half a percent. The markets declined on larger volumes of over Rs 1.05 lakh crore while the turnover for NSE F&O segment too remained on the higher side as compared to Monday at over 0.95 lakh core. The market breadth remained pessimistic as there were 1,177 shares on the gaining side against 1,609 shares on the losing side while 129 shares remained unchanged.

Finally, the BSE Sensex shaved off 224.18 points or 1.27% to settle at 17,480.83, while the S&P CNX Nifty plunged by 68.65 points or 1.29% to close at 5,257.95.

The BSE Sensex touched a high and a low of 17,661.78 and 17,422.47 respectively. The BSE Mid cap and Small cap index down by 0.72% and 0.55% respectively.

The major gainers on the Sensex were Hindustan Unilever up 3.52%, Wipro up 1.83%, Tata Power up 0.90%, Bharti Airtel up 0.84% and BHEL up 0.53%. While, ICICI Bank down 3.80%, Mahindra & Mahindra down 3.38%, Sterlite Industries down 3.22%, Tata Motors down 2.49% and ITC down 2.35% were the major losers on the index.

There was no gainer on the BSE sectoral space. While Auto down 1.98%, Realty down 1.87%, Bankex down 1.54%, Metal down 1.52% and Capital Goods (CG) down 1.10% there were top losers on BSE sectoral space.

Meanwhile, country’s export in September grew at a slower pace compared to last few months. As per the official data, India’s export in September 2011 grew by 36.36% to $24.82 billion from $18.2 billion in September 2010. The cumulative value of exports for the first six months of 2011-12 increased by 52.08% to $160.04, compare to $105.24 billion in the same period of last year.

However, in September 2011, imports also grew 17.2% to $34.58 billion as a result, trade deficit for the same month stood at $9.67 billion. The cumulative value of imports for the April-September surged by 32.41% to $233.5 billion compared to $176.36 billion in the same period of 2010-11. Hence, the trade deficit for the first half of 2011-12 stood at $73.46 billion compared to $71.11 billion in the April-September 2010.

According to the commerce and industry ministry data, Oil imports in September 2011 surged by 14.62% to $9.2 billion compared to $8.0 billion in September 2010. In the first half of 2011-12, oil imports surged by 42.39% to $70.34 billion compared to $49.4 billion in the April-September 2010.

The total value of non-oil imports during September 2011 surged by 18.17% to $25.37 billion from $21.47 billion in September 2010. During April-September 2011, non-oil imports jumped by 28.52% to $163.16 billion compared to $126.95 billion during the corresponding period last year.

The S&P CNX Nifty touched high and low of 5,310.85 and 5,238.30, respectively.

The top gainers on the Nifty were HUL up 3.13%, PNB up 2.06%, Wipro up 1.81%, BPCL up 1.42% and Maruti Suzuki up 1.13%. On the flip side, ICICI Bank down 3.87%, M&M down 3.75%, Reliance Infra down 3.73%, Dr Reddy down 3.69% and HCL Tech down 3.55% were the top losers on the index.

The European markets were trading in red. France's CAC 40 plunged 3.80%, Britain's FTSE 100 down by 2.85%, and Germany's DAX declined by 4.23%.

Renewed worries over the European debt crisis and a steep fall on Wall Street overnight dragged the Asian markets lower on Tuesday while the euro remained under pressure after suffering heavy losses overnight. After a shock announcement that Greece will hold a referendum on a new EU bailout deal for the debt-ridden country threw efforts to resolve the euro zone’s debt crisis into fresh doubt. Moreover, weaker-than-expected pick-up in China’s factory activity provided another excuse for selling, sending Hong Kong’s benchmark Hang Seng index down by about two and a half percent. The Purchasing Managers’ Index fell to 50.4 in October from 51.2 in September. Chinese manufacturing index in October was its slowest since February 2009, reminding investors of the risks to the world's second largest economy from sagging global growth.