DEPRESSING SESSION

Indian stocks markets snapped yet another depressing session with cuts of around a percent on the last trading day of the week. Unlike to the recent trends, the benchmarks had only the domestic economic reports and earnings to blame this time for their debacle as markets across the globe largely moved higher. The surprisingly worse than expected IIP numbers dampened investors' mood as industrial growth nosedived to the lowest levels in around two years to 1.9% in September, compared to 3.6% in August against forecasts of 3.5%. The fall in IIP reading confirms slowdown in the nation's economic activity, which is adversely impacted by the stubborn inflationary pressure and thirteen lending rate hikes by the RBI since March 2010. Moreover, the disappointing earnings announcement by heavyweights like Tata Steel, Hindalco and DLF too dampened investors' morale in the session. Meanwhile, market participants overlooked the slight moderation in weekly inflation data which showed that food inflation slipped slightly to 11.81% in the week ended October 29. Despite the marginal decline in food inflation, it still hovers close to 12% mark, which is well above the RBI's comfort zone of  7%. Investors also remained reluctant to build fresh positions in equities because of the depreciation in rupee, rising crude oil prices and looming uncertainties over Euro-zone debt problems. Further downside for the local bourses was limited on hopes of gradual progress in Greece and Italy. Investors across the globe cheered developments from Greece where Lucas Papademos was named as PM of a new crisis government while in Italy Mario Monti is also likely to replace PM Silvio Berlusconi. Moreover, sentiments were also relieved after Italian bond yields came off its terrifying highs of 7.5% to settle at 6.91% after the nation borrowed $6.8 billion at lower interest rates.
Earlier on Dalal Street, the benchmark got off to a somber opening as sentiments remained bearish in the initial moments. Selling pressure intensified thereafter and the frontline indices hit the session's lowest point in late morning session. Though constant attempts of recovery were evident in the session but marketmen took those opportunities to take profits off the table and pulled the bourses lower. However, some short covering in the end helped the benchmarks recover from the intraday lows. Eventually the NSE's 50-share broadly followed index Nifty, plunged by a percent to settle above the crucial 5,150 support level while Bombay Stock Exchange's Sensitive Index Sense deposed over one hundred fifty points and closed below the psychological 17,200 mark. Moreover, the broader markets too succumbed to the selling pressure evident in their larger peers and plunged by over a percent. On the BSE sectoral space, the Bankex index remained the top laggard in the space and settled with over three percent cuts followed by the Metal and Capital Goods pockets, which went home with over two percent cuts. However, the defensive Oil & Gas sector remained the top gainer in the space with gains of over three fourth of a percent after heavyweight Reliance Industries rebound in the session to settle with over two percent gains. The markets plunged on stronger volumes of over Rs 1.3 lakh crore while the turnover for NSE F&O segment too remained on the higher side as compared to Wednesday at over 1.20 lakh core. The market breadth remained pessimistic as there were 1,912 shares on the gaining side against 937 shares on the losing side while 112 shares remained unchanged.
Finally, the BSE Sensex lost 169.28 points or 0.97% to settle at 17,192.82, while the S&P CNX Nifty plunged by 52.20 points or 1.00% to close 5,168.85.
The BSE Sensex touched a high and a low of 17,279.23 and 17,096.84 respectively. The BSE Mid cap and Small cap index down by 1.13% and 1.57% respectively.
The major gainers on the Sensex were Mahindra & Mahindra up 3.12%, Sun Pharma up 2.48%, Reliance Industries up 2.23%, Hero MotoCorp up 1.85% and Bajaj Auto up 1.64%. While, ICICI Bank down 4.55%, Hindalco Industries down 4.31%, Tata Steel down 4.19%, SBI down 3.48% and L&T down 3.30% were the major losers on the index.
The top gainers on the BSE sectoral space were Oil & Gas up 0.79%, Auto up 0.62%, Health Care (HC) up 0.18% and FMCG up 0.06%. While Bankex down 3.03%, Metal down 2.33%, Capital Goods (CG) down 2.32%, Realty down 2.24% and Consumer Durables (CD) down 1.57% were the major losers on the BSE sectoral space.

Meanwhile, India's weekly food inflation measured by the Wholesale Price Index (WPI), eased to 11.81% for week ended on October 29 compared to 12.21% in the last week. This decline in food inflation after four successive increases is mainly because of decline in prices of decline in vegetables, wheat, onion and poultry products.

According to the data released by the Ministry of Commerce and Industry, the index for 'Food Articles' group declined by 0.2% to 201.7 (Provisional) from 202.2  (Provisional) for the previous week due to lower prices of fish-inland (3%), bajra (2%) and fruits & vegetables, moong and condiments & spices (1% each).  However, the prices of gram, egg, fish-marine, ragi and poultry chicken (2% each) and maize, urad and tea (1% each) moved up.
However, the index for 'Non-Food Articles' group rose by 0.2% to 177.5 (Provisional) from 177.2  (Provisional) for the previous week due to higher prices of flowers (7%), gaur seed (4%), rape & mustard seed (2%) and sunflower, raw rubber and raw jute (1% each).  However, the prices of groundnut seed (3%), coir fibre, linseed, raw silk and niger seed (2% each) and copra, gingelly seed and castor seed (1% each) declined.
As a result the index for 'Primary Articles' which accounts for 20.12% of the WPI declined by 0.1 % to 204.7 (Provisional) from 205.0 (Provisional) for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 11.43% (Provisional) for the week ended October 29 as compared to 12.08% (Provisional) for the previous week.
Meanwhile, the index for 'Fuel and Power' group, which accounts for 14.91% of WPI, remained unchanged at their previous week`s level of 169.8 (Provisional) and 14.50% (Provisional) for the week ended October 29.
Earlier in this week, Finance Minister Pranab Mukherjee said that food inflation in India is a matter of great concern and the principle reason for the recent spike in inflation is that the demand for eggs, meat, vegetables and milk has increased.
Despite the marginal decline in food inflation, it still is hovering close to 12% mark, which is almost double the Reserve Bank of India's comfort zone. However, RBI expects inflation to start moderating from December.
The S&P CNX Nifty touched a high and low of 5,198.60 and 5,142.25, respectively.
The top gainers on the Nifty were M&M up 3.20%, Sun Pharma up 2.74%, Reliance up 2.64%, Bajaj Auto up 1.81% and Hero MotoCorp up 1.63%. On the flip side, Axis Bank down 5.06%, Hindalco down 4.31%, ICICI Bank down 4.19%, Tata Steel down 3.81% and SBI down 3.59% were the top losers on the index.
The European markets were trading in green. France's CAC 40 up 0.22%, Britain's FTSE 100 up by 0.19%, and Germany's DAX up by 0.48%.
A day after suffering a huge sell-off over Italy's growing debt crisis, a successful bond auction in Rome provided some respite to the investors' sentiments and most of the Asian stock markets ended modestly higher on Friday. Rome was also able to complete a successful sale of five billion Euros ($6.81 billion) of 12-month treasury bills, suggesting there was still some confidence in the economy. Moreover, better-than-expected US unemployment report too underpinned sentiments. Data on Thursday showing US jobless claims fell to a 7-month low contributed to some easing of risk aversion.
Hong Kong shares closed about a percent higher, with traders welcoming signs of progress in Europe on addressing the debt crisis and on bargain hunting after the previous day's huge losses while, Taiwan stocks ended up 0.80 percent, led by tech heavyweights Hon Hai and TSMC following strong sales results for October.