Stock markets in India capitulated by over a percent
on Wednesday after showing signs of consolidation in last four sessions
as discouraging global leads spooked investors' sentiments in the dying
hours of trade. Despite beginning the session on a positive note and
trading in a tight range for most part of the session, the key gauges
failed to snap the session in the positive territory. The benchmark
indices suffered hefty bouts of profit booking especially in rate
sensitive counters and got dragged around the psychological 5,200
(Nifty) and 17,350 (Sensex) levels. The optimism over Italian Prime
Minister Silvio Berlusconi's vow to resign after crucial austerity
package aimed at calming Euro-zone turmoil are approved this month,
evaporated by the end. The late hour selling came on the back of the
sharp surge in Italian bonds yields which rose above 7% and also because
European markets nosedived after a short-lived rally. Back home,
sentiments were undermined as investors squared off hefty positions from
the rate sensitive Banking counter which plummeted by over two and half
a percent on reports that Moody's slashed its outlook for India's
banking sector to 'negative' from 'stable'. The global rating agency
downgraded the Banking sector citing concerns that slowdown in domestic
and international economic activities are affecting the asset quality,
capitalization and profitability of banks in the counting. Furthermore,
investors punished banking heavyweight SBI which got butchered by close
to four percent post its second quarter earnings announcement, since it
reported a steep rise in non-performing assets for the quarter.
Meanwhile, the data released by SIAM showed that India's car sales
registered the steepest plunge in more than a decade in October, owing
to a sharp drop in production from Maruti Suzuki, rising borrowing costs
and spiraling fuel prices.
Earlier on Dalal Street, the benchmark got off to a positive start in the morning trade as investors sentiments got buoyed after Italian Prime Minister Silvio Berlusconi bowed to a parliamentary revolt and intense pressure and agreed to resign once a new budget was passed. However, the indices failed to capitalize on the initial momentum and continued to see-saw around the neutral line for most part of the day. But just when it appeared that the frontline indices would extend their consolidation phase for the fifth session in a row, hefty position squaring in most sectors ensured that the indices settle with large cuts. Eventually the NSE's 50-share broadly followed index Nifty, plunged by over one and a quarter percent to settle above the crucial 5,200 support level while, Bombay Stock Exchange's Sensitive Index Sense deposed over two hundred points and closed above the psychological 17,350 mark. Moreover, the broader markets too succumbed to the selling pressure evident in their larger peers and plunged by over a percentage points. On the BSE sectoral space, the Bankex index remained the top laggard in the space and settled with over two and half percent cuts followed by the Metal pocket which too went home with similar losses. But the defensive FMCG sector remained the top gainer in the space with over a percent gains. The markets plunged on stronger volumes of over Rs 1.24 lakh crore while the turnover for NSE F&O segment too remained on the higher side as compared to Tuesday at over 1.10 lakh core. The market breadth remained pessimistic as there were 1,879 shares on the gaining side against 991 shares on the losing side while 104 shares remained unchanged.
Finally, the BSE Sensex shaved off 207.43 points or 1.18% to settle at 17,362.10, while the S&P CNX Nifty plunged by 68.30 points or 1.29% to close 5,221.05.
The BSE Sensex touched a high and a low of 17,658.34 and 17,331.23 respectively. The BSE Mid cap and Small cap index down by 1.25% and 1.06% respectively.
The major gainers on the Sensex were Hindustan Unilever up 2.85%, Wipro up 2.14%, TCS up 1.77%, Hero MotoCorp up 0.91% and ITC up 0.71%. While, SBI down 6.76%, Tata Steel down 4.08%, Maruti Suzuki down 3.82%, Hindalco Industries down 3.69% and DLF down 3.59% were the major losers on the index.
The top gainers on the BSE sectoral space were FMCG up 1.17%, IT up 0.42% and TECk up 0.01%. While Bankex down 2.62%, Metal down 2.50%, Realty down 2.48%, Oil & Gas down 2.25% and PSU down 2.07% were the major losers on the BSE sectoral space.
Meanwhile, on the back of slowdown in domestic and international economic activities, which is affecting the asset quality, capitalization and profitability of banks, the credit rating agency Moody downgraded its outlook for India's banking system to 'negative' from 'stable'.
Retarding economic growth and increased borrowing by the government will drain funds from the private credit market, pressuring bankers in India, the ratings agency said in a statement. Moody's describes 'negative' outlook as one characterized by volatility and uncertain conditions.
Vineet Gupta, Moody's vice-president and senior analyst said, "With asset quality, given the tightening environment, we anticipate that it will deteriorate over the next 12-18 months, thereby causing an increase in provisioning needs for the banks in FY2012 and FY2013."
Moody's said monetary tightening and a slowdown in the economy would cut bank loan growth, while a recent liberalization of savings deposit rates by the central bank would pressurize lenders' profitability.
In last month, shares of State Bank of India, which is India's largest bank, had declined to their lowest level in last 2 year after Moody's cut its standalone rating to D+ from C-.
'For those banks with weaker capital ratios on average and higher asset quality pressures relative to their individual rating levels, their standalone ratings are likely to come under pressure,' the Moody's statement added.
The S&P CNX Nifty touched a high and low of 5,317.50 and 5,211.75, respectively.
Most of the Asian equity indices snapped the day's trade in the positive terrain on Wednesday as investors cheered plans by Italian Prime Minister Silvio Berlusconi to resign as a step toward resolving crippling debt problems in Europe. Moreover, cooling inflation in China gave some banking and property shares a boost and also underpinning Hong Kong shares. Consumer Price Index, showed inflation in the world second largest economy rose 5.5% in October from a year earlier, slower than a 6.1% on-year rise in September. Lower inflationary pressure leaves room for further policy fine-tuning. The People Bank of China has already marginally loosened liquidity by open market operations in October.
Earlier on Dalal Street, the benchmark got off to a positive start in the morning trade as investors sentiments got buoyed after Italian Prime Minister Silvio Berlusconi bowed to a parliamentary revolt and intense pressure and agreed to resign once a new budget was passed. However, the indices failed to capitalize on the initial momentum and continued to see-saw around the neutral line for most part of the day. But just when it appeared that the frontline indices would extend their consolidation phase for the fifth session in a row, hefty position squaring in most sectors ensured that the indices settle with large cuts. Eventually the NSE's 50-share broadly followed index Nifty, plunged by over one and a quarter percent to settle above the crucial 5,200 support level while, Bombay Stock Exchange's Sensitive Index Sense deposed over two hundred points and closed above the psychological 17,350 mark. Moreover, the broader markets too succumbed to the selling pressure evident in their larger peers and plunged by over a percentage points. On the BSE sectoral space, the Bankex index remained the top laggard in the space and settled with over two and half percent cuts followed by the Metal pocket which too went home with similar losses. But the defensive FMCG sector remained the top gainer in the space with over a percent gains. The markets plunged on stronger volumes of over Rs 1.24 lakh crore while the turnover for NSE F&O segment too remained on the higher side as compared to Tuesday at over 1.10 lakh core. The market breadth remained pessimistic as there were 1,879 shares on the gaining side against 991 shares on the losing side while 104 shares remained unchanged.
Finally, the BSE Sensex shaved off 207.43 points or 1.18% to settle at 17,362.10, while the S&P CNX Nifty plunged by 68.30 points or 1.29% to close 5,221.05.
The BSE Sensex touched a high and a low of 17,658.34 and 17,331.23 respectively. The BSE Mid cap and Small cap index down by 1.25% and 1.06% respectively.
The major gainers on the Sensex were Hindustan Unilever up 2.85%, Wipro up 2.14%, TCS up 1.77%, Hero MotoCorp up 0.91% and ITC up 0.71%. While, SBI down 6.76%, Tata Steel down 4.08%, Maruti Suzuki down 3.82%, Hindalco Industries down 3.69% and DLF down 3.59% were the major losers on the index.
The top gainers on the BSE sectoral space were FMCG up 1.17%, IT up 0.42% and TECk up 0.01%. While Bankex down 2.62%, Metal down 2.50%, Realty down 2.48%, Oil & Gas down 2.25% and PSU down 2.07% were the major losers on the BSE sectoral space.
Meanwhile, on the back of slowdown in domestic and international economic activities, which is affecting the asset quality, capitalization and profitability of banks, the credit rating agency Moody downgraded its outlook for India's banking system to 'negative' from 'stable'.
Retarding economic growth and increased borrowing by the government will drain funds from the private credit market, pressuring bankers in India, the ratings agency said in a statement. Moody's describes 'negative' outlook as one characterized by volatility and uncertain conditions.
Vineet Gupta, Moody's vice-president and senior analyst said, "With asset quality, given the tightening environment, we anticipate that it will deteriorate over the next 12-18 months, thereby causing an increase in provisioning needs for the banks in FY2012 and FY2013."
Moody's said monetary tightening and a slowdown in the economy would cut bank loan growth, while a recent liberalization of savings deposit rates by the central bank would pressurize lenders' profitability.
In last month, shares of State Bank of India, which is India's largest bank, had declined to their lowest level in last 2 year after Moody's cut its standalone rating to D+ from C-.
'For those banks with weaker capital ratios on average and higher asset quality pressures relative to their individual rating levels, their standalone ratings are likely to come under pressure,' the Moody's statement added.
The S&P CNX Nifty touched a high and low of 5,317.50 and 5,211.75, respectively.
The
top gainers on the Nifty were HUL up 3.30%, Wipro up 1.81%, TCS up
1.79%, Hero MotoCorp up 0.73% and ITC up 0.59%. On the flip side, SBI
down 7.20%, BPCL down 5.71%, Tata Steel down 4.40%, DLF down 4.39% and
Hindalco down 4.29% were the top losers on the index.
The European markets were trading in red. France's
CAC 40 down 2.00%, Britain's FTSE 100 down by 1.70%, and Germany's DAX
down by 2.41%. Most of the Asian equity indices snapped the day's trade in the positive terrain on Wednesday as investors cheered plans by Italian Prime Minister Silvio Berlusconi to resign as a step toward resolving crippling debt problems in Europe. Moreover, cooling inflation in China gave some banking and property shares a boost and also underpinning Hong Kong shares. Consumer Price Index, showed inflation in the world second largest economy rose 5.5% in October from a year earlier, slower than a 6.1% on-year rise in September. Lower inflationary pressure leaves room for further policy fine-tuning. The People Bank of China has already marginally loosened liquidity by open market operations in October.
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