PROFIT BOOKING

Indian equity markets buckled under across the board selling pressure exerted by market participants in the second half of Tuesday's session, leading the frontline indices to partly undo the good work done in the previous session. The benchmark indices, which witnessed about three percentage point rally in the session gone by, even got dragged below the psychological 4,800 and 16,000 levels in the session. The domestic bourses were once again tormented by global developments as investors fretted over global economic growth prospects which prompted them to take profits off the table amid little signs of any supportive leads. Sentiments went awry since early afternoon trades tracking gloomy developments in the Europe. Position squaring gathered greater momentum as investors turned apprehensive on the back of reports that rating agency S&P may revise outlook of France's AAA rating to negative in the coming few days. While another rating agency Moody's was of the opinion that it may slash subordinated debt ratings of 87 European banks, citing concerns over the increasingly limited financial flexibility of many governments in the region. Back home, the euphoria over government's policy initiatives continued to fizzle out as the row over FDI in retail continued to disrupt the functioning of Parliament with both Lok Sabha and Rajya Sabha which were adjourned after a united opposition refused to allow any proceedings for the sixth day. Meanwhile, a finance ministry report indicated that increased market borrowings increased the government's debt to Rs 32.13 lakh crore at the end of September quarter from Rs 31.28 lakh crore in the previous quarter, representing an increase of 2.7%. Moreover, PSU oil market companies like HPCL, BPCL and IOC got hurt in the session amid expectations that petrol prices may be reduced by another up to Re 1 per litre this week, on the back of declining trend seen in the global prices.

Earlier on Dalal Street, the benchmark got off to a sluggish opening, overlooking the sanguine cues that Asian equity indices exhibited since the start of trade. After slipping to lower levels in the initial moments, key gauges rebounded to the highest point in the day, clawing back in to the green zone. But, the benchmarks soon witnessed a trend reversal and started drifting to lower levels since the early afternoon trades. Hefty profit booking in most sectoral counters pulled the gauges to the lowest point in the session in mid noon trades, post which the bourses failed to regain any conviction and ended underperforming almost all the global markets. Finally the NSE's 50-share broadly followed index Nifty, receded by close to a percent to settle above the crucial 4,800 support level while Bombay Stock Exchange's Sensitive Index Sensex slipped by over one hundred fifty points and ended above the psychological 16,000 mark. Moreover, the broader markets which traded on an optimistic note for most part of the session succumbed to the selling pressure and went home with moderate losses. On the BSE sectoral space, the rate sensitive Realty and Bankex counters were the top laggards in the space and settled with around two percent. Profit booking was also evident in the Oil & Gas and Consumer Durables indices which plunged by around one and half a percent. On the other hand, the defensive counters like the FMCG and Healthcare bucked the somber trends and closed with around half a percent gains, while the rate sensitive Auto pack too managed to keep its head above the water by the end of trade. The markets sank on weak volumes of around Rs 1.05 lakh crore while the turnover for NSE F&O segment too remained on the lower side as compared to Monday at over 0.92 lakh crore. The market breadth remained pessimistic as there were 1219 shares on the gaining side against 1515 shares on the losing side while 118 shares remained unchanged.
Finally, the BSE Sensex shaved off 158.79 points or 0.98% to settle at 16,008.34, while the S&P CNX Nifty lost 46.20 points or 0.95% to close 4,805.10.
The BSE Sensex touched a high and a low of 16,210.37 and 15,952.54 respectively. The BSE Mid cap and Small cap index were down by 0.56% and 0.18% respectively.
The top gainers on the Sensex were Bajaj Auto up 2.06%, Mahindra & Mahindra up 1.60%, Hindustan Unilever up 1.25%, Hero MotoCorp up 1.24% and Cipla up 1.14%. While, Bharti Airtel down 3.80%, Jindal Steel down 3.34%, DLF down 3.18%, Sterlite Industries down 2.43% and Reliance Industries down 2.30% were the major losers on the index.
The top gainers on the BSE sectoral space were FMCG up 0.45%, Health Care (HC) up 0.32% and Auto up 0.26%, while Realty down 2.32%, Bankex down 1.91%, Oil & Gas down 1.84%, Consumer Durables (CD) down 1.39% and Metal down 1.33% were top losers on the BSE sectoral space.
Meanwhile, Indian government's debt increased to Rs 32.13 lakh crore at the end of September quarter from Rs 31.28 lakh crore in the previous quarter, representing an increase of 2.7% compared with an increase of 5.2% in the Q1 of FY12. According to the quarterly Public Debt Management report released by the finance ministry, increased market borrowings led to the rise in public debt. The report underscored that due to the tight monetary policy followed the RBI, the interest rate (yield) on bonds increased, thus pushing up the borrowing cost.
The July-September quarter report on Public Debt Management showed internal debt constituted 90.3% of public debt, more or less unchanged from the previous quarter. However, government's internal debt went up during the second quarter of 2011-12, which is evident from the fact that the outstanding internal debt of the government stood at Rs 29.01 lakh crore constituting 32.3% of GDP compared with 31.4% in the previous quarter.
The report also indicated that marketable securities consisting of rupee denominated dated securities and treasury bills/cash management bills accounted for 79.7% of total public debt, compared with 79.1% at end-June 2011. During the September quarter, the 10-year yield on government securities went up sharply, on the back of the repo rate hike of 50 bps by Reserve Bank on July 26, 2011 to reach a high of 8.47% on July 28. Thereafter, yields gradually drifted down and remained range bound till September 28, 2011. Higher borrowing announcement of Rs 52,872 crore in the second half calendar for bonds pushed up yield and it closed the quarter at 8.44%, according to the report.
The S&P CNX Nifty touched a high and low of 4,866.10 and 4,787.10 respectively.
The top gainers on the Nifty were Dr Reddy up 2.47%, Bajaj Auto up 2.23%, M&M up 1.94%, Hero MotoCorp up 1.81% and HUL up 1.78%. On the flip side, PNB down 4.24%, Jindal Steel down 3.89%, Bharti Airtel down 3.77%, DLF down 3.63% and ACC down 3.46% were the top losers on the index.
The European markets were trading in green. France's CAC 40 up 0.80%, Britain's FTSE 100 up by 0.27%, and Germany's DAX up by 0.87%.

Asian markets extended their previous session's rally on Tuesday, tracking a positive close overnight on Wall Street after some optimism on Europe's debt crisis helped to improve investor sentiment. A strong start to the US holiday shopping season also helped some Asian stocks. Investors were also heartened by other economic data that helped dispel fears of the US slipping back into recession. Moreover, shares in the region gained in the later part of the day ahead of a meeting of 17 finance ministers from the euro-zone in which the next tranche of financial aid to Greek and to Ireland are expected to be approved.

Japanese Nikkei rose over two percent as exporters gained more ground after the local currency weakened further with the dollar trading over 78 yen. Index heavyweight Sony lifted 2.1% while Panasonic and Sharp Corp. were up 2.8% and 2.1% respectively. Moreover, Hong Kong shares inched higher on Tuesday, boosted by strong gains in Chinese consumer counters, seen as relatively safer bets in difficult market conditions, with turnover lingering near the year's low underlining the extent of risk aversion.