MARKETS CONTINUE TO LOOSE

Indian equity markets continued to trade on a daunting note in the Monday afternoon trades thanks to largely across the board the position squaring which dragged the benchmark indices to fresh intraday lows. The frontline indices even looked set to drift below the psychological 4,800 (Nifty) and 16,000 (Sensex) levels as sentiments went awry lacking any significant upside triggers got the local markets. The discouraging October IIP numbers spooked domestic sentiments as it shrank 5.1% from a year earlier, underscoring the fact that economic slowdown has taken deep roots in the Indian economy. However, the ugly IIP figures buttressed expectations that India's hawkish central bank would abstain from hiking key interest rates to combat inflation despite it persisting at stubbornly high levels of around 9%. On the global front, largely optimistic sentiments prevailed across the Asian region while the European futures too showed that the markets there would get a flat to positive start. Investors globally remained cautiously optimistic following the meeting of European Union leaders on Friday, where as many as 26 of the 27 member states of the EU accepted the Franco-German plan for greater fiscal unity to avert the onerous debt debacle in the Euro-zone. However, doubts emerged that such long-term steps could not be able to completely avert the crisis that has shaken Europe for two years. Back home, on the BSE sectoral space, Capital goods counter continued to bore the brunt of hefty selling pressure and dived over two percent, being the top laggard in the space followed by the rate sensitive Power and Metal pockets that sank around two percent each. On the flipside, only the IT sector managed to keep its head above the water with moderate gains of around half a percent.
Moreover, the broader markets too traded on a pessimistic note with large cuts of under a percent, performing in tandem with their larger peers. The bourses plunged on strong volumes of over Rs 0.60 lakh core. The market breadth on BSE was in favor of declines in the ratio of 1579:799 while 114 scrips remained unchanged.
The BSE Sensex is currently trading at 16036.30 down by 177.16 points or 1.09% after trading as high as 16360.32 and as low as 15971.01. There were 4 stocks advancing against 26 declines on the index.
The broader indices were trading on a pessimistic note; the BSE Mid cap index plunged 0.95% and Small cap sank 0.84%.
On the BSE sectoral space, the IT index added 0.46% and was the only gainer while Capital Goods down 2.11%, Power down 1.91%, Metal down 1.82%, Auto down 1.43% and Bankex down 1.39% were the major losers in the space.
Wipro up 0.59%, Infosys up 0.47%, ONGC up 0.34% and TCS up 0.12% were the only gainer on the Sensex, while Hindalco down 3.18%, Tata Power down 2.94%, JP Associates down 2.92%, Bajaj Auto down 2.89% and NTPC down 2.68% were the major losers in the index.
Meanwhile, India's Index of Industrial Production (IIP) for month of October 2011 fell at its 28 month lowest level and registered contraction of 5.1% which reflects the industrial growth getting affected by the non-stop rate hikes by the Reserve Bank of India (RBI) and high inflation. According to the data released by the Ministry of Statistics & Programme Implementation, industrial production measured by the IIP stood at -5.1% in October 2011 compared to 11.37% in October 2010. During the first seven months of current financial year, IIP growth stood at 3.5% compared to 8.7% in the same period of 2010.
The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of October 2011 stood at 120.9, 165.9 and 152.1 respectively, with the corresponding growth rates of (-) 7.2%, (-)6.0% and 5.6%. The cumulative growth in the three sectors during April-October, 2011-12 over the corresponding period of 2010-11 has been (-)2.2%, 3.7% and 8.9% respectively, which moved the overall growth in the General Index to 3.5%.
In October 2011, in terms of industries, 13 out of the 22 industry groups in the manufacturing sector have shown positive growth during the month of October 2011 as compared to the corresponding month of the previous year. The industry group 'Medical, precision & optical instruments, watches and clocks' has shown the highest growth of 30.8%, followed by 18.4% in 'Office, accounting & computing machinery' and 15.3% in 'Radio, TV and communication equipment & apparatus'. On the other hand, the industry group 'Electrical machinery & apparatus n.e.c.' has shown a negative growth of 58.8% followed by 12.1% in 'Machinery and equipment n.e.c.' and 11.4% in 'Rubber and plastics products'.
As per Use-based classification, the growth rates in October 2011 over October 2010 are (-) 0.1% in Basic goods, (-) 25.5% in Capital goods and (-) 4.7% in Intermediate goods. The Consumer durables and Consumer non-durables have recorded growth of (-) 0.3% and (-) 1.3% respectively, with the overall growth in Consumer goods being (-) 0.8%.
Some of the important items of capital goods showing high negative growth during the current month and thus contributing to the low growth of the overall index for the month include 'Cable, Rubber Insulated' [(-) 82.9%], 'Cement Machinery' [(-) 74.6%], 'Insulated Cables/Wires all kind' [(-) 38.2%], 'X-ray equipment' [(-) 35.8%] and 'Plastic Machinery including Moulding Machinery' [(-) 32.3%]. However, some important items of the capital goods are also showing significant growth. These are:  'Conductor, Aluminium' (46.6%), 'Boilers' (45.8%), 'Heat Exchangers' (35.5%) and 'Machine Tools' (31.4%).

The other important items showing growth during the month are: 'Fruit Pulp' (254.2%), 'Cashew Kernels' (91.9%), 'Petroleum Coke' (69.7%), 'Rice' (54.4%), 'Marble Tiles/Slabs' (47.2%), 'Steel Castings' (41.7%), 'Leather Garments' (33.6%), 'Aluminium Tubes/Pipes' (30.8%) and 'Woollen Carpets' (30.7%).

Meanwhile the government had also revised the IIP growth figures for September. After the upward revision, the IIP figure for month of September increased to 2% from the provisional estimate of 1.9%. 
Most of the experts and policymakers had expected that IIP for the month of October will be slower, but not negative figures. C Rangarajan, chairman of PMEAC said that the data was disappointing particularly that of capital goods. According to Rangarajan the public sector investment needs to pick up for any sort of a recovery. 'I think containing fiscal deficit at 4.6% will be a challenge,' he said adding, '...still hoping for GDP growth between 7 and 7.5%,' said Rangarajan.
In the second quarter of 2011-12, India's economic growth stood at 6.9% with is lowest in last eight quarters as a result, in the first six months of current fiscal year, India's Gross Domestic Product (GDP) fell to 7.3% compared to 8.85% in the same period of last financial year.
IIP's discouraging figures for October has raised the expectation that the RBI would reduce its policy rates at its upcoming review on December 16. However, a lot will depend on the wholesale price index (WPI) based inflation data for November 2011 which will be released on December 14.
The S&P CNX Nifty is currently trading at 4,811.35, lower by 55.35 points or 1.14% after trading as high as 4,910.25 and as low as 4,792.05. There were 7 stocks advancing against 43 declines on the index.
The top gainers on the Nifty were HCL Tech up 0.92%, GAIL up 0.74%, Wipro up 0.65%, Infosys up 0.54% and ONGC up 0.42%.
SAIL down 3.25%, Hindalco down 3.14%, JP Associates down 2.92%, Tata Power down 2.84% and ACC down 2.76% were the major losers on the index.
Asian markets largely traded on a positive note, Hang Seng climbed 0.75%, Jakarta Composite surged 0.97%, Nikkei 225 soared 1.37%, Straits Times advanced 0.58%, Seoul Composite jumped 1.33% and Taiwan Weighted ascended 0.81%.
On the flipside only Shanghai Composite plunged 1.01%.
Stock market in Malaysia remained closed on Monday.