UNDER THE GLOBAL TREMORS

The carnage in Indian stock markets prolonged for yet another session as the benchmarks continued to sway to the tune of depressing global developments and deposed another over a percentage point on the last trading session of the week. The session was characterized by extreme volatility as the frontline indices went through a rollercoaster ride amid lack of direction and a pandemonium across global equity markets. Marketmen looked at every rise as opportunity to take profits off the table as there emerged no encouraging factor that could halt the unrelenting selling pressure. With deteriorating situation in the US and Europe and fresh worries over a global economic recession after disappointing Chinese and European factory output data investors were left with the only option to take cash off the table and sit on the sidelines until something really revitalizing happens. Meanwhile, investors were seen covering lot of short positions in afternoon trades after some pessimism got petered out on the back of strong European market opening. The brief optimism in sentiments came after the Group of 20 finance ministers and central bank Governors reassured markets that they would take all necessary measure to preserve financial stability and increase the flexibility of the euro zone's rescue fund. However, the recovery proved short-lived and the markets weakened again, as inflation and rate hike worries prompted investors to cut positions ahead of the weekend. The upside chances for the local markets remained scanty as a pledge by Group of 20 nations to tackle rising risks failed to ease concern that the global economy is on the brink of another recession. Also, Asian peers continued to undermine local sentiments by exhibiting somber trends, evident from the fact that benchmarks in countries like South Korea and Taiwan ended with large cuts of 5.73% and 3.55% respectively. Meanwhile, market participants were also troubled a lot by the high volatility in Indian rupee which appreciated in the second half of trade to 49.15, though in the morning trade, it depreciated to 49.77 per dollar. Deputy Governor Subir Gokar commenting on rupee's recent declining run opined that the RBI will maintain its stance of intervening in the foreign exchange market only to smoothen volatility.
Earlier on Dalal Street, the benchmark got off to a gap down opening, in tandem with the somber sentiments prevailing in Asian markets. Thereafter, the frontline indices tried to pare the early losses and crawled towards the neutral line. But the key gauges could not succeed as selling pressure at higher levels brought the indices to intraday lows in late morning session. Benchmarks once again treaded on the road to recovery in afternoon and even managed to break into the green territory but only for a brief period as fresh bouts of profit booking again brought the indices to lower levels by the end of trade. Eventually the NSE's 50-share broadly followed index Nifty, suffered a nasty over a percent laceration to settle above the crucial 4,850 support level while Bombay Stock Exchange's Sensitive Index Sensex got obliterated by about two hundred points and closed above the psychological 16,150 mark. Moreover, the broader markets too failed to show any kind of fervor and settled with large cuts of around a percent. On the BSE sectoral space, metal, capital goods and rate sensitive counters did the maximum damage as they went home with huge losses. However, information technology pocket showed some resilience for most part of the session and attracted buying interests since rupee depreciated considerably against the American greenback, but finally settled with marginal losses. The defensive FMCG counter along with some oil and gas stocks like ONGC and BPCL did their bit to prevent the frontline indices from dipping deeper into the red terrain. The markets got bludgeoned on extremely large volumes of over Rs 2.14 lakh crore while the turnover for NSE F&O segment too remained higher as compared to Thursday at over 1.99 lakh crore. The market breadth remained awful as there were 986 shares on the gaining side against 1805 shares on the losing side while 105 shares remained unchanged.
Finally, the BSE Sensex shaved off 199.09 points or 1.22% to settle at 16,162.06, while the S&P CNX Nifty plunged by 55.90 points or 1.14% to close at 4,867.75.
The BSE Sensex touched a high and a low of 16,368.41 and 16,052.47 respectively. The BSE Mid cap and Small cap index were down by 0.84% and 1.13% respectively.
The major gainers on the Sensex were Cipla up 2.09%, Tata Power up 1.37%, SBI up 1.03%, Bharti Airtel up 0.77% and Jaiprakash Associate up 0.67%. While, Tata Motors down 4.81%, Hindalco Industries down by 3.77%, HDFC Bank down by 3.10%, HDFC down by 2.82% and L&T down 2.70% were the major losers on the index.
The only gainer on the BSE sectoral space was FMCG up 0.15%.While, the top losers were Metal down 2.28%, Capital Goods (CG) down 1.84%, Auto down 1.59%, Consumer Durables (CD) down 1.44% and Bankex down 1.35%.
Meanwhile, Finance Minister Pranab Mukherjee warned international community that if the current uncertainty in the international economy deepens, then there is danger of currency war. Giving the stress on corporation among the BRICS nations (Brazil, Russia, India, China and South Africa), finance minister said that such a currency war can be avoided through dialogue and not through competitive devaluations.

Answering to the question at the headquarters of the International Monetary Fund (IMF), Mukherjee said, 'yes, if the crisis deepens further and there is greater volatility in financial flows, there is an increased risk of this (currency war) happening. 'But our view is that if such tensions arise, it should be eased through the dialogue and not through competitive devaluations,' he added.

Finance Minister noted that the currencies used in BRICS countries should be widely appreciated and should be taken into account while determining the ingredients of special drawing rights (SDR) maintained by the IMF, as these nations' contributions to global output and the economy is increasingly substantially.
However, by adding further he said, 'but we are not suggesting right now, because there are many other factors which ought to be taken into account, including free convertibility and other things which are not uniform, but the importance of these currencies has increased.' Finance minister's comment has come at a time when Indian rupee is depreciating because of the debt crisis in US and Eurozone nations. The rupee weakened to 50 against the dollar on September 23, a level not seen in more than 28-months, as investors globally continued to dump high yielding riskier assets for the safety of government bonds.    The S&P CNX Nifty touched high and low of 4,930.25 and 4,829.60, respectively.
The top gainers on the Nifty were Reliance Power up 3.37%, Cipla up 2.09%, Grasim up 2.02%, Reliance Capital up 1.61%, and Tata Power 1.47%. On the flip side, Tata Motors down 5.37%, Hindalco Industries down 4.02%, SAIL down 3.48%, HDFC Bank down 3.45% and Cairn down 3.42% were the top losers on the index.
The European markets were trading in the red. France's CAC 40 climbed by 2.40%, Britain's FTSE lost by 1.41%, and Germany's DAX declined by 2.26%.
All the Asian equity indices barring Jakarta Composite continued their downfall for second straight day amid growing fears that the global economy is on the verge of slipping back into recession. The sell-off followed heavy losses in the United States and Europe overnight, which were caused by the Federal Reserve's comments on Wednesday that the US economy faced 'significant downside risks', with the economy struggling with slow growth, high unemployment and a depressed housing market. However, most markets were off their earlier lows after G20 finance chiefs meeting in Washington promised to take collective action to stabilize the financial system. Moreover, Hong Kong shares had their worst week since October 2008, losing 9.2 percent as escalating fears of a global recession caused investors to cut riskier holdings.