DISMAL PERFORMANCE

Indian markets extended their dismal performance as the benchmark indices plunged by over a percent in the Thursday afternoon session. Hefty bouts of profit booking were evident across the counters as sentiments got spooked not only by global developments but also by discouraging domestic earnings and economic reports. The huge sell-off in the local markets came on a day when a majority of Asian equity indices are trading on a positive note while leads from overnight US markets too were supportive. On the domestic front, the surprisingly worse than expected IIP numbers dampened investors' mood while the disappointing earnings announcement by heavyweights like Tata Steel and DLF too played spoilsport. Meanwhile, investors overlooked the slight moderation in weekly inflation data which showed that Food inflation slipped slightly to 11.81% in the week ended October 29. On the BSE sectoral front, the rate sensitive Bankex counter got pummeled by over three percent followed by the Metal and Realty pockets which plummeted by around two and half a percent. On the other hand, the defensive FMCG counter was the only gainer in the space as it traded with around a quarter percent gains. Moreover, the broader markets traded on a pessimistic note with large cuts of around one and half a percent in tandem with their larger peers. The bourses slipped on higher volumes of over Rs 0.50 lakh core while the market breadth on BSE was in favor of declines in the ratio of 1848:736 while 97 scrips remained unchanged.
The BSE Sensex is currently trading at 17,139.79 down by 222.31 points or 1.28% after trading as high as 17,279.23 and as low as 17,096.84. There were 9 stocks advancing against 21 declines on the index.
The broader indices were trading in the negative zone; the BSE Mid cap index lost 1.25% and Small cap plunged 1.55%.
On the BSE sectoral space FMCG up 0.27% was the only gainer while Bankex down 3.02%, Metal down 2.35%, Realty down 2.35%, Capital Goods down 2.17% and Consumer Durables down 1.56% were the major losers in the space.
Hero Moto up 1.63%, Bajaj Auto up 1.58%, Sun Pharma up 1.57%, Wipro up 1.43% and HUL up 1.15% were the major gainers on the Sensex, while ICICI Bank down 4.80%, Hindalco down 4.31%, Tata Steel down 4.16%, SBI down 3.70% and DLF down 2.93% were the major losers on the index.
Meanwhile, India's Index of Industrial Production (IIP) for month of September 2011 grew at its slowest pace in last two years, confirming the slowdown in economic activities because of the high inflation and continuous hike in Reserve Bank of India's (RBI's) key policy rates. As per the data released by the Ministry of Statistics & Programme Implementation, growth in industrial production measured by the IIP stood at 1.9% in September 2011 compared to 6.1% in September 2010. During the first half of current financial year, IIP growth stood at 5% compared to 8.2% in the April to September 2010.
The Indices for the Mining, Manufacturing and Electricity sectors for the month of September 2011 stood at 111.0, 175.7 and 144.1 respectively, with the corresponding growth rates of (-)5.6%, 2.1% and 9.0% as compared to September 2010. The cumulative growth in the three sectors during April-September, 2011-12 over the corresponding period of 2010-11 has been (-)1.0%, 5.4% and 9.4% respectively, which moved the overall growth in the General Index to 5.0%.

During September, in terms of industries, 15 out of the 22 industry groups in the manufacturing sector have shown positive growth as compared to the corresponding month of the previous year. The industry group 'Radio, TV and communication equipment & apparatus' has shown the highest growth of 25.0%, followed by 19.0% in 'Other transport equipment' and 16.6% in 'Office, accounting & computing machinery'. On the other hand, the industry group 'Electrical machinery & apparatus n.e.c.' has shown a negative growth of 27.7% followed by 8.2% in 'Furniture; manufacturing n.e.c.' and 8.1% in 'Wearing apparel; dressing and dyeing of fur'.

As per Use-based classification, the growth rates in September 2011 over September 2010 was 4.5% in Basic goods, (-) 6.8% in Capital goods and 1.5% in Intermediate goods. The Consumer durables and Consumer non-durables have recorded growth of 8.7% and (-) 1.3% respectively, with the overall growth in Consumer goods being 3.5%.

Some of the important items of capital goods showed high negative growth during the current month,contributing to the low growth of the overall index for the month include 'Cement Machinery'  (-) 70.4%, 'Sugar Machinery' (-) 63.8%, 'Cable, Rubber Insulated' (-) 45.3% and 'Relays, Fuses and Switchgears' [(-) 30.0%]. However, some important items of the capital goods are also showing significant growth. These are:  'Conductor, Aluminium' (45.0%), 'Earth Moving Machinery' (44.9%), 'X-ray equipment' (35.0%) and 'Tractors' (30.4%).

The other important items showing growth during the month are: 'Fruit Pulp' (90.6%), 'Paraxylene' (64.0%), 'Stainless/ alloy steel' (63.3%), 'Woollen Carpets'  (61.9%), 'Linear low density polyethylene' (58.9%), 'Tanned or Chrome Skins and Leathers' (58.1%), 'Steel Castings' (48.0%), 'Petroleum Coke' (44.6%), 'Scooter and Mopeds' (33.0%), 'Marble Tiles/Slabs' (32.3%), 'Polythene Bags including Hdpe & Ldpe Bags' (31.5%) and 'Telephone Instruments Including Mobile Phone And Accessories' (31.1%). 

Meanwhile the government ha also revised the IIP growth figures for August. After the downward revision it stood at 3.6% from the provisional estimate of 4.1%. This downward revision has raised concern for policy makers and industry. Experts are of the view that IIP growth may further decrease as the global economic condition remains unfavorable , while high inflation had made RBI to maintain its anti-inflationary stance.    

However, the RBI expects inflation to start subsiding from December and to moderate to 7% by the end of the March 2012, which may help it to take a pause in rate tightening cycle after increasing interest rates for 13 times since March 2010 to control headline inflation which is hovering above 9% for nearly a year.
The S&P CNX Nifty is currently trading at 5,157.85, lower by 63.20 points or 1.21% after trading as high as 5,198.60 and as low as 5,142.25. There were 16 stocks advancing against 34 declines on the index.
The top gainers on the Nifty were Sun Pharma up 1.86%, Cairn up 1.74%, Bajaj Auto up 1.60%, Wipro up 1.50% and Hero Moto up 1.44%.
ICICI Bank down 4.71%, Hindalco down 4.24%, Axis Bank down 4.01%, Tata Steel down 3.93% and SBI down 3.55% were the major losers on the index.
Asian markets traded largely on a positive note, Hang Seng climbed 0.73%, Jakarta Composite rose 0.02%, KLSE Composite added 0.20%, Nikkei 225 gained 0.16%, Seoul Composite spurted 2.77% and Taiwan Weighted advanced 0.80%.
On the flipside, Shanghai Composite shed 0.20% and Straits Times gained 0.04%.