IT stocks drag Nifty below 6100

Major headlines

Inflation at 8.62% in the September

Food inflation inches up to 16.37%

Infosys Technologies' consolidated Q2 net profit jumps 13% yoy; the stock closes 3.39% lower



Indian indices

Bears trounced the bulls for the second straight day. The domestic markets declined sharply, registering a biggest single day fall since May 2010, after the Reserve Bank of India (RBI) said that it may intervene in the currency markets to shield exporters as capital inflows this year fueled a rally in the rupee, making it the best performer in Asia in the past month. This led to a broad sell-off in the markets on expectations that RBI may intervene in the currency appreciation, as it is hurting exporters. Investors booked profits to make room for investment in the initial public offer (IPO) of Coal India, which is set to open on Monday, October 18, 2010 for subscription. The Coal India IPO is billed as the country's largest issue ever.

India’s inflation rose to 8.62% in September 2010 as against 8.5% seen in the previous month. Food inflation inched higher to 16.37% for the week ended October 02, 2010 as against 16.24% seen in the previous week.

Information Technology (IT) bellwether Infosys Technologies posted 13% growth in Q2 earnings, above market expectation.

The Sensex started the session 22 points higher at 20519. The index soon hit the day’s high of 20578 in initial trades. The Sensex plunged from the higher level and remained in the negative zone throughout the morning session. The index extended its losses in the afternoon session on the back of unsupportive European markets. The Sensex hit the day’s low of 20090 in late trades as strong selling was seen in all the sectors, especially in IT and index heavyweights.

At the closing bell, the Sensex shut shop at 20125, down by 373 points. The Nifty closed lower by 115 points at 6063.

Bond and Rupee update: India’s ten-year bonds fell before the government publishes the inflation data for September today. The yield on the 7.8% bonds due in May 2020 rose 3 basis points to 8.05%.

The Indian currency gained by 5.2% in the past 30 days as global investors this year poured a record $23 billion into Indian markets and $10 billion in rupee debt to profit from an economy growing at an annual pace exceeding 8%. The rupee stood at Rs44 against dollar.

Market Outlook: Tonight it is a data day for the US starting with Consumer Price Index (CPI), Advance Retail Sales and Empire Manufacturing Index to be released, followed by University of Michigan Confidence and Business Inventories. This coupled with Federal Reserve’s Chairman Ben Bernanke to address a meet where we might have some clarity on so-called QE2. Among the important results announcement, economic bellwether General Electric to report its earnings.

Market sentiment

The market breadth was extremely weak as falling stocks outpaced the gaining ones twice. On the BSE, out of the 3,110 stocks, 2,023 declined while 976 gained. Hundred and eleven stocks remained unchanged.

Sectoral & stock screening

It was a bears day out today, with all the 13 sectors in the red. BSE IT was the worst performer, down by 3.25%, followed by BSE TECk that slipped by 3.01% and BSE Auto lost by 2%. However, the remaining sectors slipped between 0.96-1.91%.

All the 30-Sensex stocks were hit except NTPC that ended with marginal gains of 0.35%. Top three slots were occupied by the IT firms, Wipro declined the most by 3.58%, Tata Consultancy Services dipped by 3.52% and Infosys Technologies fell by 3.39%. Hero Honda Motors, Bharti Airtel and State Bank of India also declined over 3% each.

Viewing volumes

Industrial finance company - IFCI was the traded the most, with over 0.57 crore shares changing hands on the BSE, followed by PSU fertiliser firm - Rashtriya Chemicals & Fertilizers (0.55 crore shares), India's second largest developers - Unitech (0.36 crore shares), wind turbine major - Suzlon Energy (0.31 crore shares) and Essar Group company - Essar Oil (0.27 crore shares).

Global signals

European shares traded on a flat note, with technology shares boosted by upbeat results from US peer Google offsetting falls in the heavyweight miners as metal prices eased from earlier highs.

The major Asian indices closed mixed. Indices like Shanghai Composite, Straits Times and Kospi closed in the green, while Hang Seng, Jakarta Composite and Nikkei shut in the red.

The US stock index futures point to mixed opening on the Wall Street tonight ahead of the September retails sales number and CPI. The investors will keep an eye on the earnings of General Electric and Mattel.