Freaky Friday: China, Irish woes shake markets

The Indian markets slump extending losing run for the third consecutive day, as rate hike fears in China and Irish’s debt woes weigh

Major headlines

IIP at 4.4%, lowest in 15 months

Oil India Q2 net profit soars 27%; the stock closes 1.73% down

Educomp Solutions Q2 consolidated PAT at Rs58 crore; the stock ends 8.24% lower

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It was a bears day on the Dalal Street as the domestic markets tumbled extending losing trend for the third day in a row. The markets dropped the most in five months as growth in the nation’s index of industrial production (IIP) unexpectedly slowed to a 15-month low. The markets witnessed extremely weak day of trade with deep cuts after witnessing a major sell-off across the board on the back of negative global news, especially from China. The Asian stocks played a overhang on the domestic markets, with the regional benchmark index recording their biggest weekly loss in three months, as speculation mounted that China will increase interest rates to curb inflation. The European indices also fell on concerns over Irish’s debt woes.

IIP numbers for the month of September came in at 4.4% versus 5.6% seen in the previous month.

India’s largest real estate developers, DLF, slid for the second consecutive day - down over 5%. India’s largest public sector bank, State Bank of India, declined over 4%.

The Sensex started the session 60 points lower at 20530 tracking weak global markets. The index trimmed some of its losses and hit the day’s high of 20594 in early trades. From the highest level, the Sensex began its southbound journey as September IIP came in lower-than-expected. In the afternoon session, the index slid further as surge in China’s inflation and weak European markets dampened sentiments. The index hit the day’s low of 20108 in its closing trade.

At the closing bell, the Sensex shut at 20157, lower by 432 points. The Nifty ended at 6072, down by 123 points.

Bonds and Rupee update: India’s 12-year bonds headed for the first weekly loss since the period ended October 22 on speculation that investors will sell the notes to make room for purchases at a government debt auction today. India’s rupee declined the most in three weeks on concern that leaders from the Group of 20 nations will be unable to reach agreement on exchange-rate manipulation and global trade imbalances at ongoing talks.

Market sentiment

The market breadth was weak as losing stocks outdid the gaining ones over thrice. Out of the 3,117 stocks on the BSE, 2,263 fell while 752 rose. Hundred and one stocks traded unchanged.

Sectoral and stock screening

All the 13 sectoral indices nosedived and closed with huge losses. The BSE Realty was worst hit on second day, declined by 4.76%. The BSE Consumer Durables (CD) slid by 3.53%, followed by BSE Metal that declined by 3.31%. Rest of the sectors fell in the range of 0.96-2.90%.

Looking into 'A' group stocks, Cadila Healthcare was the topper, up by 2.31%, followed by Rashtriya Chemicals that surged by 1.65% and Idea Cellular rose by 1.24%. Among losers, Shree Renuka Sugars slid the most by 12%, followed by Educomp Solutions that fell by 8.24% and Hindustan Copper declined by 7.70%.

Viewing volumes

Industrial finance corporation - IFCI was traded the most, with over 0.73 crore shares changing hands on the BSE, followed by sugar major - Shree Renuka Sugars (0.45 crore shares), Aditya Birla Group telecom firm - Idea Cellular (0.38 crore shares), India’s second largest developer - Unitech (0.38 crore shares) and Indian tyre manufacturer - Apollo Tyres (0.30 crore shares).

Global signals

European stocks dropped, losing ground for the third straight session, hurt by escalating fears over Ireland's debt problems that also dragged the euro to six-week low versus the dollar.

All the major Asian indices closed in the negative territory. China’s Shanghai Composite slid over 5% on the back of higher inflation figure.

The US stock index futures point to a lower opening on the Wall Street.

Market Outlook: University of Michigan Confidence Index data in the US tonight.