Investors withdraw from bank stocks as Moody's downgrades SBI

Key benchmark indices fell for the third straight day as weak global shares, data showing stepping up of selling by foreign funds on Monday, 3 October 2011, and likely muted-to-weak Q2 earnings hit sentiment adversely. The market breadth was weak. The barometer index Sensex hit 20-month low below the psychological 16,000 level. The 50-unit S&P CNX Nifty hit 5-1/2-week low. Except the BSE Capital Goods index, all the other 12 sectoral indices on BSE dropped. The Sensex slumped 286.59 points or 1.77%, up close to 120 points from the day's low and off close to 335 points from the day's high.



From a recent high of 16,698.07 on 29 September 2011, the Sensex has lost 833.21 points or 4.98% in three trading sessions. The index has slumped 4,644.23 points or 22.64% in calendar 2011. From a 52-week high of 21,108.64 on 5 November 2010, the Sensex has lost 5,243.78 points or 24.84%. From a 52-week low of 15,765.53 on 26 August 2011, the Sensex has risen 99.33 points or 0.63%. The Sensex declined 222.99 points or 1.33% in September 2011. The barometer index tumbled 2,392.11 points or 12.69% in the quarter ended September 2011, as euro-zone debt worries and weakness in the US economy, the world's biggest, pulled markets lower across the globe.

Coming back to today's trade, interest rate sensitive banking stocks fell on worries that elevated interest rates would hurt borrowers' ability to repay loans and increase delinquencies. Banking major State Bank of India (SBI) slumped to 52-week low after Moody's Investors Service cut bank financial strength rating (BFSR), or stand-alone rating of SBI, to D+ from C- because of concerns over its capital situation and deteriorating asset quality. ICICI Bank and Axis Bank, too, hit 52-week lows. Most auto stocks declined on worries that higher interest rates and a recent petrol price hike may adversely impact sales of cars and two-wheelers during the festive season. Index heavyweight Reliance Industries (RIL) dropped in volatile trade.

The market came off lows amid initial volatility. The Sensex and Nifty recovered from one-week lows. The Sensex alternately swung between gains and losses in morning trade. Volatility ruled the roost as key benchmark indices recovered soon after hitting fresh intraday lows in mid-morning trade. The market hit fresh intraday high in early afternoon trade as index heavyweight Reliance Industries turned positive from negative.

The market slumped in afternoon trade as European stocks opened on a weak note. The Sensex hit one-week low below the psychological 16,000 level. The Sensex came off lows after hitting 20-month trough in mid-afternoon trade.

Foreign institutional investors (FIIs) sold shares worth net Rs 779.40 crore on Monday, 3 October 2011, higher than net outflow of Rs 347 crore during two trading sessions on 29 September and 30 September 2011, latest data from Securities & Exchange Board of India (Sebi) showed. FIIs offloaded shares worth Rs 3088.88 crore in September 2011, as per data from stock exchanges. The outflow in August 2011 came on the top of heavy sales in August 2011. FIIs had dumped shares worth a massive Rs 10905.50 crore in August 2011, as per data from Securities & Exchange Board of India.

The BSE Sensex dropped 286.59 points or 1.77% to settle at 15,864.86, its lowest closing level since 26 August 2011. The index rose 50.93 points at the day's high of 16,202.38 in early afternoon trade. The index lost 406.02 points at the day's low of 15,745.43 in mid-afternoon trade, its lowest level since 8 February 2010.

The S&P CNX Nifty was down 77.35 points or 1.6% to 4,772.15, its lowest closing level since 26 August 2011. The Nifty hit a low of 4,728.30 in intraday trade. The Nifty hit a high of 4,869.75 in intraday trade.

The BSE Mid-Cap index fell 1.28% and the BSE Small-Cap index declined 1.09%. Both these indices outperformed the Sensex.

BSE clocked turnover of Rs 2204 crore, higher than Rs 2150.24 crore on Monday, 3 October 2011.

The market breadth, indicating the overall health of the market, was weak. On BSE, 1,771 shares fell and 992 rose. A total of 115 shares were unchanged.

Among the 30-share Sensex pack, 23 declined while the rest rose.

Coal India tumbled 4.98% and was the top loser from the Sensex pack.

Index heavyweight Reliance Industries (RIL) fell 2% to Rs 772.40. BP PLC last week said it expects its partnership with RIL to boost natural gas output at the D6 block in the Krishna Godavari basin, off India's east coast. BP Chief Executive Robert Dudley and RIL Chairman Mukesh Ambani met trade minister Anand Sharma in New Delhi on 28 September 2011.

RIL is fighting a decline in gas output at the D6 block. BP and RIL on Wednesday, 28 September 2011, pitched for permission from the government to develop satellite fields adjacent to the D6 block. RIL, last month, closed a deal with UK-based BP to sell a 30% stake in its 21 oil and gas exploration blocks in India. RIL recently denied inflating costs on its D6 gas field in the Krishna-Godavari (KG) basin. RIL made the clarification after CAG said in its final report submitted to the parliament on 8 September 2011 that RIL initially estimated capital expenditure of D-1 and D-3 gas discovery at $2.4 billion, which it later revised to $8.8 billion.

RIL's advance tax payment rose 37.6% to Rs 1800 crore in Q2 September 2011 over Q2 September 2010, hinting at good Q2 results from the diversified firm.

PSU OMCs reversed initial gains after a news agency quoted an unnamed senior finance ministry official as saying that the government plans to limit its fuel subsidies at Rs 40000 crore this fiscal year through March 2012, scaling down its initial estimate by Rs 5000 crore following easing crude oil prices and a higher borrowing aim. BPCL and HPCL declined by between 0.63% to 1.12%. Indian Oil Corporation was flat.

The finance ministry has already committed to give Rs 15000 crore as the first installment to state-run oil marketing companies, which are mandated to sell products at discounted rates. PSU OMCs sell diesel, LPG and kerosene at government controlled prices. The government has already freed pricing of petrol.

Engineering and construction major L&T rose 1.42% on bargain hunting after the stock fell 8.84% in the preceding four sessions to Rs 1318.25 on 3 October 2011 from a recent high of Rs 1446.15 on 27 September 2011.

IT stocks reversed initial losses on a weak rupee. India's largest software services exporter TCS rose 0.19%. India's third largest software services exporter Wipro gained 1%.

A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports. The Indian rupee weakened on Tuesday as fears over the extent of impact Europe's debt crisis might have on the global economy boosted the dollar. The partially convertible rupee was at 49.37/38 per dollar, weaker from Monday's close of 49.15/16. The rupee slumped 8.8% percent in July to September 2011 to 48.97/98, its largest quarterly fall since the same period in 2008.

India's second largest software services exporter Infosys fell 1.44%. India's software industry will be able to meet its 16%-18% export revenue growth target for this financial year through March as global businesses continue to spend on technology, Infosys' executive co-Chairman S. Gopalakrishnan said on Tuesday, 4 October 2011. Gopalakrishnan said he is optimistic about the Indian software industry's growth prospects in the medium- to long-term though there would be "challenges" in the short-term. He didn't elaborate.

Interest rate sensitive banking stocks fell on worries that elevated interest rates would hurt borrowers' ability to repay loans and increase delinquencies. India's largest bank by branch network and net profit State Bank of India (SBI) shed 4.08% to Rs 1786.70 after rating agency Moody's Investors Service cut bank financial strength rating (BFSR), or stand-alone rating of SBI, to D+ from C- because of concerns over its capital situation and deteriorating asset quality. The stock hit a 52-week low of Rs 1,751.35. SBI's non-performing assets were at a three-year high as of 30 June 2011, at 3.5% of loans, according to Moody's. This will likely increase the bank's potential credit costs in the near-term, it said.

"Our expectations that non-performing assets are likely to continue rising in the near term--due to higher interest rates and a slower economy--have caused us to adopt a negative view of SBI's creditworthiness," Beatrice Woo, vice president and senior credit officer, Moody's Investors Service said, in a statement. Moody's also lowered its hybrid debt rating on the bank to Ba3 (hyb) from Ba2 (hyb), following the reduction in financial strength rating. The revised standalone rating carries a stable outlook and the hybrid rating a negative outlook, Moody's said.

India's largest private sector bank by net profit ICICI Bank declined 4.59% to Rs 800.70. The stock hit a 52-week low of Rs 791.05 today. India's second largest private sector bank by net profit HDFC Bank fell 1.78%. Axis Bank fell 3.19% to Rs 959.10. The stock hit 52 week low of Rs 951.40 today.

Most auto stocks declined on worries that higher interest rates and a recent petrol price hike may adversely impact sales of cars and two-wheelers during the festive season. The timing of the latest petrol price hike has been bad for auto firms. The festive season started early last month and it will last until Diwali, the festival of lights, at the end of October 2011. Sales normally pick up during the festive season every year.

Tata Motor tumbled 4.35%. The company's total sales rose 22% to 78,786 units in September 2011 over September 2010. The homegrown firm's total passenger vehicles sales in the domestic market stood at 26,319 units in September, up 10.22% from 23,877 units in the same month last year. The company's total exports grew by 23% to 6,220 units in September 2011 over September 2010.

Mahindra & Mahindra fell 3.89% on profit taking. The company's total auto sales rose 25% to a record 44,137 units in September 2011 over September 2010. The company's domestic sales stood at 41,136 units during September 2011, as against 33,866 units during September 2010, an increase of 21%.

M&M's Passenger Vehicles segment (which includes the Utility vehicles and Verito) registered a growth of 11%, having sold 19,447 units in September 2011, as against 17,537 units during September 2010. The 4-wheeler commercial segment which includes the passenger and load categories registered a phenomenal growth of 45%.

Speaking on the numbers, Rajesh Jejurikar, Chief Executive, Automotive Division, Mahindra & Mahindra said, "We are delighted with the 28% growth that we have clocked for the first half of FY 2012 (year ending March 2012), and the record sales of 44,137 that we have clocked in September 2011. We are also very excited with the initial response to our global SUV the XUV5OO and do hope to further consolidate our position in the SUV market with this launch".

India's largest car maker by sales Maruti Suzuki India rose 2.73% and was the top gainer from the Sensex pack. The month-long standoff between the company's management and agitating Manesar plant workers ended on Saturday, 1 October 2011, following talks brokered by the Haryana state government. Maruti Suzuki's total vehicle sales fell 20.8% to 85,565 units in September 2011 over September 2010. Maruti Suzuki, 54.2% owned by Japan's Suzuki Motor Corp, said disruption in production during September at one its plants due to labour unrest, adversely impacted sales. The company announced the monthly sales data during trading hours on Monday, 3 October 2011.

Bike maker Hero MotoCorp fell 0.12%. The company's total sales jumped 26.75% to 5.49 lakh units in September 2011 over September 2010. Hero MotoCorp's total sales increased 20.10% to 15.44 lakh units in Q2 September 2011 over Q2 September 2010. The company expects sales growth to continue into the festive season.

Bajaj Auto fell 1.52%. The company said during market hours on Monday, 3 October 2011, that its total sales rose 18% to a record 4,17,686 units in September 2011 over September 2010. Motorcycle sales rose 18% to a record 3,71,208 units. Commercial vehicle sales rose 21% to 46,478 units in September 2011 over September 2010. The company said it achieved record three-wheeler sales in September 2011. Exports rose 39% to 1,41,913 units in September 2011 over September 2010.

Realty stocks extended recent losses triggered by worries higher interest rates could dent demand for residential and commercial properties. Purchases of both residential and commercial property are largely driven by finance. Indiabulls Real Estate, HDIL, DLF and Unitech shed by between 0.2% to 2.11%.

Metal shares were mixed after witnessing intraday volatility. India's largest steel maker by sales Tata Steel rose 0.65% to Rs 397.25. The stock hit 52 week low of Rs 391.10 in intraday trade today.

Jindal Steel & Power dropped 3.74% to Rs 457. The stock hit 52 week low of Rs 446 in intraday trade today.

JSW Steel rose 0.66% to Rs 553.10. The stock hit 52 week low of Rs 532.05 in intraday trade today. The company, after market hours on Monday, 3 October 2011, said its promoters have pledged 15.27% outstanding shares of the company.

JSW Steel said during trading hours on Monday, 3 October 2011, denied CBI raids at Vijayanagar unit at Bellary. In a statement, JSW Steel said that a CBI team visited the company's Vijayanagar works on Monday morning and sought certain information about procurement of iron ore. The company said it has been procuring iron ore from various sources for production requirements and every tonne of the iron or purchases had been accounted for in compliance with applicable laws. The company said it will fully cooperate and provide all the information that may be sought by the authorities concerned.

India's largest non-ferrous metals producer Sterlite Industries (India) fell 3.3% to Rs 105.35. The stock hit 52-week low of Rs 103.85 in intraday trade today.

Hindalco Industries rose 0.44% to Rs 124.70. The stock hit 52 week low of Rs 122.10 today.

Oil exploration firms fell as crude oil prices declined. Cairn India and Oil India declined 1.5% and 1.05% respectively. Lower crude oil prices will result in lower realizations from crude sales for oil exploration firms such as Cairn India.

State-run ONGC fell 1.55%. The company said that Ministry of Petroleum & Natural Gas, Govt of India vide letter dated 3 October 2011, has appointed Sudhir Vasudeva, Director (Offshore), ONGC as Chairman and Managing Director of the company. He has assumed the charge of the post of Chairman & Managing Director on 3 October 2011 (afternoon). Earlier, A K Hazarika, Director (Onshore), ONGC was holding additional charge of the post of CMD.

Crude for November delivery was down $1.12 a barrel, or 1.46% at $76.49 a barrel in electronic trading on Tuesday, 4 October 2011.

Shares of air carriers rose as crude oil prices extended recent steep losses. SpiceJet (up 0.96%), Jet Airways (India) (up 0.46%) and Kingfisher Airlines (up 5.63%), edged higher. The price of aviation turbine fuel (ATF) is directly linked with crude oil prices. ATF constitutes more than 50% of operating cost for airliners.

PSU OMCs on Friday, 30 September 2011, hiked jet fuel, or ATF price by 1.5% to pass on the impact of a depreciating rupee, which has resulted in higher import cost. The three fuel retailers--BPCL, HPCL and IOC revise jet fuel prices on the 1st and 16th of every month, based on the average international price in the preceding fortnight.

Prakash Constrowell clocked highest volume of 2.45 crore shares on BSE. Cals Refineries (1.11 crore shares), Pipavav Defence (45.36 lakh shares), Jaiprakash Associates (39.45 lakh shares) and IFCI (37.80 lakh shares) were the other volume toppers in that order.

Prakash Constrowell clocked highest turnover of Rs 563.32 crore on BSE. SBI (Rs 233.35 crore), RIL (Rs 91.54 crore), ICICI Bank (Rs 82.30 crore) and Jubilant Foodworks (Rs 59.64 crore) were the other turnover toppers in that order.

The near-term major trigger for the market is Q2 September 2011 results. The results are expected to be muted-to-weak due slower volume growth due to slowdown in domestic demand, higher input costs, rising wages, higher interest rates and slowdown in investment growth. Advance tax data from top 100 companies corroborates this view. The advance tax payment by top 100 companies rose a modest 9.9% in Q2 September 2011 from a year ago against 19% growth in Q1 June 2011, suggesting corporate profit growth is likely to be muted in the second quarter.

Among the big companies that have paid lower advance tax, indicating a drop in profits, include State Bank of India (SBI), Maruti Suzuki India and state-run Neyveli Lignite Corporation. SBI's advance tax payment declined 14.2% to Rs 1650 crore in Q2 September 2011. Maruti's tax payment fell 55.8% to Rs 120 crore. Neyveli Lignite tax payment plunged 50.1% to Rs 66 crore. But, Reliance Industries' (RIL) advance tax payment jumped 37.6% to Rs 1800 crore, hinting at good Q2 results from the diversified firm.

Investors will closely watch the management commentary at the time of announcement of Q2 September 2011 results, which will provide cues on futures earnings outlook. IT bellwether Infosys kickstarts the Q2 September 2011 earnings season on 12 October 2011. Housing finance major HDFC unveils Q2 results on 17 October 2011. HDFC Bank unveils Q2 results on 19 October 2011. Bajaj Auto, Cairn India and Thermax unveil quarterly results on 20 October 2011. Asian Paints and Godrej Consumer Products reveal Q2 results on 21 October 2011. Axis Bank unveils Q2 results on 22 October 2011. Dabur India, Colgate Palmolive (India) and BPCL unveil Q2 results on 31 October 2011.

Lower global commodity prices may ease pressure on corporate profit margins arising from higher raw material prices and at the macro level it could help ease inflation pressure. However, a weak rupee will offset the benefit of the recent steep fall in global commodity prices triggered by global growth worries. Most commodities imported by India, particularly oil, are denominated in dollars making these expensive for India. The rupee slumped 8.8% percent in July to September 2011 to 48.97/98, its largest quarterly fall since the same period in 2008.

Global commodity prices fell to 10-month lows on Monday, 3 October 2011, on increasing concern that stagnant global growth will crimp demand for metals, energy and agriculture. The Standard & Poor's GSCI Spot Index has lost more than 20% since reaching an almost three-year high in April 2011 as slowing growth reduced the chances of shortages for raw materials.

The market regulator Securities and Exchange Board of India recently set a minimum net worth of Rs 100 crore for companies that wish to issue structured products or market-linked debentures to raise funds. Sebi also set the minimum size for such issues at Rs 10 lakh. Market-linked debentures are hybrid products which have the features of usual debt securities, but offer market-linked returns like an exchange-traded derivative. The issuer company will have to appoint a third party, a credit-rating company registered with the regulator, which will provide the value of the security at least once a week, Sebi said in a circular.

A news agency recently quoted principal economic adviser to the ministry of finance Dipak Dasgupta as saying that the government has no plans to tax or impose restrictions on capital outflows. He said the government will instead focus on liberalising fund inflows into the economy, particularly via overseas borrowing.

Finance Minister Pranab Mukherjee said last month that central banks in emerging economies have been forced to raise interest rates repeatedly as they battle high inflation, exposing them to volatile capital flows. "An issue of immediate concern for emerging economies is managing large capital flows," he said. "Large and volatile capital flows to emerging markets can be destabilizing as they lead to high exchange rate volatility and in some cases make it incumbent to maintain high levels of foreign exchange reserves as an insurance against sudden and large-scale flight of international capital."

The government last month raised the limit of overseas borrowing for companies to $750 million from $500 million. Indian companies can also now raise loans up to $1 billion in Chinese yuan.

Given the lackluster initial FII response to the government's sharply raising the ceiling of FII investment in long-term corporate bonds issued by the companies in the infrastructure sector in March 2011, the government on 12 September 2011, further relaxed the norms on FII investment in such bonds. Sebi had in early August 2011 allowed Qualified Foreign Investors (QFIs) to subscribe to Mutual Fund Debt Schemes which invest in the infrastructure sector subject to a total overall ceiling of $3 billion within the total ceiling of $25 billion.

The government, last week, raised its borrowing target for the current fiscal year by Rs 52800 crore, surprising the market and fueling worries that it may even overshoot the new estimate because of muted revenue growth amid a slowing economy and swelling subsidies. The government will borrow Rs 2.2 lakh crore during October 2011-March 2012 period, or the second half of the fiscal year, compared with the target of Rs 1.67 lakh crore announced in budget in February 2011. C. Rangarajan, Chairman of the Prime Minister's Economic Advisory Council, on 29 September 2011 said it is going to be difficult to achieve fiscal deficit target of 4.6% of GDP for the year ending March 2012.

The government's new borrowing programme may crowd out private borrowers who come into the market in the second half of the year. Credit growth normally picks up after October every year when the busy season starts.

Atsi Sheth, a New York-based vice president and senior analyst at Moody's Investors Service said in a media interview last week that Moody's is unlikely to change its rating outlook on India for now, though the extent of the increase in the government's borrowing target is a surprise. The possibility of fiscal slippage is, however, already factored into the sovereign rating, Sheth said.

Standard & Poor's Ratings Services on Monday, 3 October 2011, said it is maintaining its view that India will struggle to meet its fiscal deficit target. Takahira Ogawa, director of Sovereign and International Public Finance Ratings at S&P said India must prove its intent to continue with the process of fiscal consolidation in the medium term.

Monsoon rains at the end of the June-September season were 1% above the 50-year average, raising hopes of improved crop supplies at a time when the country is battling high food prices. The rains normally start subsiding in the first week of September, but they continued two weeks longer this year. This has boosted the prospects of not only summer-sown crops such as rice, but also winter-sown staples like wheat, because of good soil moisture.

Sowing of winter crops usually starts in October and picks up between the end of November and the first half of December. Apart from wheat, rapeseed and pulses are among other important crops grown during the winter season. India is aiming for a record foodgrain output of 245 million tons in the crop year that started on 1 July.

Rangarajan on 29 September 2011 said there has to be definite signs of inflation falling before the Reserve Bank of India can reverse its current policy. Reserve Bank of India (RBI) deputy governor Subir Gokarn on 28 September 2011 said poor supply responses to rising demand for protein-rich food aren't helping to lower the inflation rate. His comment underscores the central bank's growing dismay over the government's loose fiscal stance that is diluting monetary policy moves and weakening its battle against inflation. "Energy prices have remained very steady. I think (it) is a huge problem to deal with because it certainly reduces the space that monetary policy has," Mr. Gokarn said at a conference.

RBI said at a monetary policy review on 16 September 2011 that it is imperative to persist with the current anti-inflationary stance because a premature change in the policy stance could harden inflationary expectations, thereby diluting the impact of past policy actions. The RBI raised repo rate by 25 basis points on 16 September 2011.

Going forward, the stance of the monetary will be influenced by signs of downward movement in the inflation trajectory, to which the moderation in demand is expected to contribute, and the implications of global developments, RBI said in its 16 September 2011 policy statement. The overall tone of the RBI's latest policy was softer than the previous policy announcement which was extremely hawkish.

Inflation in India remains high and will probably remain in a range of 9% to 10% until November 2011, Gokarn said last month. RBI said on 16 September 2011 that corporate margins moderated across several sectors in Q1 June 2011 compared to levels in Q4 March 2011. However, barring a few sectors, significant pass-through of rising input costs is still visible, RBI said.

RBI governor D Subbarao, last week, said inflation rate remains above the level the central bank deems acceptable. Inflation has been fairly stubborn, Subbarao said in New York. "Above a threshold, you can't accept high inflation to have higher growth," he said, adding that the price-rise limit is as much as 6% for the nation. A rate of 4% to 6% is the short-term comfort range for inflation, Subbarao said. He said the central expects inflation to slow by March 2012, but more slowly than initially expected. Intervention in forex markets brings unexpected consequences, Subbarao said.

The growth in manufacturing sector nearly stalled in September 2011, hitting its weakest spot since March 2009 on slowing output and orders growth following a series of interest rate hikes, data showed on Monday, 3 October 2011. The HSBC Markit India Manufacturing PMI fell more than two points to 50.4 in September 2011 from 52.6 in August 2011, very close to the 50 mark which divides growth and contraction. The output index plunged by its biggest amount in one month since November 2008, to 51.1 from 56.

Exports jumped 44.25% to $24.3 billion in August 2011 from a year earlier, while imports for the month rose 41.82% to $38.4 billion, leaving a trade deficit of $14 billion, the latest government data showed.

Fitch Ratings marginally revised downwards the growth projection for Indian economy to 7.5% this fiscal due to weak global situation coupled with domestic concerns arising from inflation and series of rate hikes. The agency had projected domestic GDP growth of 7.7% earlier. It has also revised the global GDP projection for 2011 to 2.6% from the earlier 3.1%.

European stock markets tumbled on Tuesday, 4 October 2011, as finance ministers from the 17-nation euro area further delayed a decision on disbursing Greece's next round of aid and indicated private bondholders may have to suffer bigger losses on debt as part of the second Greek rescue plan approved in July 2011. Key benchmark indices in UK, France and Germany were down by 2.56% to 3.36%.

Worries about Greece were compounded by fears surrounding Franco-Belgian lender Dexia, which saw shares fall more than 23% on speculation the institution could be split up.

Greece on Sunday, 2 October 2011, announced that it would miss its 2011 deficit targets, sparking a new round of turmoil in global markets on Monday, 3 October 2011, which were exacerbated by a warning from Moody's Investors Service about Dexia's exposure to Greek debt.

Luxembourg Prime Minister Jean-Claude Juncker, who chaired a regular monthly meeting of euro-zone finance ministers that ended in the early hours of Tuesday morning, told reporters that a planned extra meeting for next week had been canceled. A decision on the disbursement of Greece's 8 billion euro ($10.7 billion) round of aid would take place in mid-November, after the completion of the review being conducted by the troika--the European Union, International Monetary Fund and European Central Bank--of international lenders, he said. The meeting produced no sign of progress toward boosting the firepower of the euro zone's 440 billion euro bailout fund, the European Financial Stability Facility.

The European Central Bank and the Bank of England both hold meetings separately on Thursday, 6 October 2011, on interest rates.

Goldman Sachs today, 4 October 2011, cut its forecast for global growth in 2012 and said it now sees the euro zone sinking into a mild recession.

Asian shares fell on Tuesday, 4 October 2011, extending steep losses from the previous session, with financials and exporters skidding amid growing concerns about Europe's debt troubles. Key benchmark indices in Indonesia, Hong Kong, Japan, South Korea and Singapore were down by between 1.05% to 3.45%. Taiwan's key index turned positive and was up 0.48%. The mainland Chinese markets are closed this week for the National Day holidays.

Asian stocks had closed sharply lower Monday, 3 October 2011, with the fall a precursor for heavy follow-on losses for Europe and the US, after Greece said that it would likely not meet its deficit-reduction targets for 2011 or 2012.

Trading in US index futures indicated that the Dow could fall 104 points at the opening bell on Tuesday, 4 October 2011.