Nifty settles at 5-week low

Key benchmark indices fell for the fifth straight day on weak Q2 September 2011 corporate earnings. Intraday volatility was high. The 50-unit S&P CNX Nifty hit 5-week closing low. The barometer index BSE Sensex reached 4-week closing low. The Sensex lost 106.80 points or 0.63%, up about 135 points from the day's low and off close to 100 points from the day's high. The market breadth was weak. The Nifty regained the psychological 5,000 mark, having alternately moved above and below that mark in intraday trade.



The Sensex has lost 793.66 points or 4.51% in five trading sessions from a recent high of 17,569.53 on 8 November 2011. The Sensex has lost 929.14 points or 5.24% this month so far. The Sensex has slumped 3,733.22 points or 18.2% in calendar 2011. From a 52-week high of 20,664.80 on 3 January 2011, the Sensex has lost 3,888.93 points or 18.81%. From a 52-week low of 15,745.43 on 4 October 2011, the Sensex has risen 1,030.44 points or 6.54%.

The combined net profit of a total of 3,280 companies declined 35.7% to Rs 67674 crore on 20.7% growth in sales to Rs 1130705 crore in Q2 September 2011 over Q2 September 2010. The Q2 earnings season got over on Tuesday, 15 November 2011.

Index heavyweight Reliance Industries (RIL) edged lower in volatile trade. Bank stocks recovered. Capital goods stocks tumbled on fears that their earnings will stay muted due to sluggish economic growth amid elevated interest rates and high inflation. Power equipment major Bhel and engineering & construction giant L&T hit 52-week lows. Shares of organized retailers rose on buzz the government may allow foreign direct investment in multi-brand retail. Aviation shares rallied on buzz the government may allow foreign aviation firms to acquire stake in Indian aviation firms. Car major Maruti Suzuki India hit 52-week low.

The market hit 4-week low in early trade on weak Asian shares. A bout of volatility was witnessed in morning trade as key benchmark indices trimmed losses. The market slumped to 5-week low in mid-morning trade. The market once again pared losses in early afternoon trade. The market moved in a trading range in afternoon trade. The market staged a strong intraday rebound in mid-afternoon trade. High volatility was witnessed in late trade as the market recovered once again after sliding to fresh 5-week low.

The BSE Sensex lost 106.80 points or 0.63% to settle at 16,775.87, its lowest closing level since 18 October 2011. The index fell 4.37 points at the day's high of 16,878.30 in late trade. The index declined 241.02 points at the day's low of 16,641.65 in late trade, its lowest level since 12 October 2011.

The S&P CNX Nifty shed 38.05 points or 0.75% to settle at 5,030.45, its lowest closing level since 11 October 2011. The Nifty hit a high of 5,065.20 in intraday trade. The Nifty hit a low of 4,989.50 in intraday trade.

The BSE Mid-Cap index fell 0.94% and the BSE Small-Cap index declined 1.34%. Both these indices underperformed the Sensex.

BSE clocked turnover of Rs 2506 crore, higher than Rs 2229.15 crore on Tuesday, 15 November 2011.

The market breadth, indicating the overall health of the market, was weak. On BSE, 1,937 shares fell and 908 rose. A total of 100 shares were unchanged.

From the 30-share Sensex pack, 18 fell and the rest of them rose.

Index heavyweight Reliance Industries (RIL) fell 1.59% to Rs 848.95. The stock was volatile. The stock hit a high of Rs 860.30 and a low of Rs 838.40. Reliance Industries has denied a media report that it may invest in Kingfisher Airlines. A newspaper report on Wednesday suggested that RIL may make a financial investment in Kingfisher Airlines, or pick up an equity stake in the private airline through a preferential share issue which could be followed by an open offer to shareholders of Kingfisher.

RIL's unit Infotel Broadband Services recently acquired a 38.5% stake in privately held digital learning firm Extramarks Education. It did not disclose the financial details of the investment. The deal will help Extramarks develop its digital distribution services and expand market penetration, RIL said. Last year, Reliance acquired Infotel Broadband, the only company to win a nationwide licence for broadband wireless spectrum in a government auction, for $1 billion, marking its return to the telecom business.

India's largest oil & gas exploration firm by sales ONGC gained 1.74%.

BPCL, HPCL and Indian Oil Corporation (IOCL) shed 2.47% to 4.84% after the state-run oil refiners cut petrol prices by Rs 1.85 per litre from Wednesday, the first reduction in three years as well as since pricing controls ended 18 months ago. Petrol prices will be Rs 1.85 rupees a litre lower, excluding local taxes that vary regionally, and oil firm will now revise prices and pass on changes to customers fortnightly. The fuel will now cost Rs 2.22 cheaper at Rs 66.42 a litre in Delhi.

Jaiprakash Associates tanked 4.49%, extending Tuesday's 5.84% losses triggered by weak Q2 operating performance. Net profit rose 11% to Rs 128.65 crore on 2% growth in net sales to Rs 3132.41 crore in Q2 September 2011 over Q2 September 2010. A sharp surge in other income and decline in tax rate to 42% from 60% boosted bottom line. The core operating profit margin declined 80 basis points to 23.9%, mainly due to increase in employee costs.

Tech Mahindra shed 1.54% as consolidated net profit fell 13.05% to Rs 240.40 crore on 3.15% growth in revenue from services to Rs 1333.30 crore in Q2 September 2011 over Q1 June 2011. Tech Mahindra's debt stood at Rs 1422 crore as on 30 September 2011. Cash and cash equivalent stood at Rs 278 crore on balance sheet as on 30 September 2011. Total headcount was at 43,657. Software professional headcount stood at 26,665, BPO headcount was at 15,875 and support staff headcount was at 1,117.

Vineet Nayyar, Vice Chairman, Managing Director and CEO of Tech Mahindra said, "We have seen yet another quarter of steady growth. Our investment in capabilities has enabled us to achieve this inspite of some headwinds. We remain anchored to building and enhancing our service offerings to meet the needs of the changing market place."

Aviation shares rallied on buzz the government may allow foreign aviation firms to acquire stake in Indian aviation firms. Kingfisher Airlines jumped 14.42% extending Tuesday's 2.34% gains triggered by the private airline announcement of several cost cutting initiatives to help the firm limit losses. Kingfisher Airlines said that going forward the company retains its commitment to improve operations and maintain its prime standing with consumers. Kingfisher Airlines has initiated a large-scale aircraft reconfiguration and transition to the full service model, which would enable a greater number of seats in the air within the current costs and increase the choice of flights for its premium guests. Kingfisher said it is also undertaking several actions to further enhance profitability including network rationalisation, steps to reduce interest cost and a streamlining of existing fleet order.

Kingfisher Airlines reported net loss of Rs 468.67 crore in Q2 September 2011, higher than net loss of Rs 230.82 crore in Q2 September 2010. Fuel cost surged 70.21% to Rs 816.82 crore. Net sales rose 10.52% to Rs 1528.16 crore in Q2 September 2011 over Q2 September 2010.

Among other airliners, Jet Airways rose 4.52%. SpiceJet declined 2.53%.

State-owned oil companies on Tuesday hiked jet fuel prices by a steep 2%. The increase comes on back of a massive 3.8% or Rs 2,845 per kilolitre hike in rates effected from 1 November. Jet fuel makes up for 40% of an airlines' operating cost and the steep hike in prices will raise burden on the cash-strapped airlines. ATF or jet fuel prices vary from airport to airport, depending on the local sales tax or VAT. The three state-run fuel retailers revise jet fuel prices on the 1st and 16th of every month, based on the average international price in the preceding fortnight.

Bank stocks recovered. India's largest private sector bank by net profit ICICI Bank fell 0.2% to Rs 789.15, off the day's low of Rs 773.80. The stock extended fall of 10.66% in past five trading sessions. ICICI Bank's consolidated net profit rose 43% to Rs 1992 crore in Q2 September 2011 over Q2 September 2010. Standalone profit after tax increased 22% to Rs 1503 crore in Q2 September 2011 over Q2 September 2010. Net interest income increased 14% to Rs 2506 crore in Q2 September 2011 over Q2 September 2010. Fee income increased 7% to Rs 1700 crore in Q2 September 2011 over Q2 September 2010. Provisions decreased 50% to Rs 319 crore in Q2 September 2011 over Q2 September 2010. The result was announced during trading hours on Monday, 31 October 2011.

ICICI Bank's current and savings account (CASA) ratio stood at 42.1% as on 30 September 2011. Net non-performing asset ratio decreased to 0.8% as at 30 September 2011 from 1.37% as at 30 September 2010 and 0.91% as at 30 June 2011.

India's largest bank by branch network State Bank of India (SBI) rose 2.02% on bargain hunting. The stock had fallen 13.39% in the past four trading sessions after the second quarter results of the bank showed an increase in bad loans of the bank. The ratio of the bank's gross non-performing assets (NPAs) to gross advances increased to 4.19% as on 30 September 2011 from 3.35% as on 30 September 2010. The ratio of net non-performing assets to net advances increase to 2.04% as on 30 September 2011 from 1.7% as 30 September 2010.

SBI's net profit rose 12.35% to Rs 2810.43 crore on 23.43% rise in total income to Rs 29394.32 crore in Q2 September 2011 over Q2 September 2010. Provision for non-performing assets rose 35.08% to Rs 2921.22 crore in Q2 September 2011 over Q2 September 2010. The bank announced Q2 results during market hours on Wednesday, 9 November 2011.

The bank's consolidated net profit rose 46.8% to Rs 3470.43 crore on 8.76% rise in total income to Rs 41249.08 crore in Q2 September 2011 over Q2 September 2010.

SBI will not like to currently raise funds from overseas given the current market conditions, said Hemant Contractor, a managing director at the bank, on Monday, 14 November 2011. In September 2011, the state-owned bank had doubled its overseas borrowing aim to $10 billion.

India's second largest private sector bank by net profit HDFC Bank declined 1.24%. The bank's net profit rose 31.48% to Rs 1199.35 crore on 37.4% rise in total income to Rs 7929.38 crore in Q2 September 2011 over Q2 September 2010. The result was announced during market hours on 19 October 2011.

The asset quality of commercial banks needs to be closely watched in the changing interest rate environment as the sticky loan portfolio of small and medium enterprises might rise, the Reserve Bank of India (RBI) said in its 'Report on Trend and Progress of Banking in India 2010-11' released on Monday, 14 November 2011.

Capital goods stocks tumbled on fears that their earnings will stay muted due to sluggish economic growth amid elevated interest rates and high inflation. Suzlon Energy, Thermax, Siemens, Crompton Greaves, Punj Lloyd, ABB, SKF India, Alstom Projects, BGR Energy, Areva T&D India, Lakshmi Machine Works, Pipavav Defence, Usha Martin, BEML, Bharat Electronics declined by 0.15% to 5.11%.

India's largest engineering and construction firm by sales, L&T, tumbled 4.04% to Rs 1236.70. The stock hit 52-week low of Rs 1224 today.

India's largest power equipment maker by sales Bhel shed 4.15% to Rs 297.65. The stock hit 52-week low of Rs 286.50 today. The company announced after market hours on Monday that net profit rose 23.61% to Rs 1412 crore on 24.41% growth in total income to Rs 10765.37 crore in Q2 September 2011 over Q2 September 2010. The growth in both topline and bottomline was despite a 60 basis point drop in operating margin to 18.6% due largely on account of higher other income and lower tax incidence. In addition, the company during the quarter has changed its policy of accounting leave encashment to 30 days a month (earlier 26 days a month) and thus the profit before tax was escalated to the extent of Rs 166 crore. But for this one item which moderated the staff cost, the contraction in operating margin would have been higher

Bhel had order backlog of Rs 1.61 lakh crore as on 30 September 2011. Bhel has decided to set up a new power equipment fabrication plant in Bhandara district in Maharashtra.

Cipla rose 1.03%, extending Tuesday's 6.51% surge triggered by good Q2 results. The company announced after market hours on Monday that net profit rose 17.47% to Rs 308.97 crore on 9.8% growth in income from operations to Rs 1804.28 crore in Q2 September 2011 over Q2 September 2010.

Realty major DLF rose 1.3% on bargain hunting. The stock had falling 15.34% in the preceding five trading sessions triggered by weak Q2 results. The company announced on Thursday, 10 November 2011, that consolidated net profit fell 10.98% to Rs 372.41 crore on 2.27% rise in total income to Rs 2577.16 crore in Q2 September 2011 over Q2 September 2010.

DLF said it expects second half of the year ending March 2012 (FY 2012) to witness a stronger operational performance, both in terms of a scale up in launches in the plotted and group housing segments and deliveries of its projects across the cities of Gurgaon, Chennai and Cochin. DLF also expects the momentum on the non-core divestment plan to continue with increasing traction in the proposed divestment of its hospitality assets which would further help in moderation of its debt levels. With strategic capital expenditures being undertaken on improving the quality of its land bank and the build out of select commercial and infrastructure assets, the company is well positioned to capitalize on the growth opportunities as and when the demand scenario revives, DLF said in a statement.

DLF said that the Competition Appellate Tribunal has on 9 November 2011 issued a stay order on the demand on penalty and kept in abeyance the directions relating to modifications of conditions. This pertains to the order passed by the Competition Commission of India dated 12 the August 2011. While this is an interim order, the company believes that it has a strong case based on merits, DLF said. It may be recalled that the Competition Commission of India had imposed a Rs 630-crore penalty on the country's biggest property developer by sales in August as it found the company abusing its marker leadership position to the disadvantage of residents at a housing complex.

HDIL fell 4.52%, extending 22.35% slump in the preceding five trading sessions, after MSCI said it will exclude the stock from the MSCI India Index with effect from 1 December 2011. The HDIL stock had tumbled recently on weak Q2 results. Consolidated net profit declined 24.41% to Rs 148.55 crore on 13.89% rise in total income to Rs 450.09 crore in Q2 September 2011 over Q2 September 2010. The stock will be excluded from the MSCI India Index effective 1 December 2011.

Sobha Developers fell 2.23%, extending Tuesday's 3.07% losses triggered by weak Q2 results. Net profit declined 30.56% to Rs 40.90 crore on 22.91% decline in net sales to Rs 329.40 crore in Q2 September 2011 over Q2 September 2010.

Unitech rose 2.27% on bargain hunting. The stock had lost 5.84% on Tuesday on weak Q2 results. Consolidated net profit dropped 46.8% to Rs 92.46 crore on 2.9% decline in net sales to Rs 626.06 crore in Q2 September 2011 over Q2 September 2010. The company announced Q2 results after market hours on Monday.

Unitech reiterated that the ongoing telecom matter pertains to Unitech Wireless Tamilnadu (Uninor), which is a separate legal entity engaged in the telecom business, and will not impact Unitech. The company said it will continue to focus on its real estate business, in the normal course.

Shares of organized retailers rose on buzz the government may allow foreign direct investment in multi-brand retail. Shoppers Stop, Pantaloon Retail and Trent jumped by between 4.61% to 10.6%.

IT stocks fell on euro-zone debt worries. Europe is the second biggest outsourcing market for Indian IT firms after the US. India's largest software services exporter TCS declined 0.6%. The company announced during market hours on Wednesday, 9 November 2011 that Diligenta, a subsidiary of the company, has won a $2.2 billion 15-year contract from UK-based pensions and insurance provider Friends Life.

India's second largest software services exporter Infosys shed 0.59%. A US federal judge, last week, refused to allow Infosys an out-of-court settlement in a case filed by one of the firm's employees, a setback to the company, which is facing allegations of visa rule violations. Jack Palmer, a principal consultant at Infosys, filed a lawsuit against Infosys in the Alabama state court earlier this year, alleging the company sought his help to circumvent US visa laws. The lawsuit was later moved to the federal court. Mr. Palmer accused Infosys of using short-term business visit visas to circumvent the fewer and expensive work visas meant for high-skilled labor. His suit led to a probe by US authorities, including an inquiry by a US Senate subcommittee. Infosys has previously denied any wrongdoing.

India's third largest software services exporter Wipro shed 2.19%. The company announced after market hours on Tuesday, 8 November 2011, that Premier Foods has selected Wipro Technologies, the global IT, consulting and outsourcing business of Wipro, as a strategic technology partner. As part of the five year strategic relationship, Wipro will be supporting both systems and processes to enhance efficiency of Premier Foods' supply chain. This relationship will enable Premier Foods to realise quantifiable benefits for a known budgetary expenditure with minimal exposure to variable costs.

Some auto stocks gained on renewed buying. India's largest commercial vehicle maker by sales Tata Motors rose 0.47% after the company said Tuesday its global sales in October rose 10% from a year earlier to 95,789 vehicles. India's biggest auto maker by revenue said its UK-based Jaguar Land Rover unit sold 26,158 vehicles in October, up 39% from a year earlier. Sales of Jaguar cars grew 63% to 5,231 units, while those of Land Rover sport-utility vehicles gained 34% to 20,927 units. The company said it sold 43,184 trucks and buses globally during the month, up 6% from a year earlier.

Tata Motors announced after market hours on Monday that consolidated net profit fell 15.56% to Rs 1877.30 crore on 26.9% growth in net revenue to Rs 36197.50 crore in Q2 September 2011 over Q2 September 2010. The company's EBIDTA (earnings before interest, depreciation, taxation and amortization) margin declined to 13.3% from 14.7% in Q2 September 2010.

Tata Motors' British unit Jaguar Land Rover's (JLR) profit after tax declined 2.4% to 237.5 million pounds 30.3% growth in net revenue to 2,928.5 million pounds in Q2 September 2011 over Q2 September 2010. JLR's EBIDTA margin declined sharply by 170 basis points due to unfavorable exchange rates and cost pressures. Tata Motors said the product mix and regional mix continues to be strong.

Bajaj Auto gained 0.78%. The company's total sales rose 7% to 3.95 lakh unit in October 2011 over October 2010. The company announced the monthly sales data early this month. The company said that there was production loss of 25,000 motorcycles at Pantnagar plant in October 2011 as curfew imposed in the region in early October constrained sales.

India's largest tractor maker by sales Mahindra & Mahindra (M&M) rose 1.89% on bargain hunting after falling 9.5% in past seven trading session triggered by weak Q2 results. Net profit fell 2.78% to Rs 737.38 crore on 34.75% increase in total income to Rs 7592.14 crore in Q2 September 2011 over Q2 September 2010. The result was announced during trading hours on Monday, 14 November 2011.

Mahindra & Mahindra said that board of directors of the company at its meeting held on Monday, 14 November 2011, approved the consolidation of its shareholding in Swaraj Automotives (SAL) through a voluntary open offer. The company would be making an open offer to the shareholders of SAL for acquiring upto 6.47 lakh shares constituting 27% of the total voting equity share capital of SAL at an offer price of Rs 90 per share and for a total price consideration not exceeding Rs 5.82 crore. SAL is listed at the Delhi Stock Exchange.

India's largest motorcycle maker by sales Hero MotoCorp fell 2.73% to Rs 2,104.60. The stock had hit a record high of Rs 2248 on Monday. Early this month, Hero MotoCorp reported 1.3% growth in its October sales at 5.12 lakh units. The company had sold 5.05 lakh units in the corresponding month last year.

India's largest car maker by sales Maruti Suzuki India fell 1.39% to Rs 992.15. The stock hit 52-week low of Rs 980.10 today. Maruti had clarified recently that the decision to purchase land in Gujarat is towards building additional capacity. It had also said that the board of directors approved the purchase of land in Gujarat for future capacity requirements of the company. The logistics for reaching the finished cars to the large domestic markets in West and South India and the close proximity of the Mundra port for future exports, played an important role in the decision, Maruti said.

Metal stocks were mixed. Jindal Steel & Power jumped 3.03% after the company announced during market hours today that Jindal Power (JPL), a subsidiary of the company, has received the "Consent to Establish" for expansion project of 2,400 megawatts (MW) (4X600 MW) power plant on 15 November 2011 from Chhattisgarh Environment Conservation Board. The work on this project has now commenced, the company said.

India's largest steel maker by sales Tata Steel rose 1.12% on bargain hunting. The stock had fallen 14.19% in the preceding four trading sessions on weak Q2 numbers. The company announced on Thursday, 10 November 2011, that consolidated net profit fell 89.26% to Rs 212.43 crore on 11.73% rise in total income to Rs 32918.33 crore in Q2 September 2011 over Q2 September 2010. The company said its performance was adversely impacted by higher global raw materials costs and lower average selling prices at Tata Steel Europe. Tata Steel's net debt at the end of September 2011 stood at Rs 45056 crore, compared to Rs 46627 crore at the end of March 2011.

Hindalco Industries fell 1.79%, extending 10.33% losses in preceding four trading sessions triggered by a weak outlook issued by the copper and aluminium maker at the time of announcing Q2 results on Thursday, 10 November 2011. Hindalco Industries said that the second half of FY 2012 (year ending March 2012) will be difficult due to global uncertainties, falling LME prices, and persisting cost pressures. The intensity of resource challenge, which accentuated in the first half of FY 2012 due to monsoon related issues is expected to moderate, the company said.

JSW Steel rose 3.28% on bargain hunting. The company reported a consolidated net loss of Rs 669.32 crore in Q2 September 2011, compared with net profit of Rs 373.26 crore in Q2 September 2010. Total income rose 33.33% to Rs 8180.60 crore in Q2 September 2011 over Q2 September 2010. The company announced results during market hours on Monday.

National Aluminum Company declined 2.72%, with the stock falling for the sixth straight day on weak Q2 results. Net profit fell 37.8% to Rs 139.34 crore on 11.6% growth in total income to Rs 1746.01 crore in Q2 September 2011 over Q2 September 2010.

Steel major Steel Authority of India (Sail) slumped 5.2% as MSCI removed the stock from MSCI India Index with effect from 1 December 2011. Sail and Oman Oil Co. S.A.O.C. have signed an initial pact to jointly set up a steel plant in Oman with an estimated investment of $3 billion, steel minister Beni Prasad Verma said Tuesday. He told reporters that the two state-run companies aim to set up the plant with a capacity of 3 million metric tons a year once a feasibility study on the project was completed.

India's largest listed telecom operator by sales Bharti Airtel fell 0.09%. The stock will be added in the MSCI Emerging Markets Index with effect from 1 December 2011.

Cals Refineries clocked highest volume of 1.04 crore shares on BSE. Shree Renuka Sugars (82.75 lakh shares), K S Oils (67.34 lakh shares), Kingfisher Airlines (67 lakh shares), and SpiceJet (60.89 lakh shares) were the other volume toppers in that order.

SBI clocked highest turnover of Rs 167.54 crore on BSE. L&T (Rs 96.24 crore), Tata Steel (Rs 83.39 crore), Onelife Capital (Rs 72.76 crore) and Prakash Constrowell (Rs 70.53 crore) were the other turnover toppers in that order.

The Union Cabinet has reportedly approved the Pension Fund Regulatory and Development Authority Bill. The bill, which seeks to establish an authority that will develop, promote and regulate old-age income security, was first introduced in parliament in March. But it was silent on the extent of foreign ownership to be allowed in Indian pension funds and in a central record-keeping agency. In August, the finance ministry proposed to cap foreign investment in the pension sector at 26%, a suggestion accepted by a parliamentary panel that was examining the bill.

On the macro front, the latest data showed that inflation remains uncomfortably high in India. Inflation, as measured by the wholesale price index (WPI), stood at 9.73% in October 2011, as against 9.72% in September 2011, the latest data showed. The annual inflation rate was at 9.08% during the corresponding month of the previous year. The government left unchanged inflation rate for August at 9.7%.

Industrial production grew 1.9% in September 2011 from a year earlier, far below market expectations, reflecting weakening economic activity due to the central bank's aggressive tightening of monetary policy. The reading was also significantly lower than the revised 3.5% industrial output growth in August, government data showed on Friday, 11 November 2011.

Manufacturing output, which has a 75.5% weight in the index, rose 2.1% year on year in September, compared with a revised 4% increase in August. Mining output shrank 5.6%, compared with a revised 4.1% contraction in August. Capital goods output in September shrank 6.8% from a year earlier after rising 4.0% in August.

India's October exports rose an annual 10.8% to $19.9 billion, while imports for the month rose 21.7 percent to $39.5 billion, the trade secretary said on Tuesday, citing provisional data. India's trade deficit in October is seen at $19.6 billion, the highest in four years, Rahul Khullar said. At this rate, the trade deficit for the year could breach the $150 billion mark, he added.

India's service sector contracted for a second straight month in October, as new business grew at its weakest pace since May 2009, dragged by sagging global demand and tight monetary policy, a survey showed on Thursday, 3 November 2011. The seasonally adjusted HSBC Markit Business Activity Index, based on a survey of around 400 firms, slumped to 49.1 in October, its lowest reading in two-and-a-half years and below the 50-mark which separates growth from contraction. It was at 49.8 in September.

India's manufacturing activity in October expanded--though modestly--indicating an improvement in business conditions from a month ago as growth in new orders accelerated, a survey showed Tuesday, 1 November 2011. The seasonally adjusted HSBC Purchasing Managers' Index, prepared by Markit, rose to 52 in October from 50.4 in September. A figure above 50 indicates expansion.

India needs to guard against imported inflationary pressure as the euro-zone continues to reel under the debt crisis, Prime Minister Manmohan Singh said on Wednesday, 2 November 2011. "In an increasingly interdependent world, we have to be wary of contagion effects," Mr. Singh said in a statement before his departure to attend a conference of the Group of 20 industrial and developing economies in Cannes, France.

RBI announced a 25 basis points hike in its key policy rate viz. the repo rate to 8.5% after half-yearly review of the monetary policy on 25 October 2011. The central bank cut its GDP growth forecast for the current fiscal year through March 2012 to 7.6% from 8% earlier. But it retained its March-end inflation projection of 7%. RBI said the projected inflation trajectory indicates that the inflation rate will begin falling in December 2011 (January 2012 release) and then continue down a steady path to 7% by March 2012. It is expected to moderate further in the first half of 2012-13. This reflects a combination of commodity price movements and the cumulative impact of monetary tightening. Further, moderating inflation rates are likely to impact expectations favourably.

Mr. Sudipto Mundle, a member of the Reserve Bank of India's technical advisory committee on monetary policy, on 3 November 2011 said he expects inflation to ease in the January-March quarter as global commodity prices will begin to cool by then, helped by a favorable base. However, it will still overshoot the RBI's March-end projection of 7%, possibly ending the fiscal year at as high as 8%, he added. Mr. Mundle expects the economy to grow 7%-7.5% this fiscal year, below the RBI's 7.6% forecast.

Emerging markets such as India must take measures to boost long-term foreign direct investment to blunt volatility in exchange rates, and any capital control measures must be selective and temporary, a senior executive of the Asian Development Bank said on Monday, 14 November 2011. While capital flows and exchange rates are likely to be volatile in the short-term amid ongoing euro-zone debt concerns, India must focus on improving its investment climate by providing better infrastructure, putting in place a coherent manufacturing policy and developing financial markets, Managing Director General Rajat M. Nag said on the sidelines of the India Economic Summit.

Nag said achieving India's fiscal deficit target would be difficult, but achievable. "We are pleased with the planned approach to fiscal consolidation which is essentially improving the targeting of subsidies rather than curtailing critical investment in infrastructure," he said

European stocks fell in volatile trade on on Wednesday, 16 November 2011, as the Bank of England said prospects for the UK economy have worsened and global demand has slowed. Key benchmark indices in Germany and UK fell by between 0.1% to 0.41%. France's CAC 40 rose 0.4%.

Asian shares fell on Wednesday, 16 November 2011, as signs that rising borrowing costs were affecting AAA-rated France stirred fears that even core euro zone members may not escape contagion from the region's two-year old debt crisis. Key benchmark indices in China, Hong Kong, Indonesia, South Korea, Singapore, Japan, and Taiwan fell by between 0.15% to 2.48%.

The Bank of Japan cut its economic outlook on Wednesday, citing weaker global conditions, while voting unanimously to keep its interest-rate target at 0-0.1%, as expected. "Japan's economic activity has continued picking up, but at a more moderate pace," the Bank of Japan said in a statement accompanying the policy decision. It said exports and production were still growing, but at a slower rate. "Japan's economy will face an adverse effect from the slowdown in overseas economies and the appreciation of the yen, as well as from the flooding in Thailand. After that, the economy is expected to return to a moderate recovery path," it said.

Trading in US index futures indicated that the Dow could fall 74 points at the opening bell on Wednesday, 16 November 2011. US stocks rose on Tuesday, boosted by swift steps toward formation of a new Italian government and stronger-than-expected reports on the US economy. US retail sales rose broadly in October, and a gauge of manufacturing in New York state advanced in November, suggesting the economy could maintain momentum through the fourth quarter and pushing back recession fears.