Sensex off 3.9% in four days on euro-zone debt worries

Key benchmark indices fell for the fourth straight day to hit 3-1/2-week closing lows as world stocks fell amid renewed worries about euro-zone debt. The barometer index BSE Sensex fell below the psychological 17,000 mark. The Sensex lost 236.07 points or 1.38%, up close to 45 points from the day's low and off close to 290 points from the day's high. All the 13 sectoral indices on BSE were in red. The market breadth was quite weak. Realty stocks extended recent losses as leading realty firms reported weak Q2 results, with realty giant DLF slumping nearly 7%. Car major Maruti Suzuki India hit 52-week low. Bank stocks declined on fears of increase in bad loans in a slowing economy.



The Sensex has lost 686.86 points or 3.9% in four trading sessions from a recent high of 17,569.53 on 8 November 2011. The Sensex has lost 822.34 points or 4.64% this month so far. The Sensex has slumped 3,626.42 points or 17.68% in calendar 2011. From a 52-week high of 20,664.80 on 3 January 2011, the Sensex has lost 3,782.13 points or 18.13%. From a 52-week low of 15,745.43 on 4 October 2011, the Sensex has risen 1,137.24 points or 7.22%.

Coming back to today's trade, index heavyweights Reliance Industries (RIL) extended initial losses. Tata Power hit 52-week low after reporting consolidated loss in Q2 September 2011. Pharma major Cipla jumped more than 6% on good Q2 results. Consumer durables stocks declined. Diversified Jaiprakash Associates fell nearly 6%. Power equipment major Bhel hit 52-week low.

The market edged lower to hit three-week low in early trade on weak Asian shares. Intraday volatility was witnessed in morning trade as key benchmark indices slipped into the red once again after reversing initial losses to hit fresh intraday highs. The market trimmed gains after moving into positive terrain in mid-morning trade. Intraday recovery witnessed in mid-morning trade proved short-lived, with the market once again sliding into the negative zone in early afternoon trade. Key benchmark indices alternately moved between gains and losses in afternoon trade. The market lost ground and hit fresh three-week low in mid-afternoon trade as European stocks fell in early trade. The market extended losses in late trade.

The BSE Sensex lost 236.07 points or 1.38% to settle at 16,882.67, its lowest closing level since 21 October 2011. The index rose 53.35 points at the day's high of 17,172.09 in morning trade. The index declined 281.18 points at the day's low of 16,837.56 in late trade.

The S&P CNX Nifty shed 79.85 points or 1.55% to settle at 5,068.50, its lowest closing level since 21 October 2011. The Nifty hit a low of 5,052.85 in intraday trade. The Nifty hit a high of 5,158.75 in intraday trade.

BSE clocked turnover of Rs 2220 crore, lower than Rs 2356.53 crore on Monday, 14 November 2011.

The BSE Mid-Cap fell 2.58% and the BSE Small-Cap index slumped 2.77%. Both these indices underperformed the Sensex.

The market breadth, indicating the overall health of the market, was quite weak. On BSE, 2,238 shares fell and 630 rose. A total of 97 shares were unchanged.

From the 30-share Sensex pack, 27 fell and the rest of them rose.

Index heavyweight Reliance Industries (RIL) fell 1.42%. 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.

Consumer durables stocks edged lower in a weak market. Blue Star, Videocon Industries, and Titan Industries fell by between 1.49% to 1.75%.

Jaiprakash Associates tanked 5.84%. The company announced after market hours on Monday that net profit rose 11.36% to Rs 18.65 crore on 1.99% rise in total income to Rs 3132.41 crore in Q2 September 2011 over Q2 September 2010.

India's largest power equipment maker by sales Bhel shed 2.16% to Rs 310.55, reversing initial gains. The stock hit 52-week low of Rs 308.10 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 company's order book position remains robust. Bhel had order backlog of Rs 1.61 lakh crore as on 30 September 2011.

Bhel said that in terms of the in-principle approval given by the board at its meeting held on 14 November 2011 a new power equipment fabrication plant will now be set up in Bhandara district in Maharashtra.

BSE Realty index slumped 5.22% and was the top loser among the sectoral indices on BSE. Realty major DLF declined 6.68%, with the stock falling for the third straight day on 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 8.29%, extending sharp losses in preceding two trading sessions triggered by 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.

Unitech fell 5.84%, after 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.

Commenting on the results, Mr Ajay Chandra, MD, Unitech said, "Business environment for the real estate sector continues to remain challenging. In such an environment, the company achieved Rs 1068 crore of sales bookings and reduced debt by Rs 191 crores from its internal cash flows. Total area of projects launched during the current calendar year exceeded the targeted 10 million square feet. Apart from continuing with its strategy of offering products targeted at affordable/mid-income housing segments, the company has been taking various measures to not only deal with the current situation but also position itself to benefit once the business environment starts improving."

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.

Sobha Developers fell 3.07% after 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.

Bank stocks declined on fears of increase in bad loans in a slowing economy. India's largest bank by branch network State Bank of India (SBI) fell 1.32%, extending recent steep slide triggered by an increase in bad loans. The ratio of 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 largest private sector bank by net profit ICICI Bank fell 3.7%, with the stock falling for the fifth straight day. 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 second largest private sector bank by net profit HDFC Bank rose 0.23%. 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.

Tata Power Company fell 1.54% to Rs 98.95 after the company reported a consolidated net loss of Rs 1218.86 crore in Q2 September 2011 compared with a net profit of Rs 672.54 crore in Q2 September 2010. The stock hit 52-week low of Rs 93 today. Tata Power's net sales rose 30.2% to Rs 6248.33 crore in Q2 September 2011 over Q2 September 2010. The company said net profit is not comparable due to the provision made for impairment of Rs 823 crore and forex loss of Rs 638.96 crore incurred by Coastal Gujarat Power (CGPL), a wholly-owned subsidiary, which is in the process of implementing the 4000 megawatts (MW) Ultra Mega Power Plant at Mundra.

Cipla jumped 6.51% after 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.

Kingfisher Airlines rose 2.34% after the company announced 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.

The company said it was a challenging quarter for the aviation industry. The company said savings on interest and other costs were offset by a steep hike in fuel prices and the weakening of the Indian rupee, which negatively impacted 70% of its cost base.

Jet Airways (India) slumped 8.1%. The company reported net loss of Rs 713.60 crore in Q2 September 2011 as against net profit of Rs 12.40 crore in Q2 September 2010. Jet Airways (India)'s net sales rose 11.41% to Rs 3122.28 crore in Q2 September 2011 over Q2 September 2010. The result was announced after market hours on Friday, 11 November 2011.

SpiceJet lost 5.65%. The budget airline posted net loss of Rs 240.07 crore in Q2 September 2011, compared with net profit of Rs 10.11 crore in Q2 September 2010. SpiceJet's net sales rose 25.9% to Rs 759.03 crore in Q2 September 2011 over Q2 September 2010. The company declared the results after market hours on Friday, 11 November 2011.

India's largest engineering and construction firm by sales L&T shed 2.81%. The company announced during market hours on Monday that it has executed the first order of dry shielded canisters from Transnuclear Inc, USA, an Areva company for storage of radioactive waste. Apart from these 12 canisters, L&T is ready to dispatch additional 2 canisters for the next order, L&T said in a statement. These canisters are for US based leading nuclear utilities and have been manufactured in accordance with the US Code of Federal Regulations (10 CFR) and Nuclear Safety Class 1 standards.

PSU OMCs fell on reports that the three state-run oil companies (PSU OMCs) will today discuss a proposal for lowering of petrol prices to pass on the benefit of a global trend of falling gasoline prices to the consumer. BPCL, HPCL and Indian Oil Corporation (IOCL) declined by between 0.56% to 2.29%. Petrol prices have been raised four times this year. Petrol prices went up by Rs 3.14 a litre in September 2011 and then by Rs 1.82 a litre about two weeks ago, causing much outrage among people and political parties. The government has freed pricing of petrol.

FMCG stocks edged lower on profit taking. ITC, Hindustan Unilever, Marico and United Spirits shed by between 0.03% to 11.09%.

Most auto stocks edged lower on concerns that higher interest rates and higher petrol prices may dent demand for vehicles. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing. India's largest tractor maker by sales Mahindra & Mahindra (M&M) fell 3.97%, extending Monday's 5.73% slide 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 2.71% to Rs 2150. 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.

Bajaj Auto shed 1.26%. 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 commercial vehicle maker by sales Tata Motors rose 1.91%. The company 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.

Tata Motors said car sales India were adversely impacted by rising interest rates, fuel price hikes, inflationary pressures and intense competition. Tata Motors said that competitive intensity and increasing costs are significant challenge to the passenger vehicles industry, with higher inflation, interest costs, fuel price increases dampening the demand. Tata Motors intends to further expand sales and service network in India.

Tata Motors intends to launch variants from Prima range, world LCV range, Nano variants, Vista variants, Manza Limited edition, New Safari in the year ending March 2012 (FY 2012). The company said increase in infrastructure spending could propel demand for MHCV trucks going ahead. Services and agriculture sector along with rural connectivity, proliferation of hub & spoke model and demand of passenger applications is expected to drive growth in LCV/SCV segment, Tata Motors said in a statement. Tata Motors said that while the competitive intensity in CVs is expected to increase, Tata Motors is well placed with a wide and compelling product portfolio and customer support.

With regard to JLR, Tata Motors said it continues to work on profitable volume growth, managing costs and improving efficiencies to sustain the growth momentum. Tata Motors, however, warned that eternal geopolitical and economic factors including exchange rate, could impact volumes and profitability of JLR. Tata Motors said that further steps to improve the debt profile of JLR are under way.

India's largest car maker by sales Maruti Suzuki India fell 2.11% to Rs 1006.15. The stock hit 52-week low of Rs 992.50 today. As per reports, the company has raised prices of its diesel models by Rs 2,000-Rs 10,000 to offset the impact of an appreciating yen and rising input costs. 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.

The company also clarified that its investment plans for Haryana stay on course. These include installation of the 2.5 lakh units capacity assembly line in Manesar (Manesar C), a world class R&D center and test course in Rohtak. The company has lined up a direct investment of over Rs 3400 crores towards these facilities In addition to company's investment, its vendors and joint venture partners will continue to appropriately invest in Haryana for the future expansion, Maruti said.

Maruti's total sales slumped 53.2% to 55,595 units in October 2011 over October 2010. Domestic sales fell 52.2% to 51,458 units while exports tumbled 63.6% to 4,137 units in October 2011 over October 2010. Labour unrest at Maruti's Manesar unit during October 2011 adversely impacted the company's sales. The firm lost production of 40,000 units during the month. Maruti announced the monthly sales data on 1 November 2011.

IT stocks fell in a weak market. India's largest software services exporter TCS declined 0.32%. 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 0.57%. 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 fell 1.18%. 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.

Metal stocks declined after a slew of weak Q2 results reported by metal companies recently. India's largest steel maker by sales Tata Steel fell 2.7%, with the stock extending recent losses triggered by 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 0.28%, extending recent slide 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 fell 1.34% extending Monday's 2.34% losses triggered by weak Q2 results. 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 3.4% extending Monday's 1.92% losses triggered by 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.

Among other metal stocks, Jindal Steel & Power, Sterlite Industries and Sail shed by between 1.81% to 3.27%.

Shree Renuka Sugars clocked highest volume of 87.03 lakh shares on BSE. Kingfisher Airlines (84.57 lakh shares), Cals Refineries (59.77 lakh shares), K S Oils (57.51 lakh shares) and SpiceJet (43.02 lakh shares) were the other volume toppers in that order.

SBI clocked highest turnover of Rs 148.17 crore on BSE. Onelife Capital (Rs 83.95 crore), Tata Steel (Rs 79.29 crore), Lovable Lingerie (Rs 78.78 crore) and Tata Motors (Rs 74.06 crore) were the other turnover toppers in that order.

Foreign institutional investors (FIIs) bought shares worth Rs 321.62 crore on Monday, 14 November 2011, as per the provisional data from the stock exchanges. FIIs have made substantial purchases this month. The inflow has totaled Rs 1,369.31 crore this month, till 14 November 2011, as per data from the stock exchanges. Domestic institutional investors (DIIs) have dumped shares worth a net Rs 1540.62 crore this month so far.

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.

The food price index rose 11.81% and the fuel price index climbed 14.50% in the year to October 29, government data on Friday, 11 November 2011, showed. In the previous week, annual food and fuel inflation stood at 12.21% and 14.50%, respectively. The primary articles price index was up 11.43%, compared with an annual rise of 12.08% a week earlier.

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 on Tuesday, tracking losses in the US and Asia, as investors worry that the new Greek and Italian leaders will struggle to implement the strict austerity measures needed to get their countries back on track. Key benchmark indices in UK, France and Germany fell by between 1.07% to 2.07%.

Germany's economy grew by 0.5% in the third quarter on a seasonal and calendar-adjusted basis, according to data released today by the Federal Statistics Office. In addition, second-quarter GDP in the eurozone's largest economy was revised up by 0.2% to reflect growth of 0.3%.

The French economy recovered in the third quarter of 2011, buoyed by industrial production and consumer spending, data released on Tuesday revealed. Gross Domestic Product (GDP) rose by 0.4% from the second quarter, when it contracted by a revised 0.1%, the Paris-based statistics office, Insee, said today.

Asian shares fell on Tuesday, as a rise in euro zone bond yields reflected lingering doubts about the ability of politicians in Italy and Greece to push through painful reforms to resolve their debt crises and win market confidence. Key benchmark indices in Hong Kong, Indonesia, South Korea, Singapore, Japan, and Taiwan fell by between 0.46% to 0.88%. However, China's Shanghai Composite rose 0.04%.

Industrial production in the euro zone fell in September, the most since early 2009. Output at factories in the 17-nation group declined 2% for the month

Trading in US index futures indicated that the Dow could fall 63 points at the opening bell on Tuesday, 15 November 2011. US stocks fell on Monday as rising bond yields in Italy and other euro-zone countries reminded investors that despite changes in governments, the region's debt crisis could still spin out of control.