Metal, banking stocks lead decline

Key benchmark indices made a weak start to the new week, month and quarter as world stocks fell on Greece default fears. Data showing slowdown in manufacturing sector in September 2011, data showing continuation of selling by foreign funds last month and likely muted-to-weak Q2 earnings weighed on sentiment. The barometer index BSE Sensex and the 50-unit S&P CNX Nifty hit one-week lows. The market fell for the second straight day today, 3 October 2011. The Sensex tumbled 302.21 points or 1.84%, up close to 95 points from the day's low and off close to 105 points from the day's high. The market breadth was weak. All the 13 sectoral indices on BSE were in the red. Index heavyweight Reliance Industries (RIL) edged lower.



The index has slumped 4,357.64 points or 21.24% in calendar 2011. From a 52-week high of 21,108.64 on 5 November 2010, the Sensex has lost 4957.19 points or 23.48%. From a 52-week low of 15,765.53 on 26 August 2011, the Sensex has risen 385.92 points or 2.44%. 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, metal shares fell across the board as global commodity prices fell on global economic worries. Interest rate sensitive banking stocks fell on worries that elevated interest rates would hurt borrowers' ability to repay loans and increase delinquencies. Auto shares were mixed after good vehicle sales in September 2011.

Shares of Reliance Anil Dhirubhai Ambani Group (ADAG) companies rose on reports that the Central Bureau of Investigation has given a clean chit to the group Chairman, Anil Ambani, in 2G spectrum case. JSW Steel dropped after the company said a CBI team visited the company's Vijayanagar works today morning and sought certain information about procurement of iron ore.

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.

Data showing continuation of selling by foreign funds last month also weighed on investors sentiment. Foreign institutional investors (FIIs) sold shares worth Rs 459.47 crore on Friday, 30 September 2011, as per provisional data from the stock exchanges. FIIs sold shares worth Rs 3088.88 crore in September 2011, as per data from stock exchanges. The outflow 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 date from Securities & Exchange Board of India.

The market skidded to one-week low in early trade on weak Asian shares. Weakness continued in morning trade. The market trimmed losses in mid-morning trade. Intraday recovery witnessed in mid-morning trade short-lived as key benchmark indices hit fresh one-week lows in early afternoon trade. Key benchmark indices once again came off lows in afternoon trade. The market traded off one-week low in mid-afternoon trade as good rains this year and a setback in global commodity prices raised hopes that inflation may ease.

The BSE Sensex lost 302.21 points or 1.84% to settle at 16,151.45, its lowest closing level since 26 September 2011. The index lost 397.43 points at the day's low of 16,056.33 in early afternoon trade. The index fell 197.79 points at the day's high of 16,255.97 in early trade.

The S&P CNX Nifty shed 93.75 points or 1.9% to settle at 4,849.50, its lowest closing level since 26 September 2011. The Nifty hit a low of 4,823.90 in intraday trade.

The BSE Mid-Cap index fell 1.9% and underperformed the Sensex. The BSE Small-Cap index declined 1.48% and outperformed the Sensex.

BSE clocked turnover of Rs 2140 crore, lower than Rs 2489.43 crore on Friday, 30 September 2011.

The market breadth, indicating the overall health of the market, was weak. On BSE, 1,915 shares fell and 879 rose. A total of 104 shares were unchanged.

Among the 30-share Sensex pack, 22 declined and the rest rose. Coal India, ONGC, Bharti Airtel and Cipla rose by between 0.6% to 1.13%.

Index heavyweight Reliance Industries (RIL) was down 2.49% to Rs 788.20. The stock hit a high of Rs 800 and a low of Rs 784.50. 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.

ACC rose 0.19% after the company announced during market hours today that its cement shipments rose 9.49% to 1.73 million tonnes in September 2011 over September 2010.

Realty stocks fell on worries higher interest rates could dent demand for residential and commercial properties. Purchases of both residential and commercial property are largely driven by finance. HDIL, Indiabulls Real Estate and Unitech shed by between 3.05% to 5.92%. Realty major DLF slumped 7.82% and was the top loser from the Sensex pack.

Auto stocks were mixed after auto firms reported good vehicle sales for the month just gone by. Tata Motor declined 1.38%, in volatile trade. 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.

In the commercial vehicles segment, the company sold 46,247 units in the domestic market in September, compared to 35,734 units in the same month last year, up 29%. Light commercial vehicle sales during the month amounted to 28,092 units, a growth of 47% over last year, while medium and heavy commercial vehicle sales stood at 18,155 units, a growth of 9% compared to September, 2010.

Mahindra & Mahindra gained 0.85%. 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".

Maruti Suzuki India fell 0.39% in volatile trade as the company'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 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.

As per the agreement, workers agreed to sign the contentious good conduct bond laid down by the management, while the company agreed to conditionally take back 18 trainees who were suspended.

Bajaj Auto fell 1.2%, in volatile trade. The company said during market hours today 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.

Another bike maker Hero MotoCorp rose 0.87% as 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.

Metal shares fell across the board as global commodity prices fell on global economic worries. Data, last week, showed HSBC's China manufacturing sector continued to stagnate in September 2011 amid weak Chinese domestic demand and also weak overseas demand. China is the world's largest consumer of aluminum and copper. Nalco, Sail, Hindustan Zinc and Jindal Steel & Power shed by between 1.05% to 6.02%. LMEX, a gauge of six metals traded on the London Metal Exchange dropped 3.36% on 30 September 2011.

India's largest non-ferrous metals producer Sterlite Industries (India) lost 4.3% to Rs 108.95. The stock hit 52-week low of Rs 108.40 in intraday trade today.

Hindalco Industries fell 5.45% to Rs 124.15. The stock hit 52 week low of Rs 123.30 today.

Tata Steel declined 4.95% to Rs 394.70. The stock hit 52 week low of Rs 393 today.

Shares of India's JSW Steel fell 7.07% to Rs 549.50. The stock hit 52 week low of Rs 540 today. The company during trading hours today, 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 today 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 engineering and construction firm by order book, L&T, shed 2.94% to Rs 1318.25. The stock hit 52-week low of Rs 1,303.25 today.

India's largest power equipment maker by sales Bhel dropped 1.89% after a 5-for-1 stock-split.

Consumer durables stocks fell in a weak market. Blue Star, Videocon Industries, Gitanjali Gems and Titan Industries dropped by between 0.53% to 2.13%.

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 private sector bank by net profit ICICI Bank declined 4.12%. India's second largest private sector bank by net profit HDFC Bank fell 1.88%. India's largest bank by branch network and net profit State Bank of India (SBI) shed 2.53%. Axis Bank fell 3.01% to Rs 990.75. The stock hit 52 week low of Rs 980 today.

Shares of Reliance Anil Dhirubhai Ambani Group companies rose on reports that the Central Bureau of Investigation has given a clean chit to the group Chairman, Anil Ambani, in 2G spectrum case. Reliance Capital (up 1.6%), Reliance Communications (up 0.77%), Reliance Infrastructures (up 1.27%) edged higher.

Reliance Power rose 1.3%, after the company said its 3,960 megawatts (MW) Tilaiya Ultra Mega Power Project (UMPP) in Jharkhand has become eligible for Carbon Credits as per accreditation accorded by the Executive Board of the Clean Development Mechanism (CDM). The Tilaiya UMPP will generate 21.3 million carbon credits valued at over Rs 2000 crore during the initial ten years' period.

Meanwhile, the company has got approval from the Reserve Bank of India to raise $2.2 billion by way of external commercial borrowings for funding its 3,960 megawatts ultra mega power project in Sasan, Madhya Pradesh.

IT stocks fell on worries over Europe's debt crisis. Europe is the second largest outsourcing market for Indian IT firms after the US. India's second largest software services exporter, Infosys, fell 2.27%. India's third largest software services exporter Wipro slipped 2.85%. India's largest software services exporter TCS rose 0.63%, reversing initial losses.

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. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.

Pharma stocks declined in a weak market. Lupin, Ranbaxy Laboratories, Ipca Laboratories and Dr Reddy's Laboratories fell by between 0.11% to 3.71%

Shares of offshore oil services providers fell as a decline in crude oil prices raised concerns that oil firms may go slow on expansion of exploration and production activities. Aban Offshore, Deep Industries, Dolphin Offshore, Great Offshore and SEAMEC shed by between 1.16% to 2.64%.

Oil fell on Monday on growing fears the euro debt crisis may spread to other parts of the region and dampen global oil demand. Crude futures were down $1.17 a barrel or 1.5% to $78.03 a barrel in Asian electronic trading.

State-run oil marketing companies (PSU OMCs) rose as crude prices declined. HPCL, Indian Oil Corporation and BPCL rose by between 2.51% to 5.29%. Lower crude oil prices may reduce under-recoveries of state-run oil marketing companies (PSU OMCs) on domestic sale of diesel, LPG and kerosene at controlled prices. The government has already freed pricing of petrol. However, weak rupee will negate the impact of lower crude oil prices for PSU OMCs as the crude oil that that refineries process is either imported or priced on import-parity.

State-owned oil marketing companies on Friday, 30 September 2011 hiked jet fuel price by 1.5% as falling rupee made oil imports costlier. Jet fuel, or aviation turbine fuel (ATF) price at Delhi's T3 airport was hiked by Rs 899 per kilolitre (kl), or 1.5%, to Rs 58,578 per kl with effect from Friday night.

Airline stocks dropped after state-owned oil marketing companies on Friday, 30 September 2011, hiked jet fuel price by 1.5% as falling rupee made oil imports costlier. Jet Airways (India) (down 3.77%), SpiceJet (down 1.88%) and Kingfisher Airlines (down 2.25%), declined.

Jet fuel, or aviation turbine fuel (ATF) price at Delhi's T3 airport was hiked by Rs 899 per kilolitre (kl), or 1.5%, to Rs 58,578 per kl with effect from Friday night. ATF accounts for 50% of an airlines' operating cost. ATF prices vary from airport to airport, depending on the local sales tax or VAT. 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.

Cairn India declined 0.84% as lower oil prices will result in lower realizations from crude sales. The company announced before market hours today that Cairn Lanka made a gas discovery in CLPL-Dorado well in Sri Lanka, in which it has 100% participatory interest.

NTPC fell 1.52%. The company said that the unit 1 of 660 megawatts (MW) of Sipat Super Thermal Power Station Stage-I is declared on commercial operation on 1 October 2011. With this the commercial capacity of Sipat super thermal power station (stage-I&II) is 1660 MW and that of NTPC is 30990 MW.

Cigarette maker ITC declined 1.54%. The company has acquired the entire shareholding of Russell Credit (a wholly owned subsidiary of the company) in Wimco (Wimco), comprising 9.12 crore shares or 96.825% of Wimco's equity share capital. Consequently, Wimco has become a direct subsidiary of ITC with effect from 29 September 2011.

Shares of organized retailers fell after industry secretary R P Singh said that the government is considering raising foreign direct investment in single brand retail to 100% from 51%. Trent, Pantaloon Retail and Shoppers Stop shed by between 1.59% to 4.28%.

India Securities clocked highest volume of 4.64 crore shares on BSE. Cals Refineries (1.54 crore shares), Jaiprakash Associates (43.24 lakh shares), Unitech (25.58 lakh shares) and Reliance Communications (24.21 lakh shares) were the other volume toppers in that order.

India Securities clocked highest turnover of Rs 255.66 crore on BSE. SBI (Rs 88.16 crore), Reliance Capital (Rs 73.31 crore), L&T (Rs 70.71 crore) and Tata Steel (Rs 63.51 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, 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 reveals Q2 results on 20 October 2011. Axis Bank unveils Q2 results on 22 October 2011. Colgate Palmolive (India) and BPCL unveil Q2 results on 31 October 2011.

Global commodity prices fell to 10-month lows on Monday, 3 October 2011, on speculation a Greek default would slow global growth and curb demand for raw materials. The S&P GSCI Index has dropped 24% since April 2011, meeting the common definition of a bear market.

The fall in 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.

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 Thursday, 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.

The government is still hopeful of meeting the divestment target of Rs 40000 crore budgeted for the current fiscal year that ends in March, economic affairs secretary, R. Gopalan, said on 28 September 2011. The government, last month, deferred the about Rs 11000-crore follow-on public offer plan in state-run energy major ONGC.

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.

Food inflation rate edged higher in the week ended 17 September 2011 as meat and vegetables turned costlier. Food price index rose 9.13% and the fuel price index climbed 14.69% in the year to 17 September 2011, government data on Thursday, 29 September 2011, showed. In the previous week, annual food and fuel inflation stood at 8.84% and 13.96%, respectively. Rangarajan on Thursday, 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 Wednesday, 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 federal 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.

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.

Prime Minister Manmohan Singh, seeking to defend his government amid a growing political crisis, on Tuesday, 27 September 2011, denied there was infighting in his cabinet over a corruption scandal and accused the leading opposition party of being "prematurely restless" for early elections. The disclosure last week of a Finance Ministry memo about a controversial 2008 sale of mobile-phone spectrum was widely interpreted by the media as an attempt by Finance Minister Pranab Mukherjee to blame Home Minister P. Chidambaram, his predecessor as finance minister, for failing to prevent what turned into a massive alleged telecom corruption scam. Reports of a battle between the two top ministers have dominated the news for the past several days, especially after both of them met Congress President Sonia Gandhi on Monday, 26 September 2011.

Singh said there is no room for dissension in his cabinet. Mukherjee had told reporters on Monday that Chidambaram is a "valued colleague" and a "pillar of strength for the party and government."

European stock markets fell sharply on Monday, 3 October 2011, with banks such as BNP Paribas SA and Commerzbank AG leading losses on reports Greece will not meet its deficit targets this year, while miners and autos also came under pressure. Key benchmark indices in UK, France and Germany were down by 1.68% to 2.29%.

A draft of the Greek government 2012 budget approved by the cabinet on Sunday, 2 October 2011, showed a deficit of 8.5% of gross domestic product for 2011, which falls short of a target of 7.6%, according to media reports. The deficit will also fall short in 2012 -- 6.8% versus a 6.5% target, the plan showed.

European finance ministers will meet in Luxembourg on Monday, 3 October 2011, to discuss the Greek reform progress.

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

Asian stock markets slumped on Monday, 3 October 2011, on rising concerns of a Greek sovereign default, and with Hong Kong weighed by additional worries over China's financial health. Key benchmark indices in Indonesia, Taiwan, Hong Kong, Japan, and Singapore were down by between 1.78% to 5.64%. South Korean markets were closed for holiday. The mainland Chinese markets are closed this week for the National Day holidays.

There are fears that China could soon see a sharp rise in debt defaults, with worries about a wave of bad debts recently highlighted by Credit Suisse, among others.

Trading in US index futures indicated that the Dow could fall 10 points at the opening bell on Monday, 3 October 2011.