Indian Markets: Whipped by IIP

The Indian markets continued to trade in the negative territory during the final hours of trade. While the BSE Sensex lost further ground during the final session as sellers edged over buyers, NSE Nifty pared some losses. Weakness intensified in heavyweights from the realty, metal, and banking sectors. While pressure was also seen in stocks from the pharma, engineering and FMCG sectors, select stocks from the energy, software and telecom sectors found favour. As regards global markets, the Asian markets closed in the red, while the European markets are trading mixed currently.

The BSE Sensex closed almost 260 points lower, while the NSE Nifty closed lower by 100 points. The BSE Midcap and Smallcap indices also ended lower, each down 2%. The rupee was trading at 49.12 to the dollar.

Mirroring their global peers, the Indian bourses opened the day's proceedings on a weak note. They remained volatile in the subsequent hours of trade on account of alternate bouts of buying and selling activity in index heavy weights. The benchmark indices oscillated around dotted line till the mid day's trade. During the afternoon session however, the markets tanked on the release of the Index of Industrial Production (IIP) numbers for the month of September 2008 which show a growth rate of 4.8% YoY, lower than the 6.8% growth registered during the same period in 2007. During the last one hour of trade though, the markets pared some of their losses. The overall market breadth remained negative with the losers outnumbering gainers in a ratio of 2.2 to 1 on the BSE. While TCS (up 1%) and Infosys (INFY) (up 0.5%) were the key gainers, Jaiprakash Associate and DLF (each down 9%) were key losers.

Power stocks closed in the red led by Reliance Power (down 4%) and Tata Power (down 3%). As per a leading business daily, NTPC has entered into a joint venture agreement with the state of Karnataka to set up a 2,000 MW thermal power project. This project is estimated to cost Rs 100 bn. However, the location is yet to be finalised. As per the agreement, the state will have a right to use over 50% (1,000 MW) of power generated from the project. Further, the JV will be able to sell the remaining 1,000 MW. However, this would be possible subject to the first right of refusal, which lies with state.

As per a leading business daily, SAIL is planning to cut production of its products, including hot rolled (HR) coils and long products as demand for vehicles and homes slump and commodity prices tumble. The company has produced a record 3.5 MT of crude steel in the three months ended September 30. The demand for the steel is decelerating as the growth of the end user industries such as real estate and automobile has been hampered. The lower demand for products has led to a softening of steel prices. The company's plans to join global players in slashing output indicate its move to liquidate inventory and control costs. While SAIL closed lower by 9%, its peer Tata Steel ended lower by 3%.