Markets crumble under Euro-zone pressure

The Indian Markets closed in red as it crumbled under immense pressure from the Euro-zone where commodity companies fell amidst a fall in energy and commodity prices further deepening the risk of sovereign debt crisis. The euro fell to an eight-month low against the dollar as European finance ministers gather today to weigh the threat of a default in Greece, which is making fresh budget cuts to secure an international bailout.

Other Asian markets too ended on a negative note after U.S. consumer spending slowed and incomes unexpectedly declined in the world’s biggest economy, damping the earnings outlook for Asia’s exporters.

The Dow Jones Futures is currently trading 21 points or 0.19 per cent down at 10820 indicating a negative sentiment in the US markets.

Among the SENSEX stocks, sharp fall was seen in Realty, Metals, and Banking and CG stocks. Jindal Steel was down 6 per cent to Rs 474.75, (two years low) on reports of CBI raids at its plant. The other metals stocks like Hindalco, Tata steel and Sterlite also witnessed a sharp cut and were down by 4 to 6 per cent. Realty heavyweights like DLF and JP Associates were also among the top losers. BHEL announced a stock split, from existing Face value of Rs 10 into 5 equity shares of Face value Rs 2. The record date has been fixed at October 4, 2011. Automakers sales jumped on the back of new launches and festive season.

Meanwhile, R-ADAG stocks bucked the trend after witnessing a steep fall in the previous session on reports that the CBI has given a clean chit to a group chairman Anil Ambani, in the structuring of different firms and transfer of funds relating to Swan Telecom in 2G scam.

BSE clocked turnover of Rs 2140 crore, lower than Rs 2489.43 crore on 30^th Sept 2011. The market breadth, indicating the overall health of the market, was negative. Out of 3224 stocks traded, 1989 stocks declined while 1089 advanced. A total of 146 stocks remained unchanged.

In conclusion, with Q2FY12 results season drawing close, investor focus may shift to expectations of Q2 results of individual firms. A poor set advance tax numbers posted by top 100 companies suggest corporate profit growth is likely to be muted in the second quarter. We recommend our readers to closely watch the management commentary at the time of announcement of Q2 September 2011 results, which will provide cues on futures earnings outlook.