Markets End Flat, Hurricane Sandy Takes Global Indices By Storm

The Indian markets opened higher today, but trimmed their gains later and eventually ended the day flat. This was ahead of the RBI's monetary policy review meet to be held tomorrow (Oct 30, 2012). There has also been some movement on the fiscal front with a Cabinet reshuffle. This shuffling was also responsible for the generation of more volatility in the markets.

Aside from volatility, the market direction reversed with a lack of positive global cues and the weakness seen in the Asian and European markets. These factors resulted in the Sensex closing higher by 10.48 points or 0.06% at 18635.82 and Nifty closing higher by 1.3 points or 0.02% at 5665.6.

On the fiscal front, after the Cabinet reshuffle, we saw the Finance Minister P Chidambaram officially setting the fiscal deficit target for the current financial year at 5.3% as against Pranab Mukherjee’s targeted 5.1% in the Union Budget. The markets have reacted negatively to this. Ahead, the RBI’s decision tomorrow will be closely watched. With increasing hopes of a rate cut, the volatility seen today is likely to continue tomorrow was well.

Though the broader indices ended flat today, midcaps and smallcaps saw significant selling, with the indices falling by 0.43% and 0.6% respectively. 6 of the 13 sectoral indices closed higher today. The highest gains were seen in Oil & Gas and Consumer Durables, while Consumer Goods and Realty were the greatest losers. The overall market breadth was more or less flat, with 1234 advances and 1604 declines.

Among the leading gainers for the day were Wipro, Hero MotoCorp and Tata Power, up by 2.56%, 1.95% and 1.82% respectively. The shares of BHEL saw major selling after the company's quarterly result announcement, which came in below street expectations. The company’s net profit was down by 9.7% YoY, while the sales were up by 1%. This had the stock price of BHEL tumbling by as much as 6.19%. Bank of India too dipped low because of a disappointing quarterly report card. Its net profit was down by 38.5% YoY and it registered higher gross NPAs, which increased from 2.56% in the previous quarter to 3.42% during Q2FY13. The bank's shares ended the day lower by 2.46%.

Globally, Asia and Europe remained weak today. Asia lost out on poor earnings. Adding to the distress was Hurricane Sandy, the humongous storm headed for New York City, which is expected to cause massive damage. Due to this, insurers, reinsurers and energy stocks have faced massive losses in their stock price, dragging the markets down.

Tomorrow, the Indian markets are likely to remain volatile on the back of action on the fiscal and monetary fronts. The market direction is likely to be decided based on the decision the RBI takes and also depending on how the global markets fare, with the hurricane posing massive risks.