Sensex Ends 0.9% Down, Nifty Below 5700

The 50-share Nifty index fell below 5700 amid a strongly negative sentiment today. The BSE Sensex tanked 0.86% to close at 18683. The Nifty also plunged 0.9% as global concerns over the European economy have become grave.

The Asian markets also saw strong sell-offs, with the Hang Seng and Nikkei closing nearly 0.9% lower. The Shanghai index was down 0.12% by closing.

Yesterday, the ECB and Bank of England held the lending rates at the earlier levels. ECB, however, said that the inflation projections for the next year are on the higher side. Growth has weakened, and the central bank does not expect any major turnaround in the next year too. In the backdrop of this major new inflow, all three key European indices are trading in negatives. The German DAX is lower by of 0.65% on fears that the slowdown has spread to its territory as well. The FTSE is trading with losses of 0.31%, while CAC is down 0.13%.

In the domestic markets, none of the indices managed to stay in the positive zone by day's end. Bankex tanked over 1%, led by the disappointing results of SBI. PSU tanked 1.7% as SBI and ONGC remained a big drag on them. The Metals index was down 1.49%, while Realty dipped 1.64% on profit booking.

Among the Sensex stocks, only five shares closed in the green. Bajaj Auto was the top gainer, with 0.36% gains. Maruti Suzuki took 0.32% gains, while Cipla was up 0.14% on price reduction of its cancer drugs. The shares of HDFC were flat by closing hour.

India’s largest lender, SBI, dropped by 3.89% today. The PSU bank reported its Q2 results, in which it reported a 30% jump in its net profit to Rs 3660 crore. The bank had made lower provisions against the bad assets. Its net interest income came in at 5.3% at Rs 10973 crore. Its Gross Non-Performing Assets (NPAs) grew to 5.15% as against 4.99% in Q1. The Net NPAs were at 2.44% as against 2.22% in the Jun 2012 quarter. Its shares declined mainly due to the lower-than-expected Net Interest Income (NII) and a rise in its NPAs.

Similarly, the shares of Tata Steel closed 3.25% down as the company reported a quarterly loss of Rs 364 crore. Its robust performance in the domestic market was overshadowed by the weak demand and lower prices in European market.

ONGC's shares lost 3% by closing after its net profit came in at Rs 5896, which was below market expectations. Sterlite Industries, BHEL, NPTC, ICICI Bank, etc. all were down over 1%. Tata Motors saw some profit booking. Its shares slipped to the negative territory after the recent rally on its robust exports numbers in Q2. Wipro, Infosys and TCS ended the day in the red. Tata Power, which came out with its Q2 results this week, saw a decline of 0.45%.

Sun Pharma lost 0.24% after the company declared a provision of Rs 584 crore yesterday against potential damage in respect of a litigation related with the generic version of Protonix.

Among other shares, Ranbaxy closed over 1% lower after it was clear that most of its net profit in Q2 was on the back of forex gains.

United Spirits saw a price appreciation of 1.22% on news that the Diageo Group has picked up a 53.4% stake in the company. This news is yet to be confirmed. The shares of Kingfisher Airlines surged about 5% by closing on this buzz.

The shares of another troubled company, Suzlon, were down 0.6% ahead of its results declaration later today. Apollo Hospital declined 6% after its Q2 results announcement. Aurobindo Pharma also saw a 4.62% decline in its share price over its Q2 numbers. Godrej Industries declined 3.75% after the company reported lower net profits in the Sept quarter.

The advance-decline ratio on the BSE remained negative, as declines outnumbered the advances.

The market has seen profit booking in the last two days. Most results today were disappointing, which was against our expectations. We expect the volatility to persist over the latest set of results and the ECB’s recent comments.