Markets ended in red after an unexpected increase in inflation numbers and sell-off in global indices. The Nifty closed below the 3,000 mark and the Sensex slipped below the 10,000 level. Metal stocks led the crash followed by oil, telecom, technology, banking and auto stocks. Midcap and small cap stocks were also under pressure.

Reliance Industries, Bharti Airtel, Infosys, SBI, HDFC, ICICI Bank, Tata Steel, HDFC Bank, Sterlite Industries, Reliance Communication and Tata Motors were real culprits.

Frontline indices had opened with huge gap down following profit booking in global indices and remained weak till the afternoon. After 1:30 pm, indices had started recovery and was near to Wednesday's close, but more than expected increase in Inflation numbers and further dip in European indices pushed the markets sharply lower again.

The Sensex closed with a loss of 385.79 points or 3.81% at 9,734.22, after hitting an intraday low of 9,635.22 (down 484.79 points from previous close). The Nifty ended at 2892.65, a drop of 102.3 points or 3.42% over previous close. It has touched a low of 2860.25, (down 134.7 points).

Inflation came in at 10.72% for the week ended October 25 as against 10.68% in previous week. This was more than expectations, as CNBC-TV18 was estimating inflation at 10.45%. 

“People expected the inflation figure to be much lower,” said Mehraboon Irani, VP, PMS, Centrum Broking. “While it’s a disappointment, I think it’s an aberration.” Irani said that inflation numbers may be headed to single digits by December. “It is a disappointment definitely but the trend is downwards,” he added.

However, Irani said the immediate, subsequent fall in the markets could not necessarily be attributed to inflation news. “I don't think I would link the inflation figure to that — there could be an adjustment here and there — but I personally feel it [the markets’ fall] is either creation of new positions or squaring off of old positions.”

Metal stocks took huge beating on the bourses; Tata Steel plunged 13.67%. JSW Steel, Hindalco and SAIL fell 6.7-10.8%. BSE Metal Index lost 458.30 points or 8.4% to 4,993.44.

Sterlite Industries fell 11.33%, as Vedanta's first half yearly attributable profit was down by 24.7% to USD 350 million. Vedanta, which is not listed on the indices bourses, slipped over 10%. It has reviewed capex program and can cut investments by USD 5.1 billion. The company may temporarily cut down production at some operations. It will reduce capex by USD 1.5 billion for expansion of Alumina, Aluminium Projects. The company will defer investment of USD 2 billion in the 1980 MW Jharsuguda Power Project.

Reliance Industries has extended losses further, declined 7.71%, after losing 12.5% on Wednesday. Essar Oil and ONGC fell 1.43-3.9%. Oil & Gas Index plummeted 295.17 points or 4.83% to 5,816.94.

Telecom stocks like Bharti Airtel, Idea Cellular and Reliance Communication fell 4.6-6.2%.

BSE IT Index was down by 116.55 points or 4.26% at 2,617.80. Wipro, Infosys, Satyam and TCS lost 1-6.3%.

Bankex lost 192.18 points or 3.41% to 5,441.76. SBI, PNB, ICICI Bank and HDFC Bank plunged 3-4.6%.

Auto stocks took huge beating; Auto Index fell 79.60 points or 2.92% to 2,648.22. Tata Motors crashed 12.17%. Hero Honda, Bharat Forge and Maruti Suzuki fell 2.6-3%.

Ashok Leyland closed down over 9% at Rs 17.45 due to weak sales numbers. The company's October total sales declined to 3397 units versus 6825 units (YoY).

Vinod Dasari, COO, Ashok Leyland, said the company is looking for a production cut and will finalise on the same in the next few days. The liquidity crisis resulted in down turn in sales, he said. The company sees 15-25% decline in the commercial vehicle industry, he said. He does not see margin erosion in Q3FY09.

Power Index lost 34.69 points or 2% to 1,702.23. Reliance Power, Torrent Power, Tata Power, Power Grid Corp, Reliance Infrastructure and NTPC fell 2.3-4.6%.

Capital Goods Index was down by 77.50 points or 1.02% at 7,514.14. Siemens lost 4.80%. L&T lost 0.51%.

FMCG Index closed down by just 1.62 points at 1,925.91. United Spirits, Tata Tea, GlaxoSmith Consumer, Nestle and Dabur India dropped 1.5-8.3%.

BSE Midcap Index lost 76.20 points or 2.24% to 3,318.41 and Small Cap Index fell 84.51 points or 2.13% to 3,880.27.

In the midcap space, UTV Software lost 30%. Aurobindo Pharma, Patel Engg, Consolidated Construction and Nagarjuna Construction fell 9.5-14.6%.

Among the small cap stocks, Uflex, Balkrishna Inds, Arshiya Intl, ETC Networks and Stride Arcolab plunged 11-17%.

However, Realty Index gained just 13.68 points or 0.60% at 2,280.68. Indiabulls Real, DLF and Puravankara Projects gained 1.8-3%.

Healthcare Index rose 8.13 points or 0.28% to 2,921.35. Ranbaxy Labs, Sun Pharma, Apollo Hospital, Glenmark and Dr Reddys Labs rose 1-3.7%.

Total traded turnover stood at Rs 58,726.99 crore. This includes Rs 10,887.81 crore from NSE Cash segment, Rs 43,836.07 crore from NSE F&O and the balance Rs 4,003.11 crore from BSE Cash segment.

Market breadth was extremely weak; about 1069 shares have advanced while 1881 shares have declined. Nearly 241 shares remained unchanged.

In the recent listing, Alkali Metals closed at Rs 173.15, up 68.11% over issue price of Rs 103.

On the global front, European markets were trading sharply lower. FTSE, CAC and DAX lost 4-4.5%, at 4 hrs IST.

The Dow Jones Futures fell 1.5% and the Nasdaq Futures was down 3%%, at 4 hrs IST. There are rumours of another economic stimulus package in the US by Christmas.

Asian markets ended in negative terrain on disappointing results and negative outlook. Hang Seng lost 7.08% and Kospi fell 7.56%. Nikkei and Taiwan tumbled 6.53% and 5.71%, respectively. Shanghai, Jakarta and Straits Times fell 2.44-4.27%.

Markets Snapshot

Bears Back in Business:

Inflation disappoints markets, Inflation above street expectation

Inflation up at 10.72% for week ended October 25 versus 10.68% (WoW)

Inflation for August 30 revised to 12.38% from 12.1%

Sensex closes down (dn) 386 points to close at 9734; Nifty closes down 102 points to close at 2892

New Listings: Alkali Metals up 68.3%

CNX mid cap down 2.4%, Bse Small Cap down 2.1%

Bse Metals down 8.4%, Tata Steel down 13.8%, Sterlite Ind down 11.6%, Hindalco dn 7.8%, Sail dn 6.8%

Bse Oil & Gas 4.8%, Reliance Ind dn 7.8%

Bse IT dn 4.2%, Wipro dn 6.8, Infosys dn 5.7%,

Index Losers: Tata Motors dn 13.6%, Bharti dn 6.7%, Siemens dn 5.7%, Hdfc dn 5.2%, R Power dn 4.8%

Mid Cap Gainers: Gitanjali up 10%, Gvk Power up 9.2%, Ivrcl Infra up 7.2%, FCH up 6.9%,

Non Index Loser: UTV dn 30.7%, Patel Eng dn 12%, Educomp dn 9.6%, Bank Of India dn 7.4%

Non Index Loser: Idfc dn 8.2%, Chambal Fert dn 8.8%, Lanco Infra dn 6.8%, Nagar Const dn 9.9%

NSE Adv: Decline at 1:3

Total market turnover at Rs 58726.99 crore versus Rs 56559.07 crore

NSE F&O Turnover at Rs 43836.07 crore versus Rs 38550.94 crore

F&O Snapshot:

Some shorts seen in Nifty futures in last half an hour trade

Nifty futures adds 20.4 lakh shares, ends at 10 points discount

Some Semblance of short build up in index heavyweights

Metal Stocks sees Short Build up

Infrastructure Stocks like GVK Power (120% increase in OI) and IVRCL Infra sees long build up

Long dated Nifty 2011 4500 call adds 2 lakh shares

Options Activity:

Nifty 3000 put sheds 3.5 lakh shares

Nifty 2900 put sheds 2.7 lakh shares

Nifty 2900 call adds 1.4 lakh shares

Fresh Short:

Metals : Tata Steel , Sail , JSW steel , Sterlite Ind

Misc : Bharti , HDFC, Sbi,

Misc : IDFC , Chamabl FErt, Hdil , HCC

Fresh Long : Gvk Power , Suzlon, Gmr Infra, HUL

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