August series futures and options contract expiry day turned out to be an extremely disappointing affair for the Indian stock markets as the benchmarks capitulated to the unrelenting selling pressure amid extremely high volatility. The hefty sell-off in last two sessions of trade has erased all most all the gains amassed by the frontline indices in the initial two days of the week, dragging the key indices below the psychological 4,850 and 16,150 levels. The plunge in domestic indices appeared even shoddier because of the fact that major stock markets across the globe staged enthusiastic performances amid the tentative improvement in investors' risk appetite. The Asian peers settled registering huge gains as sentiments got bolstered from the overnight rally on Wall Street where better than expected US durable goods data helped the bourses to extend the winning momentum for third straight session. In addition, European counterparts too traded with good gains, extending the rally for the fourth straight day as speculation grew that US Federal Reserve chairman Ben Bernanke would announce stimulus measures to support the struggling US economy on Friday. On the domestic front, the weekly inflation numbers painted a gloomy picture for the marketmen as it nudged up, a week after showing some signs of moderation, despite the RBI's repeated attempt to stem its upward momentum. Post the ugly inflation numbers, expectations that the RBI may prolong its hawkish liquidity tightening stance and hike interest rates for the twelfth time since March 2010, remained another reason behind the onslaught across the board in the local markets. Besides, local sentiments were also undermined by the reports released by Metrological department that India's monsoon rains were 8% below normal in the week to August 24, losing momentum from 26 per cent above normal showers in the previous week. On the political front, the popular crusade against India's endemic corruption led by activist Anna Hazare, whose hunger strike has entered tenth day, has raised questions among global investors on whether a nervous government will be in a position to push through policy reforms.
The NSE's 50-share broadly followed index Nifty, shut shop with over a percent cut, below the crucial 4,850 support level while Bombay Stock Exchange's sensitive Index, Sensex took a one hundred fifty points blow to settle below the psychological 16,150 mark. The broader markets failed to show any kind of fervor and settled in tandem with their larger peers. The midcap index plunged 0.88% while the smallcap index closed with 0.82% losses. On the sectoral front, the IT and Metal stocks did the maximum damage as the indices shaved off 2.07% and 1.86% points respectively. The rate sensitive Bankex pocket too got pummeled by 1.40% amid fears that the RBI will not halt its monetary tightening measures. On the other hand, the high beta Real Estate counter managed to negotiate a close in green with around half a percent gains while, some short covering was also evident in defensive counters like Healthcare and FMCG. On the F&O front, for the August series the benchmarks got badly butchered by over 12%, the worst series performance since October 2008. The broader markets too got clobbered out of shape as the Midcap index got bludgeoned by 11% while the Smallcap index got pulverized by 15%. Among sectoral movers, the Information Technology index remained the top laggard by plummeting 19.6% followed by Metal which slipped 17% while the Bankex counter was down 15%. From the expiry perspective, market wide rollover of 62.15%, was below the three months average of 67.17% while Nifty rollovers were at 54.9%, higher than 3 month average of 51.6%. Sectorally, the power, finance, auto and FMCG space witnessed high rollover into the September series while stocks from the technology, pharma, telecom and fertilizers space are observing relatively low rollovers. Among individual stocks, vast rollovers into September series were witnessed in index heavyweights like Cairn (81.7%), Yes Bank (77%), Reliance Power (76%), Reliance Capital (76%) and Reliance Infra (75%) while low rollovers were seen in stocks like Tata Chemicals (34.5%), Andhra Bank (35.5%), Sun TV (41%), Patni (43%) and Aurobindo Pharma (43%). On expected lines, markets registered strong volumes of over Rs 2.38 lakh crore on the August series F&O settlement day. The turnover for NSE F&O segment remained on the higher side compared to Wednesday at over 2.25 lakh crore. The market breadth remained pessimistic as there were 1138 shares on the gaining side against 1638 shares on the losing side while 122 shares remained unchanged.
Finally, the BSE Sensex lost 138.65 points or 0.85% to settle at 16,146.33, while the S&P CNX Nifty declined by 49.30 points or 1.01% to close at 4,839.60.
The BSE Sensex touched a high and a low of 16,373.84 and 16,104.34 respectively. The BSE Mid cap and Small cap indices were down by 0.88% and 0.82% respectively.
The top gainers on the Sensex were DLF up 2.67%, Tata Motors up by 1.91%, Sun Pharma up by 1.27%, Bharti Airtel up by 1.18% and ONGC up by 1.11%.
On the flip side, Jindal Steel down 4.52%, Jaiprakash Associate down 4.50%, Hero Motors down 3.10%, Infosys down 2.68% and HDFC down 2.65% were the top losers on the index.
The top gainers on the BSE sectoral space were Realty up 0.44%, Health Care (HC) up by 0.33% and FMCG up by 0.18%. While, IT down 2.07%, Metal down 1.86%, Bankex down 1.40%, Consumer Durables (CD) down 1.27% and TECk down 1.20% were the top losers on the BSE sectoral space.
Meanwhile, a week after showing some signs of moderation, India's stubborn inflation numbers bounced back to 9.80% for the week ended August 13, from 9.03% in the previous week. However, fuel and power group inflation stood stable at 13.13% for the week ended August 13, the same as in the week ended August 6. The inflations numbers have risen despite the aggressive monetary tightening by Reserve Bank of India which has hiked key interest rates by eleven times since March 2010.
According to the data released by Ministry of Commerce and Industry, the index for Food Articles group rose by 0.4% to 192.7 (Provisional) from 191.9 (Provisional) for the previous week due to higher prices of fish-inland (2%) and mutton, gram, fruits and vegetables, egg, pork, bajra and masur (1% each). However, the prices of poultry chicken (3%) and jowar and moong (2% each) declined.
The index for Non-Food Articles group rose by 1.6% to 181.3 (Provisional) from 178.4 (Provisional) for the previous week due to higher prices of flowers (27%), raw silk (6%), niger seed and fodder (3% each), raw cotton and rape and mustard seed (2% each) and groundnut seed, sunflower and linseed (1% each). However, the prices of gingelly seed (5%), gaur seed and raw rubber (2% each) and castor seed and copra (1% each) declined.
As a result, the index for primary articles group which has the highest weightage of 20.12% in WPI rose by 0.5% to 198.5 (Provisional) from 197.5 (Provisional) for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 12.40% (Provisional) for the week ended August 13 as compared to 11.64% (Provisional) for the previous week.
The index for Fuel and Power group which has the weightage of 14.91% in WPI remained unchanged at their previous week's level of 167.2 (Provisional) and 13.13% (Provisional) for the week under consideration.
The inflation numbers, which continue to hover exceedingly higher than the central bank's comfortable levels, indicate that the it may not pause its liquidity tightening measures and continue with its hawkish stance in the next policy review meet in September.
The S&P CNX Nifty touched high and low of 4,915.85 and 4,825.05, respectively.
The top gainers of the Nifty were DLF up 2.80%, PNB up 2.60%, Ambuja Cement up 2.45%, RCOM up 2.26% and Tata Motors up 2.18%.
On the flip side, JP associate down 5.22%, SAIL down 3.92%, HCL Tech down 3.87%, Jindal Steel down 3.82 and Infosys down 2.91% were the top losers on the index.
The European markets were trading in mixed. France's CAC 40 gained 0.85%, Britain's FTSE 100 higher by 0.11% and Germany's DAX advanced by 0.79%.
Most of the Asian equity indices finished the day's trade in the positive terrain on Thursday following another rally on Wall Street and ahead of a speech by Fed chief Ben Bernanke that many hope will outline plans to kick start the ailing US economy. Meanwhile, shares in Hong Kong and Shanghai rose by 1-3 percent on Thursday after several Chinese firms reported better than expected earnings, but the lowest turnover in over three weeks suggested investors remained worried whether this week's rebound can be sustained. Moreover, South Korean stocks edged higher in the trade following Wall Street's rises as investors sought shares beaten down in the recent rout.
| Asian Indices | Last Trade | Change in Points | Change in % |
| Shanghai Composite | 2,615.26 | 74.17 | 2.92 |
| Hang Seng | 19,752.48 | 285.69 | 1.47 |
| Jakarta Composite | 3,844.38 | -2.64 | -0.07 |
| KLSE Composite | 1,464.74 | -4.41 | -0.30 |
| Nikkei 225 | 8,772.36 | 132.75 | 1.54 |
| Straits Times | 2,765.74 | 45.84 | 1.69 |
| Seoul Composite | 1,764.58 | 9.80 | 0.56 |
| Taiwan Weighted | 7,410.87 | -92.06 | -1.23 |
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