Markets end flat; shrug off global meltdown, weak Oct IIP nos

12 December 2008

The markets have shown smart recovery in second part of the day but ended marginally in green. India was the only market managed to outperform all global markets. It also shrugged off disappointing IIP data. The Nifty also clawed back above 2900 mark. Midcap and Small cap stocks continued uptrend today as well.

In the morning, it was looking like it would be the day of weak global markets. In the same line, the benchmark indices had opened with sharp gap down following weak global cues, as US Auto bailout package died in the Senate and huge sell-off in US dollar against Euro, Pound and Yen. But that did not happen and the buying in Reliance Industries, Reliance Communication, Reliance Infrastructure, L&T and banking stocks supported the markets in the last couple of hours. However, sell-off was seen in ONGC, Bharti Airtel, BHEL, auto and technology stocks.

The Sensex has seen recovery of 408.18 points from an intrday low of 9,281.89 and closed at 9,690.07, up just 44.61 points and 0.46% over previous close. The 50-share NSE Nifty ended with a gain of 1.2 points or 0.04% at 2,921.35, after showing recovery of 108.8 points from day's low of 2812.55.

The October Index of Industrial Production, or IIP, number stands at a negative 0.4% as compared to 4.8% month-on-month and 12.22% year-on-year. A negative IIP number was last seen 10 years back and this has happened for the second time in India's history. A CNBC-TV18 poll conducted earlier had estimated the October IIP number below 2%. This was largely based on a slowdown in auto sales and lack of buying during festivities. The September IIP number has been revised to 5.4% as against 4.8% earlier.

Shubda Rao of Yes Bank said the economy will see more pain for the next one–two months. ''The full play-out of the credit market crunch, which started in October, is going to definitely have some kind of a lag effect on the industrial production numbers. Remember there was a credit crunch in terms of working capital requirements as well. That definitely is going to continue to play out in November and December.'' She expects the IIP number in the third quarter to be washed out. ''It is likely to be in contraction mode very clearly.''

Surge in broader indices was led by sugar, textile and infrastructure stocks. BSE Midcap Index gained 47.40 points or 1.58% at 3,050.48 and Small Cap Index rose 2.54% or 87.37 points to 3,530.96.