Indian Market Tumbles On Weak IIP, Irish Debt Woes
The Indian market fell sharply for a second consecutive session on Friday, as disappointing industrial production data, Irish debt woes and a slide in commodity prices amid concerns that China might raise interest rates weighed on sentiment. Also, investors eagerly awaited fresh news from the ongoing G20 meeting in Seoul.
India's industrial output growth slowed unexpectedly in September, nearly halving to 4.4% from the 8.2% in the corresponding month last year, as growth in capital goods production, manufacturing, mining and electricity all slowed from a year earlier, data released today by the Central Statistical Organization showed. The 4.4% annual growth lagged the previous month's upwardly revised 6.92% growth as well, raising worries that industrial activity could be faltering.
Expressing concerns over the massive decline in industrial growth, finance minister Pranab Mukherjee said, "We need to analyze why this is happening."
In the 30-share Sensex pack, only two stocks - two-wheeler manufacturer Hero Honda Motors and mortgage lender HDFC- bucked the downward trend to end modestly higher.
Among the prominent decliners, metals stocks like Sterlite, Jindal Steel, Tata Steel and Hindalco fell between 2.31% and 4.72%, as copper prices dropped by the daily limit in Shanghai. In the banking sector, SBI led the decliners with a 4.55% loss, while ICICI Bank fell nearly 3% and HDFC Bank shed 1.65%.
Property developer DLF gave off 5.46%, utility vehicles manufacturer Mahindra & Mahindra lost 4.75%, infra firm Jaiprakash Associates shed 3.76%, FMCG player Hindustan Unilever ended down 2.43% and heavyweight Reliance Industries declined 1.87%.Bharti Airtel led the declines in the telecom sector with a 3.59% loss. Reliance Communication ended down 3.52%.
The Sensex ended down 432 points or 2.10% at 20,157 after falling to an intra-day low of 20,108 earlier in the session. Intense selling across the board dragged the broader Nifty index down by about 125 points or 2% to 6,072, while the BSE mid-cap and small-cap indexes ended down around 2.5% each. In the broader market, declining shares outpaced gaining ones by 2263 to 753 shares.
Elsewhere, the other Asian markets fell sharply on Friday, as the U.S. dollar fell, commodity prices eased and technology bellwether Cisco Systems Inc's weak outlook as well as heightened European sovereign debt worries fueled a bout of risk aversion. The euro dropped to a six-week low versus the dollar on continued worries over Europe's public debts.
Investors were also worried at the prospects of further tightening policies by Beijing after data released yesterday showed China's consumer prices jumped 4.4% from a year earlier in October, the fastest pace in two years.
China's benchmark Shanghai Composite, which covers both A and B shares, closed 5.16% lower at 2,985, its biggest drop in more than 14 months, dragged down by financial and resource sectors, on speculation that the government would introduce further measures to rein in consumer prices and soaring housing costs. European stocks also fell sharply in early trading on debt fears and the Dow futures were