Mumbai, December 8
Ignoring easing of food inflation, the Bombay Stock Exchange benchmark Sensex today tumbled 389 points, amid concerns of slow industrial growth and weak trend in the Asian markets ahead of a EU meet to deal with eurozone debt crisis.

After a weak start, the Sensex dropped 388.82 points, or 2.30% to 16,488.24, even as the food inflation fell sharply to 6.60% for week ended November 26, from 8% in the previous week.

On similar lines, the broad-based National Stock Exchange index Nifty fell by 118.95 points, or 2.35 per cent to 4,943.65 led by stocks of capital goods, realty, auto and metal sectors.

Auto sector stocks dropped led by Maruti Suzuki, Mahindra and Mahindra and Tata Motors on reports of slow expansion of the sector.

Marketmen said there were doubts among investors that the EU summit on Friday will be able to tackle the region's debt problems.

They also said that the brokerage firm CLSA lowering 12-month target for the benchmark, citing earning cuts further kept the market under pressure.

Reliance Industries dropped 3.71 per cent. — PTI

Reliance scrips dive; RIL, RCom top losers

Shares of various companies from the two Ambani groups on Thursday fell sharply on the bourses in a weak market, and stocks like Reliance Industries and RCom recorded losses higher than the market benchmark. RIL, the flagship company of Mukesh Ambani-led group, dropped by 3.71% to close at Rs 779.20 and was the biggest contributor to today's fall in the Sensex, as per the BSE data. 

Singapore, December 8
Asia's economic growth looks set to stumble over the next few months, prompting a flurry of interest rate cuts and a spike in stimulus spending that may ultimately pave the way for a strong recovery in the second half of 2012.

"The catchphrase for 2012 is the Asia yo-yo," said Rob Subbaraman, chief Asia economist at Nomura in Hong Kong. "The harder Asia's economies are hit, the stronger the tailwinds for a bounce back."

The idea that bad news would beget good news was a recurring theme in economists' year-end outlooks.

India, Indonesia, Thailand and the Philippines are widely expected to lower interest rates next year.

Elections in Taiwan, Malaysia and South Korea may shake loose even more government spending. China will most likely continue cutting banks' reserve requirements to try to spur more lending.

Mumbai, December 8
Food inflation fell sharply to 6.60% for the week ended November 26, reflecting a decline in prices of essential items like vegetables, onions, potatoes and wheat.

Food inflation, as measured by the Wholesale Price Index (WPI), stood at 8% in the previous week ended November 19. It was recorded at 8.93% in the corresponding period last year.

According to data released by the government on Thursday, onions became cheaper by 39.20% year-on-year during the week under review, while potato prices were down by 15.75%. — PTI

New Delhi, December 8
Gold rallied on Thursday to an all-time high of Rs 29,540 per 10 grams in the bullion market here by adding Rs 240 on the back of wedding season demand amid a firming global trend. The precious metal has surpassed its previous record of Rs 29,490 per 10 grams set on December 2.

On the other hand, silver declined by Rs 150 to Rs 56,250 per kg on lack of necessary buying support. Sentiment in gold bolstered after it rose by US $13.70 to $1,743.10 in New York last night. Gold of 99.9 and 99.5% purity climbed by Rs 240 each to record highs. — PTI

New Delhi, December 8
India's carmakers may just break even in the fiscal year that ends in March, an industry body warned on Thursday and said it would cut its sales outlook for the year, as firms struggle with sluggish demand on rising input costs and high interest rates.

Rising finance costs and increasing prices have deterred buyers in Asia's third-largest economy in recent months, hurting carmakers that cheered a 30 percent rise in sales over the previous financial year.

"We’ll revise our (sales growth) estimates downwards," said Sugato Sen, senior director of the Society of Indian Automobile Manufacturers. “The current estimate is 2-4%. I don't see that happening. We may just break even," he said, adding the revised outlook would be announced in January.

Sales rose 7% in November from the same month last year, SIAM said, but total sales over the first eight months of the fiscal year that began in April are down 3.5% from a year previously.

Higher prices of commodities such as steel, aluminium, plastics and rubber as well as fuel prices have pushed up costs and dented demand.

"Simply breaking even is definitely lower than the market had expected earlier in the year," said Yaresh Kothari, auto analyst at Mumbai-based Angel Broking. "The Maruti strike is still distorting the numbers a little, and adding to the undeniable slowdown in the market."

The rise in November sales, mainly due to a low comparison base, ended four consecutive months of falling volumes that culminated in the biggest drop in over a decade in October.

"The base was low specifically for passenger cars, which created quantitative growth," said Sen. "There is some revival in demand. But this is not enough to turn around the industry."

Indian automakers sold 171,131 cars last month, according to SIAM data. Before July, Indian car sales had risen for three straight years. The industry body has already cut its growth forecast twice this year, slashing it to 2-4% in October from its initial forecast of 16% to 18%.

December sales are typically lower than those seen in November, Sen said, adding that SIAM expected sales to improve in the first few months of 2012. — Reuters

New Delhi, December 8
Governance and governments will be the key theme for next year which will decide the direction for the Indian economy and stock markets, points out a research report by Kotak Institutional Equities.

According to the report, increasingly, India’s economy is perceived to be drifting rather than steered, thanks to the government’s inability to respond vigorously to problems and preoccupation with noneconomic issues.

“We think India has little choice but to improve governance and reform dramatically. The cost of ‘drift’ is extremely high in terms of time and opportunity”, the report says. It points out improved governance is critical to overcome several key challenges before India like slower GDP growth, weak fiscal and BOP positions, low investment activity, reforms (subsidies, taxation).

“In our view, India is already facing a slowdown and a crisis of confidence. Bold and decisive government action would be imperative to revive the investor sentiment, especially given the government’s large role in the economy as owner, player, policy maker, regulator and facilitator”, it says.

The report points out that the performance of the Indian stock market in 2012 will largely depend on the ability of Indian and eurozone governments to manage their challenges. It expects upside to the Indian market if governance improves in India and eurozone sovereign-debt issues get resolved favorably. In the absence of the former, India may have to contend with low GDP growth, high fiscal and BOP deficits and limited investment opportunities.

Kotak has pointed out the key investment theme for next year is the tangible demonstration of commitment by governments around the world to tackle their big challenges. For India, improved governance is the key. The report says improved governance in India will help stave off the risk of a slowdown in GDP growth in the next two years, revive the investment cycle and provide more investment opportunities for equity investors.

The note is of the view that the government may not have the option to continue with the current state of drift and weak governance. “A rude awakening from possible slowdown in growth may force the government to take action”, the report says. 

BRIEFLY

Reliance Infrastructure
Reliance Infrastructure Ltd (RInfra), one of India’s largest infrastructure players and an integrated power distribution firm, has been awarded the prestigious National Award for Innovative Training Practices for 2011. The award recognizes the adaptation of innovative training practices for HR development at RInfra in supporting and driving business success through significant change and restructuring.

India Factoring to expand
India Factoring & Finance Solutions Pvt Ltd, a joint venture of Punjab National Bank and FIM Bank Group, Malta, Banca IFIS, Italy and Blend Financial Services, Mumbai, is extending its factoring business to Punjab and Haryana for entrepreneurs and SMEs and will set up its offices in Chandigarh and Ludhiana before the fiscal end.