Germany's caution on debt plan sinks Wall Street

US stocks suffered their worst loss in two weeks on Monday after comments from Germany's finance minister caused investors to fear Europe's solution to its debt crisis may not come fast enough.

The S&P index had risen for two straight weeks for the first time since July, riding a wave of euphoria built on optimism that European leaders had a newfound commitment to tackle a crisis that threatened financial stability and global growth.

The rapid rally left the market susceptible to swift declines. German Finance Minister Wolfgang Schaeuble, speaking of an Oct. 23 European Union summit on the debt crisis, tempered enthusiasm, saying, "we won't have a definitive solution this weekend."

US bank earnings also contributed to the selling pressure. Wells Fargo & Co shares fell 8.4% to USD 24.42 after the US lender financial results fell short of expectations.

The KBW Bank index lost 3.9%.

"The German Finance Minister basically came out and sort of ruined the expectation that a grand plan was coming along, that some sizable fund was being put together to recapitalize European banks," said Stephen Massocca, fund manager with Wedbush Morgan in San Francisco.

"Depending on the development there, we could technically get back down to the low end of the trading range, which is about 1,100 on the S&P."

With that in mind, investors rushed to seek protection in the options market against losses. The CBOE Volatility index VIX, Wall Street's so-called fear gauge, rose 18.2% to 33.39, its highest one-day jump since August.

The VIX is a 30-day risk forecast of stock market volatility conveyed by S&P 500 index options; it generally moves inversely to the S&P benchmark.

The Dow Jones industrial average was down 246.58 points, or 2.12%, at 11,397.91. The Standard & Poor's 500 Index was down 23.72 points, or 1.94%, at 1,200.86. The Nasdaq Composite Index was down 52.93 points, or 1.98%, at 2,614.92.

Trading volume was light, with just 6.87 billion shares exchanging hands on the New York Stock Exchange, NYSE Amex and Nasdaq for the day, well below the year's daily average so far of about 8 billion.

Events in Europe overshadowed a USD 21 billion deal by Kinder Morgan Inc to buy rival El Paso Corp, combining the two largest natural gas pipeline operators in North America in a huge bet on the fast-growing market for that fuel.

El Paso's shares surged 24.8% to USD 24.45 and Kinder Morgan shares jumped 4.8% to USD 28.19.

Shares of Citigroup Inc fell 1.7% to USD 27.93. The bank reported higher third-quarter earnings as it set aside less money to cover bad loans and recorded an accounting gain available to banks in turbulent markets.

After the closing bell, IBM reported third-quarter revenue that met expectations. The tech company ended 2% lower at USD 186.59 during regular trading, but in after-hours action IBM shares fell 3.6% more to USD 179.81 after reporting results.

Of the 45 companies in the S&P 500 that have reported earnings, 62% have beaten analyst expectations, according to Thomson Reuters data.

Declining stocks outnumbered advancing ones on the NYSE and the Nasdaq by a ratio of about 5 to 1.

Citigroup shutting down prop trading unit

Citigroup Inc is shutting down a loss-making proprietary trading business, Chief Financial Officer John Gerspach said in a conference call on Monday.

"We're close to two-thirds done winding down that particular position, that business," Gerspach told analysts on the company's third quarter conference call. He earlier blamed weak third quarter trading performance in part on winding down Citi's principal strategies business.

Banks including Goldman Sachs and Morgan Stanley have already unwound similar businesses in preparation for stricter government regulation under the Volcker Rule.

The Volcker Rule, which goes into effect next year, is aiming to prevent banks from making risky trades by prohibiting short-term trading for their own profit.

Citi spokeswoman Danielle Romero-Apsilos said Citi's Equity Principal Strategies unit, is a "de minimis part of Citi's overall trading operation."

"As it does not fit with Citi's business model under the impending Volcker rule, it is in the process of being wound down," Romero-Apsilos said in an emailed statement.

Thunuguntla's view on Reliance Industries

Jagannadham Thunuguntla of SMC Global Securities share his view on Reliance Industries .

Thunuguntla told CNBC-TV18, "Reliance Industries, yesterday’s results clearly reflect that out of the three segments one is the gross refining margins are surely under pressure. They are not up to the mark as market had expected. Even on the petchem side definitely the margins have got squeezed by about 3% point year in year. Whatever the problem that the company is having on the refining and petchem is getting compensated with the other income because other income is the company is getting about Rs 1100 crore per quarter thanks to the Rs 61,000 crore cash balance that company is having on the books. So treasury income is definitely compensating the slowdown on other front."

He further added, "Having said that the real kicker for the stock will come either because of these two reasons - either if the KG D6 technical problem will get resolved thanks to the BP joint venture or if the company uses this Rs 61,000 crore maybe for some big global acquisition and that acquisition adding some value to the company. But for either of this to happen it seems that at least almost 18 months wait is there, so until and unless that happens, I think it’s very difficult for the stock to get back into the four digits."

"I think the company is a very good bet for Rs 700-900 that kind of swing trade - buy at Rs 700, sell at Rs 900 and again short at Rs 900 for Rs 700. I think it is one of the swing trading candidates as of now. But the stock could get back to four digits, I think of these two things have to happen - either gas or acquisition."

Hisar by-poll: Bishnoi leads, Cong third

All eyes are on Hisar in Haryana where the results for the by-polls for the Lok Sabha seat will be announced on Monday. Stakes are high for both the Congress and Team Anna. The big question is whether the voters will respond to Anna Hazare's call to defeat the Congress, making Hisar a turning point.

Initial leads show Kuldeep Bishnoi of the Haryana Janhit Congress was leading. He said that Anna should have targeted all corrupt parties and not just the Congress.

Ajay Chautala of the Indian National Lok Dal has accused the Congress of running a smear campaign against him. He was following Bishnoi at the second spot in the initial leads.

Congress' Jai Prakash who claimed the Anna factor has failed was coming in third in the early counting.

It has been Team Anna's first brush with electoral politics with Kejriwal campaigning against the Congress in these elections making it a referendum on the Jan Lokpal Bill despite reservations by other members of the team like Santosh Hegde.

The Opposition seems to have benefited indirectly from the anti-Congress tirade. Kuldeep Bishnoi, the political heir of former Chief Minister Bhajan Lal who before his death had defected from the Congress to launch his own outfit, is contesting these elections in alliance with the BJP. Kuldeep hopes to polarise the anti-incumbency and pro-Anna votes.

For the Congress which was on a weak wicket, the Hisar by-poll has turned into a high profile poll with Team Anna calling for its defeat. All eyes are now on the poll results to determine who the voters have decided to push to victory.

Zee Ent Q2 cons net profit up 23% at Rs 160 cr

Zee Entertainment has announced its second quarter results. The company's Q2 consolidated net profit was up 23% at Rs 160 crore versus Rs 130 crore.

Its consolidated net sales were up 2.86% at Rs 718 crore versus Rs 698 crore.

Advertising revenue down 4% to Rs 395 crore, YoY, and up 2% QoQ.

Subscription revenue up 6% to Rs 291 crore versus Rs 274 crore and down 4.6% QoQ