The BSE Sensex, which had slipped below the psychological 14,000 level in the opening session, fell like nine pins as selling continued unabated throughout the session.
The 30-shares BSE Sensex plunged 388.78 points (2.77%), to settle at 13,659.53. It had opened firm, at 14,071.27, but began declining immediately after. The benchmark index kept on touching one low after another, 13,568.08 being the last one.
The S&P CNX Nifty lost 101.10 points (2.50%), to 3,938.90.
The benchmark Sensex had sharply fallen close to 167 points on Thursday (22 February), in the last 45 minutes of trade, due to heavy unwinding of derivative contracts on account of their expiry. The February series, which expired on Thursday (22 February), was interestingly the first monthly series, since the devastating May plunge, when the Nifty settled in the red.
Market men are unwinding their long positions, choosing to watch from the sidelines, cautious ahead of the Union Budget for 2007-08.
The total turnover on BSE amounted to Rs 4039 crore.
The market-breadth, which reflects the overall health of the broader market, was very weak. There were 5.4 losers for every gainer on BSE. A host of stocks from the smallcap and midcap space were being heavily sold. Against 2,207 shares declining on BSE, just 411 advanced. Only 36 scrips remained unchanged.
Among the 30-Sensex pack, 28 declined while only 2 had advanced.
Telecom services provider Bharti Airtel was the top loser, down 6.48% to Rs 749.95, on a volume of 4.59 lakh shares.
Private sector ICICI Bank slumped 4.45% to Rs 906.25, on a volume of 3.46 lakh shares. The scrip had also slipped to a low of Rs 899.15. A surprise hike in CRR announced recently continues to weigh on the stock.
Grasim (down 6.05% to Rs 2270), ITC (down 5.10% to Rs 165.15) and Reliance Communications (down 4.78% to Rs 429) were the other prominent losers.
Maruti Udyog (MUL) was down 1.50% to Rs 866. Moving ahead with its plan to exit the car maker, the Central Government on Thursday invited expressions of interest (EoIs) from public sector financial institutions, banks and mutual funds for selling its remaining 10.27% stake in the company.
The process is likely to fetch the government at least Rs 2,600 crore, based on Thursday's closing of Rs 880 on the BSE. The government had said last year it will completely exit MUL, in which Japan's Suzuki owns a controlling 54.2% stake, by selling its residual 2.96 crore shares (Rs 5 face value). The money raised from the sale will go to the government, and not the National Investment Fund (NIF), as MUL is no longer a public sector.
Private sector Tata Steel was a top gainer, up 0.39% to Rs 457.90, on a volume of 24.71 lakh shares. The stock had struck a high of Rs 466.85, and was looking strong throughout the day. Reports say that Corus had hiked hot/cold rolled prices for European markets by 5 - 7% for the second quarter 2007 deliveries. The decision to increase the prices is a reflection of favourable market conditions. The Anglo-Dutch steel company was last month acquired by Tata Steel.
"Demand is improving and the stocks are at normal levels. The current strong demand for steel in Europe - particularly in construction and end-user sectors - supports this price increase," a spokesperson for Corus said.
Index heavyweight Reliance Industries (RIL) was up 0.30%, to Rs 1418, on a volume of 12.60 lakh shares. It had, however, slipped from a high of Rs 1442.75. The company’s board meets on 24 February 2007 to review plans for raising $2 billion.
Power Finance Corporation moved higher, and settled on BSE at Rs 111.55, a premium over the IPO price of Rs 85. The stock debuted at Rs 104, hit a low of Rs 103.50, and a high of Rs 117. Volumes in the stock were huge, at 4.04 crore shares, on account of multiple block deals.
The IPO had received a strong investor response. It was subscribed 77.24 times, amidst heavy bidding by FIIs, and was priced at the upper end of the Rs 73 - Rs 85 price band. NSE has also included the stock in the futures & options segment. The lot size of PFC in the derivative segment is 2,400.
Power Finance Corporation has a large equity base of Rs 1148 crore and the face value per share is Rs 10.
India's wholesale price index (WPI) rose 6.63% in the 12 months to 10 February, lower than previous week's annual increase of 6.73% due to a fall in some food and textile prices, data showed on Friday (23 February 2007). Analysts forecast the figure at 6.70%. The annual inflation rate was 3.81% during the corresponding week of the previous year.
Global markets were trading mixed. The Nikkei average rose 0.44% to a seven-year closing high on Friday, led by gains in exporters and property shares such as Mitsubishi Estate Co., but Sanyo Electric Co. tumbled following reports of accounting problems. Shares in Sanyo fell as much as 29% on news that Japan's securities watchdog was investigating the company over its past earnings reports, the latest blow to the embattled consumer electronics giant.
The Nikkei rose 79.63 points to 18,188.42, its highest close since May 2000. For the week, the index has added 1.75%.
Hang Seng index shed 97.58 points (0.47%), to 20,711.65.
Meanwhile, the Union Cabinet approved necessary changes in the law in the forthcoming Budget session to phase out central sales tax (CST) on Thursday. CST is collected by the Central Government and is distributed among the states.
The CST rate will be cut from 4% to 3% from 1 April. The phase-out is expected to be completed by 2010-11. This reduction in CST is likely to result in a loss of Rs 6,250 crore to the states’ exchequer in 2007-08. The Centre will introduce a legislation to allow states to tax certain identified services and impose additional duties on excise goods like tobacco to compensate states for the loss of revenue due to the phase-out.
Besides, the Union Government is understood to have assured states of budgetary support to cover any shortfalls.
Earlier this year, the Centre had agreed to the states’ proposal for allowing them to tax 77 services and keep the entire proceeds of it. Of the 77 services, 33 are currently taxed by the Centre, while another 44 are new items to be brought under the service tax net.
For the first year, the Centre will collect the tax and pass on the entire proceeds to the states. The 44 new services to be brought under the service tax net include barbers, legal, education, health, sports and performances of Bollywood actors.
The market is expected to remain subdued in the run up to the Union Budget 2007-08 to be presented in Parliament next Wednesday (28 February 2007). The Budget session of Parliament begins today.
Caution on the bourses is evident in that the market-breadth has turned weak, whenever the key indices have corrected over the past few days. Concerns that the government may raise short-term capital gains tax on sale of shares from the current 10% have gained currency. The securities transaction tax (STT) may also go up further. The STT was raised in the previous budget. The removal of 10% corporate surcharge may be offset by removal of certain open-ended exemptions.
Market men expect the finance ministry to give a big impetus to agriculture and infrastructure in the budget.
FIIs turned net sellers on Wednesday (21 February 2007). FIIs were net sellers to the tune of Rs 40.20 crore on Wednesday. Their inflow has been strong this month. Their cumulative inflow in February 2007 has reached Rs 4175 crore. The strong inflow has been triggered by an upgrade in India's sovereign rating to investment grade by global rating agency, Standard & Poor's, on 30 January 2007.
As per provisional data, FIIs were net sellers to the tune of Rs 435 crore on Thursday (22 February 2007), the day when the Sensex lost 167 points. FIIs were net sellers to the tune of Rs 348 crore in index-based futures on the same day. They were net sellers to the tune of Rs 104 crore in individual stock futures. Nifty March futures settled at 4066.65 on Thursday, a premium of 26.65 points over the spot Nifty closing of 4,040.
Revised market lots in NSE’s derivatives segment become applicable today. The lot size of the Nifty contract has been cut to 50 from 100. This may boost volumes in the derivatives segment.
US blue-chip stocks declined on Thursday, as a jump in oil prices added to worries about inflation, but a rally in chipmakers' stocks helped the Nasdaq advance late in the session to end at a six-year high.
The Dow Jones industrial average fell 52.39 points, or 0.41%, to end at 12,686.02, with only eight of the 30 stocks in the Dow finishing higher. The Standard & Poor's 500 Index dipped 1.25 points, or 0.09%, to finish at 1,456.38. The Nasdaq Composite Index rose 6.52 points, or 0.26%, to 2,524.94, its highest close since 15 February 2001. Earlier, the Nasdaq hit a six-year intraday high at 2,531.42.
US crude shed 9 cents to 60.86 a barrel after jumping 88 cents overnight to its highest level since 2 January 2007, after US data showed a surprisingly big fall in distillate stocks. The fall was compounded by a rash of refinery problems in the world's top consumer. Worries over another escalation in the dispute over Iran's nuclear programme added to concerns over global supply.