Market ends nearly 214 points in deficit

The market settled with losses for the week due to concerns about weak global markets, and soaring global crude oil prices, which were trading near $67 per barrel mark. Prior to this week, the markets had settled with weekly losses five straight times.

The BSE Sensex lost 213.8 points (1.6%) for the week ended 30 March 2007, to settle at 13,072.10, while the S&P CNX Nifty lost 39.50 points (1%), to end at 3,821.55.

The week started bearish, with the Sensex declining 161.61 points on 26 March, to 13,124.32, as banking and auto shares succumbed to selling pressure.

The markets remained closed on 27 March 2007, for Ram Navmi.

The 30-share BSE Sensex plunged 239.98 points, a day later, to 12,884.34, as stocks across the board were severely pounded. The market collapsed partly due to weak global markets, and partly due to unwinding in the derivatives market. All BSE sectoral indices settled with losses, and shares from IT, auto and banking space had to beat a hasty retreat.

On 29 March 2007, the Sensex advanced 95.32 points, to 12,979.66, on account of short covering in the derivatives segment. Shares from FMCG, Capital goods and IT sectors were in demand.

The 30-share BSE Sensex settled 92.44 points higher, at 13,072.10, on 30 March 2007, as investors built fresh positions, following the smooth rollover of open positions in the derivatives segment, from March to April, and anticipating robust Q4 and FY 2007 results from India Inc.

Reliance Industries (RIL) was down 0.44% to Rs 1372.60. Reports suggest that RIL was scouting for partners in Europe and the United States, to help speed up retail expansion in the country. RIL will be interested in partnering with a US specialty retailer. The company aims to open about 2,000 fresh stores over five years.

According to another report, RIL is likely to join the race for the $1-billion Vizhinjam port on the Kerala coastline. The state government has decided to call fresh tenders from private players interested in developing the port. RIL, which was eyeing participation in a major port project on the west coast capable of competing with Colombo, is showing early interest in Vizhinjam International Seaport (VISL).

Bajaj Auto was down 4% to Rs 2425.45. Chairman Rahul Bajaj reportedly said the company may build cars to ward off the prospective threat Tatas' Rs 1-lakh car poses to the two-wheeler market. Tata Motors’ Rs 1 lakh 'people's car' will hit the roads in 2008, denting top-end motorcycle sales, provided the firm gets the product right.

Bajaj's statement was the first confirmation that the country's top three-wheeler and second-largest motorcycle maker was interested in developing a low-cost car. Bajaj Auto had earlier announced it was developing a four-wheeler goods carrier, which is scheduled for launch in 2009.

Tata Motors declined 7.70% to Rs 727.75. Tata Motors intends to set up one more automobile plant in the country within two years. This will be a commercial vehicle facility for which the process of identifying a suitable site is under way. The company’s decision to set up a commercial vehicle plant was prompted by significant growth the segment has witnessed over the past couple of years.

ICICI Bank slipped 4.30% to Rs 853.10. It announced its Singapore branch, successfully priced the Euro 500 million Reg S Floating Rate Note under its Medium Term Note Programme (MTN). It is the first Indian bank to offer a benchmark sized two-year floating rate note in the Euro market. The offering had an Euro 862 million order-book with a total of 71 investors. New investors accounted for more than 50% of the deal size. The two-year floating rate notes of Euro 500 million were priced at a spread of 40 basis points over the three-month LIBOR.

Tata Consultancy Services (TCS) was down 4.21% to Rs 1231.20. There were reports that TCS may get a stake of up to 10% in Deutsche Telekom unit T-Systems for executing $1 billion worth of orders.

Tata Consultancy Services (TCS) and Sitel, a global Business Process Outsourcing (BPO) leader, announced that the two parties had concluded an agreement to transfer the ownership of the TCS' 40% stake in SITEL India to US-based Sitel Corporation for a consideration of $17.732 million. Sitel India is a joint venture between the Tata Group and Sitel Corp, formed in 2000, with both parties holding 50% stake.

Tata International, which holds a 10% stake in the JV, has also agreed to sell its stake. This joint venture company provides voice-based contact center BPO services from India. The JV is a provider of fully-integrated, customer care and back office processing services operating from five centers.

Tata Steel, fresh from its takeover of Anglo-Dutch giant Corus, gained 2.51% to Rs 449.60. The private sector steel behemoth has now entered into talks with the world's second-largest steelmaker Nippon of Japan for jointly producing an alloy for automakers and other companies. The two firms are reportedly said to be in the process of finalising the terms of the venture.

Going by media reports in Japan, the two companies are likely to spend about $423 million (about Rs 2,000 crore) to make thin-sheet steel chiefly used in automotives in joint venture, which will use Nippon's technology. The plant will be able to produce about 1 million metric tonnes of steel a year.

Shares from the sugar sector were the stars of the week’s trading session. They surged on high volumes, as these companies seem to be benefiting from the soaring crude oil prices. Earlier this week, there were reports that the government will give export incentives worth Rs 1,350-1,450 a tonne to mills. Shree Renuka Sugars surged 19%, Bajaj Hindustan jumped 16% while Sakthi Sugars soared 57%.

On 26 March 2007, Sparsh BPO Services settled at Rs 104.75. Sparsh BPO Services’ listing on BSE followed a restructuring scheme of Spanco Telesystems and Solutions. A day ahead of its listing, BSE had set Rs 130.90 as base price for Sparsh, with 20% daily circuit filters.

As per the scheme of arrangement between Spanco Telesystems and Solutions (Spanco) and Sparsh BPO Services (Sparsh), formerly known as Intelenet BPO Services, the domestic call center division of Spanco was demerged and vested into Sparsh on a going concern basis. As a part of the scheme, Sparsh allotted 79,12,275 equity shares of Rs 10 each to shareholders of Spanco in the ratio of an equity share of Rs 10 each for every three equity shares of Rs 10 each held by the shareholders in Spanco on the record date. The equity capital of Sparsh is Rs 16.14 crore and the face value per share Rs 10.

The Securities and Exchange Board of India (Sebi) decided to allow short selling by institutional investors only in such stocks which are also traded in the derivatives segment. A clarification was made by M Damodaran, Chairman, Sebi, at a press conference in Mumbai on Wednesday (28 March). At present, there are 159 stocks for which derivatives are available.

Damodaran added that institutional investors will be allowed to sell short only in these 159 stocks. According to the Sebi chief, short selling by institutional investors cannot be expanded to other stocks as the decision was based on experience gained in the matter. Even the list of 159 stocks was not small, and more stocks could be covered in due course, Damodaran informed.

On the issue of IPO grading, Damodaran said the scope of grading wouldl be expanded gradually to even rights issue and follow-on public offerings (FPOs). Later, companies will also be graded on the basis of previous issues made by them. However, with the introduction of grading, the merchant banker will not be shorn off his responsibility. Merchant bankers will continue to be responsible for all disclosures made in the prospectus and issue related processes.

On the issue of imposing the circuit filters on the first day of listing, Damodaran said, the Surveillance Committee comprising the representatives of the exchange and Sebi, was seized of the matter and some concrete decisions would be taken soon. However, on the issue of imposing ciruit filters on the day of re-listing of securities, Damodaran pointed to an already existing provision for imposing 20% circuit filter.

India's wholesale price index rose 6.46% in the 12 months to 17 March, matching the previous week's increase, data released on 30 March showed. The figure was slightly below a forecast of 6.50%.

India's current account deficit in the October-December quarter was $3.04 billion, compared with a revised deficit of $4.68 billion in the July-September quarter, the central bank said on Friday. Data from the Reserve Bank of India (RBI) showed the October-December merchandise trade deficit widening to $19.02 billion from a revised $16.06 billion in the July-September quarter. The RBI said the balance of payments (BoP) surplus in the October-December quarter was $7.51 billion, compared with a surplus of $2.27 billion in the July-September quarter.

India's foreign exchange reserves rose to a record $197.746 billion on 23 March, from $195.957 billion a week earlier, the Reserve Bank of India (RBI) said in its weekly statistical supplement on Friday. Analysts attribute part of the increase in the reserves to the central bank's aggressive dollar purchases to protect the rupee's export-competitiveness against other currencies.

RBI said foreign currency assets expressed in US dollar terms included the effect of appreciation or depreciation of other currencies held in its reserves such as the euro, pound sterling and yen. The foreign exchange reserves include India's reserve tranche position in the International Monetary Fund (IMF).