Stocks across the board massacred

Stocks across the board were severely pounded, partially due to weak global markets, and partly due to unwinding in the derivatives market. The market, whcich was weak right from the word go, kept on falling with the passage of time. Volatility was the hallmark of the session, with wild swings by the benchmark index either ways.

The 30-share BSE Sensex settled 255.15 points lower, at 12,869.19. It had opened weaker, at 13,034.27, and went on to touch a low of 12,861.18. The Sensex's high for the day was at 13,035.56.

Today was the last day of trading for the current financial year 2007. Trades executed from tomorrow will be considered for the financial year 2008.

The market-breadth, which measures the overall health of the market, also ended weak. A host of stocks from the small-cap and mid-cap space tumbled. On BSE, 1,949 shares declined compared to 660 that advanced. A total of 66 scrips remained unchanged.

The total turnover on BSE amounted to Rs 4008 crore.

Among the 30-Sensex pack, while 22 declined only 8 scrips managed to gain.

Auto major Tata Motors was the top loser, down 5.02% to Rs 716, on a volume of 4.58 lakh shares, as global crude oil prices surged.

IT stocks were being offloaded heavily, as the dollar fell below 43.15 versus the Rupee, its lowest since June 1999. Also, a weak consumer confidence report heightened concerns about a slowdown in the United States, where these companies generate most of their revenue. The report has compounded the woes of Indian IT companies, already reeling from the new found strength of the rupee.

The BSE IT Index as a result was the top loser, down 3.54%, from among the sectoral indices of BSE. TCS slumped 4.86% to Rs 1200, on a volume of 6.98 lakh shares. Other frontline IT shares also finished weak. Satyam Computers (down 3.44% to Rs 456), Infosys (down 3.26% to Rs 1989.90) and Wipro (down 4.65% to Rs 558.90) were just a few of those.

IT bellwether Infosys Technologies will announce fourth quarter and annual results on 13 April 2007.

Meanwhile, Satyam Computer Services signed a five-year contract with Applied Materials Inc, the global leader in Nanomanufacturing Technology™. The company will provide application development, maintenance, and support (ADMS) plus business transformation core technology services to applied materials through a managed services delivery model.

Index heavyweight Reliance Industries (RIL) was down 1.48% to Rs 1344.95, on a volume of 5.72 lakh shares.

Select pharma scrips were in demand. Ranbaxy Laboratories was the top-gainer, up 3.53% to Rs 339.80, as 3.32 lakh shares changed hands in the counter on BSE.

Dr Reddy’s Labs gained 1.20% to Rs 690. A strong 1.02 lakh shares got transacted on BSE.

Tata Steel, fresh from its takeover of Anglo-Dutch giant Corus, lost 0.85% to Rs 438. 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 one million metric tonnes of steel a year.

After a year in which the Indian economy fired on all cylinders, and notched up a GDP growth rate of 9.2%, things will cool down a bit in 2007, the Asian Development Bank (ADB) said.

Asian economies grew 8.3% in 2006, the fastest since 1995. China and India accounted for about 70% of this expansion. Asia’s “exceptional performance” in 2006 provides it with robust momentum in the years ahead, feels Imtiaz Ali, the chief economist at ADB. However, in order to stay on the high-growth path, macroeconomic stress will have to be addressed, reforms will have to be pursued aggressively, and growth will have to be rebalanced in order to generate jobs, Ali added.

China too is expected to see a slowdown in GDP growth rate, from a blistering 10.7% in 2006. Reports add that ADB expects initiatives taken by Chinese authorities to curb fixed-asset investment will take traction in 2007. As some of these cooling measures take effect, ADB estimates growth to slow to 10% in 2007, and further to 9.8% in 2008.

Asian economies (ex-Japan), on the whole, will post a robust growth of 7.6% in 2007 and 7.7% in 2008, driven by strengthening domestic demand and a broadly favourable outlook for the international economy, the ADB report said.

All Asian indices except the Sanghai Composite (up 1.09%) were trading with losses. The Nikkei was down 0.64%, while the Hang Seng Index was dented 0.78%.

European markets were also trading mixed.

US stocks and the dollar closed lower on Tuesday (27 March 2007)after a measure of US consumer sentiment dipped and a major home builder withdrew its profit outlook, reinforcing a view that the US economy is on shaky ground. The Dow Jones industrial average dropped 71.78 points, or 0.58%, to finish at 12,397.29. The Standard & Poor's 500 Index slid 8.89 points, or 0.62%, to end at 1,428.61. The Nasdaq Composite Index lost 18.20 points, or 0.74%, to close at 2,437.43.

A crisis in the US subprime mortgage sector, which issues mortgages to high-risk borrowers, has left investors wondering whether the broader housing sector, and even the world's largest economy, might be dragged down as well.

Crude oil rose for a seventh day in New York on concerns of a dispute over Iran's detention of British servicemen escalating, and leading to disruption of supplies from the Middle East.

Crude oil for May delivery gained $1.53, or 2.4%, to $64.46 a barrel in electronic after-hours trading on the New York Mercantile Exchange. It was at $63.89 in Singapore. The contract settled at $62.93 a barrel yesterday, up 2 cents. Prices jumped $5 in seven minutes, New York time, to $68.09, the highest intraday price since 6 September 2007.

In London, Brent crude oil for May settlement climbed $1.24, or 1.9%, to $65.84 a barrel in electronic trading on the ICE Futures exchange. Brent crude was trading at $65.69 at 12:47 pm Singapore time.

FIIs have been buying since the last few days. As per provisional data, FIIs were net buyers to the tune of Rs 58 crore on Monday (26 March), the day when the Sensex had lost 162 points. FIIs were net buyers to the tune of Rs 678.50 crore on Friday (23 March), the day when the Sensex had lost 22 points.

The next major trigger for the domestic bourses is Q4 March 2007 earnings, reports of which by corporates will start next month. Analysts expect Q4 results to be strong. Market men will closely watch what company managements have to say about the outlook for FY 2008.

The unwinding of positions in the derivatives segment ahead of the expiry of March 2007 derivative contracts on Thursday (29 March 2007) may pull the market lower. On the other hand, short covering may also spark a rally. The market remained closed on Tuesday (27 March) for Ram Navmi.