Domestic equities tumbled and the Sensex fell below the 12,500 mark today, on heavy selling across all sections. Shares continued to drift downward on the domestic bourses, worried by the Reserve Bank of India's decision to hike cash reserve ratio (CRR) and repo rate last Friday (30 March), after market hours.
Investor ire was so severe that index heavyweights also declined sharply. Banking, auto, construction, steel, and real estate shares were at the forefront of the decline. However, sugar shares stood tall among the ruins.
The Sensex closed at 12,455.37, a fall of 616.73 points for the day. Selling accentuated further towards the end of the trading session. It hit a low of 12,811.93, and a high of 12,425.52.
As per provisional data, FIIs were net sellers to the tune of Rs 509 crore today.
The BSE Mid-Cap Index lost 174.83 points, to close at 5,209.29, while the BSE Small-Cap Index lost 176.45 points, to end at 6,294.06.
The market-breadth was weak. Against 1,771 shares that declined on BSE, just 702 rose. Also, 73 stocks were unchanged. Losers outpaced gainers by a ratio of 2.52:1.
The BSE clocked a turnover of Rs 2910.51 crore compared to Friday’s 3011.09 crore.
Heavy selling happened in the banking sector scrips, expecting a slpwdown in credit offtake as the Reserve Bank of India (RBI) has raised its short-term lending rate, the repo rate, by 25 basis points to 7.75%. The central bank has also raised its cash reserve ratio (CRR) by half a percentage point. ICICI Bank and Yes Bank, both private banks, took the lead in raising lending rates following the RBI move.
Private sector ICICI Bank lost 5.70% to Rs 804.50, on raising its benchmark-lending rate by 100 basis points to 15.75%, effective 1 April 2007. ICICI Bank also raised its floating reference rate for consumer loans, including home loans, by 100 basis points to 12.75%, with immediate effect.
Yes Bank (down 1.99% to Rs 137.90) has also raised its prime lending rate (PLR) by 75 basis points to 14.75%.
The BSE Bankex lost 389.42 points, to end at 6,152.59. The unwinding was led by Oriental Bank (down 10.02% to Rs 168.75) followed by Punjab National Bank (down 9.35% to Rs 427.55), Bank of India (down 8.16% to Rs 154.10), Union Bank (down 7.51% to Rs 96.10), and Indian Overseas (down 6.80% to Rs 96).
The BSE IT Index was down 226.83 points, at 4,672.56. Infosys was down 4.54% to Rs 1921.20, Satyam Computers was down 5.06% to Rs 446.30, TCS had slipped 3.45% to Rs 1188.75, and Wipro ducked 7.18% to Rs 518.25.
Interest rate sensitive auto shares were also hit by concerns that a rise in lending rates will rein in demand. Investors were also dejected by sluggish-to-weak March 2007, sales from Bajaj Auto (down 5.15% to Rs 2300.60), Hero Honda (down 6.68% to Rs 639.55) and TVS Motors (down 4.45% to Rs 56.95). While Hero Honda's sales in March 2007 rose just 2% from a year ago, Bajaj Auto and TVS Motors' sales were down 9% and 0.5%, respectively.
Tata Motors shed 8.04% to Rs 669.25, and Maruti Udyog dropped 8.09% to Rs 753.40. Mahindra & Mahindra lost 8.31% to Rs 715.30.
On Saturday, ICICI Bank raised the floating reference rate for consumer loans by 100 basis points to 12.75%, with immediate effect. ICICI Bank is a major player in the auto finance segment. The move came about as the Reserve Bank of India (RBI) raised the repo rate and the CRR after trading hours on Friday (30 March).
The auto industry derives substantial demand through bank finance. Therefore, the rise in interest rates have sparked worries of a demand slowdown.
Interest rate hike had also caused the realty stocks to crumble. Indiabulls Real Estate, Parsvnath Developers, Sobha Developers, Anant Raj Industries, Unitech, and Mahindra Gesco Developers were the major losers today in this segment.
Reliance Industries (RIL) was down 4.01% to Rs 1313.50, in an overall weak market, despite signing an agreement for transporting natural gas. Reliance Industries (RIL) has signed this agreement with Gujarat State Petronet (GSPL) for transporting 11 MSMCMD from Bhadbhut in Bharuch to the company's refinery in Jamnagar, Gujarat.
Andrew Yule & Company soared 19.91% to Rs 26.80, on reports that it will hive off the electrical and engineering divisions before proceeding with divestment of equity in either. The entites hived off will be known as Yule Engineering and Yule Electrical.
HDFC dropped 5.77% to Rs 1432.70, on concerns about a slowdown in demand for loans after the housing finance behemoth raised its key lending rates 75 bps to 14.25%.
Tata Power Company lost 2.62% to Rs 496.10, up on signing definitive agreements to purchase 30% equity stakes in two major Indonesian thermal coal producers.
On the contrary, sugar shares conquered newer ground. Several sugar producers were up 2 - 3.77%, in an otherwise weak market, as buying continued in such counters. Among those to surge were Bajaj Hindusthan (up 1.36% to Rs 197.60), Sakthi Sugars (up 2.53% to Rs 103.35), Balrampur Chini Mills (up 2.05% to Rs 67.25) and Dharmpur Sugar (up 2.56% to Rs 76.20).
Godawari Power & Ispat lost 3.11% to Rs 105.80, on informing BSE that an additional 2,60,000 TPA capacity sponge iron manufacturing facility had been commissioned at the company's Siltara Industrial Complex (C.G), and production started from 31 March 2007.
Brokerage India Infoline rose 3.43% to Rs 345, amid block deals. Nearly 5 lakh shares changed hands at Rs 350 - Rs 351 each.
Tata Steel lost 4.52% to Rs 42.90. The company has agreed to sell a cold rolling mill in Gujarat to Theis Precision Steel India, for Rs 67 crore.
Mobile services firm, Bharti Airtel, slipped 2.91% to Rs 741. Bharti Airtel has lowered international tariffs by up to 11%, for its mobile customers from 1 April 2007.
Software firm Core Projects & Technologies eased 0.16% to Rs 611. Core Projects acquired US-based information technology services provider, Emacs Technologies, for $3 million. Emacs Technologies has substantial presence in logistics, healthcare, banking and financial services and the acquistion will strengthen Core Projects' practice in each of these segments.
Great Eastern Shipping Company (down 0.42% to Rs 202) has delivered its Suezmax crude carrier ‘Jag Laadki’, to the buyers. The 1992 built, 145242-dwt ship was contracted to be sold in February 2007.
Mahindra & Mahindra (down 7.01% to Rs 725.50) said on Monday vehicle sales in March rose 26% to 20,623 units from 16,400 units a year earlier. The company’s domestic auto sales, including utility vehicles, light commercial vehicles and three-wheelers, rose 27% to 19,869 units from 15,584 units a year earlier. Exports fell 8% to 754 units from 816 units. For FY-2007, Mahindra & Mahindra sold 178,229 vehicles, up 19% from 149,424 units.
Shares of sugar firm Mawana Sugars (up 8.32% to Rs 40.40) and SIEL (up 3.81% to Rs 27.25), currently undergoing a process for merger, were up after Mawana's board approved reducing the paid-up capital of the merged entity to Rs 24.64 crore from the earlier planned Rs 73.95 crore.
Asian stocks edged higher on Monday (2 April 2007). Key benchmark indices in Hong Kong (up 0.04%), South Korea (0.48%), Singapore (0.47%), China (up 2.15%) and Taiwan (0.01%) were in the green. Japan was down 1.50%.
US stocks ended little changed on Friday (30 March) as word that the United States had imposed duties on some Chinese imports offset strong economic news and a pullback in oil prices. The Dow Jones industrial average finished up 5.60 points, or 0.05%, at 12,354.35. The Standard & Poor's 500 Index slipped 1.67 points, or 0.12%, to 1,420.86. The Nasdaq Composite Index inched up 3.76 points, or 0.16%, to close at 2,421.64.
Oil prices eased but held just under $66 a barrel following a near two-week rally on tensions over Iran's capture of British military personnel and worries over US gasoline supplies ahead of the summer driving season.
The stock exchanges have clubbed settlement of Friday (30 March)’s trading with today’s trading. Therefore, brokers have advised clients not to sell shares today, which they had bought on Friday (30 March).