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Friday, April 27, 2007

Sensex loses 320 points; drops below 14K


After a steady rally in the past few days, the BSE Sensex had a tough time today due to heavy selling from across the board. The market was weak right from the word go, as index pivotals were offloaded, tracking weak global markets. The weakness may also be attributed to an abridged week that lies ahead on account of two public holidays, on Tuesday (1 May) and Wednesday (2 May). Although the Sensex slipped below the 14,000 mark, the S&P CNX Nifty slipped below the 4,000 mark.

All sectoral indices on BSE settled with losses, with shares from banking, healthcare, and oil & gas space plunging the most.

The 30-share BSE Sensex plunged 320.30 points (2.25%), to 13,908.58. It had opened lower, at 14,219.25, and started declining immediately after. The benchmark index also touched a low of 13,884.53.

The NSE Nifty slumped 94.35 points (2.26%), at 4,083.5.

The market-breadth suffered as small-cap and mid-cap shares came under pressure. There were over two losers for every gainer on BSE. Against 1,703 shares that declined, only 840 had advanced. A total of 82 scrips remained unchanged. The BSE Small-Cap Index closed at 6,941.48, down 1.08% while the BSE Mid-Cap Index slipped 0.94%, to 5,733.53.

The total turnover on BSE amounted to Rs 3753.36 crore, while the NSE F&O turnover was Rs 28172.44 crore. The total market-wide turnover amounted to Rs 40138.26 crore.

Among the 30-Sensex pack, 28 declined while only 2 of them survived the bloodbath.

Pharma major Cipla plunged 14.57% to Rs 216.35, on high volumes of 66.45 lakh shares. Cipla reported 34% fall in net profit in Q4 March 2007 at Rs 126 crore from Rs 191 crore, mainly due to a sharp decline in active pharmaceutical ingredient (APIs) exports and rising material costs. The company's performance in the corresponding quarter last year, was exceptionally good because of strong sales in western markets. Net sales for the quarter were up 6.3% to Rs 938.5 crore, on the back of a 14.4% growth in domestic revenues to Rs 399.7 crore. Exports were flat at Rs 529.3 crore in the quarter ended 31 March 2007, from Rs 526.6 crore in last year’s corresponding quarter. A change in the product mix also contributed to the decrease in profits.

Cipla reported a 8% increase in net profit at Rs 660.82 crore for the year ended 31 March 2007, as compared to Rs 607.64 crore in FY 2006. Net sales were up at Rs 3572.1 crore compared to Rs 2985.9 crore in the year ended 31 March 2006. The results were declared after trading hours on Thursday.

Cipla expects its exports business to show modest growth in the next two quarters, on account of ever-rising pricing pressure in the US.

With Cipla bearing the brunt, the BSE Health Care Index plunged 3.9% to 3,696.05, the most among BSE's sectoral indices. Glenmark (down 4.37%), Sun Pharma (down 3.52%), Matrix Laboratories (down 3.22%) and Orchid Chemical (down 2.31%) had slipped.

Bharti Airtel plunged 4.24% to Rs 825.50, on profit-taking, even as it posted a stronger-than-expected 98% surge in net profit for Q4 March 2007.

Bharti Airtel’s consolidated net profit as per US GAAP, jumped 98% in Q4 March 2007 at Rs 1353.09 crore (Rs 682.31 crore). Revenue rose 58% to Rs 5393.18 crore from Rs 3411.33 crore. The net profit growth exceeded expectations, while revenue growth was in line with estimates.

Bharti Airtel said it had added a net 53 lakh customers in Q4 March 2007. It also had an ever-net addition of 1.8 crore customers in FY 2007.

As on 31 March 2007, Bharti Airtel had over 3.9 crore customers, an increase in the total customer base of 86% over the last year.

"The demand for telecom services across all segments remains buoyant and we believe that the growth momentum can be sustained," Bharti Chairman Sunil Mittal said in a statement.

Index heavyweight Reliance Industries (RIL) lost 4% to Rs 1532.60, on a volume of 12.05 lakh shares. After trading hours on Thursday, Reliance Industries (RIL) reported Q4 results that beat market expectations. RIL reported 14% growth in net profit in Q4 March 2007 at Rs 2853 crore compared to Rs 2520 crore in Q4 March 2006, on the back of strong refining margins. The company said refining margins for the March 2007 quarter were $13 a barrel, higher than the benchmark Asian Dubai crack margin, which averaged less than $7 in the quarter. Net sales rose 5.5% to Rs 25895 crore from Rs 24542 crore.

In its key refining division, Reliance Industries (RIL) processed 8.1 million tonnes of crude in Q4 March 2007, which was nearly 4% higher y-o-y.

RIL posted a net profit of Rs 10908 crore for FY 2007, compared with a net profit of Rs 9069 crore in FY 2006. Net sales rose to Rs 105363.30 crore from Rs 81211 crore. The company's earnings per share (EPS) rose to Rs 78.3 in FY 2007 from Rs 65.10 in FY 2006.

RIL targets sales of more than $24 billion by 2011 from the retail business. RIL has set up 135 retail stores in 16 cities during FY-2007, the company said on Thursday.

PSU oil exploration major ONGC slumped 3.15% to Rs 930 on 1.03 lakh shares. The BSE Oil and Gas Index closed at 7,077.96, down 3%.

Banking shares edged lower due to weekly inflation data. ICICI Bank lost 3.34% to Rs 932, State Bank of India was down 4.54% to Rs 1094 while HDFC Bank was down 1.25% to Rs 1017.80. The BSE Bankex lost 2.3% at 7,086.88.

Ranbaxy was down 0.6% to Rs 369.75, but the stock had recovered from the day’s low of Rs 362.55. The pharma major reported 79% surge in consolidated net profit in Q1 March 2007 to Rs 128 crore from Rs 71.80 crore. Ranbaxy Laboratories raised its FY 2007 (for the year ending 31 December 2007) sales growth forecast from 15% to 20%.

IT major Satyam Computers was the top-gainer, up 1.16% to Rs 465.60, on a volume of 14.05 lakh shares. It had surged to a high of Rs 473. Another software exporter, Wipro, also rose 0.52% to Rs 566.

Motor Industries Company jumped 11.55%, to Rs 3820, after German parent, Robert Bosch, launched an open offer to buy an additional 20% stake in the firm. Robert Bosch proposed to buy the stake at Rs 4000 per share. The offer is a part of Robert Bosch’s investment plan of Rs 900 crore in its Indian subsidiaries, over the next two years. A bulk of the investment will flow into MICO. As of 31 March 2007, Robert Bosch already owns 60.55% stake in MICO.

HCL Infosystems rose 7.39% to Rs 145.35, after the company today reported 4% growth in consolidated net profit in Q3 March 2007, at Rs 87.98 crore (Rs 84.44 crore). HCL Infosystem's total income declined 8.8% to Rs 2916.48 crore from Rs 3200.70 crore.

Paper maker Ballarpur Industries rose 4.61% to Rs 114.70. On 12 April 2007, Ballarpur Industries reported 22% growth in net profit in the March 2007 quarter at Rs 64.06 crore. The company is expanding its pulping capacity by about 1 lakh tonne and paper capacity by about 60,000 tonne over the next two years.

All six new listings, which the market regulator Securities & Exchange Board of India alleged were manipulated on debut day, tumbled. Pyramid Saimira was 10% limit down at Rs 321.80. AI Champdany (Rs 111.45), and Shree Ashtavinayak Cine Vision (Rs 161.55) were also 5% limit down. Pochiraju Industries was down 6.42% to Rs 22.60, Cambridge Technologies was down 7% to Rs 58.65 and Mindtree Consulting was down 0.85% to Rs 777.

The Securities & Exchange Board of India (Sebi) also disallowed seven entities from dealing in securities after they were found to be involved in creating abnormally large order-books on the first day of the newly-listed initial public offerings (IPOs) mentioned above. The investigations showed that there was an artificial enhancement of the order-book by these entities by placing orders for a large amount of shares at a price much below the prevailing market price.

The entities that have been included in this order are Latesh Chheda, Viren Kenia, Bhavin Chheda, Chetan Rathod, Neptune Fincot, Dhiren Pajwani and RSS Investment, who allegedly played a lead role in manipulating stocks on their listing day.

Budget carrier Deccan Aviation tumbled by 5% lower limit to Rs 109.05, after it reported a huge loss in Q3 March 2007, after trading hours on Thursday. Bangalore-based low cost carrier Air Deccan has posted a loss of Rs 213 crore for Q3 March 2007, attributing it to high operational costs and oversupply leading to weak domestic yield. Revenue for the quarter was up 66.34% to Rs 457.45 crore over the corresponding quarter of last year. The airline improved its load factor to 83% from 71.75%, flew 1.7 million passengers against 1.07 million and operated 350 flights per day against 230 of the corresponding period last year.

The Deccan Aviation board also decided to hive off the charter services into a separate entity through a wholly-owned subsidiary and transfer the maintenance and repair facility to this body to be newly created.

Consumer products and services firm, Marico, dropped 3.63% to Rs 55.70, after the company reported 17.3% growth in its net profit in Q4 March 2007 after trading hours on Thursday. It recorded a 17.3% increase in consolidated net profit for the Q4 March 2007 at Rs 28.12 crore against Rs 23.97 crore in the year-ago period. Consolidated revenues for the company during the quarter rose 36.2% to Rs 405.6 crore. For the full year, consolidated net profit increased 29.9% to Rs 112.9 crore while sales revenues increased 36.5% to Rs 1567.08 crore.

Deccan Chronicle Holdings rose 6.81% to Rs 185.90, after declaring a hefty 153.12% net profit growth for the March 2007 quarter to Rs 25.59 crore against Rs 10.11 crore during the quarter ended March 2006. Sales rose 64.86% to Rs 147.55 crore (Rs 89.50 crore).

India's wholesale price index rose 6.09% in the 12 months to 14 April 2007, unchanged from the previous week, and analysts said they expect it to dip below 6% in the coming weeks. This figure matched street expectations.

The market-wide rollover of the April derivative contracts to May contracts was around 70-72%, which is almost the same as for the previous expiry, but lower than the 12-month average. Many investors let their long positions expire as they do not expect the market to sustain its recent gains. Corporate results, FII inflows, RBI’s pause on rate hike and firm global markets helped the Sensex gain 1,773.51 points (14.2%) from a low of 12,455.37 on 2 April 2007. The Sensex had tanked 617 points in a single trading session, on 2 April 2007, following the Reserve Bank of India (RBI)’s surprise hike in interest rates after trading hours on 30 March 2007.

Bank of Japan (BoJ) on Friday left its key interest rate unchanged at 0.5% for the third meeting in a row, as expected, against a backdrop of lingering deflationary pressures.

Markets from Asia and Europe were trading weak. The Nikkei 225 Index was down 0.17% on Friday, as investors booked profits on tech shares such as Fanuc and other gainers ahead of holidays, offsetting gains in automakers that benefitted from a weaker yen. The Nikkei closed down 28.76 points, at 17,400.41. The Nikkei was little changed on the week, edging down just 0.3%. The Hang Seng Index lost 0.68%.

FIIs have pumped money heavily into Indian stocks, this month. Their inflow picked up after IT major Infosys on 13 April 2007, issued a strong guidance for FY 2008, putting to rest concerns of a US economic slowdown on the IT sector. FII inflow for April 2007 (till 25 April) reached Rs 6514.20 crore. FIIs had pulled out a net Rs 1082 crore in March 2007.

As per provisional data, FIIs were net sellers to the tune of Rs 89 crore on Thursday (26 April). Domestic institutional investors were net sellers to the tune of Rs 178 crore on Thursday.

US stocks gained on Thursday, as better-than-expected profits from such companies as 3M Co and Exxon Mobil Corp propelled the blue-chip Dow Jones Industrial Average to its second straight close above 13,000. The Dow finished up 15.61 points, or 0.12%, at 13,105.50. The Standard & Poor's 500 Index ended down 1.17 points, or 0.08%, at 1,494.25. The Nasdaq Composite Index closed up 6.57 points, or 0.26%, at 2,554.46.

London Brent crude, currently seen as most representative of global oil prices, was up 17 cents at $67.82, supported by a slew of refinery outages in the United States that have thinned gasoline stocks.

Meanwhile, India joined the elite trillion-dollar economy club this week, but a danger of overheating remains. Some analysts believe it may not remain a member of the rarefied pack for long, at least in the short run.

A report from Credit Suisse pointed out that the development was largely a result of the rapid appreciation in the rupee, which strengthened to below 41 against the dollar on Wednesday. The Bombay Stock Exchange (BSE), with a capitalisation of $944 billion, is also inching toward the magic $1 trillion mark.

The other countries in the trillion-dollar club are the US, UK, Japan, Germany, China, France, Italy, Spain, Canada, Brazil and Russia.

“The UK is the only economy to stop being a trillion-dollar economy for a while after attaining the status for the first time,” the report said.

Credit Suisse said that for 10 economies that crossed the $1 trillion mark in GDP, stock markets rose the year afterward in eight.