The market extended its recent slide due to lack of buying support, as investors watched from the sidelines ahead of major local and global events scheduled later in the week. The Sensex lost over 100 points on the back of a fall in IT, telecom, banking shares, and two-wheeler makers. A slide in heavyweight Reliance Industries (RIL) also contributed to the fall of the barometer index. Subdued Asian and European stocks also were of not much help.
The market-breadth was quite weak. Against 1,673 scrips that declined on BSE, 891 shares rose. A total of 72 scrips were unchanged. Losers outpaced gainers by a ratio of 1.87:1.
The 30-share BSE Sensex lost 113.79 points (0.82%), at 13,765.46. The market was volatile. The BSE Sensex lost steam in early afternoon trade after surging 77.15 points, to 13,956.40, by 10:53 IST. Earlier, the Sensex had come off the lower level after an initial 63.06-point slide.
The S&P CNX Nifty lost 34.15 points (0.83%), to end at 4,077. Nifty May futures provisionally ended at 4,056.90, a discount of 20.10 points over the spot price.
All sectoral indices of BSE ended in the red. The IT Index lost 80.58 points (1.61%), to 4,932.89, and the BSE Tech Index, a free float index comprising IT, telecom and media, lost 49 points (1.32%) to 3,655.54. The Bankex shed 68.03 points (1%), to 6,752.64. The BSE Healthcare Index lost 39.35 points (1.05%), at 3,697.17. The BSE Auto Index had shed 59 points (1.17%), at 4,980.06.
Small-cap as well as mid-cap indices lost ground. The BSE Small-Cap Index shed 80.86 points (1.15%), to 6,939.25. The BSE Mid-Cap Index lost 64.54 points (1.1%), to 5,779.82.
The BSE clocked a turnover of Rs 4261 crore, compared to Monday's Rs 4497 crore.
European shares opened subdued. Key benchmark indices in London, Germany and France were down 0.5 - 0.9%. Asian stocks gave up early gains on Tuesday, as nervous investors worried whether a global rally will run out of steam. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan were down 0.07 – 1.1%.
The Dow closed at a record on Monday (7 May) for the fifth day in a row, buoyed by Alcoa's $27 billion bid for Alcan. Alcoa, the world's largest aluminum company, pushed the Dow and the S&P 500 higher with a gain of 8%, leading the latest round of takeover deals that have lifted the market in recent months. The Dow gained 48.35 points, or 0.36%, to end at a record of 13,312.97. Earlier, the Dow also hit an all-time intraday high of 13,317.69. The Standard & Poor's 500 Index advanced 3.86 points, or 0.26%, to finish at 1,509.48, off a fresh 52-week high at 1,511.00. But the Nasdaq Composite Index dipped 1.20 points, or 0.05%, to close at 2,570.95. Earlier, the Nasdaq also reached a new 52-week high at 2,580.06.
A spate of merger and acquisition activity, as well as increasingly eye-popping takeover bids have helped propel many global indices to record highs, supporting the view that the bull market has to run further. But economic news expected later in the week could inject some volatility into the global markets, with interest-rate decisions due in the euro zone, Britain and the United States. While no one expects a rate move by the US Federal Reserve, when it meets on Wednesday, investors are keenly awaiting the central bank's latest assessment of the world's biggest economy.
The Bank of England is seen lifting rates to 5.5% on Thursday, a move that would put British interest rates above those in the United States for the first time since January 2006. The European Central bank (ECB) is expected to hold its rates steady at 3.75% on Thursday, but signal a hike in June.
At home the key event to watch out for is the outcome of assembly polls in Uttar Pradesh (UP). Polling for the seventh and final phase of polls in Uttar Pradesh is under way (May 8) and counting of votes is due on 11 May 2007, with results expected the same day. The UP vote is seen as a barometer of national political trends.
The market drifted lower after a recent solid surge. From a peak of 14,228.88, the Sensex has lost 463.48 points at the current 13,765.46. A strong rebound on the domestic bourses had materialised as initial Q4 March 2007 results trickled in strong, and after Infosys issued a strong guidance for FY 2008 on 13 April 2007. From 12,455.37 on 2 April 2007, the Sensex surged 1,773.51 points (14.2%) to 14,228.88 on 26 April 2007.
India's long-term growth prospects remain strong. The long-term growth drivers are a favourable demography (large share of young population), robust domestic consumption and acceleration in infrastructure creation.
In today's trade, State Bank of India (SBI) led a fall in PSU banks. SBI shed 3.5% to Rs 1079. India's largest commercial bank unveils its FY 2007 (year ended 31 March 2007) results on Saturday (11 May 2007). Among other PSU banks, Bank of Baroda lost 2% to Rs 189, Vijaya Bank shed 2% to Rs 47.50, Bank of India eased 2% to Rs 189, and Bank of Baroda was down 1.5% to Rs 236.60.
ACC rose nearly 3% to Rs 887. Swiss cement maker Holcim had acquired an additional 3% stake in ACC, bringing its total stake to around 41%. Holcim today acquired 58.59 lakh shares of ACC, constituting a little above 3% equity of the company through a block deal executed on NSE for a weighted average price of Rs 899.07.
An overnight fall in ADRs and a rising rupee weighed on IT bellwether Infosys. The stock was down 1.8% at Rs 2002. On Monday, Infosys' ADR lost 3.6% to $51.92. Infosys enjoys 11% weightage in the benchmark Sensex.
Among other IT pivotals, Wipro shed 1.7% to Rs 545, TCS was down 0.7% to Rs 1268, and Satyam Computer shed 0.8% to Rs 456.55. The rupee was headed towards a nine-year high against the dollar on Tuesday. In early trade, the partially convertible rupee was at 40.755/765 per dollar, up from Monday's close of 40.87/89. The rupee's surge is a cause of concern for IT firms, as it directly impacts their revenue and profits, a lion's share of which is accounted for by exports.
Telecom shares dipped on profit-taking. Bharti Airtel shed 1.5% to Rs 809.80 and Reliance Communications lost 1.3% to Rs 460.20. RIL shed 0.8% to Rs 1592, off an early high of Rs 1614.60. A strong 6.6 lakh shares changed hands in the counter on BSE.
Two-wheeler makers drifted lower. Hero Honda lost 3% to Rs 681.85 and Bajaj Auto shed 1.3% to Rs 2534.
Tech Mahindra lost 4.6% to Rs 1550, in volatile trade. Tech Mahindra's consolidated net profit (excluding exceptional items) jumped 120% in Q4 March 2007 at Rs 196.1 crore compared with Rs 89.1 crore in the corresponding quarter of the previous financial year. Revenue surged 108% to Rs 874.5 crore compared with Rs 421.2 crore in the fourth quarter of the previous year. Tech Mahindra incurred a one-time exceptional charge towards an upfront payment of Rs 524.9 crore to a customer and has reported a net loss of Rs 328.9 crore in Q4 March 2007.
Maruti Udyog (MUL) shed 1% to Rs 797 in volatile trade. Maruti Udyog (MUL) on Monday launched its much-awaited sedan, SX4. Powered by its new global `M' series engine and built on a brand new platform, SX4 comes with two variants priced at Rs. 6.18 lakh and Rs. 6.89 lakh (ex-showroom Delhi). MUL has despatched 1,500 units of SX4 and has decided to gradually roll out the vehicle across the country.
L&T rose 0.39% to Rs 1701, after securing an order valued at Rs 215 crore from the Abu Dhabi Water & Electricity Authority for the supply and installation of 33 kV power cables and fibre optic cables for inter connections between various substations in the eastern region of Abu Dhabi area. The contract will be executed within 18 months.
National Aluminium rose 2.5% to Rs 258.50, on hopes of a global consolidation in aluminium sector after ALCOA on Monday announced a hostile bid for Canadian rival Alcan, saying the acquisition would create the world's biggest aluminium company. But Hindalco (down 0.1% to Rs 144.80) failed to sustain a higher level. The stock had risen as much as 2.4% to Rs 148.50 in early trade.
Thomas Cook India surged for the second day in a row after the company late last week set 21 May 2007, as record date for a liberal 10-for-1 stock-split. The stock jumped almost 5% to Rs 592.40. But it pared gains from a 10% intra-day surge, to Rs 622.20.
Dabur India dropped 1.7% to Rs 94.80. The company today reported 31% growth in net profit in the March 2007 quarter at Rs 65.70 crore (Rs 50.22 crore). Net sales surged 33.6% to Rs 444.76 crore from Rs 332.69 crore.
Moser Baer lost 0.4% to Rs 361. Moser Baer Photo Voltaic, the wholly owned subsidiary of the company, has tied up with International Finance Corporation (IFC) for a Rs 100 crore funding.
Credit ratings agency ICRA dropped 6.5% to Rs 898. The stock was volatile. It came sharply off a higher level from an intra-day 3.5% surge. As many as 27.3 lakh shares changed hands in the counter on BSE. The stock had spurted 17.4% on Monday (7 May) on a huge volume of 43.2 lakh shares on BSE.
Nagarjuna Fertilisers dropped 6% to Rs 19.10, after NSE barred further positions in its derivative contracts as 95% of marketwide limit had been reached. The stock spurted over the past few days on high volumes.
GAIL (India) dropped 4.5% to Rs 293. The Dabhol power plant is expected to switch from naphtha to natural gas by June, when GAIL (India) expects to complete a pipeline to supply the fuel. The 576 km (358 mile) pipeline will transport gas from Dahej to the power plant at Dabhol. GAIL said that on Monday it had commissioned the first phase of the pipeline, which is 100 km long. The pipeline, expected to cost Rs 3200 crore, will be able to transport 12 million cubic metres of gas a day.
Marico was flat at Rs 55.50, despite reports that it was set to hike hair oil product prices by 7%.
Reliance Capital rose 3.5% to Rs 769.10, boosted by a media report that Blackstone Group and Schroders were keen to buy a small stake in Reliance Mutual Fund, a unit of Reliance Capital.
Shrenuj & Company jumped almost 7% to Rs 47.50, on buying out Simon Golub & Sons Inc., a US-based jewellery distributor, for $22.7 million.
Kavveri Telecom Products jumped 7% to Rs 58, after the firm said it was expecting orders worth Rs 50 crore from Ericsson India, over three years.
Indus Fila dropped nearly 1% to Rs 162, even as the company on Monday reported a 406% growth in net profit in FY 2007 (year ended 31 March 2007) to Rs 26.14 crore (Rs 5.16 crore). Net sales rose 226% to Rs 268.94 crore (Rs 82.49 crore).
Subex Azure dropped 1.8% to Rs 643, even as the telecom software firm said it expected to convert 40% of the current year's order pipeline worth $310 million into firm orders.
DMC International jumped 5% to Rs 44.25, after the financial services firm said its board would meet on 14 May 2007, to consider an issue of bonus shares.
Mid-Day Multimedia plunged 9% to Rs 47.25, after the newspaper publisher posted a net loss of Rs 2.89 crore, which includes an extraordinary item of Rs 2.66 crore for the March 2007 quarter compared with a net profit of Rs 3.98 crore in the March 2006 quarter.
Syschem India lost 4.7% to Rs 1.42. The company said on Monday its board had approved consolidating 10 shares of Re 1 face value each into a share of Rs 10 each.
Finance minister P Chidambaram said on Tuesday that steps taken by the central bank and government will help moderate inflation. Chidambaram said the current high rate of inflation was triggered by hardening of commodity prices, particularly of metals and crude oil, supply-demand mismatch -- first in sugar, then in wheat and now in pulses, increase in money supply due to capital inflow and increase in demand as a result of rise in public expenditure.
The long-term solution to bring down inflation is to correct the supply-demand mismatch, created mainly due to stagnation in production of wheat, paddy and pulses, he said. The Finance Minister said, during the past nine years inflation has been in highs and lows. However, the difference in inflation rates during the NDA and the UPA regime is the economic growth factor, he said, adding average growth during the NDA rule was 5.8% while it was 8.6% during the three years of the UPA rule.