IT, auto stocks lead fall as Sensex sheds 75 points

The benchmark index, BSE Sensex, which had surged to highest level above 14,650 in nearly four months since 9 February 2007, at the onset of the trading session started declining since afternoon trade. Selling accentuated at the fag end of the trading session. A sharp fall in Chinese markets weighed on domestic bourses today. Auto and IT pivotals declined while shares from metal and banking sector edged higher.

Sensex lost 74.98 points, or 0.51%, to settle at 14495.77. In opening trade, it had surged to an intra-day high of 14,683.36, buoyed by strong global markets and sustained buying from FIIs and mutual funds. This is Sensex's highest level in nearly four months since 9 February 2007. The market had pared gains shortly after a firm opening. Sensex hit a low 14,465.68.

Sensex all time high is at 14,723.88, struck on 9 February 2007.

The S&P CNX Nifty which had advanced above the 4,350 level, to strike an all time high of 4,362.95, in opening session, settled with 30 points, or 0.70% loss at 4,267.05

The total turnover on BSE amounted to Rs 3745 crore. Turnover on NSE's futures & options segment totaled Rs 28727.23 crore

Market breadth was negative on BSE, with 1398 shares declining as compared to 1172 that advanced. 95 remained unchanged. The breadth turned negative in early afternoon trade from a strong breadth at the onset of the trading session. In morning session, there were over 2 gainers for every loser on BSE.

The BSE Small-Cap Index was down 0.10% to 7,466.77, while the BSE Mid-Cap Index lost 0.49% at 6,233.58.

Among the Sensex pack, 19 declined while the rest advanced.

Aluminium and copper major Hindalco Industries surged 4.01% to Rs 146.65 on high volume of 59.57 lakh shares, tracking firm global copper prices. It surged to a high of Rs 156.25, in intra-day trade. As per reports Hindalco and Sterlite Industries, are in talks with global firms to separately bid for Canada's Alcan. Sterlite's parent Vedanta Resources Plc was in advanced talks with global miner Rio Tinto to form a special purpose vehicle to bid for the aluminum major. While London-based Vedanta is likely invest $3-$4 billion and Rio Tinto could put in $10-$12 billion in the joint venture.

State Bank of India (SBI) advanced 2.02% to Rs 1405.90 on 6.59 lakh shares. It also surged to an all time high of Rs 1418.90, in intra-day trade. The government appears set to promulgate an ordinance to close the largest ever acquisition involving the transfer of Reserve Bank of India's 59.7% stake in State Bank of India to the Centre in a deal worth nearly Rs 40,000 crore. The government will value the 31.43 crore SBI shares, which have a face value of Rs 100 each, held by RBI at the average closing price for six months.

As per reports, the finance ministry will seek the Cabinet's approval over the next couple of weeks to ensure that the Centre hands over the cheque to RBI on 29 June 2007, a day before RBI closes its annual books of accounts.

Other shares from the banking and financial sector also advanced on renewed buying, after fears of hike in CRR eased. HDFC Bank (up 1.05% to Rs 1165), HDFC (up 0.71% to Rs 1875), and ICICI Bank (up 0.42% to Rs 932), edged higher.

Led by SBI, the BSE Bankex rose 0.8% at 7,741.56.

Tata Motors slumped 4.97% to Rs 710 on 6.82 lakh shares, and was the top loser from the Sensex pack. Tata Motors’ sales declined 4% to 42,558 units May 2007. Commercial vehicle (CV) sales declined to 20,675 units in May 2007 from 21,903 units in May 2006. Passenger vehicle sales were down 3% at 17,580 units in May 2007. It slipped to a low of Rs 710.20.

Led by fall in Tata Motors, the BSE Auto Index shed 1.63% to 4,948.37. It was the top loser among the sectoral indices on BSE.

Hero Honda Motors declined 0.56% to Rs 713.10, after its May 2007 sales declined 6% to 2,85,109 units from 3,03,444 units in May 2006.

Pune headquartered Bajaj Auto slipped 0.95% to Rs 2214 after its bike sales (including exports) dipped 15% at 1,67,008 units in May 2007 from 1,96,120 units in the same month last year. Three-wheeler sales were flat at 24,110 units (24,029). The company’s exports, however, were up 53% at 49,203 units against 32,179 units in the same month last year.

Cipla (down 3.39% to Rs 216.60), Grasim (down 3.25% to Rs 2438.05), and Bhel (down 3.14% to Rs 1370), were the other losers from the Sensex pack.

IT pivotals stayed weak, as they did over the past few weeks, as selling continued. The BSE IT Index lost 1.3% to 4,846.50.

Satyam Computers (down 2.10% to Rs 468.50), TCS (down 1.21% to Rs 1204.35), Infosys (down 1.45% to Rs 1912) and Wipro (down 2.37% to Rs 531.25) slipped.

IT stocks have not performed in the market's recent surge due to stronger rupee. A rise in the rupee directly impacts revenue and profit of IT firms, which derive a lion’s share of revenue from exports to the US. The Indian rupee headed towards last week's nine-year high on Monday, 4 June 2007, spurred by capital inflows and positive cues from most Asian currencies.

Index heavyweight Reliance Industries (RIL) slipped 0.76% to Rs 1737 on 3.66 lakh shares. As per reports, it has inked a pact with Gas Authority of India (GAIL) to supply, transport and market gas. Under the agreement, RIL would be allowed to use state-run GAIL's pipeline network in states such as Andhra Pradesh and Madhya Pradesh. In return, GAIL would get to market a portion of RIL's gas from the Krishna-Godavari basin. The two companies have not made a decision on the price of the gas.

Meanwhile, as per reports, RIL’s retail venture - Reliance Fresh which has set up 157 outlets in 18 states, is all set to put up 100 stores in Mumbai.

Asahi Songwon Colors settled at Rs 89.95, a marginal discount over its IPO price of Rs 90 per share. On BSE, 62.91 lakh shares were traded in the scrip. The scrip listed on BSE at Rs 93 and moved in a range of Rs 87.65 to Rs 134.70. The company had priced its IPO at the lower end of the Rs 90 – Rs 108 per price band. The IPO was subscribed 1.85 times.

Reliance Capital was the top traded counter on BSE with turnover of Rs 143.80 crore followed by MIC Electronics (Rs 139.60 crore), Indiabulls Real Estate (Rs 103.50 crore), State Bank of India (Rs 97.30 crore) and Hindalco Industries (Rs 92.40 crore).

Reliance Natural Resources (RNRL) led the volumes chart on BSE with 1.23 crore shares followed by Asahi Songwon Colors (63 lakh shares), Hindalco (61.50 lakh shares), Nagarjuna Fertilisers (54.80 lakh shares) and Mangalore Chemicals (44.70 lakh shares).

Metal stocks advanced on renewed buying, following firm metal prices on London Metal Exchange (LME). The BSE Metal index surged 166 points or 1.59% to 10,634.17, and was the top gainer among sectoral indices on BSE.

Hindalco Industries (up 4.01% to Rs 146.65), Tata Steel (up 0.10% to Rs 635.25), SAIL (up 0.10% to Rs 138.75), Jindal Steel & Power (up 10.57% to Rs 3660) and Jindal Saw (up 1.55% to Rs 583), edged higher.

Shares of refining companies declined after they slashed jet fuel (aviation turbine fuel — ATF) prices by 1.9%, the first reduction since February 2007. Hindustan Petroleum Corporation (HPCL) (down 3.60% to Rs 285.10), IOC (down 3.92% to Rs 447), Bharat Petroleum Corporation (BPCL) (down 1.38% to Rs 354) declined. Other refinery stocks like Bongaigaon Refinery and Petrochemicals (down 1.68% to Rs 49.70), Chennai Petroleum (down 0.81% to Rs 247), and MRPL (down 2.65% to Rs 40.65) also declined.

Oil firms had raised jet fuel prices for three consecutive months since February 2007. Public sector companies—Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) —-revise ATF prices on the first of every month in line with movement in international prices.

However aviation stocks advanced, as ATF prices account for about 45% of the operational cost of an airline firms. Jet Airways (up 1.80% to Rs 796.65), and Jagson Airlines (up 7.44% to Rs 21.65), edged higher.

Uttar Pradesh-based sugar companies' shares were down sharply after the newly elected government in the region withdrew an incentive scheme for sugar mills. Balrampur Chini Mills (down 4.16% to Rs 73.70), Bajaj Hindusthan (down 5.57% to Rs 165.20), Dhampur Sugar Mills (down 2.67% to Rs 67.35) and Triveni Engineering & Industries (down 4.22% to Rs 53.40), edged lower. The newly elected Mayawati government in Uttar Pradesh on Friday, 1 June 2007, decided to do away with the Mulayam Singh administration’s Sugar Policy 2004 on the grounds that it was not comprehensive.

Bajaj Hindusthan said on Monday, 4 June 2007, the cancellation of the Uttar Pradesh sugar policy 2004 would have a significant adverse impact on its financials. It said it could not yet quantify the impact, adding it had not heard from the government on the issue.

SREI Infrastructure Finance surged 10% to Rs 94.75 triggered by its alliance with BNP Paribas Lease group for equipment finance in India. With today’s surge, the SREI scrip has advanced 50% in the past three trading sessions after the news hit the markets during trading hours on Thursday, 31 May 2007. The alliance involves setting up of a new 50:50 joint venture (JV) company. The joint venture would be formed with an initial networth of Rs 800 crore.

Logix Microsystems jumped 5% to Rs 268.80 as its US subsidiary izmocars was selected by Earnhardt Automotive Centers to develop customized online stores and internet sales solutions and also offer internet sales training to a number of Earnhardt's dealerships. Earnhardt sells over 27,000 cars a year and has market dominance in the southwestern United States.

Rain Calcining jumped 20% to Rs 42.50 after it announced acquisition of a US based firm for $595 million. Rain Calcining said on Saturday, 2 June 2007, it had agreed to acquire US-based CII Carbon LLC for $595 million in an all cash deal, making the combined entity the world's largest maker of calcined petroleum coke. Calcined petroleum coke is a pure form of carbon used in steel and aluminium industries. The two companies would have total production of more than 2.4 million tonnes and annual sales of $550 million.

Fortis Healthcare jumped 5.01% to Rs 92.30 on reports it had entered into an agreement with DLF for floating a joint venture to set up hospitals across the country with about Rs 6,200 crore of investments. Fortis will have a majority holding with 74% stake and the rest will be with DLF in the proposed joint venture. The JV plans to set up a chain of 200-450 bed hospitals in 31 cities in India within three to five years.

Greenply Industries gained 1.82% to Rs 140, after the plywood maker reported a 78% jump in net profit in Q4 March 2007 to Rs 6.72 crore from Rs 3.77 crore in Q4 March 2006. Sales moved up 51.62% to Rs 110.61 crore (Rs 72.95 crore). The net profit rose 59.83% to Rs 22.52 crore in FY 2007 as against Rs 14.09 crore FY 2006. Sales rose 40.30% to Rs 392.20 crore (Rs 279.54 crore).

Mount Everest Mineral Water declined 5% to Rs 124.95 after Tata Tea decided to acquire controlling stake in the company. On Friday, 1 June 2007, the board of Mount Everest Mineral Water approved the issue and allotment of 50.99 lakh shares to Tata Tea at a price of Rs 140 per share on preferential allotment basis.

Hindustan Zinc rose 4.21% to Rs 675 after the company, on Saturday, 2 June 2007 raised zinc price by 1.5% to Rs 1.68 lakh per tonne and lead prices were raised by 2.4% to Rs 1.04 lakh per tonne.

Glenmark Pharmaceuticals rose 1.53% to Rs 713, after the company said its board will meet on 11 June 2007 to consider stock split proposal.

Ashapura Minechem rose 5% to Rs 291.95 on getting approval from the Development Commissioner, Kandla Special Economic Zone, Gandhidham, Kutch, to set up two 100% export oriented units (EOUs) for processed bauxite at Jamnagar. These permissions are valid upto 20 May 2012 and 16 May 2012 for the two different EOUs.

Chinese stocks fell sharply on Monday, 4 June 2007, following government efforts to cool a market boom that authorities worry could create a dangerous price bubble. The benchmark Shanghai Composite Index was down 8.26% at 3,670.41 after a 2.7% decline on Friday, 1 June 2007.

The Chinese government had raised taxes on trading last week in an effort to cool a frenzied market that by last week had pushed up prices more than 50% before they began to decline. Even with today’s fall, the Shanghai market is still up more than 40% since the start of the year after rising 130% in 2006.

Most of the other Asian market held gains. Hang Seng index rose 126.72 points or 0.62% to 20,729.59 while Nikkei 225 index gained 14.54 points or 0.08% to 17,973.42

However, all the European indices were trading with losses.

Wall Street carved out a solid advance on Friday, 1 June 2007, after data on job creation, manufacturing and inflation injected the market with renewed confidence about the economy and sent major indexes to record closes. The Standard & Poor's 500 index was the biggest gainer among the major indicators and moved toward its all-time high.

The Dow Jones industrial average advanced 40.47 points, or 0.30%, to 13,668.11, with the Dow closing on all time high for the 26th session in the year. The Dow also set a fresh intra-day high of 13,692

Broader stock indicators also gained Friday to end a week that saw stocks advance amid a bevy of favorable economic figures and the continued hum of corporate takeover activity. The Standard & Poor's 500 index rose 5.72 points, or 0.37 %, to 1,536.34. The S&P traded as high as 1,540.56 and advanced toward its record trading high of 1,552.87 set in March 2000.

Oil prices slipped on Monday, 4 June 2007, after three days of gains as a major US gasoline pipeline resumed pumping and some Nigerian militants called a one-month truce, although analysts saw little to suggest an end to 18 months of violence.

London Brent crude, currently seen as a better gauge of global oil markets, fell 31 cents to $68.76. US light, sweet crude fell 40 cents to $64.68 a barrel.

FIIs bought shares worth a net Rs 482.40 crore on Friday, 1 June 2007.