Market tumbles on weak global equities

The markets which were steady till early afternoon trade, started declining in early after-noon trade, as fresh selling emerged. The fall kept on accentuating as the day progressed, with shares across the board seeing intense selling pressure. As per market talks, there was basket selling in Nifty stocks by a couple of foreign brokerages. Cues from the global markets were not encouraging either. A broad based decline in European shares weighed on domestic bourses.

The 30-share BSE Sensex was down 277.74 points or 1.91% to 14,257.27, as per provisional closing. It opened higher at 14,551.53 and advanced to a high of 14,590.82, as buying interest continued for index pivotals. Sensex plunged to a low of 14,234.07, at the fag end of the day.

Index heavyweights suffered collateral damage. Shares that were leading the markets, in the earlier part of the day, could not withstand the fall and succumbed to selling pressure to finish with losses. Reliance Industries (RIL) and Oil & Natural Gas Corporation (ONGC), which have substantial weightage in key indices, Sensex & Nifty, dragged the market lower.

RIL lost 3.50% to Rs 1683.90, on 9.66 lakh shares. It slipped sharply from a high of Rs 1752. The government on Tuesday, 5 June 2007, approved RIL’s Haryana special economic zone, proposed to be spread over 10,000 hectares.

ONGC shed 3.17% to Rs 865.50 on 3.23 lakh shares. As per reports, Norwegian company Norsk Hydro is in talks with ONGC to pick up a share in the latter’s exploration block in the Krishna-Godavari basin. ONGC recently signed a major exploration deal with Brazilian company Petrobras, which also has a small stake in the block in which Norsk Hydro is interested.

The turnover spiked along with sharp fall. The total turnover on BSE amounted to Rs 5256 crore compared to Rs 4121 crore by 14:30 IST.

The market breadth, which indicates the overall health of the market, was quite weak as small-cap and mid-cap stocks succumbed to selling pressure. There were a little over 2 losers for every gainer on BSE. 1,733 shares declined as compared to 852 that advanced. 70 remained unchanged. This was in sharp contracts to that in morning session, when 895 shares had advanced and 631 declined.

Among the Sensex pack, 26 dipped and the remaining four advanced

Aluminium and copper major Hindalco Industries was up 2.23% to Rs 149.25 on 16.65 lakh shares. It was the top gainer from the Sensex pack. The market has been rife with speculation, this week, that Alcan may team up with Sterlite Industries to bid for Hindalco.

Wipro declined 0.73% to Rs 531.25 on total volumes of 50.79 lakh sharesh. Multiple block deals were struck on the Wipro counter, prominent being a block deal of 45.21 lakh shares executed at Rs 537.50 on BSE by 12:43 IST. It was the second most top traded counter on BSE with turnover of Rs 273.31 crore.

Reliance Communications rose 0.87% to Rs 515. Satyam Computers (up 0.36% to Rs 465) and Hindustan Lever (up 0.23% to Rs 196) were the other gainers.

Pharma major Ranbaxy Laboratories was the top loser among the Sensex constituents. It slumped 3.77% to Rs 377.50, on 1.72 lakh shares.

Banking stocks, which had performed well for previous two sessions, settled with losses, on profit booking. State Bank of India (down 3.22% to Rs 1390), ICICI Bank (down 2.81% to Rs 913), and HDFC Bank (down 2.12% to Rs 1135), declined.

Tata Motors shed 3.10% to Rs 689. As per reports, Tata Motors is planning to cut production of some trucks at its plant in Pune as higher interest rates, caused by rising inflation, force transport companies and tour operators to postpone or drop purchase plans.

Tata Motors recently had said that expensive vehicle loans led to fall in sales of its commercial vehicles by about 6% in May 2007 over that recorded in the same period last year. Sales of medium and heavy commercial vehicles, however, fell more sharply by about 17% in May. 2007.

Reliance Energy (down 3.04% to Rs 533.80), HDFC (down 3.04% to Rs 1840) and Bhel (down 3.15% to Rs 1338.90) declined on profit booking.

State-owned Steel Authority of India (Sail) plunged 5.07% to Rs 132 on reports it has cut prices of various products by up to Rs 300 per tonne. Prices have been lowered of galvanised products (GPGC), cold rolled (CR) steel and CR coils among other items. Sail also cut prices of pig iron, a major input for steel making, by up to Rs 500 per tonne. The new prices have come into effect from 5 June 2007.

Tata Steel slipped 3.60% to Rs 618.

There are concerns that investors may pull out funds from the secondary market to invest in IPOs, which are scheduled to hit the market later this month. Reality major DLF is mopping up between Rs 8,750 crore and Rs 9,625 crore at the proposed price band of Rs 500 - Rs 550 per share. DLF IPO opens for subscription on 11 June 2007 and ends on 14 June 2007.

ICICI Bank had, on 15 May 2007, filed a draft prospectus with Sebi to seek approval for raising Rs 17,500 crore through an equity issue in the domestic and overseas market.

All the European indices were trading with losses. They fell for a third day in a row on Wednesday as investors braced for possible warnings on eurozone inflation from the European Central Bank chief after a policy meeting later in the session. There are two seperate meetings of European Central Bank (ECB) and Bank of England (BOE) scheduled today. As per market expectations, ECB will raise interest rate to 4% from the present 3.75%, while BOE is expected to keep rates unchanged.

Most major Asian share markets inched lower and the dollar slipped on Wednesday, after comments from US Federal Reserve Chairman Ben Bernanke dashed hopes for an interest rate cut this year in Asia's top export market. Hang Seng was down 0.11% to 20,818.61 while Nikkei 225 index slipped 0.07% to 18,040.93.

The Shanghai Composite Index in China rose 0.24% at 3,776.37 after a strong intra-day rebound on Tuesday, 5 June 2007. Chinese stocks had recovered on Tuesday on market talks that the government would soon issue a policy statement designed to restore investor confidence. The Shanghai Composite Index has fallen more than 10% from a record high since Chinese authorities hiked a stock-trading tax a week ago to cool a market that had almost tripled in value over the past year.

US stocks edged lower on Tuesday, 5 June 2007, after comments from Federal Reserve Chairman Ben Bernanke and a strong reading on the service sector suggested the central bank has little reason to lower interest rates. The Dow fell 80.86, or 0.59%, to 13,595.46, after earlier falling more than 100 points. Broader indexes also retreated. The Standard & Poor's 500 index fell 8.23, or 0.53%, to 1,530.95, while the Nasdaq composite index shed 7.06, or 0.27%, to 2,611.23. Bernanke said inflation was still a major concern.

As per provisional data, FIIs were net sellers to the tune of Rs 148 crore on Tuesday, 5 June 2007. Domestic institutions were net buyers to the tune of Rs 48 crore on Tuesday.

Oil prices rose Wednesday, 6 June 2007, amid forecasts that the strongest storm to hit the Arabian Peninsula in 60 years was barreling toward Iran, a major oil producer, and the oil-rich Persian Gulf. Light, sweet crude for July delivery added 23 cents to $65.84 a barrel in Asian electronic trading on the New York Mercantile Exchange, mid-morning in Singapore. The contract had slipped 60 cents to settle at $65.61 a barrel Tuesday.