Political worries puncture early rally

The market saw a complete trend reversal in late afternoon trading today, 23 August 2007. Boosted by strong Asian and European markets, the market was firm till early afternoon trade. It, however, faltered in afternoon trade on a sudden sell-off due to political uncertainties.

Volatility was intense throughout the day, with the market swinging between positive and negative zone

The BSE 30-share Sensex lost 84.68 points or 0.59% at 14,163.98. It had opened higher at 14,458.33 and advanced further to hit 14,544.93 as buying continued. From here, the benchmark index declined sharply to touch a low of 14,128.72.

At the day’s high, the Sensex had gained 306.27 points. At the day’s low, it had lost 119.94 points. The Sensex oscillated 426.21 points in the day.

From an all time high of 15,868.85 24 July 2007, the BSE Sensex is down 1704.87 points.

The S&P CNX Nifty slipped 38.20 points or 0.92% at 4,114.95. The Nifty August 2007 futures settled at 4113.80, a discount of 1.15 points as compared to spot closing.

The Central Committee of the CPI (M) today, 23 August 2007, endorsed the party Politburo's opposition to the Indo-US nuclear deal and authorised it to do whatever it can to block the deal. The Politburo had warned the government of serious consequences if it went ahead with negotiations with the International Atomic Energy Agency and Nuclear Suppliers Group.

If the communist allies of the ruling coalition decide to pull their support, the government will be reduced to a minority and that could trigger fresh elections.

The market breadth, indicating the overall health of the market, was strong on BSE till early afternoon session. But it turned weak later as small- and mid-caps succumbed to selling pressure. On BSE 1,749 shares declined as compared to 943 that rose, while 67 remained unchanged.

In the opening session, the market breadth was strong on BSE, with 1,129 shares advancing as compared to 271 that declined

The BSE Mid-Cap Index was down 0.88% to 6,105.11, while the BSE Small-Cap Index declined 1.25% to 7,424.39. Both these indices were sharply off from their day’s high of 6,285.19 and 7,679.04, respectively

Most sectoral indices on BSE settled lower. The BSE Metal index (down 0.88% to 9,992.40), BSE Realty index (down 0.80% to 6,752.71), BSE PSU index (down 1.47% to 6,477.17), BSE Oil & Gas index (down 1.68% to 7,385.15), BSE Bankex (down 2.21% to 7,224.29), BSE Health Care index (down 1.15% to 3,386.60) and BSE Auto index (down 0.23% to 4,463.46), underperformed the Sensex.

BSE Consumer Durables (down 0.18% to 3,961.50), BSE TECk index (down 0.17% to 3,416.10), BSE FMCG Index (up 1.11% to 1,862.39), BSE IT index (up 0.18% to 4,356.28), BSE Capital Goods index (down 0.49% to 12,336.67) outperformed the Sensex.

The total turnover on BSE amounted to Rs 4779 crore as compared Rs 4404 crore on Wednesday, 22 August 2007. The NSE F&O turnover was Rs 56,000.15 crore as compared to Rs 51,749.7 crore on Wednesday, 22 August 2007.

Among the 30-member Sensex pack, 15 advanced while the other 15 slipped.

India’s third largest pharma company in terms of sales Cipla slumped 4% to Rs 168.50 on 6.48 lakh shares, slipping sharply from the day’s high of Rs 179.95. It was the top loser from the Sensex pack.

Banking and financial shares came under selling pressure. State Bank of India (down 3.10% to Rs 1412.80, off the session’s high of Rs 1500), ICICI Bank (down 2.45% to Rs 826, off the session’s high of Rs 869), HDFC Bank (down 1.27% to Rs 1105, off day’s high of Rs 1159.70) ended in red.

Reliance Energy (down 2.60% to Rs 706) and ONGC (down 2.20% to Rs 791 were the other losers from the Sensex pack.

India’s top car maker Maruti Udyog advanced 2.39% to Rs 785 on 2.05 lakh shares. It was the top gainer from the Sensex pack. Earlier this week a foreign brokerage recommended buy rating on the stock with a target of Rs 1050.

Cement stocks rose following Swiss cement major Holcim’s open offer to acquire an additional 20% stake in Ambuja Cement, India’s second largest cement producer by sales.

ACC (up 2% to Rs 972), UltraTech Cement (up 0.25% to Rs 855), Birla Corporation (up 6.83% to Rs 263.30), India Cements (up 3.90% to Rs 218.40), Ambuja Cement (up 1.15% to Rs 132), and Grasim Industries (up 0.85% to Rs 2749.95) ended higher.

Switzerland's Holcim today said it had acquired a 3.9% additional stake in Ambuja Cements from the founding families at Rs 154 share, in a deal worth $220 million.

FMCG stocks, considered as defensive in a volatile market held firm. ITC, the country’s biggest cigarette manufacturer, advanced 2.27% to Rs 162 on its plans to set up small-format stores in rural areas, on the lines of its existing hypermarket chain Choupal Sagar, by early next year. It also plans to raise the number of its fruit and vegetable outlets to about 200 in three years. ITC also plans to operate 50 of the Choupal Fresh stores by March 2008 in Hyderabad, Pune and Chandigarh.

Other FMCG stocks Tata Tea (up 2.80% to Rs 690) and Hindustan Unilever (up 1.43% to Rs 199) rose. On Wednesday, 22 August 2007, the BSE FMCG index had gained 2.38% to 1841.90

Bharti Airtel, the country’s largest listed mobile service provider, gained 1.22% to Rs 858 on reports it is looking to sell the management control of its passive infrastructure business, Bharti Infratel. As per reports, a clutch of private equity funds and Reliance Communications are in the race. Bharti Infratel is the largest tower infrastructure company in the country with over 40,000 towers.

India's largest engineering and construction firm by sales Larsen & Toubro was up 0.89% to Rs 2405.50 after company won a repeat order for construction of two ships from Netherlands's RollDock BV (erstwhile Zadeko Shipmanagement CV) of The Netherlands valued at over $70 million.

India’s leading power equipment maker Bharat Heavy Electricals slipped off its day’s high of Rs 1725, to settle 0.12% lower at Rs 1664.90. It had bagged contracts worth Rs 6500 crore for setting up power project units on Wednesday, 22 August 2007. The orders have been placed by Damodar Valley Corporation (DVC). The stock had lost 9.18% to Rs 1666.95 on 22 August 2007 from Rs 1765.45 on 23 July 2007.

Dr Reddy's Laboratories rose 1% to Rs 633. It had got an approval from the US Food and Drug Administration for cholesterol-lowering simvastatin tablets on Wednesday 22 August 2007. The stock lost 6.87% in the past month to Rs 626.75 on 22 August 2007.

IT stocks were mixed. Wipro (down 1.44% to Rs 447) and TCS (down 1.41% to Rs 1010), slipped. While Infosys (up 1.14% to Rs 1810), and Satyam Computers (up 0.84% to Rs 421), rose.

Reliance Industries (RIL), the country’s top private sector entity by market capitalisation and oil refiner, slipped 1.73% to Rs 1737.80 on 9.92 lakh shares. It had moved in a range of Rs 1732.10– Rs 1809.95. As per reports, RIL will foray into solar power generation through pilot projects that will supply electricity to a few villages in Maharashtra. In the next 8-12 months, pilots will be launched in 38 villages in Maharashtra.

Among the side counters, Rasoi (up 20% to Rs 295.20), Emkay Shares (up 9.68% to Rs 110), Sanghi Industries (up 9.66% to Rs 73.80), International Combustion (up 8.24% to Rs 375) and Sahara Housing (up 9.97% to Rs 75) surged.

RT Exports (down 11.19% to Rs 26.20), Ginni Silk Mills (down 13.92% to Rs 25), Jai Corp (down 5% to Rs 5935.25), Era Construction (down 5% to Rs 492.65), and Saregama (down 9.98% to Rs 221.45) declined.

Real-estate stocks advanced on fresh buying after the recent sharp fall. Ansal API (up 2.20% to Rs 252.70), Indiabulls Real Estate (up 0.13% to Rs 460.50), Omaxe (up 9.81% to Rs 301), and Sobha Developers (up 1.83% to Rs 748.80) were up. The BSE Realty index had lost 16.56% to 6,806.90 on 22 August 2007 from 8,379.28 on 23 July 2007.

Three block deals of 23.07 lakh shares each were struck on the Bank of Maharashtra counter on BSE at average price of Rs 48.18 per share in opening trade. The stock slipped 0.10% to Rs 48.10 on high volume of 70.19 lakh shares.

Asian Granito India settled at Rs 94.75 on BSE, a discount of 2.3% over the IPO price of Rs 97. The stock debuted at Rs 100.15, hit a low of Rs 82.10 and high of Rs 103.35. On BSE, 1.42 crore shares changed hands in the counter. Asian Granito India's IPO had ended on 31 July 2007 with 4.51 times subscription.

Easun Reyrolle rose 1.25% to Rs 209.85 after the company's board approved raising long term funds. The funds will be raised in Indian and or international markets by issue of equity shares/GDRs/ADRs/FCCBs/convertible bonds.

BPO firm Firstsource Solutions was up 0.10% to Rs 70.55 on reports of it emerging as the front-runner to acquire US-based MedAssist Inc. which provides a range of healthcare and related services.

Birla Kennametal rose 4.55% to Rs 255 after its board of directors at its meeting held on 22 August 2007 approved the sub-division of each of 1 (one) existing share of Rs 10 each into 5 (five) shares of Rs 2 each. The company made this announcement after market hours on Wednesday, 22 August 2007.

Godfrey Phillips India was up 0.64% to Rs 1250. It turned Rs 25 per share ex-dividend from today. It has a face value of Rs 10 per share.

Grindwell Norton had declined 4% to Rs 142.75 after it decided to sell its stake in Lincoln Hellos India to its joint venture partner, Lincoln GmbH for Rs 100 crore.

ITD Cementation India surged 14.69% to Rs 462.95 its joint venture with its promoter, Italian-Thai Development Public Company, Thailand, was awarded a Rs 893-crore contract by the Delhi Metro Rail Corporation.

All the Asian markets, which opened before the Indian markets, settled higher. At its meeting today, the Bank of Japan left interest rates unchanged at 0.50%, the lowest among major economies. The BOJ had last raised interest rates in February 2007.

Hang Seng (up 2.77% at 22,966.67), Japan's Nikkei (up 2.61% at 16,316.32), Taiwan Weighted (up 2.82% at 8,732.84), Singapore's Straits Times (up 1.49% at 3,370.91), and South Korea's Seoul Composite (up 2.29% at 1,799.72) edged higher.

China's benchmark Shanghai Composite Index surpassed the 5,000-level for the first time today, 23 August 2007 as bullish investors snapped up blue chips on a strong outlook for corporate earnings. The Shanghai Composite Index settled 1.05% or 52.41 points higher to 5,032.49. It also hit an all-time high of 5,050.38 in intra-day trade. The Shanghai Composite Index has gained 88% since the beginning of the year.

All the European markets, opened after the Indian markets, were trading higher today. Key European indices in Germany, France and UK were up between 0.70% and 0.90%.

US stocks rose on Wednesday, 22 August 2007, as takeover activity resurfaced and credit markets stabilised, luring investors back into riskier assets such as equities.

The Dow Jones Industrial Average jumped 145.27 points, or 1.11%, to 13,236.13. Broader stock indicators jumped as well. The Standard & Poor's 500 index rose 16.95 points, or 1.17%, to 1,464.07, while the Nasdaq Composite index gained 31.50 points, or 1.25%, to 2,552.80.

Crude oil prices rebounded from lower levels on Thursday, 23 August 2007, as world stock markets rallied on hopes that the worst of the credit squeeze may be past and traders braced for supply delays in the wake of Hurricane Dean. US crude rose 29 cents to $69.55 a barrel, while Brent crude gained 16 cents to $68.86 a barrel.