Market sees fourth straight session of losses on P-Note worries

The market posted losses for the fourth straight day, on sustained selling pressure triggered by worries that official attempts to moderate FII inflows would see foreigners pull out funds. The market declined sharply in first half of the trading session, but recovered some ground on value buying coupled with short covering at lower level later. Intense volatility was the hallmark of the day’s session, with the market swinging sharply. European markets and Asian markets were trading lower today, 19 October 2007.

India's wholesale price index rose 3.07% in the 12 months to 6 October 2007, lower than the previous week's 3.26% rise, government data released today afternoon showed. It was the lowest annual rise in 5 years.

The BSE 30-share Sensex settled 438.41 points or 2.44% lower at 17,559.98. It opened slightly higher at 18,031.77. It immediately stated declining sharply. Sensex hit a low of 17,226.18, on intense selling pressure. At the day’s low of 17,226.18, the Sensex had lost 772.21 points for the day. Sensex oscillated 805.59 points in the day.

The broader based S&P CNX Nifty lost 135.70 points or 2.54% at 5,215.30. The Nifty October 2007 futures settled at 5208, a discount of 7.30 points compared to spot closing

Sensex settled the week ended Friday, 19 October 2007 with a loss of 859 points or 4.7%. From an all time high of 19198.66 struck yesterday, 18 October 2007, the Sensex is down 1638.68 points.

The BSE Mid-Cap index was down 2.53% to 7,238.58 while the BSE Small-Cap index declined 3.07% to 8,800.32 today. Both these indices underperformed the Sensex.

All the sectoral indices on BSE posted losses. However BSE IT index was an exception.

BSE Auto Index (down 1.79% at 5,296.93), BSE Consumer Durables index (down 0.18% to 4,776.72), BSE PSU index (down 2.37% to 8,211.07), Bankex (down 2.18% to 8,837.55), BSE Health Care Index (down 1.61% at 3,714.90), BSE IT Index (up 0.21% at 4,685.91), and BSE TecK index (down 0.64% to 3,917.44) outperformed the Sensex.

BSE FMCG Index (down 3.05% at 2,021.67), BSE Capital Goods Index (down 4.41% at 15,429.29), BSE BSE Realty (down 3.51% to 9,053.64), BSE Oil and Gas Index (down 3.02% at 10,242.45), and BSE Metal Index (down 3.66% at 14,480.00), were underperformers.

The market breadth was quiet weak on BSE: 2,160 scrips declined as compared to 544 that advanced, while 35 remained unchanged. 21 of the 30 member Sensex pack declined.

The total turnover on BSE amounted to Rs 9611 crore as compared to record turnover of Rs 11,732.09 crore on Thursday, 18 October 2007.

The NSE F&O turnover was Rs 83,102.28 crore as compared to record turnover of Rs 110563.83 crore on Thursday, 18 October 2007.

FII selling hit the bourses for the third day in a row today following market regulator Securities & Exchange Board of India's proposals to clamp down FII inflow through the participatory notes (PN) route.

After trading hours on Tuesday, 16 October 2007, Securities & Exchange Board of India issued draft proposals wherein the market regulator proposed restriction on use of the popular participatory notes (PNs) route of FII inflow and it also recommended unwinding of some PNs within 18 months. PNs are financial instruments used by foreign investors that are not registered with Sebi, to invest in Indian shares. FIIs and their sub-accounts buy Indian securities and then issue PNs to foreign investors with these securities as the underlying.

Given the large scale of the aggregate PN holding relative to new flows, even a partial unwinding of positions can put considerable pressure on stocks such as Reliance Energy, Reliance Petroleum, ONGC, IndiaBulls Financials, IndiaBulls Real Estate and Axis Bank which have had a significant run-up in the past few weeks or have high share of PN in their foreign holding, brokerage CLSA said in a recent note.

Further, analysts reckon that with restriction on participatory notes, the near term FII inflow may be affected given that the participatory notes contributed substantially to FII inflows on the bourses over the past few months and it will take some time for the FIIs currently using the PN route to get registered with the market regulator.

Franklin Templeton Investment (FTI), which operates one of the leading mutual funds in India, however, feels that inflow to India from long-term global investors will not be impacted due to these measures given that India’s economic and corporate fundamentals remain robust.

India’s second largest power utility by net sales Reliance Energy was the top loser from the Sensex pack. It plunged 16.30% to Rs 1332 on 42.74 lakh shares. Yet, the stock recovered sharply from its day’s low of Rs 1272.

Hindalco Industries (down 6.39% to Rs 175), Maruti Suzuki India (down 6.77% to Rs 1071), and Bharat Heavy Electricals (down 5.65% to Rs 2059), were the other losers from Sensex pack.

India’s largest private company in terms of market capitalization and oil refiner Reliance Industries (RIL) was down 3.72% to Rs 2480, off sharply from its day’s low of Rs 2413.05. The stock clocked volumes of 23.35 lakh shares. It reported 27.9% growth in net profit to Rs 3837 crore on 6.6% growth in net sales to Rs 32,043 crore in Q2 September 2007 over Q2 September 2006. The results are after taking effect merger of IPCL in the company. RIL’s gross refining margin was a robust $13.6 a barrel in Q2 September 2007 compared to $9.1 in Q2 September 2006.

Though the results were strong, there was no announcement of stock split/bonus which weighed on the stock today. The market was agog with speculation that RIL could announce a bonus issue or stock split at the time of announcing the Q2 results. The results hit the market after trading hours on Thursday, 18 October 2007.

Reliance Communications, the country’s second largest listed telecom services provider in terms of market capitalisation was the top gainer from the Sensex pack. It surged 2.50% to Rs 729.50 on 71.86 lakh shares. The company said before market hours today, 19 October 2007, that it has obtained government approval to launch GSM services on a nation wide basis under its existing Unified Access Service Licenses.

Bajaj Auto, India’s second largest bike market by sales, rose 2.41% to Rs 2519.95. The stock came off day's low of Rs 2400. Bajaj Auto's net profit rose 6% to Rs 336 crore in Q2 September 2007 over Q2 September 2006. The results hit the market during trading hours today, 19 October 2007

Tata Steel (up 1.67% to Rs 850.10), Infosys Technologies (up 0.88% to Rs 1905) and ONGC (up % to Rs 1118) were the other gainers from Sensex pack.

India’s third largest software services exporter Wipro gained 0.78% to Rs 500. Wipro's consolidated net profit as per Indian GAAP rose 13.5% to Rs 823.70 crore on 13.1% rise in revenue to Rs 4,757.40 crore in Q2 September 2007 over Q1 June 2007. The results hit the market before trading hours today, 19 October 2007.

United Spirits was the top traded counter on BSE with total turnover of Rs 782.30 crore after 44.71 lakh shares change hands on the counter in a block deal on BSE at Rs 1652 per share by 12:12 IST.

Reliance Energy (Rs 594.25 crore), Reliance Industries (Rs 582.50 crore), HDFC (Rs 543 crore) and Reliance Communications (Rs 520.40 crore), were other turnover toppers on BSE.

Saamya Biotech was the volume topper on BSE with total volumes of 3 crore shares followed by Power Grid Corporation of India (2.72 crore shares), Reliance Natural Resources (2.63 crore shares), Reliance Petroleum (1.64 crore shares) and Tata Teleservices (Maharashtra) (1.59 crore shares).

Among the side counters, GL Hotels (up 10.61% to Rs 365), Shivam Auto (up 10.16% to Rs 97), Yuken India (up 8.44% to Rs 314), and Dalmia Cement (Bharat) (up 8.3% to Rs 1950), surged.

Prime Textiles (down 15.88% to Rs 20.40), Prajay Engineers Syndicate (down 11.49% to Rs 302), Union Bank of India (down 11.32% to Rs 151), and Dollex Industries (down 10.35% to Rs 86.30), slumped

Saamya Biotech (India) settled at Rs 15.30 on BSE, a premium of 53% over IPO price Rs 10. The stock debuted at Rs 17.50, a 75% premium over IPO price of Rs 10. The scrip hit a low of Rs 13.85 and high of Rs 24.35 during the day. On BSE, 3 crore shares changed hands in the counter.

Hero Honda Motors rose 3.51% to Rs 750. It reported 5.38% fall in net profit to Rs 204.33 crore on 5.4% rise in net sales to Rs 2352.09 crore in Q2 September 2007 over Q2 September 2006. The results were better than market expectations. The results announcement was made after the trading hours on Thursday, 18 October 2007.

KSL and Industries surged 9.84% to Rs 173 after it said on Thursday, 18 October 2007, its board approved alloting 2.17 million shares at Rs 253 each to four investors. The investors include Television Eighteen India and Bennett, Coleman & Company, it said in a statement.

Jagran Prakashan declined 1.14% to Rs 534. The company during the trading hours today, 19 October 2007, said its board will consider the sub-division of shares in a meeting to be held on 29 October 2007.

Himatsingka Seide rose 3.89% to Rs 109.05 on acquiring US based DWI Holdings Inc. for $30 million through its wholly owned subsidiary, Himatsingka America Inc. The announcement was made during the trading hours today, 19 October 2007.

VSNL surged 5.2% to Rs 515.85. It today announced expansion of its international in-roaming service on Wi-Fi with the addition of NTT, Japan. Starhub, Singapore, already utilizes the company's Wi-Fi network across India for its customers, the company said in a filing to the Bombay Stock Exchange.

Hexaware Technologies gained 5.2% to Rs 118.45. Its net profit rose 3% to Rs 26.92 crore on 3% fall in sales to Rs 254.62 crore in Q3 September 2007 over Q2 June 2007. The results were announced on Thursday, 18 October 2007.

Moser Baer India rose 3.5% to Rs 278.60 after the company said its board has approved the move to raise Rs 400 crore ($100 million) via the company's wholly-owned photovoltaic subsidiary. The investment will be made by a consortium led by IDFC Private Equity, GIC Special Investments, CDC Group PLC and Infrastructure Development Finance Company, Moser Baer said.

Orchid Chemicals gained 3.49% to Rs 229.70. The company on Thursday, 18 October 2007 reported, 114.8% growth in net profit to Rs 63.27 crore on 20.1% growth in net sales to Rs 295.13 crore in Q2 September 2007 over Q2 September 2006.

Britannia Industries edged higher by 3% to Rs 1400. The board of Britannia meets on 23 October 2007 to consider Q2 September 2007 results.

Omaxe slipped 3.15% to Rs 299.80 after National Stock Exchange barred further derivatives positions in the counter as 95% of marketwide limit was reached yesterday, 18 October 2007.

Arvind Mills lost 6.13% to Rs 62.75. As per reports, it has drawn up a blueprint to set up a chain of lifestyle formats straddling the entire spectrum of value retail, premium and luxury retail.

Aban Offshore shed 3.21% to Rs 3870.25. Aban Singapore, its wholly-owned subsidiary is slated to hit the Singapore stock exchange with India’s largest IPO abroad for a subsidiary company. The $4-billion company, which acts as Aban’s hub for its international activities, is to offload around 13-15% for $500 million, and the IPO is slated for December 2007.

Volatility is expected to remain high for in coming few days ahead of expiry of October 2007 derivatives contracts on Thursday, 25 October 2007.

Meanwhile, the finance minister P Chidambaram said after market hours yesterday, 18 October 2007 that Securities and Exchange Board of India (Sebi) can extend the 18-month window allowed for winding down of participatory notes already issued with derivatives as the underlying. Sebi will decide on 25 October 2007 on new rules to limit the use of offshore derivatives to invest in Indian stocks. He added that motivated rumours by Mumbai broker circles had brought down the stock market yesterday.

European markets opened lower today, 19 October 2007. Key benchmark indices in France (down 0.04% to 5,765.13), Germany (down 0.25 % to 7,901.39), and United Kingdom (down 0.12% to 6,601.13), slipped

Asian markets were trading lower today, 19 October 2007. Japan's Nikkei (down 1.71% at 16,814.37), Singapore's Straits Times (down 1.77% at 3,742.23), South Korea's Seoul Composite (down 1.75% at 1,970.10) and Taiwan's Taiwan Weighted (down 0.26% or 9,611.72) edged lower.

US markets ended mixed yesterday, 18 October 2007, after disappointing results from Bank of America Corp. provided further evidence that the credit crisis is hurting the economy. The Dow Jones Industrial Average slipped 3.58 points, or 0.03%, to 13,888.96. The Standard & Poor's index fell 1.16 points, or 0.08%, to 1,540.08. The technology-heavy Nasdaq Composite Index rose 6.64 points, or 0.24%, to 2,799.31.

Crude oil held firm within sight of its new $90 high on Friday, 19 October 2007, on rising fears over pre-winter fuel stocks lent support to an over 13% surge in under two weeks. US light crude for the soon-to-expire November contract rose 5 cents to $89.52 a barrel. The contract touched a record high of $90.02 in after-hours trade.