Sensex sheds 194 points on hike in CRR; auto shares skid

The market plunged deep in red in late trade in what was a choppy trade today. Earlier, the market had staged a solid recovery after an initial fall in early afternoon trade that was triggered by the Reserve Bank of India’s raising cash reserve ratio (CRR) by a steep 50 basis points to 7.5%, at its mid-term review of the annual monetary policy announced at 12:00 IST today. RBI kept interest rates unchanged. Contrary to some expectations, interest rates may not soften in the near term.

Auto, banking and IT stocks were weak. Capital goods, metal stocks gained. Reliance Industries lost ground. Market breadth was negative. Most of the Asian markets were trading lower. European markets were subdued.

BSE Sensex ended down 194.16 points or 0.97% to 19,783.51. It opened on a strong note with an upward gap of 125.77 points at 20,103.44 and soon rose to strike an all-time high of 20,238.16 in early trade. At day's high of 20,238.16, Sensex had gained 260.49 points.

Sensex hit a low of 19,694.85 in late trade. At day’s low of 19,694.85, Sensex had declined 282.82 points. Sensex oscillated 543.31 points between a low of 19,694.85 and high of 20,238.16.

The broader based S&P CNX Nifty ended down 37.15 points or 0.63% to 5,868.75. It hit an all time high of 5,976 in early trade.

ONGC, Bharat Heavy Electricals, Larsen & Toubro and HDFC hit all time highs today.

The central bank raised the proportion of cash banks have to keep with it on deposit by 50 basis points to 7.5 % today to mop up excess funds, but kept its key lending rates unchanged. The central bank left the reverse repo rate, the rate at which it absorbs excess cash from banks, unchanged at 6%. The bank rate, too, was unchanged at 6%.

The market breadth was negative BSE: 1,051 scrips advanced as compared to 1,657 that declined while 345 remained unchanged. 8 of the 30 members of the Sensex pack were trading with gains.

The BSE Mid Cap index was down 0.43% to 8,048.07 and BSE Small Cap index was down 0.63% to Rs 9,644.44. Both these indices outperformed Sensex.

BSE Auto index (down 3.12% to 5,479.89),BSE Oil & Gas index (down 1.14% to 11,526.30) underperformed Sensex.

BSE Bankex (down 0.94% to 10,550.09), BSE Capital Goods index (up 0.8% to 20,006.57), BSE Metal (up 0.65% to 17,302.22), BSE Realty index (up 2.36% to 10,516.99), BSE IT index(down 0.58% to 4,647.53) outperformed Sensex.

The NSE F&O turnover was Rs 89,601.31 crore today as compared to Rs 69,537.38 crore Monday, 29 October 2007.

Nifty November 2007 futures contract was trading at 5,892, at a premium of 23.25 points or 0.39% over spot price of 5,868.75.

Auto stocks declined sharply. Mahindra & Mahindra (down 7% to Rs 740.60), Maruti Suzuki India (down 8.46% to Rs 1,087.95), Hero Honda Motors (down 2.61% to Rs 724.95), Tata Motors (down 4.93% to Rs 767.30) and Bajaj Auto (down 0.6% to Rs 2,487.05) edged lower.

Banking majors declined as the Reserve Bank of India raised CRR by a steep 50 basis points to 7.5%, in a bid to suck out excess liquidity in the banking system. ICICI Bank (down 0.73% to Rs 1,240.25) and HDFC Bank (down 1.25% to Rs 1,618.25) and State Bank of India (down 2.63% to Rs 2,062.20) edged lower. CRR deposits with the RBI earn zero interest for banks.

IT majors edged lower. Infosys (down 0.5% to Rs 1,851.30), Tata Consultancy Services (down 1.86% to Rs 1,048.50) , Satyam Computer Services (down 0.64% to Rs 479.45) edged lower. Wipro (up 0.01% to Rs 509.70) edged higher.

India’s largest telecom services provider Bharti Airtel (up 0.51% to Rs 999.75) edged higher. Dr.Reddy’s Laboratories rose 0.61% to Rs 615.45.

India's second biggest power utility in terms of revenue Reliance Energy (REL) was up nearly 3.91% to Rs 1,789.20 and was the top gainer from Sensex pack. REL said today that it will transfer its road, rail, real estate and other infrastructure projects to a separate unit.

India's largest private sector entity by market capitalisation and oil refiner Reliance Industries (RIL) declined 2.02% to Rs 2,770.50. It hit a low of Rs 2,746.

Capital goods stocks extended gains. Bharat Heavy Electricals (Bhel) rose 1.63% to Rs 2,654.55. It hit an all time high of Rs 2,750 today. Net profit of Bharat Heavy Electricals (Bhel) rose 91.01% to Rs 687.66 crore on 18.68% rise in total income to Rs 3965.36 crore in Q2 September 2007 over Q2 September 2006. The company announced the results after the market hours on 29 October 2007.

India's biggest engineering & construction firm by revenue Larsen & Toubro rose 1.06% to Rs 4,323. It hit an all time high of Rs 4,470 today. Suzlon Energy however declined 0.87% to Rs 1,980.45.

Housing Development Finance Corporation, India's biggest dedicated housing finance firm, declined 2.02% to Rs 2,756.25. It hit an all time high of Rs 2,965 today. Net profit of Housing Development Finance Corporation rose 75.64% to Rs 646.39 crore on 30.54% rise in total income to Rs 1888.60 crore in Q2 September 2007 over Q2 September 2006. The company announced the results after the market hours on 29 October 2007.

Reliance Natural Resources topped volume charts on BSE, clocking volumes of 3.98 crore shares. The stock gained 4.78% to Rs 115.15. Reliance Petroleum gained 5.34% to Rs 233.75 on volumes of 3.26 crore shares and stood second in terms of volumes. Tata Teleservices (Maharashtra) slipped 3.47% to Rs 45.85 on 3.25 crore shares. It was the third most traded counter on BSE. Power Grid Corporation of India advanced 2.05% to Rs 146.60. It notched volumes of 1.92 crore shares and secured fourth position. Mangalore Refineries and Petrochemicals surged 26.22% to Rs 80.40 and finished as fifth most traded counter with volumes of 1.67 crore shares on BSE.

Reliance Capital clocked the highest turnover of Rs 828.13 crore on BSE. The stock rose 14.75% to Rs 2,127.70. Reliance Petroleum clocked the second highest turnover of Rs 755.66 crore on BSE. Reliance Natural Resources clocked third highest turnover of Rs 459.82 crore. Reliance Energy (Rs 419.77 crore) and Reliance Industries (Rs 331.20 crore) were other turnover toppers.

Among side counters, Parle Software (up 20% to Rs 695.50), Siemens Medical (up 20% to Rs 1,110.60), Mangalore Refinery and Petrochemicals (up 26.77% to Rs 80.75), Celestial Labroratories (up 17.55% to Rs 59.95) edged higher.

ITD Cementation (down 23.07% to Rs 647.95) edged lower.

European markets were subdued today. France's CAC 40 (down 0.53% to 5,805.20) and UK's FTSE 100 (down 0.63% to 6,663.70) edged lower. Germany's DAX declined 0.44% to 7,973.61.

Asian markets were trading slightly lower today, 30 October 2007. Japan's Nikkei (down 0.28% at 16,651) Taiwan Weighted (down 0.53% at 9,757), Singapore's Straits Times (down 0.56% at 3,798.45), South Korea's Seoul Composite (down 0.51% at 2,052.37) edged lower. However, Hong Kong's Hang Seng rose 0.16% at 31,638.22.

Crude oil prices fell nearly 1% below $93 a barrel on Tuesday, 30 October 2007, fading from their latest record high as investors took profits from a rally fuelled by a Mexican supply outage and the spiraling dollar. US crude fell by 85 cents to $92.68 a barrel after hitting a record high of $93.80 yesterday, 29 October 2007. London Brent slipped 77 cents to $89.65.

Q2 September 2007 results announced so far have been decent to strong.