Market drifts lower in volatile trade

The market witnessed alternate bouts of buying and selling last week. Continuing worries about the slowing US economy and its spillover effect in Asian market kept the markets volatile during the week.

Reserve Bank of India's (RBI) bitter stance to maintain status quo on interest rates, dampened the market sentiment. The market was expecting the RBI to lower the short-term lending rate by 0.25% points, after a hefty 75 basis points US Fed rate cut last week. Thereafter, another rate cut of 50 basis points by US Federal Reserve on Wednesday, 30 January 2008 was unable to lift market higher.

The US Federal Reserve (Fed) cut interest rates for the second time in eight days on 30 January 2008 in an effort to stimulate the flagging US economy. The Fed cut the rate by 0.5%, bringing its key-lending rate to just 3%. On Tuesday, 22 January 2008 the US Federal Reserve bank slashed rates by 0.75%.

However, contradicting the expectations of a rate cut, the Reserve Bank of India (RBI) kept all key rates unchanged at a meeting held on 29 January 2008. RBI kept rates steady amid inflation concerns on the domestic front and an increasingly worsening international situation.

The 30-share BSE Sensex fell 119.08 points or 64% to 18242.58, in the week ended 1 February 2008. The S&P CNX Nifty lost 66.1 points or 1.22% to 5317.25, in the week.

The BSE Small-Cap index lost 348.58 points or 3.34% to 10072.32 in the week. The BSE Mid-Cap index fell 259.58 points or 0.04% to 7761.54 in the week.

Buying in banking and auto shares helped market recover from day’s low on 28 January 2008. The market had declined sharply in afternoon trade due to fall in Asian markets. On that day, the BSE Sensex declined 208.88 points or 1.14% at 18,152.78. The broader CNX S&P Nifty was down 109.25 points or 2.03% at 5,274.10. Banking and auto shares were in focus ahead of the monetary policy review on Tuesday, 29 January 2008.

The market drifted lower in what was a choppy trading session on 29 January 2008. The market suffered sharp loses in afternoon trade as the sentiment was dampened by the Reserve Bank of India (RBI) keeping key rates - repo rate, reverse repo rate, bank rate and cash reserve ratio, unchanged at its quarterly monetary policy review announced on 29 January 2008. BSE Sensex declined 60.84 points or 0.34% at 18,091.94. However, the broader CNX S&P Nifty rose 6.70 points or 0.13% at 5,280.80.

On 30 January 2008, the market edged lower for third straight day in choppy trade tracking weak European and Asian markets. Investors refrained from making fresh commitments ahead of the crucial Federal Open Market Committee (FOMC) meeting on interest rates later that day. The BSE Sensex plunged 344.98 points or 1.91% at 17746.96. The broader based S&P CNX Nifty was down 113.20 points or 2.14% at 5167.60.

On 31 January 2008, the market extended losses for fourth straight day in highly volatile trade. Volatile movements in late trade were due to expiry of January 2008 derivative contracts on that day. The 30-share BSE Sensex declined 109.93 points or 0.62% at 17,648.71. The broader based S&P CNX Nifty was down 30.15 points or 0.58% at 5,137.45.

On 1 February 2008, the market galloped in late trade, to snap its four-day loosing streak, on buying in pivotals. Fresh build-up of positions after a smooth expiry of January 2008 derivative contracts propelled market from lower level. Sensex vaulted 593.87 points or 3.36% at 18,242.58. The broader based S&P CNX Nifty jumped 179.80 points or 3.50% at 5,317.25.

India’s largest private sector firm by market capitalization and oil refiner Reliance Industries (RIL) fell 2.60% to Rs 2541.65.

India’s largest private sector bank in terms of net profit ICICI Bank fell 4.88% to Rs 1197.75.

India’s largest listed real estate developer in terms of land bank DLF fell 13.92% to Rs 813.55. The company posted net profit of Rs 605.84 crore on total income of Rs 1,812.59 crore in Q3 December 2007. The company announced the results on 30 January 2008

India’s largest private sector aluminium manufacturer in terms of sales, Hindalco Industries rose 2.05% to Rs 176.90. Hindalco Industries’ net profit declined 16% to Rs 542 crore on 1.44% fall in total income to Rs 4646 crore in Q3 December 2007 over Q3 December 2006. The results were announced on 30 January 2008.

India’s largest cellular services provider in terms of market capitalisation Bharti Airtel fell 0.75% to Rs 907.75. It posted 36.04% rise in net profit to Rs 1,419.84 crore on 41.46% rise in total income 41.46% to Rs 6,682.57 crore in Q3 December 2007 over Q3 December 2006. The company announced the results on 30 January 2008.

India’s largest power generation company in terms of market capitalisation National Thermal Power Corporation (NTPC) fell 7.54% to Rs 205.50. The company said on Wednesday, 30 January 2008 it would invest about Rs 4375 crore in setting up a power plant in north-east India.

India’s largest oil exploration company in terms of market capitalisation Oil & Natural Gas Corporation (ONGC) rose 2.86% to Rs 1044.50. As per reports, the Director-General of Hydrocarbons (DGH) has conceded ONGC's demand for a drilling holiday on account of a global rig shortage. The stock moved in a range of Rs 970 and Rs 1034.80 so far during the day

India's second biggest listed telecommunication services provider by sales Reliance Communications fell 8.46% to Rs 611.80. The company posted 48.5% rise in consolidated net profit to Rs 1,372.83 on 29.79% rise in consolidated total income to Rs 4,874.2 crore in Q3 December 2007 over Q3 December 2006. The company announced results on 31 January 2008.

India’s largest private sector steel maker in terms of total output Tata Steel rose 8.73% to Rs 776.45. The company reported 0.45% rise in net profit to Rs 1068.58 crore on 10.34% rise in total income to Rs 5040.95 crore in Q3 December 2007 over Q3 December 2006. The results were announced during trading hours on 31 January 2008.

India’s top tractor maker in terms of sales Mahindra & Mahindra was unchanged at Rs 674.30. It registered 67.6% rise in net profit to Rs 405.15 crore boosted by one-off gain. The company’s sales rose 14.1% to Rs 2,940.15 crore in Q3 December 2007 over Q3 December 2006. The company announced results on 30 January 2008.

Annual inflation, based on the wholesale price index (WPI), rose 3.93% in the week ended 19 January 2008 as against 3.83% in the week ended 12 January 2008.

On 31 January 2008, Oil Minister Murli Deora informed that the cabinet was likely to consider a fuel price hike next week. The meeting with other members of the ministerial panel formed by the Indian goverment to look into the fuel pricing issue was inconclusive and no decision has been taken as yet.

On 31 January 2008, the goverment revised upwards India's gross domestic product growth (GDP) estimate for 2006-07 to 9.6% from 9.4% reported earlier. This was the highest GDP growth in 18 years. The robust growth of GDP was acheived due to high growth in the manufacturing sector (12%), mining and quarrying (5.7%), electricity, gas and water supply (6%) and construction (12%). Farm output was pegged at 3.8%.

On 30 January 2008, Union Information and Broadcasting Minister Priyaranjan Dasmunsi informed that the cabinet approved easing caps on foreign direct investment in sectors such as civil aviation, petroleum and natural gas, commodity exchanges, credit information services, mining in titanium, industrial parks and construction and development. The minister added that further details will be given shortly. India expects to attract foreign investment of $26 billion in 2007-08, substantially higher than $16 billion a year earlier.