Market recovers from initial slide on bargain buying

Poor debut from India's biggest ever IPO, Reliance Power hit the bourses at the onset of the week. The market recovered later as global markets rallied following an unexpected rise in US retail sales in January 2008.

Markets witnessed volatility on Friday after Federal Reserve Chairman Ben Bernanke alluded to the possibility of US nearing a recession, indicating the Fed may continue to ease interest rates. Sensex gained in 3 out of 5 trading sessions in the week.

The BSE Sensex surged 650.36 points or 3.72% to 18,115.25 in the week ended Friday, 15 February 2008.. S&P CNX Nifty rose 182.55 points or 3.56% to 5,302.90 in the week.

The BSE Mid-Cap index declined 41.19 points or 0.54% to 7,592.08 in the week. The BSE Small-Cap index slumped 299.22 points or 3.02% to 9,621.13.

Foreign institutional investors (FIIs) were net sellers of shares worth Rs 279.80 crore in this month till 13 February 2008. They were net sellers of Rs 13,315.40 crore so far in calendar 2008.

Huge selling pressure was witnessed across the board as investors fretted over the dismal debut of Reliance Power with Sensex falling 833.98 points or 4.78% at 16,630.91 on Monday 11 February 2008. Weak global cues, too, weighed on bourses. After a sharp slump, the market had witnessed recovery from lower level in mid-afternoon trade after State Bank of India, India's biggest commercial bank announced a cut in price lending rate by 25 basis points. However, the recovery proved short-lived and the market plunged again in late trade. Reliance Energy plummeted. All the sectoral indices on BSE, barring IT index, were in the red. The market breadth was poor.

Recovery in industrial production and positive global cues failed to offer solace to Indian investors after a sharp setback on Monday that was caused by poor debut of India's biggest IPO Reliance Power. Key indices shot up in early trade but were unable to sustain at higher level and finally ended the volatile session with losses with Sensex falling 22.90 points or 0.14% at 16,608.01 on Tuesday 12 February 2008. Banking and oil & gas stocks were in demand. IT stocks dropped. Broader market declined, as reflected in the weak market breadth.

Positive global cues and some hectic buying in large-caps assisted the Indian market breach five-day losing streak. Sensex rose 341.13 points or 2.05% at 16,949.14 on Wednesday 13 February 2008. Banking, realty and metal stocks were in the demand. The market breadth, which was positive in early trade, turned extremely weak as small and mid-cap shares came under selling pressure.

Strong global cues set up a solid platform for Indian market to surge as Sensex rose 817.49 points or 4.82% at 17,766.63 on Thursday 14 February 2008. The rally in global markets was triggered by an unexpected rise in US retail sales in January 2008 that helped ease recession worries in the world's largest economy. Capital goods and power stocks were in demand. Oil and gas stocks perked up on reports the Indian government has raised retail fuel prices to ease losses at state-run oil marketing firms. The market breadth was strong.

Posting gains for the third successive session, the key benchmark indices settled on a firm note with Sensex gaining 348.62 points or 1.96% to 18,115.25, on Friday,15 February 2008. Major support to the market came in from the metal and oil sector stocks. Buying was witnessed in mid-caps and small-caps, as reflected in the strong market breadth. After sliding in early trade tracking weak Asian stocks, the market moved higher in the later half of the trading session as buying intensified after Asian markets recovered.

India's biggest power equipment maker by sales Bharat Heavy Electricals rose 12.3% to Rs 2,261.35. As per reports, the company has taken a insurance policy worth $7 billion from Nation Insurance to cover all its projects. The company bagged an order worth Rs 200 crore from Oil & Natural Gas Corporation for supplying oil field equipment.

India's third-largest software services exporter by sales Wipro slipped 0.52% to Rs 42.25. It has secured an information technology outsourcing contract from Pantaloon Retail India.

India's biggest power generation firm by revenue National Thermal Power Corporation gained 0.35% to Rs 204. The company said on 15 February 2008 it has signed an agreement with Bihar State Electricity Board to form a joint venture company to undertake a thermal power project in Bihar.

India’s second largest listed telecom firm by sales Reliance Communications was down 5.32% to Rs 611.70. As per reports, the company is looking for a possible takeover of French IT services group Capgemini

India's largest engineering and construction company in terms of revenue Larsen & Toubro rose 0.27% to Rs 3,536.95. The company said on 14 February 2008, it had bagged an order worth Rs 311 crore from Qatar General Electricity and Water Corporation for design, supply, installation and commissioning of five 66/11 substations at Qatar.

India’s largest drug maker by sales Ranbaxy Laboratories gained 3.62% to Rs 396.15 on BSE, after the company said on 14 February 2008, its board would meet on 19 February 2008 to consider spinning off its new drug discovery research unit into a separate company.

India's largest private sector entity by market capitalisation and oil refiner Reliance Industries rose 6.97% to Rs 2,590.55. The company said on 14 February 2008 it had discovered natural gas reserves in an exploration block in the Krishna Godavari basin, Andhra Pradesh.

India’s top cellular services provider in terms of market share Bharti Airtel was flat at Rs 881.60. The company added 22.5 lakh mobile users in January 2008 as against 22 lakh users in December 2007

India’s largest commercial bank State Bank of India rose 4.86% to Rs 2,297.95. The bank said on 11 February 2008 it had cut its prime lending rate by 25 basis points to 12.5% with effect from 16 February 2008.

Infosys (up 0.86% to Rs 1,564.75), HDFC (up 4.48% to Rs 2,921.35), Tata Motors (up 5.62% to Rs 751.10), HDFC Bank (up 8.17% to Rs 1,564.10) were other gainers from Sensex pack.

Cords Cable Industries debuted at Rs 130 a discount of 3.70% and settled at Rs 138.30 a premium of 2.44% over the IPO price of Rs 135 (lower end of price band of Rs 125-135) on its debut on 13 February 2008.

J Kumar Infraprojects debuted at Rs 100 a discount of 9.09% and settled at Rs 102.70 a discount of 6.64% over IPO price of Rs 110 (at the lower end of the price band of Rs 110-120) on its debut on 12 February 2008.

Reliance Power debuted at Rs 547.80 a premium of 21.73% and settled at Rs 372.50 a discount of 17.22% over IPO price of Rs 450 (upper end of the price band of 405-450 per share) on its debut on 11 February 2008.

MSCI has included Reliance Petroleum, Essar Oil, Centurion Bank of Punjab and Steel Authority of India in a number of MSCI Inc. indices. The inclusion of these firms in the MSCI gauges may increase demand for these stocks by fund managers whose funds track the indices.

The growth in Index of Industrial Production (IIP) slowed down 7.6% in December 2007 from 13.4% in December 2006. IIP data for November 2007 was revised downwards to 5.1% from 5.3% reported earlier. IIP advanced 9% in April-December 2007 compared with 11.2% in April-December 2006.

On 10 February 2008 in Sivaganga (Tamil Nadu), Finance Minister Palaniappan Chidambaram informed in a public meeting, the education and agriculture sectors would get top priority in the coming Union Budget. The minister said in the last three years the UPA goverment had allocated Rs 28600 crore for the education sector lending, of which Rs 17636 crore had already been distributed.

On 14 February 2008, Union Oil Minister Murli Deora informed petrol prices were hiked by Rs 2 a litre and that of diesel raised by Re 1. The change in price would be effective from Friday, 15 February 2008. The minister explained India has raised prices of petrol and diesel for the first time in 20 months to ease losses at state-run retailers squeezed by a surge in crude oil prices while having to sell fuels cheaply.

On 15 February 2008, Prime Minister Manmohan Singh while addresing an industry conference in New Delhi, expressed confidence on sustaining a 9% annual economic growth despite a possible global slowdown. The minister also cautioned India must be aware that it cannot be completely insulated from chilly global winds that may blow in its direction.

Annual inflation, based on the wholesale price index, moved down 4.07% in the week ended 2 February 2008 compared with 4.11% in the week ended 26 January 2008. The market estimate stood at 4.16%. Inflation figure for the week ended 8 December 2008 was revised upwards to 3.84% as against 3.65% reported earlier.