Sensex off 18% from record high

The market tumbled today as blue chips came under renewed selling pressure. Weakness in Asian stocks triggered the latest round of selling on the domestic bourses. Banking, IT and auto were the worst hit in today’s fall. Domestic market underperformed most global markets, except China’s Sanghai Composite in terms of fall.

The 30-share BSE Sensex was down 385.61 points or 2.17% to 17,349.07. Sensex hit a low of 17,294.73 at the fag end of the trading session. At the day’s low, the Sensex lost 439.95 points. Sensex hit a high of 17,526.80 in early trade. At the day’s high, the Sensex lost 207.88 points. Sensex oscillated in a band of 232.07 points for the day

Sensex has tumbled 3857.70 points or 18.19% from a record high of 21,206.77 struck on 10 January 2008.

At current 17,349.07, Sensex trades at a PE multiple of 16.52 to 17.34, based on projected FY 2009 EPS of Rs 1000-to-Rs 1050 for 30 Sensex companies.

The broader based S&P CNX Nifty was down 78.25 points or 1.51% at 5,113.55. Nifty February 2008 futures were at 5077.50, a discount of 36.05 points as compared to spot closing

Despite the market fall the IPO of Rural Electrification Corporation (REC) witnessed strong response. It was subscribed 23.69 times at 16:00 IST. The price band for the IPO is Rs 90 to Rs 105.

US and Asian stock markets fell on heightened fears of a US recession. Stocks in the US fell after data showed that Mid-Atlantic factory production had slumped to its lowest level since February 2001, suggesting more rapid economic deterioration than expected. European markets, which opened after Indian markets, edged lower.

The market breadth was weak throughout the day. 27 stocks from 30-member Sensex pack were in the red.

As per provisional data, foreign institutional investors (FIIs) sold shares worth a net Rs 709.54 crore today. Domestic funds bought shares worth a net Rs 105.49 crore.

Inflation based on the wholesale price index (WPI) rose to 4.35% for the week ended 9 February 2008 from 4.07% in the previous week, data released by the government today showed.

The next major trigger for the market is the Union Budget 2008-09. With general elections due in 2009, Union Budget 2008-09 to be presented on 29 February 2008 will be the last full-fledged budget of the Congress-led United Progressive Alliance government and it is therefore likely to be a populist budget. Thus, the Finance Minister (FM) is likely to provide higher allocations to several social initiatives like rural upliftment, employment, education, agricultural growth and public health.

Though populist measures will dominate the budget, FM is also expected to take steps to stimulate investment and consumption demand at a time when the economy is witnessing moderation from a solid growth last year. A reduction in personal income tax, if any, will result in increase in disposable incomes which in turn may boost demand for consumer goods.

Expectations are that the corporate income tax rate may be cut or the 10% surcharge on corporate tax may be abolished. The surcharge is 10% on a tax rate of 30%, making the effective corporate tax rate 33%. Another possibility is that of a cut in dividend distribution tax from 15% to 12.5%. Meanwhile, FM may raise the Securities Transaction Tax slightly.

It is also expected that the FM would announce some relief packages for troubled export sensitive sectors like textiles, rubber, jewelry, leather and IT services. These sectors have been hit by rupee’s surge in the past one year.

The market breadth was weak: On BSE 1,759 shares declined as compared to 935 that advanced. 93 shares remained unchanged.

The BSE Mid-Cap index was down 0.97% to 7,594.45 and the BSE Small-Cap index slipped 1.01% to 9,595.41. Both these indices outperformed the Sensex.

The total turnover on BSE amounted to Rs 4451 crore as compared to Rs 5,410.60 crore yesterday, 21 February 2008

Turnover in NSE’s futures & options slipped to Rs 36386.23 crore as compared to Rs 43409.74 crore yesterday, 21 February 2008

Bajaj Auto, the country’s second largest bike manufacturer in terms of sales, slipped 4.78% to Rs 2295.60 on profit booking. 44,773 shares were traded on the counter on BSE. It was the top loser from Sensex pack.

The stock had gained 17.94% in 6 trading sessions from Rs 2075.50 on 14 February 2008 to Rs 2410.85 on 21 February 2008. The company on 19 February 2008 said the Bombay High Court has sanctioned a scheme of arrangement between the company, Bajaj Holdings & Investment and Bajaj Finserv and their respective shareholders and creditors.

Mahindra & Mahindra (down 1.96% to Rs 628.60), Hero Honda Motors (down 1.47% to Rs 719.25) and Tata Motors (down 1.97% to Rs 694.70), declined.

However India’s top small car maker in terms of sales, Maruti Suzuki India rose 0.43% to Rs 766.65, after sliding to day’s low of Rs 751.

India’s largest private sector firm by market capitalization and oil refiner Reliance Industries (RIL) lost 2.90% to Rs 2429. The stock had hit a high of Rs 2481.60 in early trade. A total of 5.84 lakh shares were traded on the counter on BSE.

Bank shares declined on fresh selling after latest data showed rise in inflation. ICICI Bank (down 3.92% to Rs 1099), State Bank of India (down 3.04% to Rs 2113), and HDFC Bank (down 4.47% to Rs 1473.90), slipped.

IT pivotals which had surged in the past few sessions, succumbed to selling pressure today. Satyam Computers (down 4.35% to Rs 438.25), Infosys Technologies (down 3.08% to Rs 1580.10), Wipro (down 2.14% to Rs 422.40), and TCS (down 2.44% to Rs 896), declined.

IT shares had surged in the last few days following weakening of the rupee against the dollar. Satyam Computers (up 23.37%), Infosys Technologies (up 17.27%), and TCS (up 9.87%), gained in past one month till 21 February 2008. However Wipro was down 1.85% during this period. IT companies derive a lion's share of revenue from exports and they had been hit hard by rupee’s surge in the last one year.

Reliance Communications, the country’s second largest cellular services provider in terms of market capitalisation fell 1.30% to Rs 581.30. The company said on Thursday, 21 February 2008, it had acquired a telecom firm in Uganda and will spend $500 million over the next five years in the African country.

India’s second largest pharma company in terms of sales, Cipla surged 5.44% to Rs 198.60 on 4.24 lakh shares. It was the top gainer from Sensex pack.

India’s largest private sector aluminium manufacturer in terms of sales Hindalco Industries gained 1.35% to Rs 192

Reliance Power recovered sharply in late trade to settle 0.20% lower to Rs 421.10 as speculators build up positions ahead of company’s board meet on Sunday, 24 February 2008, to consider issue of bonus shares. The bonus shares will be issued to non-promoter shareholders to compensate the losses suffered by them when the company was listed last week. The stock has been consistently trading at a discount to IPO price of Rs 450, since its listing on 11 February 2008. The stock had hit a high of Rs 433 in early trade. The counter saw high volumes of 1.07 crore shares.

Reliance Power topped the turnover charts clocking turnover of Rs 524.25 crore followed by Reliance Natural Resources (Rs 219.60 crore), Reliance Capital (Rs 200 crore), OnMobile Global (Rs 165.60 crore) and Reliance Industries (Rs 153.80 crore) in that order.

Among the stocks with high volumes, Centurion Bank of Punjab was down marginally by 0.18% to Rs 56.95 on 2.38 crore shares. The stock slipped sharply after striking high of Rs 61.90 in opening trade.

Reliance Natural Resources was down 2.65% to Rs 132.25. A total of 1.55 crore share changed hands on the counter.

Ispat Industries slipped 1.92% to Rs 43.50 on 1.03 crore shares. The stock moved in range of Rs 42.80 and Rs 44.50 during the day

Entertainment Network India rose 6.24% to Rs 479.80 and Mid-Day Multimedia gained 4.74% at Rs 39.90 after the telecom regulator recommended allowing ownership of multiple FM channels by a single operator and raising the foreign direct investment limit.

Info Edge (India) surged 10.51% to Rs 962 after the company got approval from the Reserve Bank of India for hike in FII investment ceiling to 40% of its equity capital.

Jindal Saw surged 6.07% to Rs 889.05 ahead of its results for the year ended 31 December 2007 on Tuesday, 26 February 2008.

Hexaware Technologies rose 3.77% to Rs 82.55. The company reported a net loss of Rs 72.92 crore in Q4 December 2007 as compared to a net profit of Rs 16.94 crore in Q3 September 2007. Sales rose 15.14% to Rs 127.39 crore in Q4 December 2007 over Q3 September 2007. The company announced the results on 21 February 2008.

Indiabulls Financial Services declined 3.11% to Rs 616.60 even as the company said on Friday, 22 February 2008 it has received approval from the Securities and Exchange Board of India to set up an asset management company. The company made this announcement before trading hours today, 22 February 2008.

GlaxoSmithKline Pharmaceuticals gained 2.73% to Rs 606.40 after it reported 19.34% rise in net profit to Rs 80.9 crore on 7.45% rise in total income to Rs 367.94 crore in Q4 December 2007 over Q4 December 2006. The results were announced during trading hours today, 22 February 2008.

Deccan Aviation slipped 1.07% to Rs 175.50 after company’s board approved raising up to Rs 1600 crore through issue of equity or convertible bonds in the domestic or international market. The company made this announcement after trading hours on Thursday, 21 February 2008.

i-flex Solutions rose 0.44% to Rs 1054.95 after the company said on Friday, 22 February 2008, Vietnam's FPT bank has selected its universal banking solution Flexcube for retail and corporate banking operations in Vietnam.

Alstom Projects India gained 0.48% to Rs 727 after the company said on Thursday, 21 February 2008, it had bagged two export orders worth Rs 592 crore.

Steel Authority of India rose 0.44% to Rs 237.60 after the company said on Thursday, 21 February 2008, it had formed a new joint venture with Jaiprakash Associates to set up a cement plant in Jharkhand.. Shares of Jaiprakash Associates were down 4.80% to Rs 247.

Meanwhile, as per reports, Railway Minister Lalu Prasad in his Railway budget to be presented next week, is likely to reduce both passenger fares and freight rates, riding a strong revenue growth and reduced operational costs. Rail fares are likely to be cut by 3% to 5% while freight rates for petroleum, steel and iron ore may come down by 4% to 5% due to reclassification of goods.

European markets, which opened after Indian markets, were fell today, 22 February 2008. Key benchmark indices in United Kingdom (down 0.33% to 5,912.90), Germany (down 1.16% to 6,825.01), and France (down 0.49% to 4,835.14), slipped

Most Asian markets ended weak today, 22 February 2008. Hong Kong's Hang Seng (down 1.35% at 23,305.04), Japan's Nikkei (down 1.37% at 13,500.46), Singapore's Straits Times index (down 0.20% at 3,048.64), South Korea's Seoul Composite index (down 1.05% at 1,686.46) and China’s Shanghai Composite index (down 3.47% to 4,370.36) edged lower.

However Taiwan's Taiwan Weighted index rose 0.28% at 8,108.81, after initial fall

On Thursday, 21 February 2008, US markets declined after opening higher after poor economic data re-ignited the fears of economic slowdown. The Dow Jones industrial average slipped 142.96 points, or 1.15%, to 12,284.30. The Standard & Poor's 500 index dropped 17.50 points, or 1.29%, to 1,342.53, while the Nasdaq composite index plunged 27.32 points, or 1.17%, to 2,299.78.

Meanwhile, the government on Thursday, 21 February 2008, approved a fresh Rs 500 crore assistance to help exporters make up for the loss in orders due to strengthening of the rupee. With the latest announcement, government's bailout package has crossed the Rs 5,700 crore mark.

Crude oil slipped today, 22 Friday 2008 as rising US crude and gasoline stockpiles added to evidence of slowing demand in the world's largest consumer. The US crude futures for April delivery eased 39 cents to $97.84 a barrel.