Sensex sheds 613 points on setback in pivotals

The market plunged for a second day in a row today weighed down by weak sentiment in global markets. A strong GDP growth forecast for the current fiscal and a surge in domestic liquidity, failed to provide any respite for the markets.

The 30-share BSE Sensex slumped 612.56 points or 3.38% at 17,526.93. Sensex shed 647.21 points at the day's low of 17,492.28, hit in late trade. Sensex touched a high of 18,198.68 in the initial trade. At day's high it rose 59.19 points.

The broader CNX S&P Nifty was down 189.3 points or 3.59% at 5,133.25.

The current setback on the bourses has materialized despite a boost in liquidity in the secondary markets as investors have started getting refund of excess application money in the heavily subscribed Rs 11000-crore Reliance Power IPO. It, however, remains to be seen how much money from Reliance Power IPO refunds actually comes to the secondary market in the light of immense volatility witnessed on the bourses last month.

Sensex fell below the psychological 18,000 level. Selling was conspicuous in IT, oil & gas, metal, FMCG and realty stocks. All the sectoral indices on BSE were in red. Index heavyweights Reliance Industries, ICICI Bank and Larsen & Toubro declined. Reliance Communications fell sharply in late trade.

The market breadth was negative in contrast to a strong breadth in early trade. 29 out of 30 stocks from the Sensex pack were in red.

Cues from European markets which opened after Indian markets were negative. Most of the Asian markets were closed today.

India's economy is expected to expand at 8.7% in fiscal 2007/08, slower than 9.6% growth in 2006/07, which was its strongest pace in 18 years, government's central statistics office (CSO) today said. CSO has pegged manufacturing output growth at an annual 9.4% this fiscal compared with 12% growth in the previous year.

Farm output growth is estimated at 2.6% for the full year 2007/08 compared with 3.8% growth in 2006/07. Services sector growth is estimated at 10.7% for the year against 11.1% growth in 2006/07.

European Central Bank (ECB) holds a policy meeting later today, 7 February 2008. The ECB is widely expected to hold interest rates at 4%, and investor focus is likely to be on whether the ECB would keep its vigilance on inflation risks even as signs show that economic growth in the region may be slowing.

BSE clocked a turnover of Rs 6541 crore compared to Wednesday (6 February 2008)'s Rs 6308 crore.

Nifty February 2008 futures were at 5,087.35, at a discount of 45.9 points as compared to spot closing of 5,133.25.

The NSE's futures & options (F&O) segment turnover was Rs 40,921.83 crore, which was lower than Rs 42,234.95 crore on Wednesday, 6 February 2008.

The BSE Mid-Cap index was down 2.38% at 7,781.12, while the BSE Small-Cap was down 2.02% at 10,202.63. Both these indices outperformed Sensex.

BSE Metal index (down 4.08% to 15,528.84), BSE Oil & Gas index (down 4.41% to 10,668.66), BSE PSU index (down 3.58% to 8,350.80) and BSE Realty index (down 3.69% to 10,030.33) underperformed Sensex.

BSE Auto index (down 2.37% to 4,783.80), BSE Bankex (down 2.86% to 10,384.77), BSE Consumer Durables index (down 1% to 4,893.78), BSE Capital Goods index (down 2.72% to 16,120.62), BSE FMCG index (down 2.92% to 2,125.37), BSE Healthcare index (down 2.13% to 3,639.95), BSE IT index (down 2.85% to 3,705.30) and BSE Power index (down2.52% to 3,782.74) outperformed Sensex.

The market breadth was weak: on BSE 799 advanced as compared to 2,004 that declined. 34 stocks remained unchanged.

Oil & gas stocks plunged. India’s largest private sector firm by market capitalization and oil refiner Reliance Industries declined 4.98% at Rs 2,425. Cairn India (down 4.9% to Rs 199.05), ONGC (down 3.74% to Rs 988.50) and Gail (India) (down 2.57% to Rs 425.10) edged lower.

Metal stocks declined. Sterlite Industries (down 3.75% to Rs 758.50), National Alluminium Company (down 3.32% to Rs 377.10), Hindalco Industries (down 5.63% to Rs 163.30), Steel Authority of India (down 4.91% to Rs 210.30) and Tata Steel (down 3.51% to Rs 771.40) edged lower.

Software services exporters declined for a third day in a row due to a gloomy economic outlook in the United States, which contributes to more than half of their revenue. Satyam Computer Services (down 4.36% to Rs 390.85), Wipro (down 3.56% to Rs 409.85), Tata Consultancy Services (down 1.95% to Rs 882.95) and Infosys (down 1.97% to Rs 1,480.90) edged lower.

India’s largest private sector bank by assets ICICI Bank was down 4.13% to Rs 1,105.25.

India’s largest engineering & construction firm by revenue Larsen & Toubro down 3.97% to Rs 3,630.45.

India’s second largest telecom services provider by revenue Reliance Communications declined 5.51% to Rs 644.05.

Realty stocks declined. Indiabulls Real Estate declined 1.86% to Rs 649.80.It came off from its high of Rs 696. Indiabulls Infrastructure (IIL), a subsidiary of the company, has acquired 100% shareholding of Catherine Builders and Developers (Catherine) from DLF Home Developers.

Unitech (down 7.69% to Rs 359), Housing Development Infrastructure (down 5.67% to Rs 920) and DLF (down 3.09% to Rs 843) edged higher.

FMCG majors declined. ITC fell 3.48% to Rs 193 and Hindustan Unilever was down 2.68% to Rs 199.55.

India's biggest cement maker in terms of production capacity, ACC rose 1.03% to Rs 772.70 and was the lone gainer from Sensex pack.

Grasim Industries declined 2.41% to Rs 2,819. Aditya Birla Group reportedly intends to scale up its shareholding in its cement flagship Grasim Industries to at least 40%, although it did not set a time frame for the same. According to reports, the move is in line with the idea of holding a majority stake, which according to the reports, is at least 40% in all the major companies.

Reliance Natural Resources was volume topper on BSE with 3.52 crore shares. Ispat Industries (2.9 crore shares), Nagarjuna Fertilisers and Chemicals (1.98 crore shares), Reliance Petroleum (1.69 crore shares) and IFCI (1.63 crore shares) were other volume toppers on BSE in that order.

Reliance Natural Resources clocked highest turnover of Rs 569.79 crore on BSE. Reliance Energy (Rs 338.93 crore), Reliance Petroleum (Rs 296.96 crore), Reliance Industries (Rs 244.06 crore) and Future Capital Holdings (Rs 211.85 crore) were other turnover toppers on BSE in that order.

European markets were weak. Stock markets in France, Germany and UK fell between 1% to 1.17%.

In Asia, Japan’s Nikkei index was up 0.82%. Stock markets in China, Hong Kong, South Korea, Singapore, and Taiwan were closed.

US stock indices dropped for a third straight session on Wednesday, 6 February 2008, after US Federal Reserve officials cast doubt on the outlook for more interest rate cuts. The Dow Jones industrial average lost 65.03 points, or 0.53%, at 12,200.10. The Standard & Poor's 500 Index lost 10.19 points, or 0.76%, at 1,326.45. The Nasdaq Composite Index shed 30.82 points, or 1.3%, at 2,278.75.

Sensex had plunged 523.67 points or 2.81% at 18,139.49 on Wednesday, 6 February 2008, as Asian markets tumbled after another recessionary piece of US economic data sent Wall Street shares down nearly 3% on Tuesday, 5 February 2008.

Reliance Power, which raised a record $3 billion in its initial share sale in January 2008, said on Friday, 1 February 2008, it had begun refunding excess application money to investors. The initial public offer had received bids for $190 billion.

But depressed stock markets forced property developer Emaar MGF Land to extend its initial public offer until 11 February 2008 and lower its indicated price for a second time. Wockhardt Hospitals which extended its IPO by two days to 7 February 2008, had received bids for only 13% of its 2.51 crore shares issue by Wednesday, 6 February 2008.

Sensex has lost 3,679.84 points or 17.35% from a record high hit on 10 January 2008, due to heavy selling by FIIs amid credit crisis in the United State and fears of a US recession. Huge unwinding of positions in the futures & options segment was another key trigger for the fall