Budget blues, global sell-off rattle bourses

Stock prices were battered last week tracking weak global markets which in turn were hit by US recession worries. The sentiment was also hit by a hike in short term capital gains tax and alternation of tax treatment of securities transaction in Union Budget 2008-09 announced on Friday, 29 February 2008. Sensex fell in 3 out of 4 trading sessions of the week. The market remained closed on Thursday, 6 March 2008, on account of Mahashivratri.

The BSE Sensex slumped 1,603.20 points or 9.12% to 15,975.52 in the week ended Friday, 7 March 2008. S&P CNX Nifty declined 451.9 points or 8.65% to 4,771.60 in the week.

The BSE Mid-Cap index fell 876 points or 11.4% to 6,804.39 in the week. The BSE Small-Cap index slumped 1,218.95 points or 12.66% to 8,409.18.

Foreign institutional investors (FIIs) were net buyers of shares worth Rs 1,733.30 crore in the month of February 2008. They were net sellers of shares worth Rs 12,702.90 crore in calendar 2008, till 4 March 2008. Mutual funds bought shares worth Rs 513.90 crore in the month of February 2008.

The key benchmark indices witnessed an unabated selling pressure across sectors, mirroring weakness in the global stock markets as BSE Sensex tumbled 900.84 points or 5.12% to 16,677.88 on Monday, 3 January 2008, registering its second biggest single day point loss on a closing basis. It was also Sensex’s second biggest single day fall in percentage terms. 26 out of 30 stocks from the Sensex pack were in the red. Even the mid-and small-cap stocks tumbled, as reflected in the poor market breadth. Banking, power and realty stocks plummeted. A global sell-off was triggered after weak US data on Friday, 29 February 2008, and a record loss of insurer American International Group Inc. fuelled worries that there are more write-downs to come.

The key indices drifted lower for a third consecutive session hit by Budget blues as Sensex lost 337.99 points or 2.03% at 16,339.89 on Tuesday, 4 March 2008. Banking and realty stocks were worst hit in the trade. Auto stocks bucked the bearish trend. 19 out of 30 stocks from the Sensex pack were in the red. The market breadth was extremely weak.

Snapping a four-day losing streak, the key benchmark indices surged in late trade as BSE Sensex ended rising 202.19 points or 1.24% at 16,542.08 on Wednesday, 5 March 2008. Volatility was high. Index heavyweight Reliance Industries witnessed an upward momentum at the fag end of the trade. Software stocks were the flavor of the day. Banking, realty and power stocks dropped. The market breadth was weak. European markets, which opened after Indian market, were in the green. Asian markets, which open before the Indian markets, were mixed.

A surge in inflation, weak global cues and political concerns dampened the investor sentiments as share prices declined sharply, with Sensex declining 566.56 points or 3.42% to 15,975.52 on Friday, 7 March 2008. All the sectoral indices on BSE were in the red. Reliance Energy was the biggest loser from the Sensex pack. Banking stocks tumbled. European markets, which opened after Indian market, were weak. Mid-caps and small-caps were the worst affected as reflected in the extremely weak market breadth.

India's second largest power utility by revenue Reliance Energy plunged 18.99% to Rs 1270. The company’s board on Wednesday, 5 March 2008 approved buy back of shares worth up to Rs 2,000 crore at a maximum price of Rs 1600 per share

India’s largest oil refiner by market capitalisation Reliance Industries fell 8.52% to Rs 2,248.80 . Reports on 5 March 2008 suggested that its unit Reliance Retail has signed a joint venture with Pearle Europe for the launch of a chain of optical stores in India. Pearle Europe, a subsidiary of HAL Investments, operates 2,200 optical retail stores in 21 countries across Europe and the Middle East.

India’s largest IT exporter by sales Tata Consultancy Services fell 3.15% to Rs 846.75. The company announced on 5 March 2008 the launch of its strategic business unit to meet the technology needs of small and medium businesses.

India’s largest car maker by sales Maruti Suzuki India rose 7.6% to Rs 933,15. Reacting to the cut in excise duty, the company after market hours on Friday, 29 February 2008 announced cut in prices of some models. Maruti cut prices of all its small car models, ranging from Rs 6,500 on Maruti 800 to Rs 18,030 on the Swift diesel model.

Maruti Suzuki India’s total vehicles sales rose 1.30% to 63,822 units in February 2008 over February 2007. The company’s domestic sales were almost flat at 59,311 while export went up by 15% at 4,511 in February 2008 over February 2007. Sales of Maruti 800 model slipped 3.5% to 5,747 in February 2008 over February 2007.

India’s largest power generation firm by sales National Thermal Power Corporation declined 8.5% to Rs 184.80. Reports on 5 March 2008 suggested it had tied up with Indonesian company Sugico Graha for coastal ultra mega power projects for which government may invite bids in future.

India’s largest engineering firm by revenue Larsen & Toubro fell 15.18% to Rs 2,988.20. The company announced on 5 March 2008 it bagged three orders for transmission line projects totaling Rs 458 crore.

India’s largest tractormaker by sales Mahindra & Mahindra dropped 4.01% to Rs 665.05 . The company said on 5 March 2008 it has successfully closed acquisition of an Italian based auto designing company G.R.Grafica Ricerca Design S.r.l through its subsidiary.

India’s largest private sector bank by net profit ICICI Bank declined 18.17% to Rs 892.75 . The bank clarified that it has no material direct or indirect exposure to US sub-prime credit. ICICI Bank clarified to media reports which stated that the bank has lost $264 million till 31 January 2008 due to subprime crisis. The bank said there will be no significant deterioration in actual credit quality of the underlying investment. The bank said that due to widening of credit spreads in the international markets, it suffered negative mark-to-market impact on the credit derivatives and fixed income investment portfolios and overseas banking subsidiaries.

India’s second largest motorcyclemaker by sales Bajaj Auto declined 17.15% to Rs 1,889.15. The company has reduced the prices of two-wheelers following the government cut excise duty on two-wheelers to 12% from 16% in Union Budget 2008-09.

India's biggest power equipment maker by sales Bharat Heavy Electricals lost 11.23% to Rs 2,025.75. The company won two large orders totalling 2,968 crore.

Infosys (down 7.37% to Rs 1,432.80), Wipro (down 4.51% to Rs 415.05), ONGC (down 5.65% to Rs 955.20) were other losers from Sensex pack.

National Stock Exchange (NSE) said trading in long term options on its main 50-share index, the S&P CNX Nifty began from Monday, 3 March 2008. The long term options contracts are now expected to deepen the market further, the NSE said in a statement issued late on Monday. Before the introduction of these contracts, options had a maximum tenure of 3 months. The exchange said active trading was observed in the three quarterly expiries of June 2008, September 2008 and December 2008. Total traded turnover for Monday in the long term options was Rs 150 crore at 5,223 contracts.

Finance Minister P Chidambaram said on 5 March 2008, foreign institutional investors (FIIs) were not behind the recent volatility in stock markets. The ups and downs in the stock markets depend on the changing perceptions of investors - domestic and overseas, retail and institutional - about the economy, the sector and the company, he said while replying to supplementaries during Question Hour in the Rajya Sabha.

Inflation in still a threat because of high food prices, the Chidambaram said on Monday, 3 March 2008. Inflation based on wholesale prices hit 4.89% in mid-February, 2008, the highest in more than eight months and just below the central bank's target of 5% for the fiscal year ending 31 March 2008.

India’s exports rose 20.5% in January 2008 from a year earlier to $13.14 billion, data released by the government showed. Imports rose an annual 63.6% to $22.5 billion in January 2008. The trade deficit for January 2008 widened to $9.36 billion, compared with $2.85 billion in the same month a year earlier. The trade deficit was $67.41 billion in the ten months of the current fiscal year.

The basket of crude oil that Indian refiners buy hit a fresh all-time high of $97.16 a barrel on Friday, 29 February 2008. This was the highest for the current fiscal. The Indian crude oil basket averaged $92.37 a barrel in February 2008 against $89.52 in January 2008. On Friday, the price of New York crude touched a fresh high of $103.05 a barrel. The soaring global crude prices have an impact on the profitability of the domestic oil marketing companies (OMCs), as they sell petroleum products below the cost price.

Finance Minister P Chidambaram said he expects the economy to grow 8.8% plus in the 2008/09 fiscal year. Chidambaram said an investment boom in was continuing but a sluggish farm sector was hurting overall growth.

Prime minister Manmohan Singh on 5 March 2008 said the proposed Rs 60000 crore farm loan waiver scheme announced in Union Budget 2008-09, would provide relief to farmers and clean up balance sheets of banks. The debt relief scheme will be completed by June 2008, Singh said in parliament. Singh also said the government was seeking a broadest possible consensus on Indo-US nuclear deal.

Securities and Exchange Board of India (Sebi) slashed fees by 50-80% on filing of offer document for public issues, rights issues and mutual funds. The rationalisation of fee structure will be effective 1 April, 2008. The decision was taken a Sebi board meet.

Finance Minister (FM) P Chidambaram said on Thursday, 6 March 2008, that the Rs 60000-crore farm loan waiver package announced in Union Budget 2008-09 will strengthen the banking sector. The banking sector will be compensated in a way that the banks will not be constrained at all, Chidambaram told reporters after a meeting of the board of the Reserve Bank of India (RBI) on Thursday 6 March 2008.

Inflation based on the wholesale price index rose 5.02% in the 12 months to 23 February 2008, higher than the previous week's rise of 4.89%, government data showed on Friday, 7 March 2008. The annual inflation rate was 6.20% during the corresponding week of the previous year.