Sensex slumps 951 points in second biggest single day fall

A setback in global markets rattled domestic bourses today as the Sensex posted its biggest single-day point fall. The fall on the bourses accentuated in late trade as BSE Sensex fell more than 1,000 points at the fag end of the trading session. Heavy selling was seen in banking stocks. ICICI Bank, HDFC, Hindalco Industries, Reliance Communications, Tata Steel and Reliance Energy were among the top losers from Sensex pack. The market breadth was weak.

The market tumbled today as the fire sale of ailing US bank Bear Stearns and the Federal Reserve's emergency cut in its discount rate intensified concerns that there could be more victims of the global credit crisis.

The 30-share BSE Sensex lost 951.03 points or 6.03% at 14,809.49. It hit a low of 14,739.72 in late trade, its lowest level since late August 2007. At day’s low Sensex fell 1,020.80 points in late trade.

The broader based S&P CNX Nifty was down 242.70 points or 5.11% at 4,503.10.

The fifth-largest US investment bank Bear Stearns said on Friday, 14 March 2008, its liquidity position had deteriorated significantly in the last 24 hours and a cash crunch forced it to turn to the Federal Reserve and JPMorgan Chase for emergency funds. JPMorgan said on Sunday, 16 March 2008, it would buy Bear Stearns in an all-stock deal, and that the Fed would fund up to $30 billion of Bear Stearns' less liquid assets.

In a major development, the US Federal Reserve on Sunday, 16 March 2008, cut its discount rate to 3.25% from 3.5% and said that it was creating a facility to let primary dealers borrow at that rate.

"Global meltdown and sell-off by troubled foreign institutional investors in domestic markets, is playing havoc with sentiments of domestic investors. Fear of more disturbing news from global markets is weighing heavy on traders’ mind. Even long term domestic players like insurance firms and mutual funds are staying clear of the market", says D.D. Sharma, Senior Vice President, Research, Anand Rathi Financial Service. Going by valuations, the current fall provides a great buying opportunity for investors, he feels.

A fall in the dollar to a record low against the euro, sent spot gold and crude futures hurling towards record highs, deepening concerns of rising inflationary pressures throughout the Asian region.

US stock futures fell in Asian trade, pointing to a sharply lower Wall Street open later in the day, as global investors wonder if other financial institutions might need rescuing. S&P 500 futures were down 26.70 points, while Dow Jones industrial average futures were down 203 points.

BSE Clocked a turnover of Rs 5,701 crore today 17 March 2008 compared to a turnover of Rs 5,914.99 on Friday,14 March 2008.

Nifty March 2008 futures were at 4477, at a discount of 26.10 points as compared to spot closing of 4503.10.

The NSE's futures & options (F&O) segment turnover was Rs 40,058.11 crore, which was lower than Rs 40,184.57 crore on Friday, 14 March 2008.

As per provisional data, FIIs sold shares worth a net Rs 658.22 crore today. Local funds bought shares worth a net Rs 211.48 crore.

Consumer durable index was major loser among sectoral indices on BSE. It fell more than 10%. Fertiliser stocks plunged. All the BSE secoral indices were in red.

The market breadth was weak: On BSE 2,405 shares declined as compared to 282 shares that advanced. 43 shares remained unchanged.

The BSE Mid-Cap index fell 6.97 % to 6,124.35 and BSE Small-Cap index declined 6.9% to 7,522.23. Both these indices underperformed Sensex.

BSE Consumer Durables index (down 9.69% to 3,638.56), BSE Metal index (down 7.54% to 13,725.52), BSE Bankex (down 9.06% to 7,569.16), BSE Realty index (down 7.86% to 7,106.53) , BSE Capital Goods index (down 6.43% to 12,706.31) underperformed Sensex.

BSE PSU index (down 4.97% to 7,153.44), BSE IT index (down 3.2% to 3,297.71), BSE Oil & Gas index (down 5.34% to 9,801.86),BSE Power index (down 5.58% to 2,973.68), BSE HealthCare index (down 5.2% to 3,621.90), BSE Auto index (down 4.62% to 4,329.46), and BSE FMCG index (down 3.18% to 2,119.60) outperformed Sensex.

India’s largest private sector company in terms of market capitalisation and oil refiner Reliance Industries declined 6.08% to Rs 2,180.60..

Jaiprakash Associates (down 11.94% to Rs 208.05), HDFC (down 11.07% to Rs 2,225.55), Reliance Energy (down 8.13% to Rs 1,190.80), Hindalco Industries (down 9.2% to Rs 164.85), Tata Steel (down 7.93% to Rs 658.50), Grasim Industries (down 6.55% to Rs 2,670.85) and Larsen & Toubro (down 7.03% to Rs 2,703.50), were major losers from Sensex pack.

Banking stocks declined further in late trade. India’s largest commercial bank by net profit State Bank of India declined 4.72% to Rs 1,633.40. ICICI Bank (down 13.76% to Rs 757.40), HDFC Bank (down 5.89% to Rs 1,238.50) edged lower.

Consumer durables stocks extended losses. Titan Industries (down 13.03% to Rs 930.05), Rajesh Exports (down 15.58% to Rs 79.65), Videocon Industries (down 7.46% to Rs 279.30) and Blue Star (down 10.26% to Rs 380.50) edged lower.

India's biggest power-equipment maker by sales Bharat Heavy Electricals (BHEL) declined 4.41% to Rs 1,796.05. As per reports, the company will acquire Vizag-based Bharat Heavy Plates and Vessels by the first half of 2008/09.

India’s largest telecom services provider by sales Reliance Communications fell 6.87% to Rs 482.75. It added 1.61 million mobile subscribers in February 2008. The firm had 42.6 million mobile subscribers at the end of January 2008.

Reliance Power declined 6.45% to Rs 315.70. It has reportedly struck a deal to buy out a coal mine in Indonesia. The valuation of the coal mine, based on its reserves, is estimated to be around Rs 20,000 crore.

Fertiliser stocks slumped. National Fertiliser (down 13.45% to Rs 38.60), Mangalore Chemicals & Fertilisers (down 10% to Rs 18.20), Nagarjuna Chemicals & Fertilisers (down 7.79% to Rs 36.10), Chambal Fertilisers & Chemicals (down 7.23% to Rs 48.75), Coromandel Fertilisers (down 7.81% to Rs 103.30), Deepak Fertilisers (down 12.85% to Rs 92.60) edged lower.

Cairn India declined 6.61% to Rs 213.30. The company said today, 17 March 2008 before market hours its board will meet on 17 March 2008 to consider a preferential issue of equity shares.

Reliance Natural Resources clocked the highest volume of 2.26 crore shares on BSE. Orchid Chemicals & Pharmaceuticals (1.54 crore shares), Reliance Petroleum (1.37 crore shares), V-Guard Industries (1.3 crore shares) and Ispat Industries (1.11 crore shares) were the other volume toppers in that order.

Reliance Industries clocked highest turnover of Rs 274.22 crore on BSE. GSS America Infotech (Rs 237.04 crore), Reliance Natural Resources (Rs 232.49 crore), Reliance Petroleum (Rs 215.46 crore ) and Orchid Chemicals & Pharmaceuticals (Rs 206.98 crore) were the other turnover toppers in that order.

European markets which opened after Indian markets were weak. France’s CAC, Germany’s DAX and UK’s FTSE 100 were down between 2.23% to 3.29%.

In Asia, key benchmark indices in Hong Kong, Japan, China, South Korea, Singapore and Taiwan were down by between 1.61% to 5.18%.

The news about Bear Stearns hit US stocks hard on Friday, 14 March 2008. The Dow Jones industrial average dropped 194.65 points, or 1.60% to end at 11,951.09. The Standard & Poor's 500 Index shed 27.34 points, or 2.08%, to 1,288.14. The Nasdaq Composite Index slipped 51.12 points, or 2.26%, to 2,212.49.

A crucial meeting of the UPA-Left committee on the Indo-US nuclear deal will be held in New Delhi today. As per media reports, the government is expected to hand over the Left leaders copies of the draft India-specific safeguards agreement it has reached with the International Atomic Energy Agency (IAEA). Government is also likely to brief them on the over three-month long negotiations it held with the IAEA on the safeguards agreement, reports suggest.

The meeting comes in the backdrop of major Left parties asserting that they would withdraw support to the Congress-led government if it went ahead with the nuclear deal with the US.

A torrent of bad news has spooked bourses in the past few days with buyers deserting the market. Adding to the woes of domestic bourses already hit by tumbling global markets were earnings downgrade recently by brokerages of ICICI Bank, India’s biggest private sector bank in terms of net profit, and Larsen & Toubro, India’s biggest engineering and construction firm in terms of order book; lower-than-expected industrial production data for January 2008; and a surge in inflation.

The hike in short-term capital gains tax and alteration of tax treatment of the Securities Transaction Tax (STT) in Union Budget 2008-09 announced on 29 February 2008 has earlier dented sentiment. Buyers have stayed away from the bourses on continued uncertainty about the extent and duration of the credit crisis caused by the defaults in the US sub-prime mortgage market.