Market falls for the week

The market edged lower last week as concerns about potential losses of corporate India on forex derivatives resurfaced after the Institute of Chartered Accountants of India (ICAI) asked companies to disclose losses on a mark-to-market basis incurred on derivatives trades from the current financial year onwards (year ending March 2008), as a precursor to making a new accounting standard -- the AS-30 -- mandatory from 1 April 2011. This may hit Q4 March 2008 and FY 2008 (year ending March 2008) bottom line of Indian firms.

Some arbitrageurs and jobbers stayed away from the market on 1 April 2008 protesting change in tax treatment of the Securities Transaction Tax (STT) that came into force from that day. The protest led to low volumes, which saw share prices swing wildly on the first day of the new financial year FY 2009 (year ending March 2009).

India's wholesale price index (WPI) rose 7% in the 12 months to 22 March 2008, accelerating from the previous week's rise of 6.68%. The rate is the highest since 4 December 2004.

The 30-share BSE Sensex fell 1,028.17 points or 6.28% at 15,343.12 in the week ended 4 April 2008. The S&P CNX Nifty shed 295 points or 5.96% to 4647 in the week.

The BSE Mid-Cap index outperformed the Sensex, falling 259.94 points or 3.99% to 6,262.85. The BSE Small-Cap index, too, outperformed the Sensex, falling 186.99 points or 2.37% to 7,714.99.

Indian companies are sitting on potential losses on account of the forex derivative transactions they undertook last year. A steep decline in the value of the US dollar against the Japanese Yen and the Swiss Franc has hit Indian corporates which have used these two currencies (Yen and Franc) extensively to swap their rupee denominated debt.

Meanwhile, the change in tax treatment of securities transaction tax (STT) is seen raising cost for arbitrageurs, which in turn may result in fall in arbitrage volumes. STT will now be treated like any other deductible expenditure against business income of the assesses. This is against the earlier practice of 100% rebate for STT paid against the tax liability for the year.

Sustained selling pressure in blue chips spooked the bourses on Monday, 31 March 2008. The 30-share BSE Sensex plunged 726.85 points or 4.44% at 15,644.44. The broader based S&P CNX Nifty plunged 207.50 points or 4.20% at 4,734.50.

On 1 April 2008, after opening on a firm note, market lost ground by early afternoon trade only to recover in mid-afternoon, led by recovery in index heavyweights Reliance Industries (RIL) and ICICI Bank. The 30-share BSE Sensex was down 17.82 points or 0.11% at 15,626.62. The broader based S&P CNX Nifty rose 5.05 points or 0.11% at 4,739.55.

On 2 April 2008, an early surge on the bourses proved short-lived as index heavyweights Reliance Industries, ICICI Bank and L&T, gave up initial gains. The Sensex, which had surged past 16,000 mark in early trade, fell below that level later. The Sensex settled 123.78 points or 0.79% higher at 15,750.40. The broader based S&P CNX Nifty was up 14.65 points or 0.31% at 4,754.20.

On 3 April 2008, the key benchmark indices ended higher as IT stocks rallied on hopes a US recession might not be deep as feared. The Sensex settled 82.15 points or 0.52% higher at 15,832.55. The broader based S&P CNX Nifty rose 17.4 points or 0.37% at 4771.60.

On 4 April 2008, data showing a surge in inflation to a three-year high pulled the market down. The 30-share BSE Sensex slipped 489.43 points or 3.09% at 15,343.12. The broader based S&P CNX Nifty fell 124.6 points or 2.61% at 4647.

India’s largest electrical equipments maker by sales Bharat Heavy Electricals slipped 21.90% to Rs 1634.10 after global investment firm JPMorgan Chase & Company reduced its share price estimate for the company to Rs 2,200 a share from Rs 2,850 earlier.

India’s largest private sector company in terms of market capitalisation and oil refiner Reliance Industries fell 1.08% to 2322.20. The company said on Tuesday, 1 April 2008, it had discovered more gas in an exploration block off the east coast. The potential commercial interest of the discovery is being ascertained through more data gathering and analysis, the company said in a statement.

India’s top tractor marker in terms of sales Mahindra & Mahindra (M&M) fell 12.44% to Rs 605.15. M&M said on Tuesday, 1 April 2008, its vehicle sales rose 20% to 24,682 units in March 2008 over March 2007. M&M’s sales rose 30% to 2,31,355 vehicles, in the financial year to March 2008 over the financial year to March 2007.

India’s top truck marker in terms of sales Tata Motors fell 5% to 613.65. Tata Motors said on Tuesday, its vehicle sales 6% to 66,495 units in March 2008 over March 2007. Sales of commercial vehicles rose 17% to 35,993 units and sales of cars and utility vehicles fell 4% to 24,737. Exports fell 9% to 5,765 vehicles

India’s largest private sector power utility company in terms of sales Reliance Energy slumped 12.54% to Rs 1166.35.

India’s largest private sector bank in terms of net profit ICICI Bank fell 8.56% to Rs 763.70.

India's second largest software exporter by sales Infosys Technologies fell 2.85% to Rs 1482.90. India's fourth largest software exporter by sales Satyam Computer Services rose 4.11% to Rs 425.25

Gammon Infrastructure Projects debuted on 3 April 2008 at 7.78% premium at Rs 180 on BSE. On that day, the stock settled at Rs 157.90 on BSE, at a discount of 5.4% over the initial public offer price of Rs 167.

Infrastructure sector output grew 8.7% in February 2008 from a year earlier, faster than a downwardly revised 3.1% growth in January 2008, government data showed on Thursday, 3 April 2008. Output had risen an annual 7.6% in February 2007.

Exports from India rose 35.3% in February 2008 from a year earlier to $14.24 billion, government data showed on Tuesday. Imports rose an annual 30.5% to $18.47 billion. The trade deficit for February 2008 widened to $4.23 billion, compared with $3.62 billion in the same month a year earlier. The trade deficit was $72.47 billion in the first eleven months of the fiscal year to February 2008.