Market settles slightly lower in choppy trade; turnover drops

As some arbitrageurs and jobbers stayed away from the market to protest change in tax treatment of the Securities Transaction Tax (STT) that came into force from today, low volumes saw share prices swing wildly on the first day of the new financial year FY 2009 (year ending March 2009). 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 market breadth was strong. 16 shares from the 30-member Sensex pack advanced.

European markets, which opened after Indian market extended gains after Swiss bank UBS AG unveiled a fresh attempt to reverse its fortunes and its writedowns came in along expected lines. UBS posted $19 billion in additional writedowns and said it was hiving off ailing portions of the bank into a separate unit. Asian markets, which opened before Indian market were mixed. US markets ended higher yesterday, 31 March 2008.

The 30-share BSE Sensex was down 17.82 points or 0.11% at 15,626.62. Sensex lost 342.59 points at day’s low of 15,301.85 touched in early afternoon trade. Sensex rose 189.61 points at day’s high of 15,834.05 hit in early trade. Sensex oscillated in a band of 532.20 points in volatile trade.

The broader based S&P CNX Nifty rose 5.05 points or 0.11% at 4,739.55. Nifty April 2008 futures were at 4775, a premium of 35.45 points as compared to spot closing

As per provisional data, foreign funds sold shares worth a net Rs 638.86 crore today. Domestic funds sold shares worth a net Rs 289.56 crore.

The market breadth was strong: On BSE 1,722 shares advanced as compared to 924 that declined. 51 shares remained unchanged.

The BSE Mid-Cap index was down 0.50% to 6,395.42 and the BSE Small-Cap index rose 0.31% to 7,865.90, as per provisional closing.

The total turnover slipped to Rs 4697 crore on BSE, as compared to Rs 5,941.63 crore yesterday, 31 March 2008, due to fall in arbitrage activity.

Total turnover in NSE’s futures & options segment amounted to Rs 47200.87 crore as compared to Rs 49087.03 crore yesterday, 31 March 2008.

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.

Most Sectoral indices on BSE slipped. The BSE Consumer Durables index (up 0.10% to 3,887.15), the BSE FMCG index (up 2.06% at 2,337.27), and the BSE Oil & Gas index (up 3.36% to 10,353.72), outperformed the Sensex

However, the BSE IT index (down 0.20% to 3,540.59), the BSE Auto (down 1.22% at 4,469.60), the BSE Bankex (down 0.96% at 7,643.55), the BSE Realty index (down 1.17% at 7,466.48), the BSE Health Care index (down 0.44% at 3,831.32), the BSE TecK index (down 0.24% to 3,016.77), the BSE Power (down 1.16% to 3,152.66), the BSE Capital Goods index (down 3.21% at 13,559.93), the BSE Metal index (down 1.49% to 13,813.76), and the BSE PSU index (down 0.42% to 7,395.52), slipped.

India’s largest private sector company in terms of market capitalisation and oil refiner Reliance Industries advanced 2.97% to Rs 2331.80 on 10.48 lakh shares. The stock moved in a range of Rs 2245.50 and Rs 2375 during the day.

India’s largest FMCG company in terms of net sales. Hindustan Unilever jumped 4.39% to Rs 238.75 on 2.49 lakh shares. It was the top gainer from Sensex pack.

Reliance Energy, the country’s largest private sector power utility company in terms of net profit surged 3.11% to Rs 1290. The stock surged the most in Sensex pack, by 152%, in the financial year ended 31 March 2008. The company has bought back 9.51 lakh equity shares aggregating Rs 122.40 crore since the start of the buyback offer on Tuesday, 25 March 2008,

India’s largest software services exporter TCS advanced 3.16% to Rs 836.50 after it said on Monday, 31 March 2008, it had signed a five-year, multi-million dollar contract with auto components maker ArvinMeritor Inc. Financial details of the deal were not disclosed. The stock was the worst performer from Sensex pack, in the financial year ended 31 March 2008, declining 34%.

However other IT pivotals, Wirpo (down 3.60% to Rs 410), and Infosys (down 0.71% to Rs 1420), declined

North India’s largest cement maker by sales Ambuja Cements rose 0.29% to Rs 121.40 after it announced 16% rise in cement shipments to 1.72 million tonnes in March 2008 over March 2007.

ITC (up 2.25% to Rs 211), and Reliance Communications (up 2.90% to Rs 523.05), edged higher from Sensex pack.

Shares from capital goods witnessed a sell-off. Bharat Heavy Electricals, the country’s largest state run engineering company in terms of order book position, was down 8% to Rs 1892. It was the top loser from Sensex pack. On Monday, 31 March 2008, the company secured Rs 550-crore export order for supply of boilers from Koniambo Nickel SAS, an overseas joint venture of Switzerland-based mining group Xstrata PLC and a local company in New Caledonian.

Larsen & Toubro, the country’s largest private sector engineering company in terms of order book position, lost 4.80% to Rs 2880, after hitting low of Rs 2845. On Monday, 31 March 2008, the company bagged Rs 576 crore order from Hindustan Petroleum Corporation for 2 lakh tonne per annum lube oil base stock plant consisting of raffinate hydrotreating unit, mobil selective dewaxing unit and hydro finishing unit.

Tata Steel (down 3.77% to Rs 667), DLF (down 3.60% to Rs 623.20), and Mahindra & Mahindra (down 6.44% to Rs 650.85), slipped from Sensex pack.

Banking shares staged sharp recovery from lower levels. ICICI Bank (down 1.83% to Rs 756, after hitting a low of Rs 732) and HDFC Bank (down 1.13% to Rs 1305.10, after touching a low of Rs 1271), though down were well off their lower levels. India’s largest bank in terms of market capitalisation State Bank of India rose 1.45% to Rs 1622.

India’s largest car maker by sales Maruti Suzuki India declined 1.51% to Rs 817 after its sales declined 2% to 70,296 vehicles in March 2008 over March 2007. Maruti domestic sales remained flat at 64,421 units in March 2008 over March 2007. Its exports fell 19 %to 5,875 units in March 2008 over March 2007.

GSS America Systems was the top traded counter on BSE with turnover of Rs 468.38 crore. The stock saw high volatility today, swinging in a range of Rs 740.60 and Rs 865.

Reliance Capital (Rs 300.67 crore), Reliance Industries (Rs 243 crore), and Reliance Petroleum (Rs 211.09 crore), were the other turnover toppers on BSE in that order.

Unitech was the fifth top traded counter on BSE with turnover of Rs 157.32 crore boosted by a block deal of 40.09 lakh shares struck on the counter on BSE at Rs 277.90 per share at 10:16 IST. The stock fell 1% to Rs 273.40 on high volumes of 56.80 lakh shares.

Reliance Petroleum topped volumes charts on BSE clocking volumes of 1.30 crore shares followed by Reliance Natural Resources (1.22 crore shares), Ispat Industries (89.42 lakh shares), Bellary Steel (89.54 lakh shares), and Essar Oil (69.54 lakh shares), in that order

Among the side counters, Atul Auto (up 20% to Rs 62.45), Rajvir Industries (up 19.97% to Rs 137.90), Technocraft Industries (up 19.96% to Rs 62.50), and Indowind Energy (up 19.94% to Rs 81.80), surged.

However Bosch Chasiss Systems (down 10% to Rs 621.90), Setco Automotive (down 13.06% to Rs 169.10), and Panama Petrochemicals (down 9.92% to Rs 124), slipped

Reliance Petroleum surged 6.75% to Rs 166.80 after the company said it has executed a facility agreement to raise $500 million for the refinery project at Jamnagar, Gujarat.

Punj Lloyd slipped 0.53% to Rs 905.60 despite winning an order worth $68 million from Tecnimont S.p.A, Italy for borouge 2 polyolefins project of Abu Dhabi Polymers Company, UAE. The company made this announcement during trading hours on Monday, 31 March 2008.

Dr Reddy's Laboratories gained 1.02% to Rs 597 on entering into a definitive agreement with The Dow Chemical Company to acquire Dowpharma Small Molecules business associated with its United Kingdom sites in Mirfield & Cambridge.

Hero Honda Motors rose 1.59% to Rs 701.20 after the company said on Monday its sales rose 15% to 3.20 lakh units in March 2008 over March 2007. For the fiscal year to 31 March 2008, Hero Honda sold a total of 33.4 lakh motorcycles and scooters, almost the same as in the previous year. The sales, helped by new model launches, increased Hero Honda's marketshare in motorcycles to 52%, Managing Director Pawan Munjal said in a statement.

Power Grid Corporation of India gained 0.10% to Rs 98.05 after the company said on Monday, 31 March 2008 it has raised close to $1 billion via loans from Asian Development Bank and The World Bank.

Pratibha Industries declined 2.758% to Rs 320.05 despite bagging an order worth Rs 37.03 crore from Sunshine Housing Development for construction of a commercial building Sunshine Towers at Dadar in Mumbai.

The market sentiment remains edgy as Indian companies are sitting on huge 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.

The sharp rise in inflation has also been a cause of concern. Inflation has now risen above the Reserve Bank of India’s caution limit of 5%. India's wholesale price index surged to 13-month to 6.68% in the 12 months to 15 March 2008, surging from the previous week's rise of 5.92%, government data showed on Friday, 28 March 2008.

Finance minister P Chidambaram yesterday, 31 March 2008 announced a slew of measures, in an attempt to rein in commodity prices. The measures include a total ban on non-basmati rice exports, a reduction in import duty on edible oils, allowing states to impose stock limits with traders, and also warning the steel lobby to hold the priceline.

Meanwhile the Reserve Bank of India’s governor in a statement on the same day said that he was ready to tackle unacceptably high inflation, underscoring the seriousness across government quarters on tackling the issue.

European markets were trading higher. Key benchmark indices in United Kingdom (up 0.92% to 5,754.40), France (up 1.40% to 4,773.18) and Germany (up 1.45% to 4,766.24) rose.

Asian markets were trading mixed today, 1 April 2008. Hang Seng (up 1.26% at 23,137.36), Japan's Nikkei (up 1.04% at 12,656.62), and Singapore's Straits Times (up 1.30% at 3,046.54), rose. However, China’s Shanghai Composite index (down 4.13% to 3,329.12), South Korea's Seoul Composite (down 0.10% to 1,702.35) and Taiwan's Taiwan Weighted index (down 1.78% at 8,419.72), declined

US markets ended higher yesterday, 31 March 2008, after a plan for regulatory overhaul raised hopes for calmer financial markets. The Dow Jones industrial average added 46.49 points, or 0.38%, to 12,262.89. The S&P 500 index rose 7.48 points, or 0.57%, to 1,322.70, and the Nasdaq Composite index gained 17.92 points, or 0.79%, to 2,279.10.

Meanwhile, the current account deficit in India’s balance of payments (BoP) has widened despite higher growth in income from software services and a strong growth in remittances by the Indian diaspora. The current account deficit which is derived from cross-border transactions of goods and services, widened to $5.4 billion during the quarter ended December 2007 on account of a bloated import bill caused by higher oil prices and industrial offtake