Profit taking pulls Sensex down 91 points; ICICI Bank, RIL slide

Profit taking pulled the market lower in choppy trade today. Traders booked profit ahead of the outcome of the US Federal Reserve's policy meeting later in the day. The market breadth turned negative in late trade in contrast to strong breadth earlier in the day.

Banking and realty stocks declined even as auto stocks rose. Consumer durables stocks fell. IT and FMCG stocks rose. Oil & gas majors declined. European markets which opened after Indian markets were in red.

The 30-share BSE Sensex shed 91.15 points or 0.52% at 17,287.31. Sensex hit a high of 17,480.70 in early trade. At the day’s high, Sensex rose 102.24 points. Sensex hit a low of 17241.88 in late trade. At day’s low Sensex lost 136.58 points.

The broader based S&P CNX Nifty was down 29.6 points or 0.57% at 5,165.90. Nifty May 2008 futures were at 5183.90, at a premium of 18 points as compared to spot closing of 5165.90.

BSE clocked a turnover of Rs 6856 crore today compared to Rs 7290.22 crore yesterday, 29 April 2008. The NSE's futures & options (F&O) segment turnover was Rs 33,950.04 crore, which was lower than Rs 41,819.49 crore on Tuesday, 29 April 2008.

The market breadth turned negative on BSE with 1296 shares advancing as compared to 1397 that declined. 75 remained unchanged.

The BSE Mid-Cap index down 0.11% to 7,138.74 and BSE Small-Cap index down 0.13% to 8,773.57.

BSE Consumer Durables index (down 0.93% to 4,543.11), BSE Oil & Gas index (down 1.33% to 11,505.79), BSE Bankex (down 1.62% to 8,819.68), BSE Realty index (down 1.67% to 8,505.49) underperformed Sensex.

BSE FMCG index (up 2.02% to 2,461.38), BSE Auto index (up 1.71% to 4,726), BSE PSU index (up 0.91% to 8,081.53), BSE HealthCare index (up 0.62% to 4,275.10), BSE IT index (up 0.57% to 4,261.93), BSE Power index (up 0.07% to 3,338.81), BSE Capital Goods index (flat at 13931.25), BSE Metal index (down 0.49% to 16,114.40) outperformed Sensex.

India’s largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) declined 1.44% to Rs 2,614.85.

Consumer Durables stocks declined. Titan Industries (down 4.5% to Rs 1,244.30), Asian Star Company (down 1.33% to Rs 1,275.30) edged lower. Videocon Industries declined 1.59% to Rs 374.20. The company’s net profit rose 8.55% to Rs 251.22 crore on 15.69% rise in total income to Rs 2538.78 crore in Q4 March 2008 over Q4 March 2007.

Realty stocks declined. DLF (down 2.84% to Rs 705.25), Unitech (down 2.24% to Rs 310.40) and Indiabulls Real Estate (down 1.72% to Rs 547.75) edged lower.

Banking stocks declined. ICICI Bank (down 2.43 % to Rs 879.40), HDFC Bank (down 2.11% to Rs 1,514.85), State Bank of India (down 0.96% to Rs 1,776.35) edged lower.

FMCG stock rose. ITC (up 3.61% to Rs 219.80), Tata Tea (up 3.67% to Rs 912.25) edged higher. India’s largest FMCG major by sales Hindustan Unilever was flat at Rs 250.65. Nestle India jumped 9.15% to Rs 1774 on reporting 47.7% surge in net profit to Rs 160.15 crore in Q1 March 2008 over Q1 March 2007.

Auto stocks rose. Mahindra & Mahindra (up 4.31% to Rs 670.40), Maruti Suzuki India (up 1.45% to Rs 741.90), Tata Motors (up 3.48% to Rs 662.20) edged higher. India’s largest motorbike maker by market share Hero Honda Motor declined 1.61% to Rs 848.

IT stocks rose. Wipro (up 1.96% to Rs 488.60), Infosys (up 0.17% to Rs 1,753.75), Tata Consultancy Services (up 0.96% to Rs 919.55) and Satyam Computer Services (up 0.59% to Rs 482.20) edged higher.

Jaiprakash Associates (up 1.95% to Rs 271.30), Bharat Heavy Electricals (up 0.27% to Rs 1,897) edged higher from Sensex pack.

Grasim Industries (down 2.81% to Rs 2,402.75), Hindalco Industries (down 2.32% to Rs 193.60), ACC (down 2.15% to Rs 758.65), Ranbaxy Laboratories (down 0.99% to Rs 480.085) edged lower from Sensex pack.

India’s largest dedicated housing finance firm by operating income HDFC declined 2.66% to Rs 2,804.80. The company’s net profit rose 39.64% to Rs 768.12 crore on 33.82% rise in total income to Rs 2,320.21 crore in Q4 March 2008 over Q4 March 2007.

India’s largest telecom services provider by sales Reliance Communications rose 0.88% to Rs 579.75. The company’s consolidated net profit rose 70.5% to Rs 5401.14 crore on 31.79% rise in total income to Rs 19067.76 crore in the year ended March 2008 over the year ended March 2007.

NTPC rose 1.08% to Rs 196.75. NTPC said on Tuesday its board had approved spending Rs 487 crore on renovating Auraiya gas power station in Uttar Pradesh. The board of the state-run firm also approved setting up an 8 megawatt (MW) Singrauli small hydel project in Uttar Pradesh at an estimated cost of Rs 62.90 crore, to add capacity from renewable energy sources.

Ispat Industries clocked the highest volume of 1.96 crore shares on BSE. IFCI (1.6 crore shares), Reliance Natural Resources (1.38 crore shares), Reliance Petroleum (1.18 crore shares) and Indiabulls Securities (1.17 crore shares) were the other volume gainers in that order.

Sesa Goa clocked the highest turnover of Rs 258.69 crore on BSE. Reliance Petroleum (Rs 240.62 crore), Reliance Communications (Rs 235,95 crore), Titagarh Wagons (Rs 200.66 crore) and Reliance Capital (Rs 188.92 crore) were the other turnover toppers in that order.

The market expects the Fed to cut interest rates by 25 basis points to 2% and then signal that its rate-cutting cycle may be over for now in the face of mounting global energy and food inflation pressure. Indian stock market remains closed tomorrow, 1 May 2008, on account of Maharashtra Day.

Inflation remains the biggest concern for the Indian stock market. The measures taken by the Union government to control inflation have also added to uncertainty on corporate profit. Finance Minister P Chidambaram yesterday, 29 April 2008, said government will impose export tax on basmati rice and some steel products, and cut import duties on key inputs like ferro alloys and metallurgical coke. He said the measures were being taken to improve domestic supplies and to moderate prices. The government has already banned export of cement and non-basmati rice.

Given that parliamentary elections are scheduled next year (in May 2009), the government may leave no stone unturned in its attempt to rein in inflation. This is bad news for commodity scrips like cement, steel etc.

In a bid to rein in inflation, the Reserve Bank of India, on Tuesday, 29 April 2008, raised cash reserve ratio (CRR) by 25 basis points to 8.25%, to suck out excess liquidity in the banking system, in its annual monetary policy review. While the central bank has mentioned price stability as its key priority, the overall undertone of the policy is not as hawkish as market had feared. That in turn boosted the bourses with Sensex jumping 362.50 points or 2.13% on Tuesday to settle at 17,378.46. The RBI governor Y V Reddy expects inflation to moderate in the next 2-3 months.

Good Q4 results March 2008 results and firm global markets, triggered a solid rebound in the Indian market over the past few days. Buying by domestic institutions has supported the market.

The structural growth drivers of the Indian economy remain intact – India’s economy is expected to witness a decent-to-strong growth for a long period of time due to favourable demographics. Rating agency CRISIL in its latest outlook for Indian economy for the year through March 2009 has stated that the overall growth scenario is expected to remain strong with investment as the main driver.

Another pointer to the fact that the long term India growth story remains intact is the outcome of the latest 2008 US-India Business Council (USIBC) survey, according to which, India is, and will continue to be, a premier destination for investment by US firms, with a large number of respondents rating future economic growth in India as highly sustainable.

On Wall Street, stocks ended little changed on Tuesday, 29 April 2008, as setbacks for two drugs weighed down the pharmaceutical sector, offsetting the relief from a retreat in record high crude oil prices.

Asian markets were mixed today. Key benchmark indices in China, South Korea, and Taiwan were up by between 0.32% to 4.82%. Key benchmark indices from Hong Kong, Japan and Singapore was down between 0.3 to 0.6%.

European markets were in the red. France’s CAC 40, Germany’s DAX and UK’s FTSE 100 fell between 0.38% to 0.73%.