Sensex sheds 110 points ahead of RBI policy review

The market snapped last two day’s rally to end in the red. The 30-share BSE Sensex fell below 17,000 level in late trading before once again regaining that level shortly. Investors were cautious ahead of central bank’s monetary policy meet tomorrow, 29 April 2008. Capital goods, IT and oil & gas stocks slipped. European markets which opened after Indian market were in the green.

Among interest rate sensitive stocks, while banking shares edged lower, realty and auto stocks rose ahead of Reserve Bank of India’s annual monetary policy review tomorrow 29 April 2008. Metal stocks were mixed following reports the government plans to rejig the duty structure to rein in surging steel prices. The market breadth was negative.

The 30-share BSE Sensex lost 110.02 points or 0.64% to 17,015.96. The market had moved in a narrow range, moving between positive and negative zone in early afternoon trade. A bout of volatility was witnessed earlier in the day. The market had opened on a firm note extending last week's rally. Sensex hit a high of 17,271.56 in early trade. At the day’s high, Sensex rose 145.58 points. Sensex hit a low of 16,978.89 in late trade. At day’s low Sensex fell 147.09 points.

The BSE clocked a turnover of Rs 5511 crore as compared to Rs 6060.58 crore on Friday, 25 April 2008.

The NSE's futures & options (F&O) segment turnover was Rs 25,459.22 crore, which was lower than Rs 33,831.87 crore on Friday, 25 April 2008.

The broader based S&P CNX Nifty was down 22.05 points or 0.43% at 5,089.65. Nifty May 2008 futures were at 5117, at a premium of 27.35 points as compared to spot closing of 5089.65.

The market breadth was negative on BSE with 1295 shares advancing as compared to 1374 that declined. 71 remained unchanged.

The BSE Mid-Cap index rose 0.16% to 7067.40 while BSE Small-Cap index declined 0.21% to 8,709.82.

BSE Metal index (down 0.71% to 15624.22), BSE IT index (down 0.9% to 4026.74), BSE Oil & Gas index (down 1.08% to 11430.02) and BSE Capital Goods index (down 1.2% to 13755.04) undrperformed Sensex.

BSE Consumer Durables index (up 1.87% to 4460.65), BSE PSU index (up 0.53% to 7878.78), BSe HealthCare index (up 0.32% to 4,215.91), BSE Realty index (up 0.22% to 8,168.07), BSE Power index (down 0.15% to 3,304.59) and BSE FMCG index (down 0.28% to 2,400.22), BSE Auto index (down 0.57% to 4,577.20) and BSE Bankex (down 0.58% to 8,816.54) outperformed Sensex

As per the provisional figure, Foreign institutional investors (FII) sold shares worth Rs 38.33 crore today, 28 April 2008 and domestic funds sold shares worth Rs 166.61 crore.

Capital goods stocks declined. Larsen & Toubro (down 0.86% to Rs 2,945.75), and Suzlon Energy (down 3.75% to Rs 278.45) edged lower. India’s largest electric equipment maker by sales Bharat Heavy Electricals was flat at Rs 1,867.

Oil & gas stocks were mostly in the red. Reliance Industries (down 1.24% to Rs 2,592.05), ONGC (down 0.72% to Rs 1,047.40), Reliance Petroleum (down 0.41% to Rs 193.95), BPCL (down 0.56% to Rs 391.40) and GAIL India (down 1.83% to Rs 436.90) edged lower. However, Indian Oil (up 1.88% to Rs 445) and HPCL (up 2.32% to Rs 253.35) edged higher.

New York crude oil futures hit a new record of $119.93 a barrel on Monday 28 April 2008, pushed higher as a refinery strike closed the BP PLC (BP)- operated Forties pipeline, which moves about 7,00,000 barrels of oil a day, or 40% of the UK's oil production.

Oil marketing firms Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) are making losses on retail sale of petrol and diesel as they are not allowed to pass on the rise in oil prices to retail consumers.

Consumer durables stocks rose. Titan Industries (up 6.38% to Rs 1,190.80), Lloyd Electric (up 3.65% to Rs 113.50), Videocon Industries (up 0.6% to Rs 378.95) edged higher.

IT stocks declined. Wipro (down 1.82% to Rs 457.70), Infosys (down 1.27% to Rs 1,664.95), Satyam Computer Services (down 0.37% to Rs 442.95) and Tata Consultancy Services (down 0.76% to Rs 883) edged lower.

Realty stocks rose. Unitech rose 1.61% to Rs 293.50. Two Middle East-based wireless operators — Kuwait’s Zain and UAE’s Emirates Telecommunications Corporation (Etisalat) — have reportedly joined South Africa’s MTN and Russia’s Altimo in the race to acquire 25-35% stake in Unitech’s new telecom venture.

Anant Raj Industries (up 8.01% to Rs 296.10) and DLF (up 0.06% to Rs 668.55) edged higher. However, Indiabulls Real Estate declined 2.56% to Rs 540.80. If the interest rates move up further, the cost of capital for new as well as ongoing realty projects will increase. The real estate market is already witnessing a slowdown and this will compound the problem.

Banking stocks declined. India’s largest private sector bank by assets ICICI Bank declined 2.31% to Rs 894.95. It came off from session's high of Rs 947. ICICI Bank reported 39.4% rise in net profit to Rs 1149.84 crore on 22.3% increase in operating income to Rs 10390.92 crore in Q4 March 2008 over Q4 March 2007.

India’s second largest private sector bank in terms of net profit HDFC Bank rose 1.38% to Rs 1517.95. However India’s largest commercial bank State Bank of India declined 0.77% to Rs 1,736.65.

India’s largest tractor maker by sales Mahindra & Mahindra declined 0.08% to Rs 635.25. The board of Mahindra & Mahindra will meet on Saturday, 3 May 2008 to consider a proposal for a private placement of securities.

India’s largest car maker by sales Maruti Suzuki India declined 1.68% to Rs 724.90. India's biggest motorcycle maker by market share Hero Honda Motors rose 1.34% to Rs 818.15.

India' s largest truck maker by sales Tata Motors declined 0.86% to Rs 633.60.

Metal stocks were mixed. Sesa Goa surged 5.91% to Rs 3,707. The board of Sesa Goa will meet today, 28 April 2008 to consider a stock split and bonus share issue. But Tata Steel (down 3.19 % to Rs 777.70), Steel Authority of India (down 0.82% to Rs 175.75), Hindalco Industries (down 1.48% to Rs 186.20) edged lower. India’s largest public sector aluminium maker by sales National Aluminium Company (Nalco) declined 1.52% to Rs 439.50. It has reportedly lined up a $1 billion investment to put up smelters and a power plant in Iran.

Sterlite Industries (India) rose 2.63% to Rs 857.90. It reported 46.50% rise in net profit to Rs 306.45 crore on 14.75% rise in sales to Rs 3379.53 crore in Q4 March 2008 over Q4 March 2007.

Reportedly, the government is planning duty rejig to cool steel prices. Government is set to remove import duty on pig iron, mild steel, metcoke and levy 10% export duty on bars, rods, HR coils, HR sheets, HSM plates, CR coils, CR sheets, galvanised steel products, pipes and tubes. Besides, export duty of 10% is likely to be imposed on semi-finished products like pig iron, sponge iron, steel and iron scraps, reports suggest.

Jaiprakash Associates (up 2.22% to Rs 251.15), Reliance Communications (up 1.34% to Rs 584.80), HDFC (up 0.96% to Rs 2719.75), NTPC (up 0.18% to Rs 192.95) edged higher from Sensex pack.

Cipla (down 4.08% to Rs 215.15), Ambuja Cement (down 1.26% to Rs 113.35), ACC (down 2.04% to Rs 766.80), Hindustan Unilever (down 1.02% to Rs 247.20) edged lower from Sensex pack.

India’s second largest power utility firm by sales Reliance Energy rose 4.95% to Rs 1,426.10. The company’s net profit rose 35.33% to Rs 1084.63 crore on 14.08% rise in total income to Rs 7501.2 crore in FY 2008 over FY 2007.

Reliance Natural Resources clocked the highest volume of 2.4 crore shares on BSE. Nagarjuna Fertilisers and Chemicals (1.59 crore shares), IFCI (1.14 crore shares), Ispat Industries (1.07 crore shares) and Indiabulls Securities (97.9 lakh shares) were the other volume toppers in that order.

Reliance Natural Resources clocked the highest turnover of Rs 304.54 crore on BSE. Reliance Energy (Rs 257.66 crore), Reliance Capital (Rs 173.89 crore), Reliance Industries (Rs 158.17 crore) and Orchid Chemicals & Pharmaceuticals (Rs 140.62 crore) were the other turnover toppers in that order.

European markets opened strong. France’s CAC 40, Germany’s DAX and UK’s FTSE 100 were up by between 0.45% to 1.01%.

Asian markets were mixed. Indices in Hong Kong, Japan, Singapore, Taiwan were up by between 0.22% to 0.53%. China’s Shanghai Composite was down 2.33% and Singapore’s Seoul composite was down 0.08%.

After witnessing a battering in the last three months, the market has staged a comeback in the past few days on the back of good Q4 results and on firm global markets. Buying by domestic institutions has supported the market. The BSE Sensex gained 2316.49 points or 15.64% to 17,125.98 on 25 April 2008 from a recent low of 14,809.49 touched on 17 March 2008. However, it is still off substantially from its all time high of 21,206.77 hit on 10 January 2008.

The next two-three days may see the market remain in a wait and watch mode because of important events. RBI is set to unveil annual monetary policy review on Tuesday, 29 April 2008. Given the high inflation, the central bank may hike key rates. The stock market has factored in a 25 basis points hike in short term rates by RBI.

Meanwhile, the two-day discussion on Finance Bill 2008-09 begins in Lok Sabha today. The Finance Bill will be passed in Lok Sabha tomorrow, 29 April 2008.

The two-day US Federal Reserve policy meeting ends on Wednesday, 30 April 2008. 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.

Meanwhile, good news for India is that as per the latest 2008 US-India Business Council (USIBC) survey, 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. USIBC, formed in 1975 at the request of the Government of India and the US Government to advance US-India commercial ties, is hosted under the aegis of the US Chamber of Commerce. The US Chamber of Commerce is the world's largest business federation representing more than 3 million businesses and organizations of every size, sector, and region.

The Dow Jones Industrial Average and S&P 500 rose on Friday, 25 April 2008, after signs that American Express Co was holding its own amid the economic slowdown, but Microsoft Corp's weak profit forecast pulled down the Nasdaq. American Express said its quarterly profit fell, but the results beat expectations and the company affirmed its full-year earnings forecast, lifting its shares 5.7% and helping to boost the Dow. Higher oil prices underpinned the market's rise by lifting shares of oil services companies nearly 2% after a cargo ship chartered by the US military fired warning shots at two small boats in the Gulf.

The Dow Jones industrial average rose 42.91 points, or 0.33%, to end at 12,891.86. The Standard & Poor's 500 Index gained 9.02 points, or 0.65%, to 1,397.84. But the Nasdaq Composite Index fell 5.99 points, or 0.25%, to 2,422.93.