Bears rule the roost

Bears are in total command of the proceedings on the stock exchanges. Bulls are in hibernation. Equities extended losses for the fifth straight day today with the barometer index BSE Sensex falling below the psychologically important 14,000 mark for the first time in 10 months since late August 2007. However, it settled above that level. Heavy selling pressure in index pivotals during the second half of the trading sessions spooked the market. Metal, IT and FMCG shares were the worst hit in today’s trade.

Choppy swings were witnessed in late trade with the Sensex even bouncing in the green for a while led by solid rally in index heavyweight Reliance Industries (RIL). However, as RIL quickly pared gains, the Sensex plunged in late trade. The market breadth was weak. All sectoral indices in BSE suffered losses. Asian and European markets were trading lower.

Fears of further increase in interest rates to tame inflation continued to weigh on the market sentiment. Reserve Bank of India (RBI) governor signaled on Monday, 23 June 2008, that the central bank will tighten monetary policy further to tackle inflation that surged past 11% in early June 2008 to a 13-year high.

As per provisional data, foreign funds today, 24 June 2008, bought shares worth a net Rs 90.06 crore. Domestic funds bought shares worth a net Rs 475.94 crore.

The 30-share BSE Sensex was down 186.74 points or 1.31% at 14,106.58. Sensex lost 302.01 points at day’s low of 13,991.31 hit at the fag end of the trading session. It was the Sensex's lowest level in 10 months since 22 August 2007.

At the day’s high of 14,432.90, the Sensex gained 139.58 points in early trade.

The broader based S&P CNX Nifty slumped 75.30 points or 1.76% at 4,191.10. Nifty hit a low of 4,156.10, its lowest level in 10 months since 24 August 2007.

Nifty June 2008 futures were at 4159.70, a sharp discount of 31.40 points as compared to spot closing.

Bears have been calling the shots on the bourses for a while now. The Sensex has lost 1590.32 points or 10.13% in five trading sessions, from its close of 15,696.90 on 17 June 2008, due to political uncertainty, and on fears of further rise in interest rates by the Reserve Bank of India to combat inflation

The barometer index has shaved 6180.41 points or 30.46% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2008. It is down 7100.19 points or 33.48% from its all-time high of 21,206.77 struck on 10 January 2008.

In a crucial global event, the US Federal Reserve is expected to hold key rate for short-term lending at its current 2%, at its two-day policy meeting that begins today, 24 June 2008. Investors will scrutinise the statement accompanying the decision for clues on the future course of monetary policy.

Meanwhile, a crucial UPA-Left meeting on the controversial civilian nuclear deal with the United States is scheduled tomorrow, 25 June 2008. The left allies, whose parliamentary support is crucial to the Congress-led United Progress Alliance (UPA) government at the Centre, have said they would withdrew support if the government went ahead with the deal.

All the sectoral indices on BSE were in the red today. The BSE Metal index (down 3.52% to 13,368.82), BSE Power (down 1.64% to 2,398.09), BSE Realty index (down 1.72% at 5,098.44), BSE FMCG index (down 2.54% to 2,146.63), BSE Auto (down 2.06% at 3,842.77), BSE TecK index (down 2.08% to 3,161.59), BSE Consumer Durables index (down 1.46% to 3,719.09), BSE IT index (down 2.17% to 4,141.51), BSE Bankex (down 1.97% at 6,499.66), BSE Capital Goods index (down 1.46% at 10,639.60), BSE PSU index (down 2.80% to 6,040.08), underperformed the Sensex.

The BSE Oil & Gas index (down 0.28% to 9,146.43), and BSE Health Care index (down 1.29% at 4,165.61), outperformed the Sensex.

The market breadth was weak. On BSE, 1930 shares declined as compared to 713 that advanced. 67 remained unchanged.

The BSE Mid-Cap index slipped 1.76% to 5,712.74 and the BSE Small-Cap index fell 1.82% to 7,006.42. Both these indices underperformed the Sensex.

The total turnover on BSE amounted to Rs 5355 crore as against Rs 5,035.83 crore yesterday, 23 June 2008. Turnover on NSE’s futures & options segment amounted to Rs 70250.13 crore as compared to Rs 66917.33 crore yesterday, 23 June 2008.

Reports that Indian coroprates have paid higher advance tax in the first installment of June 2008 over the corresponding period of the previous year has failed to lift the sentiments on the bourses. As per reports, corporate advance tax payment rose 27% to Rs 21,000 crore in the first installment of 15 June 2008. Advance taxes are paid in four installments, in June, September, December and March. Usually, the first installment is 15% of the total tax estimated to be paid for the whole fiscal.

Among the 30-member Sensex pack, 24 declined while the rest gained in today's trade. India's largest private sector engineering company in terms of order book Larsen & Tourbo declined 4.23% to Rs 2294.95

Metal shares declined sharply. India’s largest private sector steel maker Tata Steel plunged 7.08% to Rs 692.80 on 12.52 lakh shares. It was the top loser from Sensex pack.

Sterlite Industries (down 5.39% to Rs 698.10), Hindalco Industries (down 3.65% to Rs 143), National Aluminium Company (down 11.20% to Rs 359.95), Jindal Steel & Power (down 4.95% to Rs 1810.05), and Sesa Goa (down 4.3% to Rs 3230) were the other major losers from the metal sector.

Hindustan Unilever (down 6.38% to Rs 212.10), Dabur India (down 4.40% to Rs 88.10), ITC (down 2.74% to Rs 190.05), Marico (down 5.58% to Rs 58.40), and Nestle India (down 0.70% to Rs 1648), edged lower from the FMCG sector.

Among the real estate stocks, Ansal Infrastructure (down 5.41% to Rs 83), DLF (down 1.43% to Rs 439.85), Unitech (down 0.47% to Rs 170.65), Sobha Developers (down 1.66% to Rs 323.85), and Parsvnath Developers (down 1.84% to Rs 141.15), declined.

India’s largest private sector company in terms of market capitalisation and oil refiner Reliance Industries (RIL) saw high volatility in the day. The stock settled 0.80% higher to Rs 2038.30 on 16.45 lakh shares. The stock swung wildly in a range of Rs 2012 and Rs 2133.70 during the day. As per recent reports, RIL plans to open its first North American plant in North Carolina by investing $215 million.

India’s largest power generation company in terms of sales, NTPC lost 4.84% to Rs 154.20. As per reports, NTPC had paid 6.9% lower advance tax at Rs 188 crore in the first installment of this financial year over the corresponding period in the previous year.

India’s largest state-run oil exploration company Oil & Natural Gas Corporation (ONGC) fell 4.75% to Rs 845.15. ONGC has decided to exit projects to set up a refinery and a special economic zone Andhra Pradesh, the company said on Monday, 23 June 2008. ONGC will unveil its Q4 and year ended March 2008 results on Wednesday, 25 June 2008.

Banking stocks slipped on selling pressure. ICICI Bank (down 2.95% to Rs 700.10), HDFC Bank (down 4.62% to Rs 1046) and State Bank of India (down 0.17% to Rs 1203), edged higher.

Software stocks slipped in the red after firm start. Satyam Computer Services (down 2.09% to Rs 450.50, off day’s high of Rs 465.75), Infosys Technologies (down 4.08% to Rs 1772.05, off day’s high of Rs 1859.90), and TCS (down 1.26% to Rs 847, off day’s high of Rs 864.80) declined.

Wipro, the country’s third largest software services exporter was down 2% to Rs 470. Wipro has reportedly raised close to Rs 1,400 crore (35 billion Yen) through external commercial borrowings (ECBs). The company has been pursuing an aggressive acquisition strategy over the last few years and it concluded two major acquisitions in the year ended March 2008 including Unza and Infocrossing for a cumulative value of close to $900 million. As of 31 March 2008, Wipro had cash and bank balance Rs 3,927 crore.

Reliance Communications (RCom), the country’s second largest telecom services provider in terms of market capitalisation slumped 2.85% to Rs 474. RCom’s proposed merger deal with South Africa based global operator, MTN is reportedly expected to close by first week of July 2008 with RCom likely to acquire 40% stake in the merged entity.

India’s leading pharma company in terms of sales, Ranbaxy Laboratories gained 2.44% to Rs 526 on 14.58 lakh shares. It was the top gainer from Sensex pack.

Bharat Heavy Electricals (Bhel), the country’s largest state-run engineering company in terms of order book, gained 2.10% to Rs 1390. As per reports, Bhel has paid 42.8% higher advance tax at Rs 300 crore in the first installment of this financial year over the corresponding period in the previous year.

India’s dedicated housing finance company Housing Development Finance Corporation advanced 2.05% to Rs 2260. The stock moved in a range of Rs 2182 and Rs 2300 in the day.

Reliance Capital was the top traded counter on BSE with turnover of Rs 454.33 crore followed by Reliance Industries (Rs 341.56 crore), Tata Steel (Rs 239.07 crore), Reliance Communication (Rs 184.91 crore), and Anu’s Labs (Rs 177.87 crore), in that order.

Reliance Natural Resources topped the volumes charts on BSE clocking volumes of 1.39 crore shares followed by IFC (1.32 crore shares), Reliance Petroleum (1.03 crore shares), Chambal Fertislisers & Chemicals (99.16 lakh shares) and Ispat Industries (84.14 lakh shares), in that order.

Among side counters, Simplex Projects (down 13.88% to Rs 184.30), ANG Auto (down 13.81% to Rs 68), Niraj cement & Structurals (down 12.03% to Rs 165.20), Spice Communications (down 11.48% to Rs 53.20), Educomp Solutions (down 11.20% tp Rs 2938), slumped

Indian Hotels Company declined 4.36% to Rs 88.90 on reporting 0.3% rise in net profit to Rs 134.88 crore on 10.4% rise in sales to Rs 557.63 crore in Q4 March 2008 over Q4 March 2007. The company announced result after trading hours on Monday, 23 June 2008.

Jetking Infotrain soared 12.73% to Rs 310 after the company said its board will meet on 30 June 2008 to consider issue of bonus shares. The company made this announcement during trading hours today, 24 June 2007.

Orchid Chemicals & Pharmaceuticals fell 4.81% to Rs 225.50 after the company said it had secured Canadian regulatory approval to sell a combination antibiotic injection in that country. The company made this announcement during trading hours today, 24 June 2007.

Tech Mahindra slipped 2.21% to Rs 745 despite signing a contract with Telecom New Zealand for program management and systems integration for the latter's retail business.

Tata Power Company declined 6.93% to Rs 1110 despite reporting 24.8% rise in net profit to Rs 869.90 crore in the year ended March 2008 over the year ended March 2007 The company announced the results after trading hours on Monday, 23 June 2007.

GAIL India tumbled 5.42% to Rs 357.90, off sharply from day’s high of Rs 394, after its board recommended issue of bonus shares in the ratio of one equity share for every two shares held. The company made this announcement before trading hours today, 24 June 2007.

European markets, which opened after Indian market, slipped into the red after firm opening. Key benchmark indices in United Kingdom, France and Germany were down by between 1.18% and 1.48%.

Crude oil prices continue to hold firm. Crude for August delivery was up 20 cents at $136.94 a barrel today, 24 June 2008 amid fears of Nigerian supply disruptions and tensions between Israel and Iran. It had hit a record high of $139.89 on 16 June 2008. Oil price has risen about 40% in this calendar year so far.

Asian markets, which opened before Indian market, were trading lower except China's Shanghai Composite which rose 1.50% at 2,801.72. Japan's Nikkei (down 0.06% at 13,849.56), Hong Kong's Hang Seng (down 1.14% at 22,456.02), Taiwan's Taiwan Weighted (down 1.76% at 7,738.12), Singapore's Straits Times (down 0.57% at 2,962.20) and South Korea's Seoul Composite (down 0.28% at 1,710.84) slipped.

US markets lost some ground yesterday, 23 June 2008, sending financial shares to their lowest level in five years, on a deteriorating outlook for bank earnings. The Dow Jones industrial average dropped 0.33 points, or less than 0.01%, to 11,842.36. The Standard & Poor's 500 index gained 0.07 points, or 0.01%, to 1,318.00, and the Nasdaq composite index lost 20.35 points, or 0.85%, to 2,385.74.

Back home, volatility is expected to remain high on the Indian bourses in the near term as derivatives contracts for June series are set to expire on Thursday, 26 June 2008. As per reports, the marketwide rollover of positions from June 2008 series to July 2008 series stood at 26.50% while that of Nifty was 31%, as on Friday, 20 June 2008.