Fears of early election rattles bourses

Mounting political concern was the key culprit that haunted bourses since second half of day's trading session, wiping-off steady early gains. A late sell-off resulted in the benchmark index BSE Sensex cracking below the physcological 16,000 mark, only to close slightly above that level. However the S&P CNX Nifty shut shop below 4,750 level. The market breadth was weak. Asian markets, which opened before Indian markets were firm.

The market which was firm till early afternoon trade, witnessed a sharp sell-off thereafter triggered by reports that the Revolutionary Socialist Party (RSP), a member of the Left Front led by the Communist Party of India-Marxist (CPM) was pulling out of the United Progressive Alliance (UPA)-Left coordination committee. Wary investors pressed sales over uncertainty that Left parties may withdraw support to the government.

Weak European markets, slower manufacturing growth and widening trade deficit, were the other demons that haunted the markets. Shares from realty, metal and banking were axed brutally. However auto stocks held firm throughout the day.

The 30-share BSE Sensex eroded a sharp 352.39 points or 2.15% to 16,063.18. The index climbed 217.15 points at day’s high of 16,632.72, hit at the onset of trading session. Sensex lost 424.36 points at day’s low of 15991.21.

The broader based S&P CNX Nifty declined 130.5 points or 2.68% to shut shop at 4,739.60. Nifty has struck an intra-day high of 4,908.80 in opening trade. Nifty June 2008 futures were at 4696, a sharp discount of 43.60 points as compared to spot closing of 4739.60.

The market breadth was weak on BSE with 600 shares advancing as compared to 2066 stocks that declined. 50 stocks remained unchanged.

The BSE Mid-Cap index declined 2.61% to 6,584.19 and BSE Small-Cap index down 2.13% to 7,959.51.

Among the sectoral indices on BSE, the BSE Realty index (down 4% at 6,728.13), BSE PSU index (down 3.84% to 6,087.83), BSE Metal index (down 3.66% to 16,295.26), BSE Power (down 3.66% to 2,828.74), BSE Bankex (down 3.37% at 7,454.33), BSE Consumer Durables index (up 2.94% to 4,193.75), underperformed Sensex.

However the BSE Auto index (up 0.06% at 4,358.21), BSE FMCG index (down 0.67% at 2,411.48), BSE Health Care index (down 1.04% at 4,350.42), BSE IT index (down 1.37% to 4,580.35), BSE TecK index (down 1.48% to 3,561.57), BSE Oil & Gas index (down 1.83% to 10,206.71) BSE Capital Goods index (down 2.6% at 12,808.75) outperformed Sensex.

BSE clocked a turnover of Rs 4,779 crore today compared to a turnover of Rs 5514.14 crore on 30 May 2008.

The NSE futures & options (F&O) segment turnover was Rs 35,257.77 crore, which was slightly lower than Rs 35,883.79 crore on Friday, 30 May 2008.

Prime Minister Manmohan Singh reportedly said that the government is left with no option but to hike the fuel prices in the wake of soaring global crude oil prices. However government's move to hike fuel price will face challenge from Left, and may propel inflation above 10%.

On the other hand, if government does not hike prices, oil marketing companies will go bankrupt, spoiling its report card.

As per petroleum minister's proposal, a hike of Rs 10 a litre in petrol prices, Rs 5 per litre in diesel and Rs 50 per cylinder in cooking fuel is to be considered to cut losses being incurred by the state-run firms. But the Left parties had said they would oppose any move to hike prices of transport and cooking fuels since the average citizen was already burdened by high inflation.

Indian manufacturing activity slowed a fraction in May 2008 to its lowest in 10 months, although output and new export orders rose, but input and factory gate prices increased, a survey showed. The ABN AMRO Bank purchasing managers' index (PMI) was a seasonally adjusted 57.4 in May 2008 after 57.5 in April 2008, significantly below its December 2007 reading of 61.9 which was the highest in the survey's three-year history.

Meanwhile, trade deficit widened to $9.87 billion in April 2008 as against $6.81 billion in April 2007. Exports grew to $14.4 billion in April 2008-09, against $10.95 billion a year ago.

India’s largest private sector firm by market capitalisation and oil refiner Reliance Industries declined 1.91% to Rs 2,355.70. It came off from its high of Rs 2437.

Interest rate sensitives, realty and banking sectors suffered sharp cut in today's trade. Indiabulls real Estate (down 1.86% to Rs 472.20), Unitech (down 6.47% to Rs 217.45) and DLF (down 3.37% to Rs 567.65) edged lower from real estate sector.

Banking stocks declined on fears of further surge in inflation post fuel price hike. HDFC Bank (down 3.78% to Rs 1,306.55), ICICI Bank (down 2.97% to Rs 764.85) and State Bank of India (down 3.41% to Rs 1,394.10) edged lower.

Metal stocks declined after the Centre withdrew duty drawback benefits on all iron & steel shipments. The move was aimed at discouraging exports in the face of domestic inflationary pressures. Tata Steel (down 3.86% to Rs 868.05), National Aluminium Company (down 5.11% to Rs 506.60) and Hindalco Industries (down 5.05% to Rs 182.25), Steel Authority of India (down 3.54% to Rs 154) edged lower.

Power stocks declined on profit booing. Reliance Infrastructure (down 4.9% to Rs 1,170.40), NTPC (down 6.39% to Rs 161.25), Power Grid Corporation of India (down 4.11% to Rs 94.45), Reliance Power (down 3.07% to Rs 228.60) and Tata Power Company (down 4.77% to Rs 1,292) declined.

However auto stocks held gains after posting rise in May 2008 monthly sales. Bajaj Auto rose 0.27% to Rs 576 after posting 7.57% rise in motorcycle sales to 179,649 units in May 2008 over May 2007.The sale of total two wheelers rose 6.86% to 180,935 units, in May 2008 over May 2007. The total two and three wheeler sale rose by 4.17% to 201,511 units in May 2008 over May 2007.

India’s largest motorcycle maker by sales Hero Honda Motors rose 5.6% to Rs 788.55. It reported a 9.54 % rise in its motorcycle sales in May 2008 at 3,12,317 units as compared with 2,85,109 units in May 2007.

India’s largest car maker by sales Maruti Suzuki India rose 2.94% to Rs 787. The company’s total vehilcle sales rose 16% to 69,001 units in May 2008 over May 2007. Mahindra & Mahindra (up 0.76% to Rs 597.05) edged higher. However Tata Motors declined 0.85% to Rs 572.

ITC (up 1.01% to Rs 219.85) and Bharti Airtel (up 0.14% to Rs 877.70) edged higher.

ACC (down 5.23% to Rs 626.10), Bharat Heavy Electricals (down4% to Rs 1595.65), Reliance Communications (down 3.78% to Rs 555.35), Ambuja Cements (down 3.1% to Rs 92.25), Ranbaxy Laboratories (down 2.76% to Rs 514.05), Wipro (down 2.51% to Rs 495.25 edged lower.

IFCI clocked the highest volume of 1.84 crore shares on BSE. Ispat Industries (1.6 crore shares), Spice Communications (1.17 crore shares), Chambal Fertilizers and Chemicals (1.14 crore shares) and Reliance Natural Resources (94.69 lakh shares) are other volume toppers in that order.

Essar Oil clocked the highest turnover of Rs 183.42 crore on BSE. Reliance Capital (Rs 180.98 crore), Reliance Industries (Rs 173.06 crore), GSS America Infotech (Rs 142.8 crore) and Reliance Petroleum (Rs 142.36 crore) are among other turnover toppers in that order.

Among the side counters, private sector oil refiner Essar Oil soared 5.61% to Rs 236.20. The company is reportedly mulling upto $5 billion fresh debt to fund its $6 billion refinery capacity expansion programme at Vadinar, Gujarat and for acquisition of oil and gas blocks.

India's largest drug maker by market capitalisation Sun Pharmaceuticals jumped 3.13% to Rs 1,446.80. The company reported 59.2% surge in net profit to Rs 247.89 crore on 32.1% rise in net sales to Rs 780.74 crore in Q4 March 2008 over Q4 March 2007. The company announced the results after trading hours on Friday, 30 May 2008.

Monsanto India plunged 14.12% to Rs 1653.10 after the company’s shares started trading at Rs 180 per share ex-dividend from today, 2 June 2008.

Sesa Goa slumped 7.94% to Rs 3,946.25 after reports that the government has imposed 15% export duty on iron ore.

Zandu Pharmaceuticals Works galloped 19.54% to Rs 9,714.90 after Emami raised its stake in the company to 27.51% for an undisclosed amount.

Punj Lloyd plunged 10.53% to Rs 287.05 despite reporting 459.6% surge in net profit to Rs 129.71 crore on 87.8% rise in net sales to Rs 1499.40 crore in Q4 March 2008 over Q4 March 2007.

Sterlite Industries India declined 1.95% to Rs 916.70 after the company agreed to buy assets of USA's third largest copper producer Asarco for $2.6 billion in cash.

European markets, which opened after Indian market, were trading weak. Key benchmark indices in France, Germany and UK were down by between 1.1% to 1.36%.

Most of the Asian markets settled higher today, 2 June 2008. Hong Kong's Hang Seng, Taiwan Weighted, Singapore's Straits Times and Japan's Nikkei, China's Shanghai Composite were up by between 0.34% to 1.22%.

However South Korea’s Seoul Composite declined 0.24% at 1,847.99.

US markets closed mixed on Friday, 30 May 2008. Dell earnings were better than expectations and rebound in oil price led technology and energy shares higher. The Dow Jones industrial average fell 7.9 points to 12,638.32. However the technology-led Nasdaq Composite index gained 14.34 points to 2, 522.66.

U.S. light, sweet crude oil futures dipped 14 cents to $127.21 a barrel today, 2 June 2008 as traders took profits tracking the dollar for direction.

India's GDP grew a strong 8.8% in Q4 March 2008 from a year earlier, led by strong expansion in the services sector, data released by the government on Friday, 30 May 2008 showed. The Q4 annual GDP growth matched an upwardly revised 8.8% growth in Q3 December 2007. The GDP growth was 9% in FY 2008 (year ended March 2008). The government had earlier estimated annual growth of 8.7% in FY 2008.

India's inflation based on the wholesale price index rose 8.1% in 12 months to 17 May 2008, the highest reading in more than 3-½ years and above the previous week's annual rise of 7.82%, government data released on Friday, 30 May 2008, showed. Inflation for the week ended 22 March 2008 was revised upwards to 7.85% from 7%.

Liberalisation of imports, banning exports and a cut in excise and customs duties are some of the many steps initiated by the United Progressive Alliance (UPA) government to control inflation in the country, Finance Minister P Chidambaram said on 1 June 2008.