Inflation worries, oil price surge rattle bourses

A setback to stocks in Asia and US, sharp spurt in crude oil prices and political uncertainty due to Indo-US nuclear deal rattled bourses. Sustained selling pressure in index pivotals throughout the day kept market depressed. Fears of a further monetary tightening by the Reserve Bank of India (RBI) following surge in inflation to more than a 13-year high weighed on the sentiment. The BSE Mid-Cap index, ICICI Bank and Tata Motors touched 52-week lows today.

After an initial sharp fall, the market had staged a mild recovery from lower level in early afternoon trade which proved short lived as news that crude oil has hit a fresh record high of $141.71 a barrel, once again spooked the market and Sensex ended at the lowest level of the day.

Inflation based on the wholesale price index stood at 11.42% for the week ended 14 June 2008, the highest reading in more than 13 years. The rise has been primarily on account of higher prices of food items like tea, milk and cereals. The other commodities, whose prices went up during the week were lubricants and manufactured items.

The market breadth was weak. Realty, auto and banking stocks declined sharply. Shares of oil marketing and air carriers were hit hard following surge in crude oil prices.

Political uncertainty continued to dog bourses. As per reports in a section of the media, Congress president Sonia Gandhi has given the green signal to Prime Minister Manmohan Singh to go ahead with the Indo-US nuclear deal even if it leads to the collapse of the government at the Centre. Left parties are opposing the deal and they have threatened to withdraw their support to the government if it went ahead with operationalisation of the deal.

US stocks plunged on Thursday, 26 June 2008, with the Dow Jones Industrial Average sliding about 360 points to a 21-month low as oil hit a record and Goldman Sachs urged investors to sell bank and automaker shares, escalating concern about the outlook for profits.

The 30-share BSE Sensex slumped 619.60 points or 4.30% to 13,802.22. The barometer index opened with a sharp downward gap of 294.06 points at 14,127.76. Intense selling pulled it lower to day’s low of 13,760.78, which is its lowest level in more than 13 months. The Sensex lost 661.04 points at day’s low hit in fag trade.

The broader based S&P CNX Nifty tanked 179.20 points or 4.15% at 4,136.65. The Nifty slipped to a low of 4,119.20 which is its 10-month low. Nifty July 2008 futures were at 4,075 a sharp discount of 61.65 points as compared to spot closing.

Nifty June 2008 expired yesterday, 26 June 2008. As per reports, the marketwide rollover of positions from June 2008 contracts to July 2008 contracts in the derivatives segment stood at 82% while that of Nifty was 70%. June 2008 derivaties contracts expired yesterday, 26 June 2008.

The BSE Sensex is down 6484.77 points or 31.96% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2008. It is 7404.55 points or 34.91% away from its all-time high of 21,206.77 struck on 10 January 2008.

All sectoral indices on BSE settled with losses today. The BSE Power (down 4.87% to 2,335.26), BSE Realty index (down 4.45% at 4,875.25), BSE Metal index (down 4.53% to 13,292.45), BSE Auto (down 5.26% at 3,689.92), BSE Bankex (down 5.34% at 6,125.95), underperformed the Sensex.

The BSE Oil & Gas index (down 2.99% to 9,387.63), BSE PSU index (down 4.29% to 5,821.62), BSE Capital Goods index (down 4.09% at 10,442.14), BSE TecK index (down 3.86% to 3,093.63), BSE Consumer Durables index (down 3.13% to 3,649.33), BSE FMCG index (down 3.24% to 2,073.15), BSE Health Care index (down 1.40% at 4,150.05), BSE IT index (down 4.24% to 4,004.75), outperformed the Sensex.

Standard and Poor’s (S&P) and its Indian subsidiary Crisil have lowered their India growth forecast for the current year to 7.8% from 8.1-8.6% earlier. The agencies said that the Indian economy would be hit by the surge in inflation fuelled by energy and commodity prices.

The market breadth was weak on BSE with 2038 shares declining as compared to 617 that advanced. 54 remained unchanged.

The BSE Mid-Cap index was down 3.19% to 5,559.07 after touching a 52-week low of 5,542.35. The BSE Small-Cap index shed 2.68% to 6,938.07. Both these indices outperformed the Sensex.

The total turnover on BSE amounted to Rs 5,890 crore as compared to Rs 5,205.78 crore yesterday, 26 June 2008. The turnover was boosted by 3 large block deals of 20.12 lakh shares each on ACC counter on BSE struck at an average price of Rs 596 per share in opening trade. It was the top traded counter on BSE with turnover of Rs 730.18 crore. The stock slipped 3.61% to Rs 578.

Reliance Industries (Rs 540.09 crore), Reliance Capital (Rs 308.13 crore), Reliance Petroleum (Rs 284.19 crore), and Tata Steel (Rs 258.03 crore), were the other turnover toppers on BSE.

All the 30-members from the Sensex pack suffered losses.

Auto stocks dropped on fears a surge in oil may impact their sales. India’s top tractor maker in terms of sales, Mahindra & Mahindra (M&M) slumped 8.98% to Rs 503, also its 52-week low. 61,161 shares were traded on the counter. It was the top loser from Sensex pack.

Ashok Leyland (down 4.75% to Rs 30.10), Hero Honda Motors (down 4.80% to Rs 679), and Maruti Suzuki India (down 3.97% to Rs 650), were the other losers from auto pack.

India’s top truck manufacturer in terms of sales, Tata Motors slumped 8.06% to Rs 450. The stock touched a 52-week low of Rs 445.05 on BSE.

India’s largest private sector company in terms of market capitalisation and oil refiner Reliance Industries (RIL) shed 3.20% to Rs 2167.70 on 24.72 lakh shares. The stock moved in a range of Rs 2137 and Rs 2247. RIL will start pumping 25 million standard cubic metres a day (mmscmd) of natural gas by September from its D-6 field in the Krishna Godavari basin, the oil ministry said on Wednesday, 25 June 2008. It said the output would be raised to 40 mmscmd by March 2009.

Jaiprakash Associates (down 7.37% to Rs 142.10), Ambuja Cements (down 7.66% to Rs 80.80), and HDFC (down 8.05% to Rs 2055) edged lower from Sensex pack.

Frontline telecom stocks Bharti Airtel (down 3.04% to Rs 744), Reliance Communications (down 4.79% to Rs 472), and Idea Cellular (down 4.44% to Rs 95.80), also tumbled in the market meltdown.

Software stocks dropped on concerns about the impact of a slowing US economy, their key market. Wipro (down 6.25% to Rs 450), Infosys Technologies (down 4.48% to Rs 1702), and TCS (down 2.15% to Rs 858), slumped.

Satyam Computer Services, the country’s fourth largest software services exporter fell 4.49% to Rs 439.15 even as the company said it has formed an alliance with US based Sciformix Corporation to provide end to end management services in 'Pharmacovigilance'. The company made this announcement after trading hours yesterday, 26 June 2007.

Banking shares were weak after inflation data was released, with India’s largest private sector bank in terms of net profit ICICI Bank striking 52-week low of Rs 643 on BSE. The stock crashed 6.71% to Rs 650.90.

State Bank of India (down 5.36% to Rs 1151), Kotak Mahindra Bank (down 5.89% to Rs 487.95), Axis Bank (down 7.39% to Rs 626.25), Bank of India (down 8.50% to Rs 224.90), and HDFC Bank (down 3.91% to Rs 1017), were the other losers from banking sector.

Power and power sector related stocks declined on selling pressure. Tata Power Company (down 6.46% to Rs 1054), Suzlon Energy (down 4.88% to Rs 230.80), Reliance Infrastructures (down 7.98% to Rs 884), Bharat Heavy Electricals (down 3.98% to Rs 1380), edged lower.

Real estate stocks slipped on selling pressure, with the BSE Realty index touching 52-week low of 4,841.49. Akruti City (down 0.85% to Rs 714.20), DLF (down 5.70% to Rs 424.20), Ansal Infrastructure (down 5.52% to Rs 74.50), Phoenix Mills (down 13.11% to Rs 163.70), were not spared either.

Unitech slipped 1.51% to Rs 183 after posting 50.76% fall in net profit to Rs 175.84 crore on 14.08% decline in total income to Rs 759.65 crore in Q4 March 2008 over Q4 March 2007. The company announced the results during trading hours today, 27 June 2008.

Tata Steel, the world's sixth-largest steelmaker in terms of sales, saw high volatility in the day. The stock settled 4.49% lower at Rs 723.10 after striking day’s high of Rs 783.90 and day’s low of Rs 721.15. The counter saw high volumes of 34.37 lakh shares. On Thursday 26 June 2008, the company reported 195.64% jump in consolidated net profit to Rs 12349.98 crore on 415.04% growth in total income to Rs 132110.09 crore in the year ended March 2008 (FY 2008) over the year ended March 2007. The results are non-comparable due to merger Corus Group with Tata Steel in FY 2008.

At the time of announcing the results, Tata Steel managing director B. Muthuraman said it had raised prices for one-year steel sale contracts. 25% of Tata Steel's total sales were through annual contracts, he said.

Ranbaxy Laboratories (down 2.01% to Rs 523.60), NTPC (down 2.25% to Rs 152.20), and Cipla (down 2.75% to Rs 210.70), outperformed the Sense.

Oil marketing companies declined as surge in crude oil prices to record high will increase their under recoveries. Hindustan Petroleum Corporation (down 6.29% to Rs 184.60), Bharat Petroleum Corporation (down 9.43% to Rs 244), and Indian Oil Corporation (down 3.46% to Rs 342), declined.

Shares of air carriers also declined on selling pressure in the wake of surging oil prices. Jet Airways (down 5.56% to Rs 489.10), SpiceJet (down 5.10% to Rs 26.10), and Deccan Aviation (down 7.71% to Rs 70), slipped.

However upstream oil company, Cairn India rose 1.59% to Rs 275.50 as rising crude oil augurs well for the oil exploration firm.

Debutante Bafna Pharmaceuticals topped volumes charts clocking volumes of 2.28 crore shares followed by Reliance Petroleum (1.63 crore shares), Chambal Fertilisers & Chemicals (1.16 crore shares), Niraj Cement & Structurals (1.09 crore shares) and Reliance Natural Resources (1.07 crore shares), in that order.

Among the side counters, Hindustan Construction Company (down 13.71% to Rs 83.70), S Kumars Nationwide (down 18.28% to Rs 80), Kaveri Telecom (down 20% to Rs 117.65), Atlas Copco (down 10% to Rs 960.65), and Bartronics (down 9.75% to Rs 170.30), slumped.

Bafna Pharmaceuticals, a multi-product pharmaceutical formulations company, settled at Rs 38.50, a 3.75% discount of over its price of Rs 40 per share. The stock listed on BSE at Rs 43.80, a premium of 9.5%. The stock hit a low and high of Rs 37.30 and Rs 47.20 during the day. The company’s IPO was subscribed 4.96 times.

Allcargo Global Logistics gained 2.49% to Rs 825 after the company said its board has deferred a decision on sub-division of the equity shares. The company made this announcement before trading hours today, 27 June 2007.

Sun Pharmaceutical Industries slipped 0.77% to Rs 1332 after the company said it has exercised the option under its option agreement to acquire all the shares held by the controlling shareholders of Israel’s Taro Pharma. The company announced this before trading hours today, 27 June 2007.

ABG Shipyard plunged 5.93% to Rs 352.10 despite securing an order worth Rs 585 crore from Sealion Shipping for construction of three sub-sea multi purpose vessels. The company made this announcement before trading hours today, 27 June 2007.

Religare Enterprises declined 2.45% to Rs 388 even as it reported 109.4% surge in net profit to Rs 23.45 crore on 107.3% growth in operating income to Rs 31.89 crore in the year ended March 2008 over the year ended March 2007.

National Aluminium Company plunged 10.75% to Rs 330 following reports the company formed a joint venture with Tata Africa to set up a $3 billion aluminium smelter and power plants in South Africa.

Parsvnath Developers declined 3.73% to Rs 131.50 despite bagging an order worth Rs 125 crore from the state government of Bihar for building a park in an area of 2.9 million square feet.

Anant Raj Industries jumped 5.19% to Rs 142.85 after the company said a Bahrain realty fund acquired a minority stake in its subsidiary Anant Raj Projects for Rs 216.38 crore. The company made this announcement during trading hours today, 27 June 2007.

European markets, which opened after Indian markets, were trading lower. Key benchmark indices in United Kingdom, Germany and France were down by between 0.28% and 1.33%.