Market extends losses for fourth week in a row

The market tumbled to register its lowest level in calendar year 2008 as soaring crude oil prices, spiraling inflation and weak global cues dampened sentiment. Heavy offloading from foreign institutional investors (FIIs) caused the market to register its fourth straight weekly loss in the week ended Friday, 13 June 2008. The key benchmark indices settled lower in three out of five trading sessions. BSE Mid-Cap and BSE Small-Cap indices outperformed the Sensex.

The BSE Sensex declined 382.56 points or 2.45% to 15,189.62 in the week ended 13 June 2008. The S&P CNX Nifty fell 110.70 points or 2.39% to 4,517.10 in the week.

The BSE Mid-Cap index fell 121.98 points or 1.92% to 6,228.17 in the week. The BSE Small-Cap index shed 114.33 points or 1.48% to 7,581.72.

The Sensex is down 6,017.15 points or 28.37% from its all-time high of 21,206.77 hit on 10 January 2008.

Foreign institutional investors (FIIs) pressed heavy sales in the backdrop of a weakening rupee against the dollar, accentuating fall in share prices. In June 2008, FIIs dumped shares worth Rs 5,321.50 crore (till 11 June 2008). FII outflow in calendar year 2008 totaled Rs 20,690.90 crore (till 11 June 2008). On the other hand, domestic funds were net buyers to the tune of Rs 894.89 crore in the month of June 2008, during this period.

Trading for the week started on a bearish note as key indices slumped on Monday, 9 June 2008, as surging global crude oil prices along with setback in US stocks played the spoilsport. The 30-share BSE Sensex tumbled 506.08 points or 3.25% at 15,066.10 and the broader based S&P CNX Nifty shed 126.85 points or 2.74% at 4,500.95, on that day.

The market extended losses on Tuesday, 10 June 2008, as weakness in global markets once again weighed on the domestic bourses. The 30-share BSE Sensex lost 176.85 points or 1.17% at 14,889.25 and the broader based S&P CNX Nifty was down 41.25 points or 1.14% at 4,449.80, on that day.

On that day both the key indices Sensex and Nifty hit their lowest levels in 2008, with Sensex hitting a low 14,645.31 Nifty 4369.80.

The market recovered on Wednesday, 11 June 2008, as investors resorted to bargain buying after recent steep fall in share prices, taking cue from firm Asian markets. The 30-share BSE Sensex rose 296.07 points or 1.99% at 15,185.32 and the broader based S&P CNX Nifty jumped 73.8 points or 1.66% at 4,523.60, on that day.

Improved April 2008 industrial production data, firm European markets and higher US futures markets triggered gains on domestic bourses on Thursday, 12 June 2008, after an earlier steep intra-day fall caused by the Reserve Bank of India (RBI)'s decision to raise repo rate - a short term interest rate by 25 basis points to 8% after trading hours the previous day. The 30-share BSE Sensex gained 64.88 points or 0.43% at 15,250.20 and the broader based S&P CNX Nifty rose 15.75 points or 0.35% at 4,539.35, on that day.

The market drifted lower on Friday, 13 June 2008, as inflation surged to a seven-year high. The 30-share BSE Sensex declined 60.58 points or 0.40% at 15,189.62 and the broader based S&P CNX Nifty shed 22.25 points or 0.49% at 4,517.10

India’s largest drugmaker by sales Ranbaxy Laboratories surged 11.86% to Rs 566.90 in the week. Ranbaxy founders Malvinder Singh and Shivinder Singh inked a deal to sell their combined 34.8% stake to Japanese drug maker Daiichi Sankyo at Rs 737 a share. Daiichi also seeks to acquire majority of the voting capital of Ranbaxy. The total transaction value is expected at about Rs 14740 crore to Rs 19800 crore depending on the response to a mandatory 20% open offer which Daiichi will be making to Ranbaxy shareholders.

India’s largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) rose 1.29% to Rs 2268.30. RIL's chairman Mukesh Ambani said that the company will pursue greenfield investment in polyester.

India’s second largest telecom services provider by sales Reliance Communication (RCom) slipped 0.63% to Rs 543.55. As per reports, RCom and the South African telcom company MTN will decide the share swap ratio at which Anil Ambani will transfer his stake in RCom to get stake in MTN. Both the companies have reportedly agreed for the deal, which will result in RCom promoter viz. the Anil Dhirubhai Group (ADAG) emerging as the single-largest shareholder in MTN and the foreign company becoming the holding firm of RCom.

India’s third largest IT exporter by sales Wipro declined 5.38% to Rs 477.85. It is reportedly bidding for 12 contracts worth at least $100 million each as it seeks bigger clients.

India’ largest engineering and construction firm by sales Larsen & Toubro (L&T) was up 1.05% to Rs 2,710.15. L&T has reportedly decided to delay the listing of its software business unit L&T Infotech to 2009-10, due to unfavourable market condition. The firm had earlier decided to go for L&T Infotech's initial public offer in the second half of this fiscal.

India’s largest private sector bank by net profit ICICI Bank shed 0.78% to Rs 764.80. It is reportedly cutting about 1000 jobs at different levels. While the company insists that only the poor performers have been asked to leave, reports say the job cut is part of the company's attempt at cutting cost, mainly in segments such as retail, rural and agri-credit.

India’s largest dedicated housing finance firm by operating income HDFC slumped 9.11% to Rs 2133.30. HDFC’s chairman Deepak Parekh said the company will take a decision on raising interest rates on home loans by end of this month. He said there was upward pressure on interest rates.

India’s largest commercial vehicle maker by sales Tata Motors lost 4.42% to Rs 516.20. As per reports, it plans to raise an additional $1 billion in the international market to fund its expansion plans, which include strategic alliances and acquisitions.

Diversified company Grasim Industries fell 3.56% to Rs 2182.30 after the company said on Tuesday, 10 June 2008, it has sold its sponge iron business Vikram Ispat to Welspun Power and Steel for Rs 1030 crore.

Among the side counters, GHCL (up 41.52% to Rs 71.75), Aurobindo Pharma (up 16.98% to Rs 329.95), Chambal Fertilisers & Chemicals (up 13.09% to Rs 91.15), Fortis Healthcare (up 16.03% to Rs 82.50), and Zenotech Laboratories (up 11.85% to Rs 109.45), surged.

Inflation based on wholesale price index rose 8.75% in the 12 months to 31 May 2008, above the previous week's annual rise of 8.24%, government data released on 13 June 2008, showed. The reading is highest since 10 February 2001, when it was 8.77%. Inflation for the week ended 5 April 2008 was revised to 7.71% as against 7.14% reported earlier.

The Reserve Bank of India (RBI) on Wednesday, 11 June 2008, raised short-term lending rate viz. the repo rate, by 25 basis points to 8% to contain inflation expectations.

Industrial production rose 7% in April 2008 from a year earlier, rebounding strongly from the previous month's provisional 3% rise, data released by the government on 12 June 2008, showed. Manufacturing production rose 7.5% in April 2008 from a year earlier, compared with a provisional 2.9% growth in March 2008.

On 9 June 2008, Finance Minister P Chidambaram said the Indian economy is expected to grow 8.5% in the fiscal year ending March 2009. Chidambaram also said the government’s target for direct tax receipts for 2008/09 would be revised upwards from the current Rs 3.65 trillion.