Sensex sheds 618 points

The soaring crude oil prices, high inflation and sustained selling by foreign institutional investors (FIIs) pulled the market down to its lowest level in calendar year 2008. Political concerns over the nuclear deal with US also weighed on the market sentiment. Sensex declined in 3 out of 5 trading sessions in the week ended Friday, 20 June 2008.

The BSE Sensex declined 618.33 points or 4.07% to 14,571.29 in the week ended Friday, 20 June 2008. S&P CNX Nifty lost 169.55 points or 3.75% to 4,347.55 in the week.

The BSE Mid-Cap index declined 195.74 points or 3.14% to 6,032.43. The BSE Small-Cap index slumped 184.06 points or 2.43% to 7,397.66.

Interest rate sensitive sectors bore major brunt of selling. BSE Bankex (down 3.56% to 6,804.78), BSE Auto index (down 2.1% to 4,042.86) and BSE Realty index (down 5.05% to 5,383.81) edged lower in the week.

Foreign institutional investors (FIIs) pressed heavy sales in the backdrop of a weakening rupee against the dollar. In June 2008, FIIs dumped shares worth Rs 7,477.80 crore (till 19 June 2008). FII outflow in calendar year 2008 totaled Rs 22,847.20 crore (till 19 June 2008). On the other hand, mutual funds were net buyers of shares to the tune of Rs 1,820.20 crore in the month of June 2008, till 19 June 2008.

The 30-share BSE Sensex rose 206.20 points or 1.36% at 15,395.82 on Monday, 16 June 2008. The market ended on a firm note on the back of firm global markets. However, a rebound in global crude oil prices pared strong intra-day gains on that day. Banking and information technology stocks rallied. However, automobile stocks declined after the Union government raised excise duty on large cars, multi-utility vehicles and sports utility vehicles with an engine cubic capacity exceeding 1500.

The 30-share BSE Sensex gained 301.08 points or 1.96% at 15,696.90 on Tuesday, 17 June 2008. Bulls had an upper hand over bears for a second day in a row with market sentiment boosted by reports of higher advance tax payment by top Indian firms in the first installment of 15 June 2008, reports of good monsoon in the initial phase and easing of oil prices from record high.

The 30-share BSE Sensex lost 274.59 points or 1.75% at 15,422.31 on Wednesday, 18 June 2008. Bears struck back with a vengeance on the bourses after a sharp rally in the past two days. Bears used the ploy of weak European markets and deferral of a crucial UPA-Left coordination committee meeting on Indo-US nuclear deal scheduled to bring share prices down. The decline followed a range bound movement on the bourses for a better part of the day till early afternoon trade.

The 30-share BSE Sensex lost 334.32 points or 2.17% at 15,087.99 on Thursday, 19 June 2008. The market succumbed to selling pressure for the second consecutive day. Political concerns and weak Asian markets weighed on the investor sentiments. Banking, realty and capital goods stocks were hurt the most. All the sectoral indices on BSE ended in red.

The 30 share BSE Sensex declined 516.70 points or 3.42% to 14,571.29 on Friday, 20 June 2008. The two key indices, Sensex and Nifty hit their lowest level of calendar year 2008 on that day. The market tumbled after the latest data showed India’s inflation soared to a 13-year high early this month. High inflation sparked fears of tighter monetary policy by the Reserve Bank of India.

India's largest aluminium producer by sales Hindalco Industries declined 8.21% to Rs 161 in the week . Its board on 20 June 2008 approved raising up to Rs 5000 crore by way of a rights issue to redeem a bridge loan it had taken for acquisition of Novelis Inc. The ratio for the rights issue will be 1:3, i.e. one right of Rs 1 each for every three equity shares of Rs 1 each held by the shareholder as on the record date.

India’s biggest engineering and construction firm in terms of revenue Larsen & Toubro rose 0.8% to Rs 2637.80 The company on 20 June 2008 said its heavy engineering division had crossed Rs 1000 crore of order booking for supply of high tech equipment and systems in the first two months of the current financial year.

India’s second largest telecom services provider by sales Reliance Communications plunged 9.58% to Rs 491.30 in the week. In another family feud between Ambani brothers, Mukesh ambani controlled Reliance Industries claimed a right of first refusal to buy a controlling stake in Reliance Communications. Meanwhile, Reliance Communications (RCom) said, in a mala fide effort to disrupt the talks, Reliance Industries (RIL) has sent a communication to MTN, making a false claim of an alleged right of first refusal to buy a controlling stake in RCom.

Reliance Communications (RCom) also threatened to claim damages from Reliance Industries, in case the latter choses to take legal action against RCom. It added that RIL's claim is legally and factually untenable, baseless, and misconceived. Earlier on 26 May 2008, Reliance Communications (RCom) had informed the bourses that it has entered into exclusive negotiations with MTN Group for 45 days soon after the South African giant aborted its talks with the Sunil Mittal-controlled Bharti group. As part of a tie-up, Anil Ambani would likely swap his controlling stake in Reliance Communications to become the largest shareholder in MTN.

World’s sixth largest steel producer Tata Steel declined 7.58% to Rs 777.60. The company said it has formed a joint venture with Jasper Industries to set up a 135 megawatt power plant in Orissa. Tata Steel along with its wholly owned subsidiary Rawmet Ferrous Industries will hold 26% in the project and Japser Industries will hold the remaining 74%.

India’s largest commercial bank State Bank of India declined 6.52% to Rs 1,247.50. The country's largest lender, on Saturday, 14 June 2008, decided not to raise its prime-lending rate. The decision was taken at a meeting of the assets-liability committee (Alco) of the bank

India’s largest tractor maker by sales Mahindra & Mahindra gained 0.84% to Rs 575.20. The Union government raised excise duty on large cars, multi-utility vehicles and sports utility vehicles with an engine cubic capacity exceeding 1500. As per reports, the additional excise duty will be applicable on Mahindra & Mahindra’s Renault-Logan, Mahindra Scorpio and Bolero, Maruti Suzuki India’s Maruti SX4, and Tata Motor’s Tata Safari, Tata Sumo

India’s largest car maker by sales Maruti Suzuki India gained 0.82% to Rs 727.80 in the week.

ICICI Bank (down 3.94% to Rs 734.65), Infosys (down 1.93% to Rs 1,827.60), Satyam Computer Services (down 5.37% to Rs 455.05), Tata Consultancy Services (down 4.88% to Rs 863.40), HDFC Bank (down 2.17% to Rs 1,099), Reliance Industries (down 7.57% to Rs 2,096.60) edged lower in the week.

The infrastructure sector output rose 3.6% in April 2008 from a year earlier, much lower than an unrevised 9.6% growth in March 2008, government data showed on Wednesday, 18 June 2008. The infrastructure sector accounts for 26.68% of industrial output.

The direct tax collections recorded strong growth in the first two months of this fiscal. As per the Finance Ministry data, direct tax collections jumped 71.28% to Rs.22840 crore in April-May 2008 over April-May 2007. The growth in personal income tax was 73.05% at Rs.14690 crore in April-May 2008 over April-May 2007. Corporate tax collection rose 68% to Rs 8126 crore in April-May 2008 over April-May 2007.

The wholesale price index rose 11.05% in the 12 months to 7 June 2008, government data released on Friday, 20 June 2008, showed. The rate was above market expectation of about 10% rise. The reading was the highest in 13 years since 6 May 1995, when it was 11.11%.

The June-September south west monsoon has been 45% above average so far this season, the Indian Meteorological Department said on 19 June 2008. Rainfall in the four-month rainy season this year will be near-normal, or 99% of the average between 1941 and 1990, the weather office had said in April 2008. The department classifies rainfall as near normal when it's between 96% and 104% of the 50-year average. Good rains will bolster farm production which in turn may help rein in inflation.

A key UPA-Left coordination committee meeting on Indo-US nuclear deal, which was scheduled on 18 June 2008, was postponed due to absence of leaders. The meeting is now likely to be held on 25 June 2008.