Bears in command as Sensex sheds 1,460 points in three trading sessions

Bears are in complete command of the proceeding on the street thanks to record high oil prices, surging inflation, higher interest rates and political uncertainty which have rattled the bourses in the past few days. A third day of sell-off on the bourses today pulled the two key benchmark indices below psychological levels - the barometer index BSE Sensex fell below 13,000 mark and the S&P CNX Nifty fell below 4,000 level. Sensex has lost 1,460.14 points in the last three trading sessions.

Reliance Communications and Reliance Infrastructure fell more than 10% each in late trade. Banking, realty, auto and metal stocks fell. The market breadth was weak. Except NTPC all other Sensex stocks ended in the red. All the sectoral indices on BSE were in red.

Crude oil, India's biggest import, was trading above $141 a barrel today, 1 June 2008. It had hit a record $143.67 in the previous trading session.

European markets which opened after Indian market, were weak. The key benchmark indices in France, Germany and UK were down by between 1.84% to 2.4%.

The 30-share BSE Sensex lost 499.92 points or 3.71% at 12,961.68. It lost 557.51 points at day’s low of 12,904.09, its lowest level in more than 14 months. At the day’s high of 13,613.01 hit in mid-morning trade, the Sensex rose 151.41 points.

The broader based S&P CNX Nifty was down 158.8 points or 3.56% at 3,896.75. Nifty hit a low of 3,878.20, its lowest level in more than 14 months.

BSE clocked a turnover of Rs 4961.13 crore compared to Monday (30 June 2008)'s Rs 4725.64 crore

From a record high of 21,206.77 hit on 10 January 2008, Sensex has lost 8,245.09 points or 38.87%. It has shed 7,325.31 points or 36.1% in calendar year 2008 thus far.

The market’s concerns are that the rise in input costs and tough macro economic environment comprising high inflation, record high global crude oil prices and rising interest rates, will result in slowdown in earnings growth of the corporate sector. Nevertheless, advance tax payment by the Indian corporate sector this year so far has been strong. Government’s direct tax collection from the corporate sector rose 39.81% to Rs 30655 crore until 21 June 2008 compared to the corresponding period last year.

Nifty July 2008 futures were at 3815, at a discount of 81.75 points as compared to spot closing of 3896.75.

Sustained selling of Indian stocks by foreign institutional investors (FIIs) has also dented market sentiment. As per provisional data, foreign funds sold shares worth a net Rs 208.66 crore on Monday, 30 June 2008. FII outflow in June 2008 totaled Rs 10095.80 crore (till 30 June 2008). FII outflow in calendar year 2008 totaled Rs 25465.30 crore.

The market breadth was weak on BSE with 406 shares advancing as compared to 2,272 that declined. 46 remained unchanged.

Political uncertainty continues to haunt Indian bourses. The media continues to speculate whether the ruling Congress led United Progressive Alliance government will be able to push through a much-debated Indo-US nuclear deal and still retain its power, in the face of heavy opposition from its key communist allies. The Left parties on Sunday, 29 June 2008, renewed their threat to withdraw support from the ruling coalition if Prime Minister Manmohan Singh forged ahead with the nuclear deal. Singh on Monday, 30 June 2008, promised to bring the nuclear pact with the US before parliament before going ahead with the deal that is fiercely opposed by his communist allies, a report said.

The Prime Minister played down the communists' threats to withdraw support to his government saying all that he wanted was that the government should be allowed to complete the negotiation process with the International Atomic Energy Agency-IAEA and Nuclear Suppliers' Group-NSG. Singh expressed confidence that the government would be able to address concerns of all including the Left parties on the civil nuclear cooperation agreement with the US.

For the stock market, the political uncertainty pertains to whether there will be stability at the centre if mid-term polls are held i.e. whether the new government will complete five years and whether the new government restarts economic reforms process which has virtually come to a halt in the last two years or so.

A good news in the current gloom on the macroeconomic front is that the Indian Meteorological Department (IND), in its long-range forecast update for the 2008 southwest monsoon, has maintained that rainfall for the country as a whole is likely to be ‘near normal’. 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.

Back to today's trade, the BSE Mid-Cap index declined 4.54% to 5,141.86 and BSE Small-Cap index fell 4.73% to 6,385.11. Both these indices underperformed Sensex.

BSE Realty index (down 7.21% at 4,215.93), BSE Bankex (down 5.62% at 5,583.59), BSE Metal index (down 5.4% to 12,494.19), BSE Auto (down 4.91% at 3,409.47), BSE Consumer Durables index (down 4.28% to 3,328.76), BSE Power (down 4.24% to 2,156.94) underperformed Sensex.

BSE IT index (down 1.74% to 3,949.95), BSE Health Care index (down 2.17% at 4,073.99), BSE FMCG index (down 2.83% to 2,021.44), The BSE Oil & Gas index (down 3.06% to 8,733.32), BSE TecK index (down 3.07% to 2,950.53), The BSE Capital Goods index (down 3.34% at 9,744.31), BSE PSU index (down 3.61% to 5,461.97), outperformed the Sensex.

India’s largest private sector company in terms of market capitalisation and oil refiner Reliance Industries (RIL) fell 2.34% to Rs 2,044.20.

Auto stocks tumbled. India’s largest carmaker by sales Maruti Suzuki India fell 8.05% to Rs 568. Its vehicle sales rose 2% to 61,247 units in June 2008 over June 2007. Mahindra & Mahindra (down 9.27% to Rs 440.10), Bajaj Auto (down 0.82% to Rs 446.75) edged lower.

India’s largest commercial vehicle maker by sales Tata Motors fell 4.23% to Rs 408.45. Tata Motors today said it had raised prices of commercial vehicles by an average of 3% with immediate effect on account of higher input prices.

Metal stocks declined. Hindalco Industries (down 5.67% to Rs 134.05), Tata Steel (down 4.19% to Rs 697.85), Sterlite Industries (down 4.13% to Rs 673), Steel Authority of India (down 1.08% to Rs 137.90), National Aluminium Company (down 0.21% to Rs 348.80) edged lower.

Realty stocks extended recent steep fall. Indiabulls Real Estate (down 7.65% to Rs 250.45), Unitech (down 6.48% to Rs 159.60) and DLF (down 7.02% to Rs 368.40) edged lower.

Banking stocks fell after some of the major lenders hiked their lending rates. India’s largest private sector bank by net profit ICICI Bank declined 6.46% to Rs 589.50. India’s largest dedicated housing finance firm by operating income HDFC fell 6.47% to Rs 1,835.45.

HDFC said on Monday, 30 June 2008, its prime lending rate would go up by 50 basis points from Tuesday, 1 July 2008. On the same day, ICICI Bank said rates on consumer loans would rise by 75 basis points on Tuesday, 1 July 2008. Both HDFC and ICICI Bank also raised deposit rates between 50-100 basis points.

India’s largest commercial bank State Bank of India fell 7.81% to Rs 1,024.65. It will decide in a week's time whether to raise interest rates on home loans, its chief, OP Bhatt, said today, 1 July 2008. The bank raised its benchmark prime lending rate by 50 basis points to 12.75% last week, after the central bank aggressively tightened policy in the face of surging inflation.

India’s second largest private sector bank by net profit HDFC Bank fell 4.22% to Rs 960.

NTPC rose 1.02% to Rs 153.20 and was the lone gainer from Sensex pack.

Reliance Communications (down 10.49% to Rs 396), Reliance Infrastructure (down 10.54% to Rs 702.05), Jaiprakash Associates (down 6.01% to Rs 135.20), Grasim Industries (down 5.02% to Rs 1,753.70), edged lower from Sensex pack.

Reliance Natural Resources clocked the highest volume of 1.62 crore shares on BSE. Reliance Petroleum (1.41 crore shares), Ispat Industries (1.07 crore shares), IFCI (1.05 crore shares), Chambal Fertilisers and Chemicals (90.43 lakh shares) were the other volume toppers on BSE in that order.

Reliance Industries clocked the highest turnover of Rs 421.51 crore on BSE. Reliance Capital (Rs 337.97 crore), Reliance Petroleum (Rs 239.36 crore), Reliance Infrastructure (Rs 137.77 crore) and Reliance Communications (Rs 115.52 crore) were the other turnover toppers in that order.

Most of the Asian markets which opened before Indian markets were in the red. Key benchmark indices in China, Japan, Singapore, Taiwan and South Korea were down between 0.13% to 3.09%.

US markets, stocks ended mixed on Monday 30 June 2008 .The Dow Jones was up 3.50 points to 11,350.01. The Nasdaq Composite index lost 22.65 points to close at 2,292.98.