Bears on a rampage as Sensex tanks 654 points

The key benchmark indices collapsed under the combined weight of weak global markets and domestic political uncertainty. The BSE Sensex today hit its lowest level in more than 15 months. Shares from banking, capital goods and metal sectors collapsed. Ranbaxy Labs plunged on high volumes for the second straight day. All the sectoral indices on BSE posted losses. The market breadth was weak.

Fears over the solvency of major Western banks rattled stocks in Asia and Europe after the US Federal Reserve and Treasury Department mounted a rescue plan to help support top mortgage lenders Fannie Mae and Freddie Mac following the sharp fall last week in their stock prices. On top of the troubles at Fannie and Freddie, two pillars of the US mortgage system, US regulators seized mortgage lender IndyMac Bancorp Inc late last week following withdrawals by panicked clients.

In Europe key benchmark indices in UK, Germany and France were down by between 1.45% and 1.93%. In Asia, key benchmark indices in China, Japan, Hong Kong, Taiwan, Singapore and South Korea were down by between 2.11% and 4.51%.

As per provisional data, foreign funds sold shares worth a net Rs 702.70 crore while domestic funds bought shares worth a net Rs 283.40 crore today, 15 July 2008.

The 30-share BSE Sensex plunged 654.32 points or 4.91% to 12,676.19. It lost 725.51 points at the day's low of 12,605, hit in late trade, a 15-month low. The Sensex opened with a downward gap of 263.43 points.

The broader based S&P CNX Nifty tumbled 178.60 points or 4.42% at 3861.10. Nifty July 2008 were at 3804, at a steep discount of 57.10 points as compared to spot closing.

The BSE Sensex is down 7610.80 points or 37.51% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 8530.58 points or 40.22% away from its all-time high of 21,206.77 struck on 10 January 2008.

Back to today's trade, the market breadth was extremely weak on BSE with 2091 shares declining as compared to 540 that advanced. 59 remained unchanged.

Turnover on BSE slipped to Rs 4,282 crore as compared to Rs 4,474.95 crore yesterday, 14 July 2008. NSE's futures & options (F&O) segment turnover rose to Rs 44,122.92 crore, from Rs 40,096.24 crore on Monday, 14 July 2008.

The BSE Mid-Cap index was down 3.14% to 5,163.51and the BSE Small-Cap index fell 3.15% to 6,430.90. Both these indices outperformed the Sensex.

All sectoral indices on BSE settled with losses. The BSE Power (down 4.91% to 2,224.37), BSE Realty index (down 5.44% at 4,503.45), BSE Metal index (down 5.21% to 12,225.64), BSE Capital Goods index (down 5.25% at 10,175.75), and BSE Bankex (down 7.75% at 5,508), underperformed the Sensex.

The BSE Auto (down 2.50% at 3,477.28), BSE Oil & Gas index (down 3.42% to 8,677.70), BSE PSU index (down 4.37% to 5,821.96), BSE Consumer Durables index (down 3.36% to 3,468.67), BSE TecK index (down 3.36% to 2,789.17), BSE FMCG index (down 3.93% to 1,881.40), BSE Health Care index (down 4.18% at 3,909.25), and BSE IT index (down 2.34% to 3,589.57), outperformed the Sensex.

All the 30-members from the Sensex pack edged lower.

India’s largest pharma company in terms of sales Ranbaxy tumbled 14.90% to Rs 405 on high volumes of 71.66 lakh shares. It was the top loser from the Sensex pack. As per foreign brokerage house UBS, the stock could erode 50% if the deal with Daiichi is called off. The stock continued to suffer losses for the second straight day after plunging 10.86% yesterday on reports the US government has levelled serious allegations against the company.

The US department of justice (DoJ) has said that there was evidence to suggest that Ranbaxy used active pharmaceutical ingredients (API) from unapproved sources, blended unapproved API with approved API, and used less-than-approved API at its Paonta Sahib (Himachal Pradesh) plant in its drugs, resulting in the sale of subpotent, super- potent or adulterated medicines in the US market. Ranbaxy has strongly denied the allegations raised by the US Department of Justice (DOJ).

BSE's banking sector index Bankex tumbled 8.39% to 5,469.85 and was the biggest loser among the sectoral indices on BSE. The banking index had hit 52-week low of 5437.7 touched on 2 July 2008.

India’s second largest private sector bank in terms of net profit HDFC Bank plunged 11.47% to Rs 914.25. India’s largest private sector bank in terms of net profit ICICI Bank tumbled 9.11% to Rs 527, off its 52-week low of Rs 525 hit in intra-day trade.

India’s largest state-run bank in terms of net profit State Bank of India lost 7.93% to Rs 1158. The bank has reportedly recovered Rs 2000 crore in bad loans during April-June 2008 period.

Among the mid-cap bank stocks, Kotak Mahindra Bank (down 7.05% to Rs 458), Axis Bank (down 7.29% to Rs 589.45), Indian Overseas Bank (down 4.59% to Rs 73.80), Bank of India (down 6.51% to Rs 229.10), and Punjab National Bank (down 3% to Rs 390.90), edged lower.

Even though Indian banks have little exposure to the US housing sector, sentiment in the sector across the globe is at an all-time low, and India is no exception. The likely hood of another interest rate hike in light of the inflation situation only makes matters worse for Indian banks.

India’s largest private sector firm by market capitalization and oil refiner Reliance Industries was down 3.75% at Rs 1,970.

Metal shares slipped on selling pressure. Hindalco (down 8.10% to Rs 138.40), Hindustan Zinc (down 6.87% to Rs 542), Sterlite Industries (down 6.42% to Rs 639.30), Tata Steel (down 5.72% to Rs 645), and Steel Authority of India (down 5.52% to Rs 131.75), slumped.

Real estate stocks cracked on renewed selling. DLF (down 5.48% to Rs 430.80), Unitech (down 6.81% to Rs 152.50), Purvankara Projects (down 7.04% to Rs 166.95), and Omaxe (down 6.16% to Rs 121.05), slumped.

Capital goods stocks extended losses after the data showed on Friday, 11 July 2008, that growth in industrial production declined sharply in May 2008. Suzlon Energy (down 5.98% at Rs 185.50), Siemens (down 8.04% at Rs 437.95), Punj Lloyd (down 6.65% at Rs 197), Bharat Heavy Electricals (down 6.95% to Rs 1368), Larsen & Toubro (down 4.97% to Rs 2272.70), declined from capital goods pack.

Reliance Infrastructure (down 7.45% to Rs 757) and HDFC (down 7.39% to Rs 1790) edged lower from the Sensex pack.

India’s largest cellular services provider in terms of market capitalisation Bharti Airtel lost 4.66% to Rs 702.50. Reliance Communication, the country’s second largest cellular services provider in terms of market capitalisation plunged 7.92% to Rs 403.05.

IT pivotals lost ground after firm start. Infosys Technologies (down 1.25% to Rs 1536.45, off day’s high of Rs 1578.65), TCS (down 3.50% at Rs 742, off day’s high of Rs 785), Wipro (down 7.88% at Rs 372.55, off day’s high of Rs 409.95), and Satyam Computer Services (down 2.26% to Rs 400, off day’s high of Rs 424.85), slipped.

Ranbaxy Laboratories was the top traded counter on BSE with turnover of Rs 303.91 crore followed by Reliance Industries (Rs 278.82 crore), Reliance Capital (Rs 261.05 crore), Infosys (Rs 168.11 crore), in that order.

Reliance Natural Resources topped volumes chart on BSE clocking volumes of 1.33 crore shares followed by IFCI (1.29 crore shares), Ispat Industries (1.16 crore shares), Chambal Fertilisers & Chemicals (78.10 lakh shares), and Reliance Petroleum (75.05 lakh shares), in that order.

Orchid Chemicals saw high volatility. The stock, which was trading flat at around Rs 254 for most part of the day plunged to day’s low of Rs 231 only to recover almost all lost ground. The stock settled 0.57% lower at Rs 253.

SpiceJet rose 1.97% to Rs 28.50 after the company said that the US based private equity firm WL Ross & Co LLC will invest about Rs 345 crore in the company.

Sun Pharmaceutical Industries slipped 3.30% to Rs 1293.10 after the company extended the date for tender offer to buy all outstanding shares of Israel's Taro Pharmaceutical Industries. Sun is seeking to force Taro's controlling shareholders to sell their stakes after a merger agreement collapsed in May 2008

TTK Healthcare surged 13.53% to Rs 88.95 after the company said its board will meet on 25 July 2008 to consider buyback of equity shares. The company made this announcement after trading hours yesterday, 14 July 2008.

BEML declined 6.20% to Rs 626.90 even as the company said it has bagged export orders aggregating to Rs 34.50 crore from African countries for the supply of equipments. The company made this announcement before trading hours today, 15 July 2008.

Fitch Ratings today, 15 July 2008, lowered India's domestic rating outlook to negative from stable due to the central government's worsening fiscal position. Fitch has maintained the country's BBB-minus rating for both its local currency rating and its foreign currency rating.

Oil prices hovered around $145 per barrel today, 15 July 2008, close to its record high of $147.27 set on Friday, 11 July 2008.

US stocks tripped yesterday, 14 July 2008, as concerns on the health of the US banking sector mounted after the collapse of IndyMac eclipsed the earlier optimism over the government's plan to stabilise mortgage lenders Fannie Mae and Freddie Mac. The Dow Jones industrial average slipped 45.35 points, or 0.41%, to 11,055.19. The Standard & Poor's 500 index declined 11.19 points, or 0.90%, to 1,228.30, and the Nasdaq Composite index lost 26.21 points, or 1.17%, to 2,212.87.

Back home, the Manmohan Singh government suffered another setback on Monday, 15 July 2008, on reports that at least two important leaders it was counting on for support in the trust vote seemed to be backing off. The two leaders are the Telengana Rashtra Samiti (TRS) chief Chandrashekhar Rao, and the other is DMK’s Dayanidhi Maran. The government is holding a two-day special session of parliament on 21 July 2008 and 22 July 2008 to seek vote of confidence after it was reduced to minority following withdrawal of support by Left parties on 8 July 2008. The government hopes to retain power due to backing from Samajwadi Party, a regional party in Uttar Pradesh.

India-dedicated funds saw $944 million outflows in the month to 9 July 2008, the highest redemption faced by any country-specific funds group in the period, according to EPFR Global data. Redemptions have continued for five weeks in a row leading the Indian benchmark indices to their lowest levels in 15 months. In the week ended 9 July 2008, India-dedicated funds saw an outflow of $215 million, again the highest by any country fund category.

Indian markets also reportedly bore the brunt of redemption from Asia regional funds, which have considerable allocations to Indian markets.