Post Session Commentary - July 29 2008

Market failed to recover from sharp losses and closed in deep red on account of monetary tightening by RBI. To curb the inflation, Central bank announced the hike in Repo rate by 50 basis points to 9% and CRR by 25 basis points to 9%, which will be effective from 30th August 2008. Repo rate will be at 9% for the first time since October 2000 and CRR at 9% for the first time since November 1999. Indian market opened on the back foot tracking the weak global cues and tumbled down further after the RBI’s quarterly review, in which it hikes the key rates and this adds to the investors’ negative sentiment. The market kept on hovering in extremely territory without showing any sign of recovery till the end the session. Both NSE Nifty and BSE Sensex closed with losses of more than 3%. The BSE Sensex ended below 13,800 level and NSE Nifty closed below 4,200 mark. All indices closed in red. Out of which, the interest sensitive indices like Bank and Reality lost more than 8% and 5% respectively. Along with this, the Capital Goods index also lost more than 5%. Heavy selling was also witnessed from the Oil & Gas, Metal, Power and Auto stocks baskets. The market breadth was weak as 963 stocks closed in green while 1672 stocks closed in red and 72 stocks remained unchanged.

The BSE Sensex closed lower by 557.57 points at 13,794.31 and NSE Nifty ended down by 142.25 points at 4,189.85. The BSE Mid Caps closed with losses of 142.20 points at 5,488.58 and Small Cap ended down by 81.97 points 6831.01. The BSE Sensex touched intraday high of 14,153.12 and intraday low of 13,727.14.

The Reserve Bank of India has released its Macro Economic review, as it always does a day before the credit policy. According to this review broad money growth YoY was at 20.5 % as on 4th July 2008 as against 21.8% a year ago. The bank deposits YoY grew by 20.7 % as against 23.1 %. Along with this GDP growth according to the revised estimate of CSO (Central Statistical Organization) is 9 % for the year ended 2007-08 in comparison to 9.6 % in 2006-07. The review also pointed out that India''s budget deficit may come under pressure in 2008-09 as the government’ spending is increasing. According to this report inflation is global phenomenon and is high in major economies due to the impact of high food and fuel prices and strong demand conditions.

Lossers from the BSE are HDFC Bank Ltd (8.71%), ICICI Bank Ltd (8.45%), Reliance Industrial Infra (7.99%), Maruti Suzuki (7.03%), SBI (6.84%), Tata Motors (6.84%), L&T Ltd (6.52%), M&M Ltd (5.54%), DLF Ltd (5.52%), HDFC (5.21%) and JP Associates (5.10%).

The BSE Capital Goods index lost 586.21 points to close at 11,320.60. Major lossers are Bharat Elect (16.28%), Praj Indus (7.46%), L&T Ltd (6.52%), Siemens Ltd (6.32%), Punj Lloyd (5.33%), Walchand In (4.57%) and Reliance Industrial Infra (3.95%).

The BSE Bank index closed lower by 562.22 points at 6,199.60. Major lossers are Bank of India (12.57%), Axis Bank (11.06%), Bank of Baroda (9.53%), Indian Overseas Bank (9.52%), HDFC Bank Ltd (8.71%), ICICI Bank Ltd (8.45%), Oriental Bank of Commerce (8.22%), and Punjab National Bank (8.05%).

The BSE Oil & Gas index ended down by 349.33 points at 9,303.57. As Aban Offshore (5.99%), Reliance Nat Res (5.73%), HPCL (5.26%), BPCL (4.81%), Reliance (4.31%), ONGC (3.02%) and Essar Oil Ltd (2.97%) closed in negative territory.

The BSE Reality index ended lower by 281.41 points at 4,979.71. As Indiabull Real (7.98%), Unitech Ltd (6.50%), Mahindra Life (6.17%), DLF Ltd (5.52%), Akruti City (5.36%), Sobha Dev (4.98%), and Parsvnath (4.33%) closed in negative territory.

The BSE Metal index closed down by 236.36 points at 12,130.36. Lossers are Gujarat Nre C (8.07%), HIndalc (4.72%), Welspan Gujarat Sr (4.69%), Steel Authority (4.33%), Ispat Industries (4.03%), and Tata Steel (3.25%).

The BSE Auto index closed lower by 150.59 points at 3,573.21. Major lossers are Maruti Suzuki (7.03%), Tata Motors (6.84%), M&M Ltd (5.54%), Hero Honda Motors (4.23%), Exide Industries (3.56%), Bajaj Auto (2.63%) and MRF Ltd (2.55%).