Sensex sheds 176 points in sell-off in world markets; Nifty ends below 4,000

The market failed to sustain yesterday’s small gains as global markets played a spoilsport. Nevertheless, the market came off lower level after an initial sharp fall, shrugging of decision of Left parties to withdraw their support to the Congress-led United Progressive Alliance (UPA) government. The moment the Left front announced their decision in afternoon trade, recovery began on the bourses.

The 30-share BSE Sensex lost 176.34 points or 1.3% at 13,349.65. At the day’s low of 13,049.96 Sensex lost 476.03 points in mid-morning trade. At the day’s high of 13,451.67 hit in late trade Sensex lost 74.32 points.

The broader based S&P CNX Nifty was down 41.45 points or 1.03% at 3,988.55.

Hopes that government may push forwards some stalled economic reforms aided recovery on the bourses from lower level after the Left's decision. Over the last four years, Left parities had stalled privatisation of state-run firms, pension reforms, higher foreign limits in insurance and more liberal norms for foreign banks

FMCG, consumer durables, and IT stocks slipped while capital goods and power stocks climbed. The market breadth was weak.

The Left's exit is expected to lead to a parliamentary vote of confidence in the government, which hopes the newly enlisted support of the regional Samajwadi Party (SP) will enable it to win such a ballot and avoid calling early general elections. Left parties had for months threatened to end their support if the government pressed ahead with the deal and approached the International Atomic Energy Agency for its approval.

Prime Minister Manmohan Singh on Monday, 7 July 2008 said the UPA government will go through the remaining formalities of the nuclear deal with the US and expressed full confidence that his government will last its full term. SP said on Tuesday it will vote with the government in support of the nuclear deal with the United States.

Stocks tumbled in Asia and Europe after sharp decline in shares of top US mortgage firms Fannie Mae and Freddie Mac on Monday, 7 July 2008, on funding concerns reminded investors about the fragility of global credit markets. In Europe, key benchmark indices in France, Germany and UK were down by between 1.2% to 1.82%. in Asia, key benchmark indices in Taiwan, Singapore, Hong Kong, South Korea, Japan were down by between 1.74% to 3.94%. China’s Shanghai Composite rose 0.81%.

Back home, Nifty July 2008 futures were at 3938.70, at a discount of 49.85 points as compared to spot closing of 3988.55.

BSE clocked a turnover of Rs 4,513 crore today 8 July 2008 as compared to Rs 6,784.55 crore on Monday, 7 July 2008. NSE's futures & options (F&O) segment turnover was Rs 41,117.91 crore, which was lower than Rs 44,634.29 crore on Monday, 7 July 2008.

As per the provisional figures on NSE, the foreign institutional investors (fii)'s sold shares worth Rs 326.27 crore today,8 July 2008 and domestic funds bought shares worth Rs 427.27 crore.

From a record high of 21,206.77 hit on 10 January 2008, Sensex has lost 7,857.12 points or 37.05%. It is down 6,937.34 points or 34.19% in calendar year 2008 so far.

Back to today's trade, the BSE Mid-Cap index was down 0.45% at 5,315.99, while the BSE Small-Cap index shed 0.46% to 6,562.62.

BSE IT index (down 3.11% to 4,045.95), BSE TecK index (down 2.5% to 3,016.65), BSE FMCG index (down 2.02% to 1,952.33), BSE Consumer Durables index (down 2% to 3,530.33), The BSE Oil & Gas index (down 1.56% to 8,743.36) underperformed Sensex.

The BSE Capital Goods index (up 1.36% at 10,854.14), BSE PSU index (up 0.82% to 5,723.73), BSE Power (up 0.43% to 2,300.34), BSE Metal index (up 0.07% to 12,266.78), BSE Bankex (up 0.06% at 5,896.14), BSE Auto (down 0.3% at 3,498.38), BSE Health Care index (down 0.44% at 4,090.38), BSE Realty index (down 0.85% at 4,620.98) outperformed Sensex.

The market breadth was weak on BSE, with 1417 losers outpacing 1,156 gainers. 83 stocks remained unchanged.

India’s largest private sector firm by market capitalization and oil refiner Reliance Industries declined 2.44% to Rs 1,978.60.

India’s largest commercial bank State Bank of India rose 2.79% to Rs 1,204.45. It recovered from session’s low of Rs 1,059.40.

Capital goods stocks rose. India’s largest engineering and construction firm by sales Larsen & Toubro rose 1.5% to Rs 2,400.20 as it bagged a Rs 1047-crore order from Railways. It recovered from session’s low of Rs 2,260.80. Bharat Heavy Electricals (up 2.18% to Rs 1,498.25) and Suzlon Energy (up 1% to Rs 196.75) edged higher.

Power stocks also rose. NTPC (up 3.6% to Rs 161.20), PowerGrid Corporation of India (up 2.4% to Rs 78.95), Reliance Power (up 0.96% to Rs 137) edged higher. India’s second largest power utility firm in terms of sales Reliance Infrastructure fell 3.03% to Rs 754.95.

India's second largest software exporter by sales Infosys Technologies fell 3.62% to Rs 1,736.

India’s third largest IT services provider by sales Satyam Computer Services fell 2.99% to Rs 467.55. The company said on Monday, 7 July 2008, it has entered into an alliance with Tyfone, a global provider of mobile financial services, infrastructure and fully-integrated mobile payments capabilities. The two companies will collaborate to provide businesses with an even greater edge when competing in the mobile financial services sector.

Tata Consultancy Services (down 2.97% to Rs 826.70) and Wipro (down 4.61% to Rs 419.70) edged lower.

FMCG stocks declined. ITC (down 3.24% to Rs 171.85) and United Spirits (down 2.52% to Rs 1,100.10) edged lower. India’s largest FMCG major by sales Hindustan Unilever rose 0.07% to Rs 209.60.

Consumer durables stocks fell. Videocon Industries (down 2.99% to Rs 269.10), Titan Industries (down 1.35% to Rs 1,035.70) and Rajesh Exports (down 4.45% to Rs 52.60) edged lower.

ACC (up 6.21% to Rs 527), Mahindra & Mahindra (up 3.92% to Rs 515.80), Hindalco Industries (up 2.18% to Rs 145.40), Ambuja Cements (up 0.81% to Rs 74.50) edged higher from the Sensex pack.

Tata Motors (down 4.13% to Rs 376.35), Grasim Industries (down 3.19% to Rs 1,670.70), HDFC (down 2.14% to Rs 2,010.95), ICICI Bank (down 1.64% to Rs 593.85), Bharti Airtel (down 2.03% to Rs 711.90), edged lower from the Sensex pack.

India’s second largest telecom services provider by sales Reliance Communications fell 1.05% to Rs 415.40. The stock recovered from session's low Rs 395.05. As per reports, talks between Reliance Communications (RCom) and South Africa's MTN Group which are due to end on Tuesday, 8 July 2008, may be extended by three or four weeks. The deal may be structured in a way whereby RCom Chairman Anil Ambani will take 51% in the South African firm through a cash and share swap. Such an arrangement will require more scrutiny by MTN which is the reason why the deadline for the 45-day exclusivity pact might be extended, reports suggest.

Reliance Natural Resources clocked the highest volume of 2.84 crore shares on BSE. IFCI (2.47 crore shares), Reliance Petroleum (99.96 lakh shares), Chambal Fertilisers and Chemicals (91.84 crore shares) and Ispat Industries (89.76 lakh shares) were the other volume toppers in that order.

Reliance Capital clocked the highest turnover of Rs 425.08 crore on BSE. Reliance Industries (Rs 366.11 crore), Reliance Infrastructure (Rs 230.90 crore), Reliance Natural Resources (Rs 186.76 crore) and Reliance Petroleum (Rs 163.96 crore) were the other turnover toppers in that order.

US markets edged lower yesterday, 7 July 2008, on concerns that the top two mortgage providers would have to raise even more capital, eroding existing shareholders' stakes further. The Dow Jones industrial average lost 56.58 points, or 0.50%, to 11,231.96. The Standard & Poor's 500 index slipped 10.59 points, or 0.84%, to 1,252.31, and the Nasdaq Composite index dropped 2.06 points, or 0.09%, to 2,243.32.

Oil, India's biggest import, rose by more than half a dollar to nearly $142 a barrel, rebounding from the previous day's near $4 fall as the US dollar weakened.

The BSE Sensex rose 71.99 points or 0.54% at 13,525.99 and the broader based S&P CNX Nifty gained 14 points or 0.35% at 4,030 yesterday, 7 July 2008.