Sensex sheds 571 points

The strong rebound on the bourses witnessed yesterday, 2 July 2008, proved short-lived as share prices dived once again today. A surge in oil price to a record high above $144 a barrel and overnight fall in US stocks that pushed the Dow Jones Industrial Average to bear market, weighed on the investor sentiment with Sensex falling more than 700 points at one point of time. The Sensex ended just above 13,000 mark while Nifty ended below 4,000 mark. Tata Steel fell more than 11%. European markets were in red.

All the sectoral indices on BSE were in the red. Power, banking realty and metal stocks slumped. The market breadth was weak.

Oil, India's biggest import, rose to a fresh record high above $144 per barrel on Wednesday, 2 July 2008. Oil has risen more than 40% in calendar 2008 so far and it is the key reason for the turmoil of Indian equities. A section of the market reckons that only a sharp fall in oil prices can bring out a meaningful recovery in battered Indian stocks.

In Europe, key benchmark indices in France , UK and Germany were down by between 0.33% to 0.7%. In Asia, key benchmark indices in Singapore, Hong Kong, Japan and South Korea were down by between 0.16% to 2.13%. Key benchmark indices in Taiwan and China were up by between 0.55% to 1.95%.

The Dow Jones Industrial Average sank into a bear market on Wednesday, 2 June 2008, after a report showed US private employers cut the most jobs in nearly six years and oil shot to another record, increasing concerns about the health of the economy and corporate profits. Dow tumbled 166.75 points, or 1.46%, to 11,215.51. The Standard & Poor's 500 Index lost 23.39 points, or 1.82%, to close at 1,261.52, while the Nasdaq Composite Index slid 53.51 points, or 2.32%, to end at 2,251.46.

The 30-share BSE Sensex slumped 570.51 points or 4.18% at 13,094.11. At the day’s low of 12,934.92 Sensex lost 729.7 points in afternoon trade. Sensex was down 133.94 points at the day's high of 13,458.30 hit in opening trade.

The broader based S&P CNX Nifty was down 167.6 points or 4.09% at 3,925.75.

From a record high of 21,206.77 hit on 10 January 2008, Sensex has lost 8,112.66 points or 38.25%. It is down 7,192.88 points or 35.45% in calendar year 2008 so far.

There are concerns 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 India Inc. According to Morgan Stanley, net earnings of 30 Sensex firms are expected to grow just 6% in Q1 June 2008 over Q1 June 2007.

The BSE clocked a turnover of Rs 5,585 crore today 3 July 2008 as compared to a turnover of Rs 6,421.03 crore on Wednesday, 2 July 2008.

Nifty July 2008 futures were at 3870, at a discount of 55.75 points as compared to spot closing of 3925.75. NSE's futures & options (F&O) segment turnover was Rs 51,604.28 crore, which was lower than Rs 57,532.76 crore on Wednesday, 2 July 2008.

The market breadth was weak on BSE. 750 shares advanced as compared to 1,876 that declined. 59 remained unchanged. 28 from 30 Sensex stocks were in red.

The BSE Mid-Cap index fell 2.82% to 5,161.76 and BSE Small-Cap index declined 2.42% to 6,349.17. Both these indices outperformed Sensex.

BSE Realty index (down 9.21% at 4,295.22), BSE Metal index (down 8.5% to 12,113.55), BSE Power (down 4.67% to 2,173.63), BSE Bankex (down 4.59% at 5,647.79) underperformed Sensex.

BSE Consumer Durables index (down 1.41% to 3,463.01), BSE Health Care index (down 1.43% at 4,107.58), BSE PSU index (down 2.2% to 5,543.81), The BSE Oil & Gas index (down 2.97% to 8,922.47), The BSE Capital Goods index (down 3.01% at 10,007.28), BSE IT index (down 3.33% to 4,038.62), BSE Auto (down 3.44% at 3,377.76), BSE FMCG index (down 4.03 % to 1,918.61), BSE TecK index (down 4.09% to 2,982.68), outperformed Sensex.

India’s largest private sector company in terms of market capitalisation and oil refiner Reliance Industries (RIL) fell 3.36% to Rs 2,071.10.

India's second largest IT exporter by sales Infosys declined 4% to Rs 1,747.80.

Realty stocks declined. The BSE Realty index was down 9.21% to 4,295.22 and it was the major loser from sectoral indices on BSE. Indiabulls Real Estate (down 8.65% to Rs 261.45), Unitech (down 9.99% to Rs 154) and DLF (down 9.93% to Rs 381.85) edged lower. The BSE Realty index had risen more than 12% in yesterday’s rebound on the bourses.

Metal stocks fell. Tata Steel (down 11.3% to Rs 657.45), Steel Authority of India (down 9.8% to Rs 128), Sterlite Industries (down 7.99% to Rs 658.10), Hindalco Industries (down 4.6% to Rs 135.75), National Aluminium Company (down 2.22% to Rs 341.70) edged lower.

Banking stocks fell ahead of inflation data scheduled at 12:00 IST tomorrow, 4 July 2008. ICICI Bank (down 7.89% to Rs 573.85) and HDFC Bank (down 3.6% to Rs 983.80) edged lower. However, India's biggest commercial bank, State Bank of India gained 0.6% to Rs 1086.

Power stocks fell. Tata Power Company (down 9.03% to Rs 1,000.05), Reliance Infrastructure (down 8.72% to Rs 721.55), NTPC (down 3.91% to Rs 152.55) and Reliance Power (down 1.51% to Rs 130.55) edged lower.

ACC (down 5.94% to Rs 472.30), ITC (down 5.71% to Rs 169.35), Tata Motors (down 5.55% to Rs 390.45), Grasim Industries (down 5.45% to Rs 1,678.15), HDFC (down 5.09% to Rs 1,935.50) edged lower from the sensex pack.

India’s second largest telecom services provider by sales Reliance Communications fell 6.91% to Rs 389.50. It may reportedly partner with a sovereign wealth fund in Middle East and may directly buy a large equity stake in South Africa's MTN, thereby emerging as the single-largest shareholder.

India’s largest state owned oil exploration firm by sales ONGC rose 0.56% to Rs 859.20. As per reports, ONGC sees the cost of replacing its exploration and production infrastructure in the north-eastern state of Assam to double to around Rs 4000 crore due to rising steel prices.

Reliance Natural Resources clocked the highest volume of 2.93 crore shares on BSE. IFCI (1.36 crore shares), Reliance Petroleum (1.34 crore shares), Ispat Industries (1.33 crore shares) and Shree Renuka Sugars (1.32 crore shares) were the other volume toppers in that order.

Reliance Capital clocked the highest turnover of Rs 432.06 crore on BSE. Reliance Industries (Rs 354.03 crore), Reliance Infrastructure (Rs 291.72 crore), Reliance Petroleum (Rs 226.35 crore) and Reliance Natural Resources (Rs 181.76 crore) were the other turnover toppers in that order.

Hopes that a political crisis over Indo-US nuclear deal may be avoided triggered a strong rebound on the bourses yesterday, 2 July 2008, with the Sensex surging 703 points, its biggest single day rise in more than three months.

As per media reports, Congress-led United Progressive Alliance (UPA) government may be able to retain power as Samajwadi Party (SP) is likely to provide support to the government at a time when Left parties are on the verge of withdrawing support to the government over Indo-US nuclear deal. SP has 39 seats in parliament, compared with 59 seats for the communist parties. The ruling coalition needs the support of 44 lawmakers to reach a majority and it hopes to also win support from a few smaller parties.

However, in an indication that all's still not well between SP and the UPA government, SP General Secretary Amar Singh today said his party's struggle would continue against the rising prices.