Banking, realty shares lead 369-point Sensex fall

The market extended losses for the third session in a row as a bounce back in crude oil prices stroked fears of increase in inflationary pressures. Investors were also cautious ahead of the release of the inflation data for the year through 2 August 2008 after trading hours today.

A disappointment due to no decision by the market regulator Securities & Exchange Board of India (Sebi) on participatory notes (PNs) at its board meeting yesterday, 13 August 2008, also contributed to the fall on the bourses.

Stocks of interest rate sensitive sectors suffered the most on fears that a rise inflation pressures may provoke the central bank to raise interest rates yet again. IT stocks rose as the rupee weakened against the dollar.

The government will meet its fiscal deficit target for 2008/09 despite the pay increase for government workers, Finance Minister P Chidambaram said after the government today, 14 August 2008, approved the Sixth Pay Commission recommendations. He said the wage increase had been factored in while preparing the budget for 2008-09. The Sixth Pay Commission had in March 2008 submitted its report to the government, recommending an average 28% hike for central government staff and defence personnel.

The BSE 30-share Sensex declined 368.94 points or 2.44% to 14,724.18. The index lost 406.46 points at day’s low of 14,686.66 hit in late trade. At day’s high of 15,033.28, the index lost 59.84 points at the onset of the trading session.

The S&P CNX Nifty was down 98.35 points or 2.17% to 4430.70. Nifty August 2008 futures were at 4434.90, a premium of 4.2 points as compared to spot closing.

The BSE Mid-Cap index was down 1.79% to 5,823.42 and the BSE Small-Cap index was down 1.65% at 7,110.44.

BSE clocked a turnover of Rs 4851 crore as against Rs 5,076.33 on 13 August 2008. NSE’s futures & options turnover amounted to Rs 47,643.15 crore as compared to Rs 43,947.06 crore Wednesday, 13 August 2008.

The market breadth was weak on BSE with 811 shares advancing as compared to 1849 that declined. 70 shares remained unchanged.

Sensex has lost 779.74 points or 5.02% from a recent high of 15503.92 hit on 11 August 2008. The barometer index is down 5562.81 points or 27.42% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 6482.59 points or 30.56% away from its all-time high of 21,206.77 struck on 10 January 2008.

Top Sensex losers were, DLF (down 8.66% at Rs 501.10), Jaiprakash Associates (down 7.74% at Rs 172.30), Reliance Infrastructure (up 7.72% at Rs 985.45), and HDFC (down 5.21% at Rs 2288.35).

India’s largest aluminium manufacturer in terms of sales Hindalco Industries fell 2.69% to Rs 135.80 ahead of a meeting of a committee of directors today, 14 August 2008 to determine the price and other terms and conditions of the proposed rights offering.

Banking shares witnessed major sell off on fears of further monetary tightening by the central bank. India’s largest private sector bank by market capitalisation ICICI Bank slipped 5.25% at Rs 673.25. Kotak Mahindra Bank (down 6.28% at Rs 613.25), Axis Bank (down 3.45% at Rs 700.15), HDFC Bank (down 3.45% at Rs 1,175.20), declined. The BSE Bankex underperformed the Sensex, falling 5.07% to 6,902.96.

India’s largest commercial lender State Bank of India fell 6.24% at Rs 1,458.20. The bank got approval from the finance ministry to merge associate State Bank of Saurashtra with itself.

Realty shares tumbled on major selling by funds. Indiabulls Real Estate (down 13.86% at Rs 303.95), Housing Development Infrastructure (down 7.54% at Rs 431.35), and Unitech (down 6.82% at Rs 169.35), slumped. The BSE Realty index was down 7.97% at 5,163.53.

Software stocks moved up as the rupee weakened to a four-week low against the dollar. Infosys Technologies (up 3.95% at Rs 1,689.45), Satyam Computer (up 1.39% at Rs 411.90), and TCS (down 0.41% at Rs 831.45), moved up. However, India’s third largest software exporter by sales Wipro fell 1% at Rs 429.15 after hitting an intra-day high of Rs 442.90. Strong dollar bodes well for software exporters as they derive more than half of their revenue in dollar terms.

World’s sixth largest steel maker Tata Steel rose 0.94% at Rs 616.20 after the company said it has signed a joint venture deal with Vietnam Steel Corp and Vietnam Cement Industries to build an integrated steel plant in the country at $5 billion. The company made this announcement during trading hours yesterday, 13 August 2008 when the stock rose 0.41% to 610.45.

State-run oil refiners slipped as higher oil prices raised concerns of higher subsidy bills. Hindustan Petroleum Corporation (down 6.44% at Rs 223.10), Indian Oil Corporation (down 2.64% at Rs 440.55), and Bharat Petroleum Corporation (down 2.08% at Rs 316.15), slipped.

India’s largest private sector firm by market capitalisation and oil refiner Reliance Industries fell 2.80% at Rs 2275.30.

Private sector oil explorer Cairn India rose 1.89% at Rs 245.25 as crude oil rose to $116 a barrel. Cairn benefits from higher oil prices.

Software products maker Subex jumped 12.23% to Rs 111.50. The stock is rallying from past two sessions on market buzz that a large firm is buying shares of the company from the open market, aiming at a complete takeover. However, the promoters of Subex, in a media interview today, denied knowledge of any entity accumulating the stock from open market. The stock has gained 33.98% to Rs 99.35 on 13 August 2008 from Rs 74.15 on 11 August 2008.

Reliance Capital clocked a highest turnover of Rs 266.32 crore on BSE. Vishal Information Technologies (Rs 231.77 crore), Reliance Industries (Rs 210.33 crore), Reliance Natural Resources (Rs 186.80 crore), Larsen & Toubro (Rs 161.54 crore), were the other turnover toppers on BSE.

Reliance Natural Resources reported a highest volume of 1.87 crore shares on BSE. Vishal Information Technologies (92.35 lakh shares), Infrastructure Development Finance Corporation (84.02 lakh shares), Landmark property Development Company (80.27 lakh shares), and IFCI (77.37 lakh shares), were the other volume toppers on BSE.

There was no relaxation by Sebi on participatory notes at its board meeting yesterday, 13 August 2008. Marketmen were anticipating that Sebi may extend the period for unwinding PNs, on underlying derivatives from 18 months to 24 months. PNs are issued by foreign institutional investors registered in India to unregistered overseas investors. In October 2007, Sebi had also restricted issuance of PNs in the spot segment to 40% of assets under custody and expectation was that it might raise the cap to 45% from 40%

European shares held firm. Key indices in UK, France and Germany were up 0.41% to 1.10%. Asian stocks were mixed today, 14 August 2008. Key benchmark indices in Japan and China were down by 0.38% to 0.51%. However, key indices in Singapore, Hong Kong, Taiwan, and South Korea were up by 0.17% to 0.61%.

US stocks fell on Wednesday, 13 August 2008, as persistent concerns about the credit crisis hurt bank shares while a rebound in oil prices and weak outlooks at some retailers raised anxieties about consumer spending. The Dow Jones industrial average fell 109.51 points, or 0.94%, to 11,532.96, while the Standard & Poor's 500 Index slipped 3.76 points, or 0.29%, to 1,285.83. The Nasdaq Composite Index was down 1.99 points, or 0.08%, at 2,428.62.

The Indian stock market remains closed on Friday, 15 August 2008, on account of Independence Day