Market bounces back in choppy trade

In a sudden reversal of fortunes, the market moved higher shrugging off rate hike by the Reserve Bank of India on Tuesday, 29 July 2008. Strong bounce back in global markets and further decline in oil prices were the key factors that revitalized the investor sentiments during the week.

The 30-shares BSE Sensex rose 381.75 points or 2.67% to 14,656.69 in the week ended 1 August 2008. The CNX S&P Nifty rose 101.7 points or 2.35% to 4413.55.

The BSE Mid-Cap index rose 70.15 points or 1.26% to 5,642.74 and the BSE Small-Cap index rose 201.32 points or 2.96% to 6,980.10.

The wholesale price index rose 11.98% in 12 months to 19 July 2008, above the previous week's annual rise of 11.89%. Inflation for the week ended 24 May 2008 was revised upwards to 8.9% from 8.24%.

Foreign institutional investors (FIIs) sold shares worth Rs 1836.80 crore in the month of July 2008. FIIs sold shares worth Rs 26705.10 crore in the calendar year 2008. Mutual funds have bought shares worth Rs 1223.50 crore in the month of July 2008, till 30 July 2008.

The key benchmark indices scored marginal gains on 28 July 2008. However, trade was cautious ahead of the Reserve Bank’s monetary policy review scheduled on 29 July 2008. The 30-share BSE Sensex gained 74.17 points or 0.52% higher at 14,349.11. The broader based S&P CNX Nifty rose 20.25 points or 0.47% at 4,332.10.

The key benchmark indices slumped sharply on 29 July 2008 after the Reserve Bank of India (RBI) on that day raised cash reserve ratio (CRR) by 25 basis points and repo rate by 50 basis points at its quarterly monetary policy review. The 30 share BSE Sensex plunged 557.57 points or 3.89% at 13,791.54. The broader based S&P CNX Nifty was down 142.25 points or 3.28% at 4,189.85.

Rally in global equities and fall in oil prices aided a rebound on the domestic bourses on 30 July 2008. The 30-share BSE Sensex jumped 495.67 points or 3.59% at 14,287.21. The broader based S&P CNX Nifty jumped 123.70 points or 2.95% at 4,313.55.

On 31 July 2008, the key benchmark indices extended previous session’s sharp gains ending marginally higher amidst volatility as futures & options contracts for July 2008 series expired on that day. The 30-share BSE Sensex rose 68.54 points or 0.48% at 14,355.75. The broader based S&P CNX Nifty was up 19.40 points or 0.45% to 4,332.95.

On Friday, 1 August 2008, the market which had opened weak on subdued global cues completely changed the course, ending near day's high. The rally gathered steam in late trade after United Nations nuclear watchdog chief Mohamed ElBaradei said a basic inspection plan for India met all safeguards standards. Members of IAEA's board of governors will be voting on the India-specific nuclear safeguard agreement, a key step in operationalisation of Indo-US nuclear deal. The 30 share BSE Sensex surged 300.94 points or 2.10% at 14,656.69. The broader based S&P CNX Nifty rose 80.6 points or 1.86% at 4413.55.

India’s second largest listed telecom service provider by sales Reliance Communications tanked 13.18% to Rs 436.80 in the week after the reported the slowest profit growth in nine quarters. RCom reported 23.9% growth in consolidated net profit to Rs 1512 crore on 23.7% growth in revenue to Rs 5322 crore in Q1 June 2008 over Q1 June 2007.

India’s largest private sector firm by market capitalization and oil refiner Reliance Industries rose 7.10% to Rs 2299.75 in the week.

India’s largest private sector bank by market capitalization ICICI Bank fell 2.25% to Rs 642.10. The bank’s net profit declined 6.1% to Rs 728.01 crore on a 1.6% growth in operating income to Rs 9429.98 crore in Q1 June 2008 over Q1 June 2007. Treasury losses and slower growth in advances have taken a toll on ICICI Bank’s profits for the first quarter of the current financial year.

Tata Motors, the country’s top truck manufacturer in terms of sales lost 6.57% to Rs 398.60. The company reported 30.10% fall in net profit to Rs 326.11 crore on 14.40% rise in net sales to Rs 6928.44 crore in Q1 June 2008 over Q1 June 2007.

India’s largest cigarette maker in terms of sales ITC fell 0.56% to Rs 187.70. The company reported 4% drop in net profit at Rs 748.67 crore on 18% growth in net turnover to Rs 3,900 crore in Q1 June 2008 over Q1 June 2007. The drop in net profit was attributed to the increase in excise duties on non-filter cigarettes in the Union Budget 2008, steep rise in commodity prices and store rentals.

India’s largest tractor maker by sales Mahindra & Mahindra fell 3.06% to Rs 523.70. The company’s net profit fell 16.66% to Rs 159.3 crore on 25.99% rise in total income to Rs 3331.8 crore in Q1 June 2008 over Q1 June 2007. The company's board approved acquisition of all the business assets of Kinetic Motor Company (KMCL), a two-wheeler company for Rs 110 crore.

Power generation major NTPC fell 5.76% to Rs 176.70. On Tuesday, 29 July 2008, NTPC reported 27.1% fall in net to Rs 1726.53 crore on 5.87% growth in total income to Rs 10256.70 crore in Q1 June 2008 over Q1 June 2007.

India’s largest state run oil exploration firm by sales ONGC rose 1.41% to Rs 996.85. ONGC reported 44% surge in net profit to Rs 6636 crore on 47% growth in turnover to Rs 20,123 crore in Q1 June 2008 over Q1 June 2007. The company attributed the strong performance to higher price realization on crude oil and cost management.

India’s largest drug maker by sales Ranbaxy Laboratories jumped 5.92% to Rs 509.75. The company reported 0.25% rise in consolidated net profit to Rs 160.80 crore on 13% rise in consolidated sales to Rs 1829.60 crore in Q2 June 2008 over Q2 June 2008.

In a move to curtail surging inflation and inflationary pressures, the Reserve Bank of India (RBI) on 29 July 2008 tightened the liquidity in the system by raising the Cash Reserve Ratio (CRR) of banks by 25 basis points to 9% and the short-term indicative rate viz. the repo rate by 50 basis points to 9%.

The increase in CRR - the portion of deposits banks must keep aside - with effect from 30 August 2008 is expected to suck out another Rs 9,000 crore from the banking system. Repo rate is the rate at which the RBI lends money to banks. The RBI also revised the GDP growth projection for 2008-09 to around 8%, from earlier 8% to 8.5%.

Exports rose 23.5% in June 2008 from a year earlier to $14.66 billion. That helped narrow the trade deficit from May 2008 to $9.79 billion. Imports were up by 25.9% to $24.45 billion in June 2008 from a year earlier. Oil imports rose 53.4% to $9.03 billion.

Telecom minister A Raja on 1 August 2008 said the government will hold a global auction for high-speed third-generation (3G) mobile services and have five operators initially. India has 60 MHz of 3G spectrum available, and will allow both GSM and CDMA 3G services, he said.