Auto, metal shares lead 398-point Sensex slide

A strong rebound in mid-afternoon trade on Finance minister P Chidambaram’s comments that the Securities & Exchange Board of India (Sebi) has asked foreign institutional investors (FIIs) to reverse short positions on borrowed shares, proved short-lived. Auto and metal stocks led 398.20 points or 3.92% fall in the BSE Sensex, which ended below the 10,000 mark. Relaxation of the overseas borrowing norms for corporates and softening inflation failed to lift the gloom.

Chidambaram told a television channel that the reversal of FIIs' short postions on borrowed shares, is likely to take place over the next few days. Early this week, Sebi had disapproved overseas lending of shares by foreign funds after data showed that FIIs had lent equities worth Rs 348 crore to overseas entities for the purpose of short selling, during 10 October-14 October 2008. The data had later showed that their FIIs had lent equities worth Rs 1000 crore between 10 October-17 October 2008.

Meanwhile, the liberal overseas borrowing norms will help Indian firms with good credit rating in raising overseas funds once the global credit market crises eases. According to the new rules notified by the Reserve Bank of India, external commercial borrowings up to $500 million per borrower per financial year would be permitted for rupee expenditure or foreign currency expenditure for permissible end uses under the automatic route.

Stocks fell in Europe as bearish updates from engineering group ABB and auto group Daimler added to worries about the global economy that sent banks and commodity shares sharply lower. Key benchmark indices in France, UK and Germany fell by between 2.25% to 3.94%.

Asia markets, which had tumbled earlier in the day on fears of a severe global downturn, however, cut steep intraday losses on news the Federal Deposit Insurance Corp Chairman Sheila Bair is expected to suggest in a Senate Banking Committee on Thursday, that the government give banks incentives to turn troubled loans into more affordable mortgages. Yet, most markets ended in the red. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore, China and Taiwan were down by between 1.07% to 7.48%.

The BSE 30-share Sensex lost 398.20 points or 3.92% to 9.771.70. The index rose 90.65 points at the day's high of 10,260.55 in mid-afternoon trade soon after the FM's comments on short selling. The Sensex fell 488.62 points at day’s low of 9,681.28 in early trade, its lowest level since 15 June 2006.

The S&P CNX Nifty was down 122 points or 3.98% to 2,943.15. Nifty hit a low of 2,918.10 in early trade its lowest level since 24 July 2006.

There has been a massive erosion in investors' wealth this year. The barometer index is down 10,515.29 points or 51.83% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 11,435.07 points or 53.92% below its all-time high of 21,206.77 struck on 10 January 2008.

BSE clocked a turnover of Rs 3747 crore today as compared to a turnover of Rs 3,095.17 crore on 22 October 2008.

Nifty October 2008 futures were at 2932.60, at a discount of 10.55 points as compared to spot closing of 2943.15. NSE's futures & options (F&O) segment turnover was Rs 53,624.95 crore, which was higher than Rs 50,046.83 crore on Wednesday, 22 October 2008.

The BSE Mid-Cap index was down 3.2% at 3,378.72 and the BSE Small-Cap index was down 3.55% at 3,965.70. Both the indices outperformed the Sensex.

BSE Metal index (down 11.08% to 4,996.92), BSE Auto index (down 7.21% to 2,769.79), BSE Oil & Gas index (down 5.3% to 6,058.28), BSE Realty index (down 5.26% to 2,305.58), BSE HealthCare index (down 4.22% to 3,064.44) underperformed the Sensex.

BSE Teck index (down 3.38% to 2,087.08), BSE Bankex (down 3.33% to 5,321.14), BSE PSU index (down 2.3% to 4,930.03), BSE Power index (down 2.16% to 1,640.34), BSE IT index (down 1.81% to 2,739.80), BSE FMCG index (down 1.68% to 1,936.53), BSE Capital Goods index (up 0.25% to 7,244.86), BSE Consumer Durables index (up 0.99% to 2,210.95), outperformed the Sensex.

The market breadth was weak. On BSE, 622 shares advanced as compared to 1,908 that declined. 66 shares remained unchanged.

India’s largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 7.62% to Rs 1,215.15 ahead of the results unveiled after trading hours. The net profit rose 7.4% rise in net profit to Rs 4122 crore on 39.5% rise in total income to Rs 44938 crore in Q2 September 2008 over Q2 September 2007.

HDFC (down 7.71% to Rs 1758.10), Bharti Airtel (down 7.76% to Rs 615.60) and Jaiprakash Associates (down 6.41% to Rs 67.85) were the other major losers from the Sensex pack.

Grasim Industries (up 1.89% to Rs 1,182), Bharat Heavy Electricals (up 2.74% to Rs 1,170.35), and ONGC (up 1.94% to Rs 776.05) were the gainers from the Sensex pack.

Metal and mining stocks extended recent losses on slump in metal prices on the London Metal Exchange. The BSE Metal index was down 11.08% and was the major loser from the sectoral indices on BSE. Hindustan Zinc, National Aluminum Company, Steel Authority of India fell by between 10.03% to 14.39%. Sterlite Industries fell 7.43% despite 18.51% rise in net profit to Rs 1280 crore on 0.3% rise in net sales to Rs 6590 crore in Q2 September 2008 over Q2 September 2007.

Concerns that the global economy will slide into recession rattled commodities markets on Wednesday, 22 October 2008.

India’s largest steel maker by sales Tata Steel fell 14.85% tumbling for the second day in a row, after Moody's Investors Service yesterday lowered outlook on corporate family rating to negative from stable due to weak operating enviourment at its UK unit. The stock had plunged 12.04% yesterday, 22 October 2008.

Sesa Goa tumbled 6.45%, as weak global spot iron ore prices offset strong Q2 results.

Key banking pivotals dropped in volatile trade on sharp fall in ICICI Bank ADR overnight. India’s largest private sector by bank by net profit ICICI Bank fell 7.79% to Rs 365.55. Its ADR fell sharply by 15.2% overnight. India’s largest commercial bank State Bank of India fell 4.84%.

India’s second largest private sector bank by net profit HDFC Bank rose 2.23%. ICICI Bank, State Bank of India and HDFC Bank have a weightage of 24.21%, 22.44% and 20.55%, respectively, in the Bankex.

Inflation based on the wholesale price index (WPI) rose 11.07% in the year through 11 October 2008, much lower than previous week’s 11.44% rise, data released by the government during trading hours, showed. The Reserve Bank of India cut repo rate by 100 basis points to 8% on 20 October 2008. The repo rate is the rate at which the RBI provides funds to banks against the collateral of government bonds for a day to three days.

Auto stocks tumbled across-the-board on prospects of dismal Q2 September 2008 results from auto majors, as higher interest rates hit demand. Mahindra & Mahindra, Maruti Suzuki India, Tata Motors and Hero Honda Motor fell by between 6.51% to 14.57%.

Most realty stocks declined today despite hopes cut in lending rates will spur demand for residential properties. The BSE Realty index fell 5.26%. Realty majors, DLF, Indiabulls Real Estate and Unitech fell by between 6.7% to 13.81%.

PSU OMCs fell after crude oil rebounded from a 16-month low after Iran said Organisation of Petroleum Exporting Countries should cut production by 2 million barrels a day to stem the slump in prices. BPCL, HPCL and Indian Oil Corporation fell by between 5.45% to 7.42%. State-run oil firms suffer revenue losses on domestic sale of petrol, diesel, LPG and kerosene at a controlled price.

Crude oil for December delivery rose as much as $1.75, or 2.6 % to $68.50 a barrel on the New York Mercantile Exchange today.

Weak rupee had helped IT stocks recover from initial fall caused by overnight slide in American depository receipts (ADRs) and on lower-than-expected results of Tata Consultancy Services, India's largest IT exporter by sales. TCS led the rebound, gaining 0.2% to Rs 547.45, recovering from the day's low of Rs 497. TCS' net profit fell 2.57% to Rs 1173.04 on a 9.36% rise in sales to Rs 5699.96 in Q2 September 2008 over Q1 June 2008.

India's fourth largest IT exporter by sales Wipro fell 2.55% to Rs 272.25. Wipro ADR fell 7.75% overnight after the results.

India's third largest IT exporter by sales Satyam Computer Services fell 2.73% to Rs 299.75. Its ADR skidded 4.88% overnight. The company raised its earnings guidance in rupee terms at the time of announcing Q2 September 2008 results on Friday, 17 October 2008.

India's second largest IT exporter by sales Infosys down 1.35% to Rs 1,282.75. Infosys ADR lost 4.52% overnight.

Infosys, Satyam Computer Services, Tata Consultancy Service and Wipro have a weightage of 55.06%, 16.01%, 10.45% and 7.09%, respectively, in the BSE IT index.

The Indian rupee dropped to a record low beyond 49.50 per dollar in opening deals on Thursday as sharp falls in Asian shares heightened fears of more capital outflows from the local stock market. The partially convertible rupee was at 49.68/69 per dollar, 0.80% weaker than Wednesday's close of 49.28/29. A weak rupee results in higher revenues for IT companies as they earn most of their revenues in dollar terms.

Pharma majors fell on poor Q2 resuls. Dr Reddys Laboratories declined 2.71% on BSE, as net profit declined 27.19% to Rs 91.01 crore in Q2 September 2008 over Q2 September 2007. Cipla declined 1.5%, as net profit fell 20.6% to Rs 151.43 crore in Q2 September 2008 over Q2 September 2007.

India’s largest drugmaker by sales Ranbaxy Laboratories declined 10.94% to Rs 229.95. The company will announce Q3 September 2008 result on 31 October 2008.

Ajanta Pharma rose 3.18%, as net profit surged 53.74% to Rs 4.32 crore in Q2 September 2008 over Q2 September 2007.

India’s largest cement maker by sales ACC fell 2.02% as net profit remained flat at Rs 283.43 crore on 7.9% rise in total income to Rs 1870.65 crore in Q3 September 2008 over Q3 September 2007.

Reliance Petroleum clocked the highest volume of 1.64 crore shares on BSE. Housing Development & Infrastructure (89.75 lakh shares), Indiabulls Real Estate (83.58 lakh shares), Reliance Natural Resources (73.13 lakh shares) and Cals Refineries (72.32 lakh shares) were the other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 281.19 crore on BSE. Reliance Capital (Rs 268.9 crore), State Bank of India (Rs 201.76 crore), ICICI Bank (Rs 181.82 crore) and Reliance Petroleum (Rs 153.51 crore) were the other turnover toppers in that order.

Crompton Greaves rose 1.51% as the company sees a robust order intake.

ICI India rose 0.25%, on decision to buy back own shares at a price not exceeding Rs 575 a share, a 30.6% premium to the ruling market price.

Exide Industries spurted 5.1% as net profit rose 25% to Rs 77.84 crore in Q2 September 2008 over Q2 September 2007.

United Spirits spurted 6.4%, extending gains for the fourth session in a row on buzz that a foreign liquor firm may buy stake.

Lignite based power producer Neyveli Lignite Corporation declined 4.26%, as net profit dropped 18.5% to Rs 188.39 crore in Q2 September 2008 over Q2 September 2007.

Zen Technologies rose 0.39% on proposal to consider buyback of own shares.