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Thursday, October 16, 2008

PSU banks rally on rate cut hopes


The key benchmark indices ended lower in choppy late trading sessions on global recession worries and on Indian stock market regulator's decision to raise margins in the derivatives segment. Sensex ended down 227.63 points or 2.11%. Measures by the central bank to boost liquidity in the banking system failed to avert a slide. Nevertheless, the market made a strong rebound from a sharp intraday fall as European stocks cut initial steep losses.

Banking stocks bounced back as fall in inflation raised hopes for cut in interest rates. Index stocks, Sterlite Industries, Reliance communications, HDFC, Bharti Airtel, and Tata Steel recovered sharply from their lows. European markets were down between 3.14% to 3.91%, after having fallen as much as 5.6% earlier on global recession worries. Trading in US index futures suggested the Dow would fall 14 points at the opening bell.

The BSE 30-share Sensex lost 227.63 points or 2.11% to 10,581.49. The index declined 791.32 points at the day's low of 10,017.80 hit in early afternoon trade, its lowest level since 24 July 2006. The Sensex fell 22 points at day’s high of 11,787.20 in mid-afternoon trade.

The S&P CNX Nifty ended down 69.10 points or 2.07% to 3,269.30. It hit a low of 3,099.90, its lowest level since 26 July 2006.

The barometer index BSE Sensex is down 9,705.50 points or 47.84% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 10,625.28 points or 50.1% below its all-time high of 21,206.77 struck on 10 January 2008.

BSE clocked a turnover of Rs 4540 crore today as compared to a turnover of Rs 3,581.21 crore on 15 October 2008.

Nifty October 2008 futures were near spot price at 3269.90, as compared to spot closing of 3269.30. NSE's futures & options (F&O) segment turnover was Rs 55,892.70 crore, which was higher than Rs 43,996.07 crore on Wednesday, 15 October 2008.

The BSE Mid-Cap index was down 1.7% at 3,657.23 outperformed Sense and The BSE Small-Cap index was down 2.44% at 4,286.36 underperformed the Sensex.

BSE Oil & Gas index (down 5.57% to 6,827.77), BSE Capital Goods index (down 5.23% to 7,664.80), BSE IT index (down 3.99% to 2,669.17), BSE Auto index (down 3.43% to 3,195.91), BSE Power index (down 2.24% to 1,863.01), BSE Metal index (down 2.15% to 6,179.87) underperformed the Sensex.

BSE Realty index (up 5.15% to 2,813.26), BSE FMCG index (up 1.73% to 1,902.51), BSE Consumer Durables index (up 0.75% to 2,141.90), BSE Bankex (up 0.43% to 5,866.76), BSE HealthCare index (down 0.93% to 3,297.32), BSE PSU index (down 1.1% to 5,494.30), BSE Teck index (down 1.45% to 2,198.21), outperformed the Sensex.

The market breadth was weak. On BSE, 833 shares advanced as compared to 1,733 that declined. 57 shares remained unchanged.

India’s largest private sector company by market capitalization and oil refiner Reliance Industries fell 8.03% to Rs 1,397.25. The stock came off from a 52-week low of Rs 1,327. The stock declined for the second day in a row today on fears the company may report fall in its gross refining margins in Q2 September 2008 over Q2 September 2007 largely due to sluggish demand for petroleum products in key Western markets. The stock had slumped 6.2% yesterday, 15 October 2008.

Metal stocks recovered from lower level. Sterlite Industries rose 2.21% to Rs 298.80, off the day’s low of Rs 255.50. India’s largest steel maker by sales Tata Steel fell 1.28% to Rs 269.75 off day’s low of Rs 251.10.

Telecom stocks bounced back. India’s largest telecom services provider by market share Bharti Airtel rose 1.79% to Rs 731.45 off the day’s low of Rs 655. India's second largest telecom services provider by sales Reliance Communications jumped 9.8% to Rs 258.90, off the day’s low of Rs 214.20 and was the major gainer form the Sensex pack.

Jaiprakash Associates (up 2.82% to Rs 77), Reliance Infrastructure (up 0.31% to Rs 557.40), Tata Power Company (up 0.7% to Rs 800) edged higher from the Sensex pack.

Among the major losers from the Sensex pack were Hindalco Industries (down 12.15% to Rs 69.75), Tata Motors (down 11.17% to Rs 250.55), Grasim Industries (down 8.05% to Rs 1,375.50), Larsen & Toubro (down 7.55% to Rs 825.75).

Softening of inflation and the cental bank's liquidity boosting measures triggered recovery in bank stocks from an initial slump. India’s largest private sector bank by net profit ICICI Bank rose 0.19% to Rs 415 off the session's low of Rs 376.25. ICICI Bank ADR slumped 14.19% in US on 15 October 2008.

India’s largest private sector bank by net profit HDFC Bank dipped 4.15% to Rs 1,087.35, off the day’s low of Rs 1,041. HDFC Bank's net profit rose 42.28% to Rs 527.98 crore on 62.88% rise in total income to Rs 4634.32 crore in Q2 September 2008 over Q2 September 2007. The bank company announced the result at the closing trade today 16 October 2008

State Bank of India, India's biggest commercial bank, was up 3.13% to Rs 1,543.90 off day’s low of Rs 1,420.55.

A host of other state-run banks rose. Punjab National Bank, Indian Bank, Corporation Bank, Dena Bank IDBI Bank, Canara Bank, Bank of India, Syndicate Bank, Bank of Baroda, Union Bank of India, Allahabad Bank and Indian Overseas Bank rose between 2.03% to 8.07%.

India’s largest home loan lender by sales HDFC rose 6.27% to Rs 1,820, off the day’s low of Rs 1,600.

IndusInd Bank surged 3.91%, as net profit jumped 50.67% to Rs 33.66 crore in Q2 September 2008 over Q2 September 2007.

Lower inflation may trigger cut in interest rate by the Reserve Bank of India (RBI) which may spur lending. Inflation based on the whole price index rose 11.44% in year through 4 October 2008, lower than previous week’s 11.8% rise, data released by the government today, 16 October 2008, showed.

The Reserve Bank of India cut cash reserve ratio by 100 basis points and announced a slew of other measures on Wednesday, 15 October 2008, including disbursal of Rs 25,000 crore to banks for farm loan waiver scheme, to boost liquidity in the banking system.

The BSE Realty index surged 5.15% to 2,813.26, on hopes of reduction in interest rates on home loans. The index bounced back from a record low of 2,436.55 struck in the day. India's largest real estate player by sales DLF rose 8.25% to Rs 324.90 off day's low of Rs 279.80. Housing Development & Infrastructure, Indiabulls Real Estate and Unitech rose between 1.13% to 7.22%.

IT stocks cut initial losses on weak rupee. India's third largest IT exporter by sales Satyam Computer Services down rose 0.26% to Rs 273.05, off the session's lows of Rs 240. India's largest IT exporter by sales Infosys fell 4.85% to Rs 1,266.70 off the day's low of Rs 1,101. Infosys' American depository receipt (ADR) tanked 10.98% overnight.

India's largest IT exporter by sales Tata Consultancy Services fell 8.86% to Rs 495.20 off the day's low of Rs 467. Most IT companies earn their revenue in dollars and fall in rupee results in higher revenue. The partially convertible rupee was at 49.00/15 per dollar compared with Wednesday's close of 48.525/540.

India’s largest steel maker by sales Tata Steel fell 1.28% bouncing back from 52-week low after its UK unit signed pact for procuring iron ore, a key raw material.

Allcargo Global Logistics slumped 4.91% on BSE, even as the company decided to consider stock-split proposal.

Oil exploration firm Cairn India slumped 8.29% on BSE as fall in crude oil price to a 14-month low will reduce realisations.

Refex Refrigerants was locked at 5% lower limit at Rs 76.10 on BSE, as net profit fell 23.3% to Rs 2.76 crore in Q2 September 2008 over Q2 September 2007.

Orchid Chemicals & Pharmaceuticals rose 0.96% after the company received US Food & Drug Administration approval for a new drug.

Biocon fell 3.13% as net profit fell 23.81% to Rs 33.53 crore in Q2 September 2008 over Q2 September 2007.

Monnet Ispat Energy declined 8.24%, even as the company decided to consider a proposed for buyback of its own shares.

Financial Technologies India tumbled 10.17% on BSE, after the company announced an overseas acquisition

HCL Technologies lost 1.49% despite reporting turnaround results in Q1 September 2008.

Container Corporation of India declined 3.80% on BSE, despite net profit surging 28.48% to Rs 223.68 crore in Q2 September 2008 over Q2 September 2007.

IFCI clocked the highest volume of 1.21 crore shares on BSE. Chambal Fertilisers and Chemicals (1.16 crore shares), Reliance Natural Resources (1.07 crore shares), Indiabulls Real Estate (96.9 lakh shares) and Suzlon Energy (86.03 lakh shares) were the other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 418.91 crore on BSE. Reliance Capital (Rs 258.68 crore), ICICI Bank (Rs 239.24 crore), State Bank of India (Rs 212.86 crore) and Larsen & Toubro (Rs 170.59 crore) were the other turnover toppers in that order.

The market regulator Securities & Exchange Board of India (Sebi) has tightened margins in the derivatives segment to ward defaults and curb volatility. The exposure margin for gross open positions in single stock futures and gross open positions in stock options will now be higher of 10% or 1.5 times the standard deviation in the notional value of the positions.

A warning of tough times ahead by Federal Reserve Chairman Ben Bernanke sent Asian markets sharply lower, as investors brace for looming recession. Key benchmark indices in China, Hong Kong, Japan, South Korea, Singapore and Taiwan were down by between 3.25% to 11.41%.

Shrugging off recent optimism about massive government efforts to prop up the global financial system Wall Street , yesterday, 15 October 2008, suffered its worst one-day percentage decline since the stock market crash of 1987.

Crude oil for November delivery fell as much as $1.58, or 2.1%, to $72.96 a barrel on the New York Mercantile Exchange on 15 October 2008, the lowest since 30 August, 2007.