Sensex cuts losses sharply

Key benchmark indices witnessed sharp intra-day pullback in second half of the day's trading session helped by short covering of derivative positions ahead of the expiry on Wednesday, 29 October 2008, after plunging to over 3-year low in the first half spooked by weak global equities. Volatility was the hallmark of the day's trading session. The market breadth was weak.

The opening volatility on the bourses followed the slump in Asian markets to five-year lows, following the poor showing by the US markets overnight on concerns of looming US recession worries and global economic slowdown decelerating corporate earnings growth. Key benchmark indices in China, Hong Kong, South Korea, Taiwan, and Japan slipped between 0.80% and 6.36% today, 27 October 2008. European markets were not spared from the global bloodbath either as indices in France, Germany and UK fell between 3.16% to 6.31%.

The Dow Jones industrial average futures were down about 200 points today, 24 October 2008. S&P 500 and Nasdaq 100 futures also fell sharply as turmoil gripped markets around the world. Futures measure current index values against perceived future performance and give an indication of how markets may open when trading begins in New York.

The BSE 30-share Sensex declined 180.49 points, or 2.07%, to provisionally close at 8,520.58, after slumping 1,003.68 points to 7,697.39 in afternoon trade, its lowest since 28 October 2005. At the day’s high of 8,739.48 hit in early trade, the Sensex rose 38.41 points. The Sensex had opened 112.21 points lower at 8,588.86.

The S&P CNX Nifty lost 51.60 points, or 2%, to 2,532.40 as per the provisional figures, after tanking to a low of 2252.75, its lowest since 22 July 2005.

The market breadth, indicating the overall health of the market, was weak with 1,996 shares declining compared with just 538 that rose. 41 shares remained unchanged.

The volatility is attributed to the expiry of the derivative contracts for October 2008 series on Wednesday, 29 October 2008. As per reports, marketwide rollover of positions was 37%, while that of Nifty stood at 45% from the October 2008 series to November 2007, by Friday, 24 October 2008. The rollovers are fairly high, indicating market players are uncertain about the direction of the market.

Among the 30-member Sensex pack, 21 declined while the rest gainer. Mahindra & Mahindra (down 15.67% to Rs 241.80), Tata Motors (down 13.73% to Rs 1404.40), Grasim Industries (down 10.2% to Rs 946) were the key losers from the Sensex pack.

India’s largest state-run bank by net profit State Bank of India (SBI) fell 9.2% to Rs 1050 on muted growth in consolidated net profit in Q2 September 2008. In its results declared before market hours today, 27 October 2008, SBI reported a 10.60% rise in consolidated net profit to Rs 2378.19 crore on a 26.4% increase in total income to Rs 27083.47 crore in Q2 September 2008 over Q2 September 2007. The consolidated earnings include numbers from recently acquired State Bank of Saurashtra.

India’s largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) jumped 6.25% to Rs 1,079, making a strong recovery from day’s low of Rs 930 . RIL’s net profit rose 7.4% to Rs 4122 crore on 39.8% growth in sales to Rs 44787 crore in Q2 September 2008 over Q2 September 2007, the company said after market hours on Thursday, 23 October 2008.

Select Sensex stocks reversed early losses. India's second largest IT exporter by sales Infosys was rose 0.3% to Rs 1252.50 after hitting an intra-day low of Rs 1,161. Sterlite Industries rose 1.49% to Rs 211.45 off from day’s low of Rs 164.50. India’s largest private sector bank by net profit ICICI Bank rose 1.61% to Rs 315 after declining to low of Rs 282.15. India’s largest telecom services provider by market share Reliance Communications surged 6.33% to Rs 205.65 off day’s low of Rs 148.60. Bharti Airtel, India’s largest telecom services provider by market share jumped 10.17% to Rs 588.80, off day’s low of Rs 484. Reliance Infrastructure rose 5.13% to Rs 401, recovering from low of Rs 354.

India's third largest IT exporter by sales Satyam Computer Services rose 2.28% to Rs 293.40 off day’s low of Rs 240.25. Its ADR slid 6.9% in US on Friday.

India's fourth largest IT exporter by sales Wipro tumbled 6.4% to Rs 220.10 off day’s low of Rs 181.70. Its ADR shed 9.6% on Friday in US.

India’s second largest power generation company in terms of net profit Tata Power Company slumped 8.75% to Rs 570.25 ahead of its Q2 results today, 27 October 2008.

BSE Realty index rose 4.25% and was the major gainer from the sectoral indices on BSE. Realty majors, Indiabulls Real Estate, Unitech rose between 15.07% to 41.86%. However, India’s largest real estate player by market capitalization DLF fell 2.84% to Rs 198.10 off day’s low of Rs 158.

Central banks across the globe are likely to launch new coordinated emergency action this week to calm panic in financial markets. Reports indicate the US Federal Reserve is widely expected to announce a 50 basis-point cut in overnight rates on Wednesday, 29 October 2008 that would take them to 1%, the lowest level since June 2004, with some expecting an even deeper reduction to 0.75%.

The US markets had declined in volatile trade on Friday, 24 October 2008, as fears of a full-blown global recession intensified and investors dumped risky assets. The Dow Jones Industrial Average plunged 312.30 points, or 3.59%, to 8,378.95. The S&P 500 index slipped 31.34 points, or 3.45%, to 876.77, and the Nasdaq Composite index lost 51.88 points, or 3.23%, to 1,552.03.

Back home, markets suffered a severe setback on Friday 24 October 2008, plunging to three-year lows mirroring weak global equities on worries about a sharp global economic slowdown and disappointment from the second quarter monetary policy review of the Reserve Bank of India. The BSE 30-share Sensex plunged 1070.63 points, or 10.96%, to 8,701.07, recording its biggest fall in percentage terms since May 2004 and the S&P CNX Nifty was down 359.50 points or 12.2% to 2,584.

Crude oil was little changed in New York near a 16-month low amid expectations that OPEC's decision to cut production will start to bring supply back in line with demand that is being curbed by the global financial crisis. Crude oil for December delivery was at $US63.93 a barrel down 22 cents, in after-hours electronic trading on the New York Mercantile Exchange today.

The Indian currency continued its downward march and plunged to 50.05 against the greenback in early trade on Monday.