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Friday, October 17, 2008

Sensex down 13% from recent high


Bears ruled the roost on the boures with the Sensex falling below 10,000 mark for the first time in more than two years. The Sensex lost 606.14 points or 5.73%, on global recession worries. Trading in US index futures suggested the Dow would fall 257 points at the opening bell.

The market declined sharply in late trade after witnessing bout of volatility earlier in the day. An initial surge boosted by reports government was considering several measures to raise domestic institutional participation in the equities, proved short-lived.

Realty and banking stocks tumbled. Index heavyweight Reliance Industries (RIL) dipped more than 7.5%. Reliance Infrastructure was down more than 13.5%, Sterlite Industries was down more than 12% and Jaiprakash Associates slumped nearly 12%. NTPC and DLF lost almost 10% eachl. Though in the red, the BSE Mid-Cap and Small-cap indices outperformed the Sensex.

The government has reportedly sought data from the Reserve Bank of India to consider a proposal to enhance the investment limit for bank exposure to equity markets. This will be part of several measures to boost domestic institutional participation in the markets at a time when foreign institutional investors (FIIs) are exiting. At present, a bank can invest up to 20% of net worth in a single company and up to 40% of net worth in a group.

The domestic markets have declined sharply in the past few days despite Reserve Bank of India’ several attempts to infuse liquidity in at a time when global recession worries have marred investor sentiment.

Asian markets were mostly lower as worries about a slowing global economy kept investors on the sidelines.

The BSE 30-share Sensex slumped 606.14 points or 5.73% to 9,975.35. The index dipped 670.17 points at the day's low of 9,911.32 in late trade, its lowest level since 24 July 2006. The Sensex rose 205.44 points at day’s high of 10,786.93, at the onset of the trading session.

The S&P CNX Nifty was down 194.95 points or 5.96% to 3,074.35. It hit a low of 3,046.60 in late trade, its lowest level since 25 July 2006.

From a recent high of 11,483.40 on 14 October 2008, Sensex has tumbled 1508.05 points or 13.13% in last three trading sessions. The barometer index is down 10,311.64 points or 50.82% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 11,231.42 points or 52.96% below its all-time high of 21,206.77 struck on 10 January 2008.

The BSE clocked a turnover of Rs 4,121 crore today as compared to a turnover of Rs 4,552 41 crore on 16 October 2008.

The BSE Mid-Cap index was down 3.07% at 3,544.84 and The BSE Small-Cap index was down 2.76% at 4,167.86. Both the indices outperformed the Sensex.

BSE Realty index (down 10.25% to 2,524.89), BSE Power index (down 8.09% to 1,71227), BSE Metal index (down 6.12% to 5,801.71), BSE Teck index (down 5.91% to 2,068.20) underperformed Sensex.

BSE FMCG index (down 2.29% to 1,858.99), BSE Consumer Durables index (down 2.64% to 2,085.28), BSE HealthCare index (down 2.68% to 3,209.02), BSE Auto index (down 3.01% to 3,099.60), BSE PSU index (down 4.71% to 5,235.48), BSE IT index (down 4.94% to 2,537.27), BSE Oil & Gas index (down 5.1% to 6,479.56), BSE Bankex (down 5.46% to 5,546.89), BSE Capital Goods index (down 5.52% to 7,241.36), underperformed the Sensex.

The market breadth was weak. On BSE, 719 shares advanced as compared to 1,877 that declined. 56 shares remained unchanged.

India’s largest private sector company by market capitalization and oil refiner Reliance Industries fell 6.58% to Rs 1,305.25 off day’s high of Rs 1,438. From a recent high of Rs 1619.70 on 14 October 2008, the stock has plunged 19.41% in the last three days on concerns of fall in refining margins.

Meanwhile, the Bombay High Court on Thursday, 16 October 2008, questioned the government about its locus standi in the legal tussle between Reliance Industries and Reliance Natural Resources over supply of gas from the former’s Krishna Godavari basin to the latter’s proposed power plant at Dadri in Uttar Pradesh. This came after the government sought to be a party to the case. The government counsel will present his case on Friday, 17 October 2008.

Reliance Infrastructure (down 11.96% to Rs 490.75), Jaiprakash Associates (down 10.7% to Rs 66.75), Reliance Communications (down 9.64% to Rs 233.95), NTPC (down 9.68% to Rs 149.75) were the major losers from the Sensex pack.

Realty stocks slumped despite possibility of home loan rate cuts by lenders due to fall in inflation and cut in the cash reserve ratio cut by the Reserve Bank of India three times in last ten days. BSE Realty index fell 10.25% and was the major loser from the sectoral indices on BSE. All the stocks from the index were in red. Realty majors, Indiabulls Real Estate, DLF and Unitech fell between 10.34% to 14.16%. Fall in lending rates may spur demand for residential properties.

Most lenders slipped despite India’s second largest private sector bank by net profit, HDFC Bank’s robust Q2 results. HDFC Bank fell 5.82% even as it reported 43.2% rise in net profit to Rs 527.98 crore on 62.8% growth in total income to Rs 4,634.32 crore in Q2 September 2008 over Q2 September 2007. The stock had fallen 4.15% yesterday, 16 October 2008, ahead of the results which hit the market after trading hours.

Other banking majors extended fell. ICICI Bank and State Bank of India fell between 5.82% to 8.42%.

India’s largest home loan lender by sales HDFC fell 1.37% even as it reported 32.5% growth in net profit to Rs 534 crore in Q2 September 2008 over Q2 September 2007. The results hit the market during trading hours.

Power stocks dropped, with the BSE Power index falling 8.09%. It was the second major loser from the sectoral indices. All the stocks from the index were in red. NTPC, Reliance Infrastructure, Tata Power Company Power Grid Corporation of India and Reliance Power slip between 3.32% to 11.96%.

Metal stocks fell on falling metal prices on mounting fears a global economic slowdown will hit demand. Hindalco Industries, Sterlite Industries, Hindustan Zinc, National Aluminum Company), Steel Authority of India fell between 4.64% to 8.82%.

India’s largest steel maker by sales Tata Steel fell 7.99% after its UK unit Corus decided to cut crude steel production by up to 20% or 1 million tonnes over the next three months due to slowing demand caused by the global financial crises. There would be no material change in production for its operations outside Europe, Tata Steel said.

Capital goods stocks fell on reports faulty government policies has resulted in surge in import of capital goods from countries like China thereby impacting the domestic capital goods industry. Bharat Heavy Electricals, Larsen & Toubro and Suzlon Energy fell between 3.19% to 9%.

India's third largest IT services provider by sales Satyam Computer Services fell 2.6% to Rs 265.95. The stock had held firm for a better part of the trading sessions after the company raised its earnings per share forecast in rupee terms for year ending March 2009 at the time of announcing Q2 September 2008 results today.

India Infoline tumbled 16.85% as net profit declined 29.20% to Rs 32.23 crore in Q2 September 2008 over Q2 September 2007.

Elecon Engineering Company declined 6.63% on BSE, as net profit declined 7.05% to Rs 16.01 crore in Q2 September 2008 over Q2 September 2007.

Pritish Nandy Communications declined 2.11% on BSE, on increase in promoters' stake in the company.

Chettinad Cement Corporation declined 2.61%, as net profit declined 32.70% to Rs 34.16 crore in Q2 September 2008 over Q2 September 2007.

Parsvnath Developers slipped 11.3%, despite bagging an order worth Rs 29.50 crore from the Delhi Metro Rail Corporation.

Hindustan Petroleum Corporation gained 3.29%, after the company formed a subsidiary for production of biodiesel.

Pyramid Saimira Theatre fell 0.88% on reports a group firm has acquired a direct-to-home services firm in Europe.

Wockhardt fell 2.36%, after the company secured US Food & Drug Administration approval for a new drug.

Jaiprakash Associates clocked the highest volume of 92.35 lakh shares on BSE. Housing Development & Infrastructure (91.5 lakh shares), Reliance Natural Resources (67.96 lakh shares), Chambal Fertilisers & Chemicals (64.28 lakh shares) and IFCI (63.7 lakh shares) were the other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 333.61 crore on BSE. ICICI Bank (Rs 235.9 crore), Reliance Capital (Rs 225.31 crore), State Bank of India (Rs 159.36 crore) and Axis Bank (Rs 145.79 crore) were the other turnover toppers in that order.

European markets which opened after Indian markets were positive. France’s CAC 40, Germany’s DAX and UK’s FTSE 100 rose between 2.02% to 3.03%.

Asian markets were mostly lower. South Korea's Seoul Composite, Singapore’s Straits Times, and Taiwan's Taiwan Weighted, Hong Kong's Hang Seng, fell between 1.52% to 2.73%. China's Shanghai Composite index and Japan's Nikkei, rose between 1.08% to 2.78%.

US markets staged a comeback in a late-day rally in highly volatile trade on Thursday, 16 October 2008, as investors snapped up beaten-down shares a day after Wall Street's worst day since the 1987 crash. The Dow Industrials surged 401.35 points, or 4.68%, to 8,979.26. The S&P 500 index advanced 38.59 points, or 4.25%, to 946.43, and the Nasdaq composite index added 89.38 points, or 5.49%, to 1,717.71.