Market crumbles as inflation rises

The market tumbled in a highly volatile trading session as an unexpected increase in inflation shattered hopes of further interest rate cuts by the Reserve Bank of India. Volatility in index heavyweight Reliance Industries (RIL) caused volatility in the key benchmark indices. Weak global markets also weighed on the domestic bourses, as the BSE Sensex plunged 385.79 points or 3.81% to 9,734.22. Most of the sectoral indices on BSE declined

Asian markets, which opened before Indian market, mirrored overnight losses in the US as a fresh batch of dismal economic data underscored the upbeat market mood from Democrat Barack Obama's victory in the US presidential election. Hong Kong's Hang Seng was down 7.7% and Japan's Nikkei plunged 6.5%. Key benchmark indices in China, Singapore, South Korea and Taiwan ended down by 2.44% to 7.56%.

US stocks slumped on Wednesday, 5 November 2008. The Dow Jones industrial average slid 486.01 points, or 5.05%, to 9,139.27. The Standard & Poor's 500 Index plunged 52.98 points, or 5.27%, to close at 952.77. The Nasdaq Composite Index lost 98.48 points, or 5.53% to 1,681.64.

Companies in the US cut an estimated 1,57,000 jobs in October 2008, the most in almost six years, a private report based on payroll data showed on Wednesday, 5 November 2008. Meanwhile, the Institute for Supply Management said the US service sector contracted sharply in October 2008.

The 30-share BSE Sensex fell 385.79 points or 3.81% to 9,734.22. The index fell 484.79 points to 9,635.22 in afternoon trade. It fell 10.56 points at day’s high of 10,109.45 in mid-afternoon trade.

The 50-unit S&P Nifty was down 102.30 points or 3.42% to 2892.65.

The BSE Mid-cap index was down 2.24% to 3,318.41, while the BSE Small-cap index was down 2.13% to 3,880.27.

The market breadth was weak with 1633 shares losing and 869 stocks gaining on BSE. A total of 83 stocks were unchanged.

BSE clocked a turnover of Rs 3841 crore as against Rs 4,983.72 crore on 5 November 2008.

Nifty November 2008 futures were at 2883.30, at a discount of 9.35 points as compared to spot closing of 2892.65. NSE's futures & options (F&O) segment turnover was Rs 43836.07 crore, which was higher than Rs 38550.94 crore on Wednesday, 5 November 2008.

The BSE Oil & Gas index underperformed the Sensex, falling 4.83%. PSU OMCs fell on reports the government may cut petrol prices by around Rs 2 a litre and diesel by Rs 1 per litre to drum up support with voters ahead of key state elections later this month. BPCL, HPCL and Indian Oil Corporation fell by 0.91% to 2.03%

India’s largest private sector firm by market capitalisation and oil refiner Reliance Industries extended losses for the second session. The stock fell 7.71% even as the firm denied a newspaper report that it had shut five polyester and petrochemical plants near Mumbai amid falling demand. The stock had tumbled 12.76% in the previous trading session hit by the media report.

Volatility in the stock was immense. The scrip declined 8.7% at the day’s low of Rs 1159 in late trade. The stock declined 2.3% at the day’s high of Rs 1240 in early trade. The stock had tumbled 12.76% in the previous trading session hit by the media report about the plant closure.

Oil exploration and offshore oil services firms fell on fall in global crude oil prices. Cairn India, Aban Offshore, and Shiv Vani Oil fell by 3.85% to 8.19%

India’s largest state-run oil explorer by market capitalisation ONGC fell 1.43% despite reports the French oil major Total is picking up stakes in ONGC Mittal’s Nigerian oil blocks.

Oil fell towards $65 a barrel on Thursday, 6 November 2008, extending its 7% overnight drop caused by weak US economic data and growing US fuel stockpiles.

State-run GAIL India rose 1.15% on reports it may be nominated as the sole agency to sell natural gas from Reliance Industries' eastern offshore KG-D6 block to fuel-starved fertilizer units.

Gains in sector bellwether DLF helped the BSE Realty index outperformed the Sensex. The index rose 0.60%. DLF, India's biggest realty developer by market capitalisation, rose 2.46% even as Morgan Stanley cut price estimate on the stock by 82% to Rs 256. Indiabulls Real Estate (up 3.13%) and Puravankara Projects (up 1.77%), were other gainers from the realty pack.

Stocks from the broader healthcare sector gained on defensive buying. The BSE Healthcare index outperformed the Sensex, rising 0.28%. Ranbaxy Laboratories, Glenmark Pharmaceuticals, Dr Reddy's Laboratories, Lupin, Apollo Hospitals, Glaxosmit Pharmaceuticals, and Biocon rose between 0.04% to 3.72%.

Drug maker Sun Pharmaceuticals Industries rose 1.67% after the company received US Food & Drug Administration approval to market generic version of Sinemet in tablet form in multiple strengths.

Gains in index heavyweight Hindustan Unilever supported the BSE FMCG index. The index outperformed the Sensex, falling merely 0.08%. Hindustan Unilever, which makes daily use products like soaps and detergents, rose 3.05%. It has 29.06% weightage on the BSE FMCG index.

Other FMCG stocks like ITC, United Spirits, Tata Tea, Nestle India, Dabur India, GlaxoSmithkline Consumer Healthcare, United Breweries, and Marico declined by 0.32% to 8.33%.

Heavy electrical equipments maker Bharat Heavy Electricals (Bhel) helped the BSE Capital Goods index outpeforme the Sensex. The index fell 1.02%. Bhel rose 0.52%. The stock has 23.49% weightage on the BSE Capital Goods index. Suzlon Energy (up 2.74%), and Punj Lloyd (up 2.34%), were the other gainers in the pack.

However, stocks like Larsen & Toubro, Crompton Greaves, Siemens, ABB, Areva T&D and Thermax fell by 0.71% to 5.28%

The BSE Consumer Durables outperformed the Sensex, falling 1.90%. This was on the back of strong gains in Gitanjali Gems and Rajesh Exports, which rose 10.21% and 3.36% respectively. Meanwhile, Videocon Industries, Titan Industries, Lloyd Electric and Blue Star fell by 1.16% to 4.92%.

The BSE Power index outperformed the Sensex, falling 2%. GVK Power & Infrastructure rose 9%. Power and allied projects developer GMR Infrastructure rose 3.83% after the company said the group is pursing possibility of acquiring a coal mine in Indonesia.

Meanwhile, Neyveli Lignite, Tata Power and Reliance Infrastructure fell by 2.76% to 5.12%.

The BSE Auto index outperformed the Sensex, falling 2.92%. This was despite the massive fall witnessed by Tata Motors.

Tata Motors, India's largest commercial vehicle maker by sales, tumbled 12.17%, extending losses for the second session, as the firm closed its commercial vehicle plant in Jamshedpur for three days starting today to avoid a build-up of inventory. The stock moved in the range of Rs 154.55 and Rs 175. The stock had declined 6.53% in the previous session, ahead of the announcement.

Commercial vehicles maker Ashok Leyland plunged 9.33% after the company posted 50.2% fall in sales to 3397 units in October 2008 over October 2007.

Banking shares fell in volatile trade on higher inflation and on comments by State Bank of India chief O.P. Bhatt that there is not enough liquidity in the banking system. India's largest commercial bank State Bank of India fell 4.58% after Bhatt said the bank will announce a 75 basis point cut in its prime lending rate later today.

India's largest private sector bank by market capitalisation ICICI Bank fell 3.87%. HDFC Bank and Axis Bank fell 3.10% and 3.51% respectively. The BSE Bankex outperformed the Sensex, falling 3.41%.

Shares of the software exporters fell as American depository receipt (ADR) of Infosys Technologies, Wipro, and Satyam Computer fell between 4.28% to 7.72% overnight. TCS, Infosys Technologies, Wipro and Satyam Computer were down by 1.08% to 6.31%. The BSE IT index underperformed the Sensex, falling 4.26%

World's largest steel maker, ArcelorMittal's poor earnings outlook for the fourth quarter hit metal shares. World’s sixth largest steel maker Tata Steel fell 13.67%. JSW Steel, Steel Authority of India, and Jindal Steel & Power, were down 6.02% to 10.80%.

ArcelorMittal, on Wednesday, 5 November 2008, reported third-quarter net profit below expectations and forecast significantly lower earnings in the fourth quarter. The company also announced a series of measures, including more temporary production cuts and a pause in its growth strategy, in response to the economic slowdown.

India's largest aluminium maker by sales Hindalco Industries slipped 7.50% on reports the company bought $2 billion from the foreign exchange market to part-repay a $3.03 billion bridge loan it took to buy Canadian aluminium can manufacturer, Novelis.

Sterlite Industries India, a leading producer of copper, tumbled 11.33% after parent Vedanta Resources reported 24.73% fall in net profit to $350 million in the half year ended 2008 over the half year ended 2007. The BSE Metal index underperformed the Sensex, falling 8.41%

Reliance Industries clocked the highest turnover of Rs 391.47 crore on BSE. Reliance Capital (Rs 202.90 crore), State Bank of India (Rs 173.15 crore), ICICI Bank (Rs 165.32 crore), and Alkali Metals (Rs 161.38 crore), were the other turnover toppers on BSE in that order.

GVK Power & Infrastructure reported the highest volume of 3.30 crore shaes on BSE. Suzlon Energy (2.27 crore shares), Reliance Natural Resources (1.39 crore shares), Unitech (1.21 crore shares), and IFCI (1.16 crore shares), were the other volume toppers on BSE in that order.

There has been a massive erosion in investors' wealth this year. The barometer index BSE Sensex is down 10551.78 points or 52.01% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 11471.78 points or 54% below its all-time high of 21,206.77 struck on 10 January 2008.