Market extends losses for fourth straight day

Key benchmark indices extended their downward journey for the fourth straight session today, 17 November 2008 despite staging a sharp pullback in late trade. The BSE Sensex recovered over 330 points in choppy trade to regain the psychological 9,000 level.

The BSE 30-share Sensex slipped 94.91 points, or 1.01%, to 9,291.01 after swinging 479.21 points in volatile trade between the day's low of 8.956.68 and high of 9,435.89

The S&P CNX Nifty fell 10.80 points, or 0.38%, to 2,799.55. Nifty November 2008 futures were at 2795.35, at a discount of 4.20 points as compared to spot closing of 2799.55.

The market declined for a fourth day in a row today, 17 November 2008. The BSE Sensex has declined 1,245.15 points or 11.81% in the last four trading sessions from 10536.16 on 10 November 2008.

The barometer index is down 10,995.98 points or 54.2% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 11,915.76 points or 56.18% below its all-time high of 21,206.77 struck on 10 January 2008.

Measures announced by the Reserve Bank of India (RBI) during the weekend to shield the Indian economy from the global economic slowdown had triggered a firm start. However weak global cues dragged it lower. European shares extended losses in choppy trade, pushed further into the red by banks and by oil shares that reversed a brief rally. Key benchmark indices in France, UK and Germany rose by between 1.74% to 2.3%. Moreover, trading in US index futures which indicated the Dow could fall 65 points at the opening bell, also played the spoilsport.

Key benchmark indices in Hong Kong, Singapore, South Koera and Taiwan were down by between 0.29% to 0.91%. Japan slid into its first recession in seven years in the third quarter as the financial crisis curbed demand for Japanese exports. Despite the weak data, the the Nikkei rose 0.71% in a choppy trade, with buying by pension funds lifting the market. But in China, the Shanghai China rose 2.22%.

Leaders of the G20 nations agreed on an action plan on Saturday, 15 November 2008, to restore global growth and prevent future financial upheaval while promising new spending plans and a set of reforms. But the plan was light on detail and there was no reference to coordinated stimulus packages by governments -- an idea promoted by Britain.

Back home the RBI on Saturday, 15 November 2008, announced measures to improve money market liquidity and help exporters. The measures include extension of a special repurchase facility to provide liquidity for mutual funds and non-banking finance companies till March 2009, increase in the limit on export credit refinance available to banks, allowing housing finance companies to raise funds through short-term overseas borrowings, reduction in provisioning on standard assets of banks to a uniform level of 0.4%, and reduction in risk weights for banks on commercial real estate and on unrated claims on corporates.

The central bank also said it would consider proposals from local firms to buy back foreign currency convertible bonds early.

BSE clocked a turnover of Rs 3213 crore today as compared to a turnover of Rs 3,685.59 crore on 14 November 2008. Turnover in NSE's futures & options (F&O) segment was Rs 41,086.89 crore, which was lower than Rs 41,483.17 crore on Friday, 14 November 2008.

The market breadth, indicating the overall health of the market, was weak. On BSE, 679 shares rose as compared with 1800 that declined. 60 shares remained unchanged. Out of 30 Sensex stocks 19 stocks settled with losses while the rest gained.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) slipped 0.51% to Rs 1,142.65, on concerns a global slowdown would hit demand for petrochemicals. The stock recovered from the session's low of Rs 1,081.10. The government on Friday, 14 November 2008, said RIL cannot sell gas to anybody at a price less than $4.20 per British Thermal Units without its approving the pricing formula.

Reliance Infrastructure (down 6.23% to Rs 484.40), Tata Power Company (down 2.95% to Rs 724.35) and Hindalco Industries (down 3.36% to Rs 54.70) were the major losers from the Sensex pack.

Auto stocks recovered on the hopes government could come up with a policy initiative for the sector hit by declining demand due to high interest rates and fuel prices. India's largest car maker by sales, Maruti Suzuki India rose 2.45% to Rs 549.80, recovering from the day's low of Rs 521. India's largest commercial vehicle maker by sales Tata Motors rose 2.56% to Rs 140.45, off the day's low of Rs 130.25. But Mahindra & Mahindra and Hero Honda Motors fell by between 1.8% to 3.57%.

Realty shares fell on concerns banks may not raise lending to realty firms despite the latest Reserve Bank of India measures to ease banks' lending to the cash-stripped sector. DLF, Unitech, Indiabulls Real Estate, Housing Development & Infrastructure, Sobha Developers, Mahindra Lifespace Developers, and Omaxe were down 3.92% to 9.23%.

The Reserve Bank of India (RBI) on Saturday (15 November 2008) announced fresh steps to free up liquidity for the troubled realty sector. The RBI reduced the risk weightage on bank exposure to the real estate sector and non-deposit taking non-banking financial institutions (NBFCs) from 150% to 100% -- it means, banks will need less capital to give such loans. Additionally, standard provisioning requirements for commercial real estate sector has been reduced to a uniform level of 0.40%.

Despite the measures, it remains to be seen whether banks will raise lending to the realty sector given the severe slowdown and increasing risk of non performing assets (NPAs).

Banking stocks declined as weak American Depository Receipts (ADRs) and fears of rising delinquencies in a weakening economy offset Reserve Bank of India's steps to augment both rupee and dollar liquidity in the banking system. India's largest private sector bank by net profit ICICI Bank fell 2.25% to Rs 387.05 as ADR lost 6.56% on Friday, 14 November 2008. The stock recovered from the day's low of Rs 360.50. India's second largest private sector bank by net profit HDFC Bank fell 7.71% as ADR slumped 6.39% on Friday. India's largest commercial bank State Bank of India (SBI) lost 0.17% to Rs 1168.10.

IT stocks were mixed amid weak ADRs and a weaker rupee. India's third largest IT exporter by sales Satyam Computer Services fell 3.76% as its American depository receipt (ADR) fell 9.68% on Friday, 14 November 2008.

India's second largest IT exporter by sales Infosys rose 1.12% to Rs 1232.80, recovering from the day's low of Rs 1,172, after chief executive S. Gopalakrishnan today, 17 November 2008, said the company is on track to add 25,000 gross staff in the current fiscal year to March 2009 despite the financial sector turmoil. Gopalakrishnan said the currency movement will have an impact on revenue in Q3 December 2007 and that the company is seeing flat billing rates.

India's fourth largest IT exporter by sales Wipro rose 4.59% to Rs 251.95 off day's low of Rs 230.55 even as ADR slipped 13.36%. India's largest IT exporter by sales Tata Consultancy Services lost 2.52%.

The rupee fell 0.7% today on heavy buying demand following worries a stock market slide would accelerate foreign fund withdrawals. A weak rupee benefits IT firms which derive a lion's share of revenue in dollars.

Cement stocks slipped as concerns about slowdown in demand in a weakening economy offset government's export incentives. Grasim Industries, Ultratech Cement, Birla Corporation, Ambuja Cements fell between 0.33% to 3.85%. India's largest cement producer by sales ACC rose 4.29% to Rs 436.55 off the day's low of Rs 400.05.

Steel stocks fell as a possible slump in demand offset the government declaring export incentives for the sector. Among the steel makers, Tata Steel, Steel Authority of India, JSW Steel, Maharastra Seamless, and Bhushan Steel fell by 1.34% to 7.95%.

According to a government notification, exporters of cement and several steel items will be entitled for tax refunds through duty entitlement pass book scheme. The government also announced that the two sectors cement and steel have been included in the Focus Market Scheme which will enable these distressed industries to boost their exports to the third world.

Shares of the housing finance firms slipped as investors fretted a weakening economy would raise defaults. Housing Development Finance Corporation (HDFC), LIC Housing Finance, GIC Housing Finance, were down 1.22% to 3.84%. While, Dewan Housing Finance Corporation rose 0.43%.

The Reserve Bank of India (RBI) on Saturday (15 November 2008) allowed housing finance companies to raise short-term foreign-currency loans. This is a temporary step only available to companies registered with the National Housing Bank. The move will provide much-needed funds for non-deposit taking housing finance companies, though details of this measure are awaited.

Airline stocks rose after state-run oil companies slashed jet fuel prices. Spicejet rose 0.7%. Kingfisher Airlines surged 12.88% on reports of holding exploratory talks with international carriers for diluting up to 25% stake. State-run oil companies on Saturday, 15 November 2008 slashed jet fuel prices by over 12% to a 14 month low, the cut being the third one for the month and fifth one since August 2008. While, Jet Airways fell 1.1%.

GVK Power & Infrastructure clocked the highest volume of 1.96 crore shares on BSE. Suzlon Energy (1.47 crore shares), Unitech (1.4 crroe shares), Chambal Fertilisers and Chemicals (69.52 lakh shares), Tata Tele Maharashtra (64.81 lakh shares) were the other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 291.26 crore on BSE. ICICI Bank (Rs 180.52 crore), Reliance Capital (Rs 144.82 crore), HDFC (Rs 135.71 crore) and State Bank of India (Rs 111.76 crore) were the other turnover toppers in that order.

UTV Software Communications slipped 5.44% on projecting a loss of up to Rs 25 crore for its broadcasting vertical in the year ending March 2010.

Elecon Engineering Company rose 2.01% on news of a promoter firm acquiring shares from the open market.

Godrej Consumer Products jumped 1.21% on BSE, on share buyback plan.

Reliance Natural Resources fell 3.72% on BSE after the government said it will decide the selling price of natural gas produced from Reliance Industries' Krishna Godavari basin.

Ispat Industries slumped 4.31%on reports the company is planning for further 10% cut in production by December 2008.

Apollo Tyres gained 1.81% on reports it plans to invest Rs 3000 crore in the next five years for expansion.