Market extends losses for the seventh straight day

Weak global markets pulled the domestic bourses down for the seventh consecutive trading session. It was a choppy trading session with wild swing in share prices. The BSE 30-share Sensex lost 322.77 points, or 3.68%. World stocks fell on worries of a deep global recession and fears that there could be another wave in the global credit crisis.

Selling by foreign funds pulled the domestic bourses lower. As per the provisional data released by the stock exchanges after trading hours, foreign institutional investors (FIIs) today, 20 November 2008, sold shares worth a net Rs 762.94 crore. FIIs are dumping stocks in Indian and other emerging markets to shore up resources to beat the global liquidity crunch. FII outflow reached Rs 52,820.80 crore in calendar 2008, so far, till 19 November 2008, as against an inflow of a huge Rs 71,440.10 crore in the corresponding period last year.

Volatility was high. The market cut losses in the last 20 minutes of trade as bank shares recovered on rate cut hopes. Earlier, an intraday recovery from a steep slide had proved short lived.

A further fall in inflation has raised hopes the central bank will cut interest rates further to shield the domestic economy from the global economic slowdown. Lower interest rates boost stocks as lower borrowing costs help lift corporate profits. Inflation based on the wholesale price index rose 8.90% in the 12 months to 8 November 2008, marginally below the previous week's annual rise of 8.98%, data released by government data at about 12:00 IST showed. Inflation has been softening since peaking at 12.91% on 2 August 2008.

The RBI has aggressively cut rates over the past two months. The repo rate has been cut by 150 basis points to 7.5% since October this year and the cash reserve ratio, the proportion of deposits that banks have to keep with the central bank, has been reduced by 350 basis points to 5.5%. In response, government owned banks lowered prime lending rates by up 75 basis points, but large private lenders like ICICI Bank and HDFC Bank are yet to do so.

European stocks fell, led lower by pharmaceuticals, banks and commodities stocks, as investors remained nervous due to the prospect of a prolonged global economic downturn. The key benchmark indices in France, Germany and UK were down by between 1.23% to 1.88%. Trading in US futures suggested Dow could fall 47 points at the opening bell.

Asian shares tumbled as economic data indicated a global recession could get even uglier. In Japan the Nikkei 225 average slumped nearly 7% as exports registered a biggest annual decline in seven years in October 2008, the latest data showed. Key benchmark indices in Hong Kong, South Korea, Singapore, China and Taiwan were down by between 1.67% to 6.7%.

Federal Reserve officials on Wednesday, 19 November 2008, pared their outlook for growth in the world's biggest economy to minimal levels. The weaker forecast came on a day in which data showed US consumer prices in October 2008 posted their biggest drop since monthly records began in 1947, while new-home buildings slumped to fresh lows.

US stocks plunged to their lowest in five-and-a-half years on Wednesday, 19 November 2008, as investors girded for a lengthy economic downturn and automotive executives predicted a far-reaching calamity without a government lifeline. The Dow Jones industrial average tumbled 427.47 points, or 5.07%, to 7,997.28. The Standard & Poor's 500 Index fell 52.54 points, or 6.12%, to 806.58. The Nasdaq Composite Index lost 96.85 points, or 6.53%, to 1,386.42.

Turmoil in the US commercial real estate market deepened on Wednesday as securities backed by loans on commercial properties such as office buildings fell in value. Citigroup shares tumbled to a 13-year low as investors questioned survival prospects on concerns about mounting losses from credit cards, mortgages and toxic debt.

The BSE 30-share Sensex was down 322.77 points, or 3.68%, to 8,451.01. At the day's high of 8,540.46 hit in late trade, the Sensex fell 233.32 points. The Sensex lost 457.38 points at the day's low of 8,316.39 in early afternoon trade.

The S&P CNX Nifty was down 81.85 points, or 3.11%, to 2,553.15.

Fears of a global recession, slowdown in the domestic economy and selling by foreign funds have pulled the Sensex down 2,085.15 points or 19.79% in the last seven trading sessions from 10,536.16 on 10 November 2008. The barometer index is down 11,835.98 points or 58.34% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 12,755.76 points or 60.14% below its all-time high of 21,206.77 struck on 10 January 2008.

The BSE clocked a turnover of Rs 2,893 crore today as compared to a turnover of Rs 3,545.97 crore on 19 November 2008.

Nifty November 2008 futures were at 2574, at a premium of 20.85 points as compared to the spot closing of 2553.15. Turnover in NSE's futures & options (F&O) segment was Rs 37,983.83 crore, which was lower than Rs 41,656.37 crore on Wednesday, 19 November 2008.

The market breadth, indicating the overall health of the market, was weak. On BSE, 594 shares rose as compared with 1,899 that declined. 68 shares remained unchanged.

The BSE Mid-Cap index down 3.42% to 2,895.79 and The BSE Small-Cap index down 3.09% to 3,385.34. Both the indices outperformed the Sensex.

The BSE Realty index (down 8.3% to 1,679.06), the BSE Consumer Durables index (down 4.95% to 1,763.93), the BSE Oil & Gas index (down 4.64% to 5,252.01), the BSE Bankex (down 4.32% to 4,398.29), the BSE Metal index (down 4.18% to 4,250.39), the BSE Auto index (down 4.14% to 2,252.97) underperformed the Sesex.

The BSE FMCG index (down 0.51% to 1,856.56), the BSE HealthCare index (down 1.44% to 2,764.43), the BSE PSU index (down 1.91% to 4,368.94), the BSE Power index (down 2.24% to 1,495.70), the BSE IT index (down 2.77% to 2,343.84), the BSE Capital Goods index (down 2.93% to 6,209.38), the BSE Teck index (down 3.49% to 1,831.93) underperformed the Sensex.

Reliance Infrastructure (down 6.7% to Rs 425.35), Jaiprakash Associates (down 6.66% to Rs 59.55), Tata Power Company (down 6.39% to Rs 633.90) were the major losers from the Sensex pack.

NTPC (up 1.54% to Rs 138.10), Ranbaxy Laboratories (up 0.79% to Rs 218.10) and Hindustan Unilever (up 0.32% to Rs 234.30) were the major gainers from the Sensex pack.

State Bank of India (SBI) led recovery in banking pivotals on hopes a further fall in interest rates may boost lending growth. SBI rose rose 1.21% to Rs 1,092.55, recovering from the session's low of Rs 1025. Though down 7.87% to Rs 320.35, India's largest private sector bank by net profit ICICI Bank, recovered sharply from the day's low of Rs 308.50. ICICI Bank's ADR lost 13.63% on Wednesday, 19 November 2008. India's second largest private sector bank by net profit HDFC Bank slipped 7.3% as ADR slumped 10.14% on Wednesday.

India's largest home loan lender by operating income HDFC fell 5.59% on fears Citigroup may sell its stake in the company to offset its sub-prime related losses.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) slipped 6.58% to Rs 1,058.60 on concerns a global slowdown would hit demand for petrochemicals.

Oil exploration firms fell on falling crude oil prices. India's largest oil exploration firm by revenue ONGC fell 0.33%. Cairn India slipped 5.37% on reports the union cabinet has rejected an oil ministry proposal to award a deepwater block off the west coast to the company.

Oil prices dropped for a fifth straight session to below $53 a barrel. Oil on Wednesday, 19 November 2008, fell to its lowest settlement since late January 2007 as investors expect a sharp slowdown in demand for a commodity that just in July this year hit a record high at about $147 a barrel.

Real estate stocks declined after real estate body, Confederation of Real Estate Developers' Associations of India (CREDAI) asked realty firms to lower prices given the general slowdown in the economy. Unitech, Indiabulls Real Estate, DLF, Housing Development & Infrastructure, and Omaxe were down by 5% to 11%.

Sobha Developers dropped 1.12%, as reports of the realty firm cutting property prices raised concerns of fall in margins.

Metal stocks declined as worries that global economic slowdown will hit demand offset imposition of 5% import duty on steel by the government on 18 November 2008 to protect the domestic industry. Hindalco Industries, Sterlite Industries, Tata Steel, Jindal Steel, JSW Steel, National aluminum Company fell by between 0.4% to 7.96%.

Steel Authority of India slipped 0.51% on reports it may consider cut in production due to the global economic slowdown.

Hindustan Copper declined 10.03% on reports it expects 10% fall in production in the year ending March 2009

IT stocks slipped on mounting worries about the US economy after the Federal Reserve slashed its growth forecasts for the economy. India's second largest IT exporter by sales Infosys slipped 3.82%, as ADR fell 1.23% on Wednesday. India's fourth largest IT exporter by sales Wipro lost 1.33% as ADR lost 7.25% on Wednesday. India's third largest IT exporter by sales Satyam Computer Services lost 0.02% as ADR fell 6.09% overnight.

India's largest IT exporter by sales Tata Consultancy Services was down 2.36% despite reports it has emerged the lowest bidder for an e-governance contract to computerise Employee State Insurance Corporation and provide smart cards, beating Wipro and Infosys. TCS bid at Rs 1677 crore, suggest reports.

Indian IT firms derive a lion's share of revenue from exports to US. The Indian rupee recovered from a record low of 50.60 per dollar reached in early trade on Thursday, helped by heavy dollar selling by the central bank. The partially convertible rupee was at 50.00/02 per dollar, off a high of 49.94, and little changed from its close of 50.02/03 on Wednesday. A stronger rupee affects the operating margins, as IT firms earn most of their revenues from exports.

Auto stocks fell on a worsening global economic outlook and declining domestic demand due to high interest rates and higher fuel prices. Maruti Suzuki India, Mahindra & Mahindra, Hero Honda Motors, Tata Motors slipped by between 0.64% to 6.52%.

Capital goods stocks slumped on worries global economic slowdown would crimp orders. Larsen & Toubro, Bharat Heavy Electricals and Suzlon Energy fell by between 2.72% to 3.46%.

Cement stocks were mixed despite slowdown in cement demand. Ambuja cements, Grasim Industries fell by between 1.27% to 3.61%. However, Ultratech Cement, ACC rose by between 1.55% to 1.58%.

The 205 million-tonne domestic cement industry has seen the lowest despatch growth rate in the last four years. During April-October 2008, the despatches growth stood at 6.27% against 8.7% during the same period last year.

Telecom firms slipped amid a controversy regarding the award of 2G telecom licenses. Bharti Airtel, reliance Communications and Idea Cellular fell by between 3.44% to 7.92%. The controversy centres on award of 2G telecom licenses for a total of Rs 9000 crore on 10 January 2008. It has been alleged that this amounted to severe underpricing, causing a loss of almost Rs 51000 crore to the exchequer.

FMCG stocks edged higher on defensive buying as investors find a safe haven in these stocks in slowing economy. Britannia India, Hindustan Unilever, Nestle India and REI Agro rose by between 0.06% to 0.32%. While, India's largest cigarette maker by sales ITC fell 0.33%.

GVK Power & Infrastructure clocked the highest volume of 1.78 crore shares on BSE. Suzlon Energy (89.04 lakh shares), Reliance Petroleum (86.83 lakh shares), Reliance Natural Resources (72.29 lakh shares) and Housing Development & Infrastructure (70.31 lakh shares) were the other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 293.78 crore on BSE. Reliance Capital (Rs 154.88 crore), State Bank of India (Rs 29.44 crore), Educomp Solutions (Rs 128.72 crore) and ICICI Bank (Rs 124.97 crore) were the other turnover toppers in that order.

Cummins India tumbled 3.96% after the board approved sale of its power generation rental business.

Asian Paints plunged 4.72% on shutting phthalic anhydride plant in Gujarat due to inventory build up and for maintenance.

Wockhardt slipped 1.38% on reports US drug major Eli Lilly has sued the company for patent infringement on antidepressant drug.