Market snaps five-day winning streak; Sensex drops nearly 5%

Weakness in European stocks and lower US index futures pulled the market sharply lower in what was a volatile trading session. The BSE Sensex declined 511.11 points or 4.81% %, with index heavyweight Reliance Industries (RIL) plunging close to 13% on brokerage downgrade. The S&P CNX Nifty fell below the psychological 3,000 mark. Realty, banking and metal stocks dropped on profit taking after recent strong gains.

Firm Asian stocks had triggered an intra-day recovery on the domestic market in afternoon trade after it had slipped into the red in mid-morning trade after a strong start. The market had surged earlier in the day boosted by rally in Asian stocks, Democrat Barack Obama’s election as the next US president and expectations that a cut in interest rates by state-run banks would result in lower borrowing costs for the corporates.

The early rally was also triggered by a sentiment by the Commerce and Industry Minister Kamal Nath after trading hours on Tuesday, 3 November 2008, that the government will further ease foreign investment rules, including those relating to defence production.

Trading in US futures suggested the Dow would fall 82 points at the opening bell, as the focus shifted to the weak economy after Obama's decisive win in the US presidential election. European markets which opened after the Indian market, fell as the spotlight moved back to the troubled economy after the US presidential election. Key benchmark indices in France, Europe and UK were down by between 1.44% to 1.88%.

Asian markets, which opened before the Indian market, surged boosted end of the uncertainty about who will lead the US economy in the midst of great financial peril. Key benchmark indices in China, Japan, Singapore, Hong Kong, and South Korea were up by between 1.76% to 4.46%. But the Taiwan Weighted fell 0.29%.

Obama captured the White House today, defeating Republican John McCain to make history as the first black to be elected as the US president.

The BSE 30-share Sensex plunged 511.11 points or 4.81% to 10,120.01. The Sensex surged 314.29 points at day’s high of 10,945.41 in early trade. The index slumped 579.60 points at the day's low of 10,051.52 in late trade.

The S&P CNX Nifty was down 147.15 points or 4.68% to 2,994.95.

The market snapped gains of the last five trading sessions. From a low of 8,509.56 on 27 October 2008, the BSE Sensex had risen 2,121.56 points or 24.93% to 10,631.12 on 4 November 2008. But there has been a massive erosion in investors' wealth this year. The barometer index BSE Sensex is down 10,166.98 points or 50.15% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 11,086.76 points or 52.27% below its all-time high of 21,206.77 struck on 10 January 2008.

BSE clocked a turnover of Rs 4,973 crore today as compared to a turnover of Rs 4,431.22 on 4 November 2008.

Nifty November 2008 futures were at 2973.50, at a discount of 21.45 points as compared to spot closing of 2994.95. NSE's futures & options (F&O) segment turnover was Rs 38,550.94 crore, which was higher than Rs 33,758.52 crore on Tuesday, 4 November 2008.

The BSE Mid-Cap index was down 1.5% at 3,394.61 and the BSE Small-Cap index was down 1.74% at 3,964.78. Both the indices outperformed the Sensex.

The BSE Oil & Gas index (down 9.44% to 6,112.11), the BSE Metal index (down 6.88% to 5,451.74), the BSE Realty index (down 5.64% to 2,267) underperformed the Sensex.

The BSE Capital Goods index (down 4.42% to 7,591.64), the BSE PSU index (down 2.82% to 4,935.52), the BSE Teck index (down 2.64% to 2,142.67), the BSE Power index (down 2.5% to 1,736.92), the BSE Auto index (down 2.28% to 2,727,82), the BSE Bankex (down 1.87% to 5,633.94), BSE FMCG index (down 1.72% to 1,927.53), the BSE Consumer Durables index (down 0.82% to 2,108.29), the BSE IT index (down 0.57% to 2,734.35), the BSE HealthCare index (up 1.18% to 2,913.22), outperformed the Sensex.

The market breadth turned weak in late trade in contrast to a strong breadth earlier in the day. On BSE, 1,000 shares advanced as compared to 1,565 that declined. 73 shares remained unchanged.

India’s largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) slumped 12.76% to Rs 1,269.45 after ABN Amro recommended a 'sell' on the stock and cut its target price by whopping 38% to Rs 1,150 from Rs 1,850 earlier. The scrip was the biggest loser from the Sensex pack.

Jaiprakash Associates (down 10.01% to Rs 80.50), Grasim Industries (down 7.28% to Rs 1,049.45), Tata Motors (down 6.53% to Rs 181.20), and ACC (down 7% to Rs 470.95) were the other major losers from Sensex pack.

Telecom stocks fell on concerns that a government move to charge more for radio spectrum may impact their earnings. India’s largest telecom services provider by sales Bharti Airtel fell 4.54%.

India's second largest telecom services provider by sales, Reliance Communication slipped 9.5% after Morgan Stanley cut price estimate on the stock by 45% to Rs 280.

As per reports, the government plans to increase fees telecom firms pay for using additional spectrum by up to 2% of the firms' revenue, and would also levy a one-time charge for granting additional spectrum.

Metal stocks declined after recent sharp fall in metal prices on global recession worries. Hindalco Industries, Hiindustan Zinc, Sterlite Industries, Steel Authority of India fell by between 2.75% to 12.76%. Tata Steel, the world's sixth largest steel maker, was down 10.05% after ArcelorMittal on reported quarterly operating profit and sales below expectations.

IT stocks were mixed amid strong rupee and on worries the US outsourcing business will be curtailed after Obama won the US presidential election. India's third largest IT exporter by sales Satyam Computer Services rose 0.27% even as American depository receipt (ADR) fell 0.83% overnight.

India's fourth largest IT exporter by sales Wipro rose 2.72% as ADR jumped 5.25%. India's second largest IT exporter by sales Infosys fell 0.91%, even as ADR rose 4.84%. India's largest IT exporter by sales Tata Consultancy Services slipped 0.5% off day’s high of Rs 548.90.

Obama has strong reservations on outsourcing from the US. He had made many statements during his election speeches that he would discourage outsourcing from the US when he comes into power.

The rupee strengthened 0.5% to 47.46/50 per dollar. A strong rupee affects the IT companies as they earn most of their revenues in dollar terms.

Bank stocks fell following reports private sector banks are expected to cut their lending and deposit rates in the next 15 days and will support credit lines to finance companies and mutual funds. India’s largest commercial bank State Bank of India was down 3.59% after its chairman O P Bhatt said on 4 November 2008 the bank was likely to cut interest rates by up to 50 basis points.

Bank of India gained 0.04% on reports it has cut its prime lending rate by 75 basis points to 13.25% with effect from Thursday, 6 November 2008. But Indian Bank fell 3,12% after early gains after the bank said yesterday it will consider cutting its lending and deposit rates by 50-75 basis points this week.

State Bank of Bikaner & Jaipur was flat at Rs 2651.70 after it cut its benchmark prime lending rate to 13.25% from 14%, effective 5 November 2008.

State Bank of Travancore rose 5% after bank fixed 20 December 2008 as the record date for 10 for 1 stock split.

India’s largest private sector bank by net profit ICICI Bank fell 1.62% even as the American depository receipt (ADR) spurted 7.28% overnight. ICICI Bank's chief executive K.V. Kamath said on 3 November 2008, the bank will review interest rates in the next few days.

India’s second largest private sector bank by net profit HDFC Bank slipped 1.46%, even as ADR jumped 7.63% on Tuesday.

India’s largest home loan lender by operating income HDFC fell 8.63%.

As per recent reports, public sector banks are likely to cut deposit and lending rates by 50 to 75 basis points within one week. The Reserve Bank of India (RBI) on Saturday, 1 November 2008, unexpectedly cut its main short-term lending rate viz. the repo rate to ease a growing cash squeeze, spur faltering economic growth and fend off damage from the global financial crisis.

Most realty stocks plunged in late trade from their gains earlier in the day despite hopes lower interest rates will spur demand for residential properties. Realty majors, Unitech, Anant Raj Industries, Parsvnath Developers, DLF slipped by between 2.6% to 11.59%. Indiabulls Real Estate rose 5.15%.

IVRCL Infrastructures & Projects rose 0.33%, extending gains for the fourth session in a row, on strong Q2 results and healthy order book.

GMR Infrastructure spurted 4.26% on reports the company is set to buy a coal mine in Indonesia

Gammon India surged 6.76% extending gains for the fourth day in a row, on bargain hunting after a recent sharp fall caused by poor quarterly performance.

Healthcare stocks were mixed following reports the drug regulator National Pharmaceutical Pricing Authority has issued notices to Cipla, Ranbaxy Laboratories and Piramal Healthcare among others for overcharging. Cipla, Glenmark Pharmaceuticals, and Ranbaxy Laboratories fell between 0.38% to 2.06%. Dr. Redddy’s Laboratories, Piramal Healthcare rose between 0.04% to 1.18%. The drug regulator has asked these firms to deposit Rs 1630 crore with the government exchequer besides explaining the hike.

Auto stocks were mixed on reports the government may cut petrol and diesel prices to drum up support with voters ahead of key state elections later this month. Maruti Suzuki India and Hero Honda Motors rose by between 0.08% to 1.41%. Mahindra & Mahindra and Tata Motors fell by between 6.07% to 6.53%.

Ashok Leyland was fell 8.96% on reports of plans to reduce monthly production target for November 2008 to 1,500 units from the average 6,800 units it clocked each month in the first six months of this fiscal.

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 between 2.21% to 3.02%.

Meanwhile, Crude oil fell in New York as investors judged yesterday's 10 percent gain excessive, and on forecasts that a government report will show U.S. crude inventories swelling as demand ebbs. Crude oil for December delivery declined as much as $3.47, or 4.9 %, to $67.06 a barrel on the New York Mercantile Exchange.

GAIL India slumped 15.34% even on signing a cooperation agreement with the Himachal Pradesh state government for extension of the proposed Dadri-Bawana-Nangal natural gas pipeline to the state.

Airlines stocks declined on reports of Kingfisher Airlines defaulting on payment of lease rentals on aircrafts. Kingfisher Airlines tumbled 16.57%. SpiceJet and Jet Airways fell by between 4.49% to 6.39%. The government had recently scrapped customs duty on jet fuel.

Shri Dinesh Mills was locked 10% upper limit at Rs 795.95 at 11:36 IST on BSE, on setting record date for 10-for-1 stock split.

Shree Cement rose 2.56% after cement shipments rose 12.81% to 6.25 lakh tonnes in October 2008 over October 2007.

Compact Disc India galloped 5.52% after the company said it would issue convertible warrants at a sharp premium to the prevailing stock price.

GVK Power & Infrastructure clocked the highest volume of 3.69 crore shares on BSE. Suzlon Energy (3.46 crore shares), Reliance Natural resources (1.76 crore shares), IFCI (1.29 crore shares) and Reliance Petroleum (1.19 crore shares) were the other volume toppers in that order.