Market snaps seven-day losing streak; Sensex jumps 5.5%

A surge in US index futures and gains in European stocks boosted the domestic bourses in a volatile trading session. The market staged a solid bounce back after it had slipped into the red briefly in mid-afternoon trade. The BSE 30-share Sensex was up 464.20 points, or 5.49%, recovering from a steep slide in the preceding seven trading sessions.

The market was choppy. It had plunged into red in mid-afternoon before bouncing back instantly. The market had surged in mid-morning trade as Asian stocks rose triggered by speculation governments will step up efforts to revive economies. Hopes of a further rate cut by the Reserve Bank of India (RBI) to shield the domestic economy from the global economic slowdown also supported the domestic bourses.

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 on Thursday, 20 November 2008 showed. Inflation has been softening since peaking at 12.91% on 2 August 2008.

Prime Minister Manmohan Singh said today, 21 November 2008, India will emerge strong from the global economy crisis. Singh said the government will ensure that the shortage of demand from the global slowdown is neutralised to the maximum possible extent through the use of fiscal and monetary policies and through the use of public investment.

European stocks edged higher on Friday, 21 November 2008, with oil shares turning positive and banks rising further as Bank of Ireland surged on bid talk. The key benchmark indices in France, Germany and UK were up by between 0.1% to 0.53%.

Asian stocks rose for the first time in five days, led by finance companies, as a variety of rumors such as China cutting interest rates later in the day prompted investors to cover short positions before the weekend. Speculation that Citigroup, the number two US bank, will merge with a rival which will help shore up the global financial system, also aided the rebound in Asian shares from an slide caused by weak US economic data.

The Nikkei share average turned positive after falling three percent earlier. It was now up 2.93%. Singapore's Straits Times index rose 3.21% even as the government today said the economy could shrink next year, as financial services and its exports are expected to be hit by a weaker global economy. Key benchmark indices in Hong Kong, South Korea and Taiwan were up by between 1.98% to 5.8%. But China's Shanghai Composite fell 0.72%.

One such rumour floating in the market was that China will cut interest rates later in the day. Speculation was also rife that the Federal Reserve could cut interest rates in an emergency move later in the day and global central banks could conduct another round of joint interest rate cuts in the face of renewed market volatility.

Better-than-expected results by the world's No. 2 PC maker Dell Inc and decision by two biggest home loan finance companies to staunch the wave of evictions and home losses in the United States, also aided recovery in Asian stocks and the positive news aided surge in US index futures. Trading in US futures suggested the Dow could rise 223 points at the opening bell. But the futures were volatile.

Dell shares surged 6.3% to $10.43 in after hours trading in the United State on Thursday, after the world's No. 2 PC maker reported better-than-expected profit as cost cuts tempered lower revenue. In another positive development after hours, Fannie Mae and Freddie Mac, the two biggest home loan finance companies, said they would suspend foreclosures of occupied homes until early 2009 -- one of the biggest moves to date by the government to staunch the wave of evictions and home losses.

The BSE 30-share Sensex was up 464.20 points, or 5.49%, to 8,915.21. At the day's high of 8,988.03 hit in late trade, the Sensex rose 537.02 points. The Sensex lost 8.7 points at the day's low of 8,442.31 in mid-afternoon trade.

The S&P CNX Nifty rose 140.30 points, or 5.5%, to 2,693.45 .

The market snapped last seven days losses. Fears of a global recession, slowdown in the domestic economy and selling by foreign funds had pulled the Sensex down 2,085.15 points or 19.79% in the last seven trading sessions to 8,451.01 on Thursday, 20 November 2008 from 10,536.16 on 10 November 2008

The barometer index is down 11,371.78 points or 56.05% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 12,291.56 points or 57.96% below its all-time high of 21,206.77 struck on 10 January 2008.

The BSE clocked a turnover of Rs 3,562 crore today as compared to a turnover of Rs 2,899.59 on 20 November 2008.

Nifty November 2008 futures were at 2727, at a premium of 33.55 points as compared to the spot closing of 2693.45. Turnover in NSE's futures & options (F&O) segment surged to Rs 47,696.14 crore from Rs 37,983.83 crore on Thursday, 20 November 2008.

Though the key benchmark indices surged, the market breadth, indicating the overall health of the market, was negative. On BSE, 1,177 shares rose as compared with 1,293 that declined. A total of 96 shares remained unchanged. The market breadth swung between positive and negative territory throughout the day today. After an initial weakness, the breadth had improved later, before weakening again in afternoon trade.

The BSE Mid-Cap index was up 0.72% to 2,916.66 and the BSE Small-Cap index up 0.16% to 3,390.76. Both the indices underperformed the Sensex.

The BSE Power index (up 6.21% to 1,588.64), the BSE Oil & Gas index (up 5.69% to 5,550.89), the BSE Capital Goods index (up 5.59% to 6,556.37) outperformed the Sensex.

The BSE Teck index (up 5.22% to 1,927.62), the BSE PSU index (up 5.04% to 4,589.33), the BSE IT index (up 4.85% to 2,457.55), the BSE Bankex (up 4.56% to 4,598.90), the BSE Metal index (up 2.99% to 4,377.60), the BSE Auto index (up 2.31% to 2,305.12), the BSE HealthCare index (up 1.75% to 2,812.70), the BSE Consumer Durables index (up 1.69% to 1,793.72), the BSE FMCG index (up 1.68% to 1,887.75), the BSE Realty index (down 2% to 1,645.42), underperformed the Sesex.

Reliance Communications (up 13.64% to Rs 207.10), Larsen & Toubro (up 6.75% to Rs 760.35), Bharat Heavy Electricals (up 7.29% to Rs 1,281.25), were the major gainers from the Sensex pack.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) rose 6.49% to Rs 1,127.35, on recent reports the company is seeking nod to restart fuel retailing.

India's largest oil exploration firm by revenues ONGC rose 6.1% after it along with its partners bagged 20 out of the 44 blocks that have been awarded under the seventh round of the New Exploration Licensing Policy (NELP-VII). The government announced awarding the blocks after trading hours on Thursday.

Selan Exploration Technology rose 1.8% after its board approved buyback of shares at up to Rs 230, a 73.78% premium over the ruling market price.

Power stocks gained on reports Union power ministry will shortly meet private sector players to help resolve their problems, amid concerns that the global financial meltdown could hurt India's power project development plans. NTPC, Reliance Infrastructure, ABB, Reliance Power, Power Grid Corporation of India rose by between 5.08% to 14.03%. Meanwhile, public sector utilities are not finding it difficult to go ahead with their plans because they have huge cash reserves, reports suggest.

Metal stocks gained on hopes the government will take steps to prop up domestic demand. Hindalco Industries, Hindustan Zinc, Sterlite Industries, Steel Authority of India Tata Steel, Jindal Steel, National aluminum Company rose by between 1.27% to 10.55%.

The government had on 18 November 2008 announced imposition of 5% import duty on specified iron and steel items to protect the domestic steel industry from cheaper imports.

Banking stocks rose in volatile trade on hopes of a further fall in interest rates may boost lending growth. India's second largest private sector bank by net profit HDFC Bank was up 4.19% to Rs 856.70. India's largest private sector bank by net profit ICICI Bank rose 4.74 % to Rs 335.55 even as its ADR lost 9.72% on Thursday, 20 November 2008. The stock came off from the day's low of Rs 308.10. India's largest commercial bank State Bank of India (SBI) surged 8.29% after it got Reserve Bank of India's approval for a proposed joint venture with a unit of French bank Societe Generale for offering custodial and related services.

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.

IT stocks rose as the rupee was trading near a record low against the dollar. India's third largest IT exporter by sales Satyam Computer Services rose 3.08% even as ADR fell 5.81% overnight. India's fourth largest IT exporter by sales Wipro rose 4.64% even as ADR lost 8.19% on Thursday. India's largest IT exporter by sales Tata Consultancy Services jumped 7.89%.

India's second largest IT exporter by sales Infosys gained 5.1% on reports it is pursuing five to six outsourcing deals each worth $50 million to $200 million. Its ADR fell 5.67% on Thursday.

The Indian rupee shed some of its early gains and traded flat in afternoon trade on Friday as choppy equity markets raised concerns of accelerating foreign withdrawals. The partially convertible rupee was at 50.175/200 per dollar, little changed from its previous close of 50.18/22, when it had hit a record low of 50.60. A weaker rupee augurs well for the sector as IT firms earn most of their revenues from exports.

Real estate stocks declined for the second day in a row after the National Association of Realtors said on Thursday 20 November 2008 the economic downturn will slow commercial real estate market in 2009. Unitech, DLF, Housing Development & Infrastructure, and Omaxe were down by between 0.47% to 5.39%. While, Indiabulls Real Estate rose 8.25%.

Ansal Properties & Infrastructure tumbled 3.37%, after rating agency Fitch downgraded the long-term credit rating of the property firm and revised its outlook to negative from stable.

Infrastructure stocks rose on reports the finance ministry is considering further relaxation in overseas borrowing norms for infrastructure companies. Larsen & Toubro, Hindustan Construction Company, Nagarjuna Consruction Company, IVRCL Infrastructure & Projects rose by between 2.18% to 12.18%. The government is looking at doing away with interest rate caps to make borrowing outside India easier for the infrastructure firms.

GVK Power & Infrastructure surged 13.28%, on bagging seven deep sea blocks out of the 44 blocks that were awarded under the government's New Exploration Licensing Policy.

Auto stocks rose on hopes a further cut in interest rates could spur demand which is mainly driven by finance. Maruti Suzuki India, Mahindra & Mahindra, Hero Honda Motors, Tata Motors rose by between 0.16% to 5.9%.

Banco Products India declined 2.95%, on its decision to reduce the number of working days of operations due the slowdown in automobile industry.

Eicher Motors moved up 2.74%, after its board approved buyback of own shares at a price which was more than three times its closing price on Thursday, 20 November 2008.

Unitech clocked the highest volume of 2.05 crore shares on BSE. GVK Power & Infrastructure (1.71 crore shares), Suzlon Energy (1.51 crore shares), Reliance Natural Resources (1.33 crore shares) and DLF (71.85 lakh shares) were the other volume toppers un that order.

Reliance Industries clocked the highest turnover of Rs 344.16 crore on BSE. Reliance Capital (Rs 184.05 crore), ICICI Bank (Rs 176.56 crore), State Bank of India (Rs 161.87 crore) and DLF (Rs 139.83 crore) were the other turnover toppers in that order.

Glenmark Pharmaceuticals gained 2.53%, on receiving US Food & Drug Administration approval for a new drug.

Meanwhile latest data in the United States raised concerns of a deep and protracted global economic recession. The number of American workers on the unemployment rolls surged to the highest in a quarter century, government data on Thursday showed, while a regional manufacturing gauge slumped as the economic misery intensified.