Sensex sheds 3% in choppy trade on political uncertainty ahead of state polls

Key benchmark indices slumped in volatile trade, extending Tuesday's (11 November 2008) losses on political uncertainty ahead of the beginning of assembly polls in five states. Volatility on the domestic bourses was partly due to volatility on the global markets. The BSE 30-share Sensex was down 303.36 points or 3.08% All the BSE sectoral indices were in the red.

Selling by foreign funds pulled the market down. As per the provisional data released by the stock exchanges after trading hours, foreign funds today, 12 November 2008, dumped shares worth Rs 735.14 crore. Domestic funds bought stocks worth Rs 215.48 crore.

Trading was choppy on the domestic bourses. By early afternoon trade, the market had cut earlier steep losses on higher-than-expected industrial production growth in September 2008 and gains in US index futures. Sensex rose 88.91 points in early afternoon trade soon after the industrial production data hit the market at about 12:00 IST, recovering 369.27 points from a low of 9,559.33 hit in early trade. The upmove was short-lived and a sell-off gripped the market in mid-afternoon trade. The barometer index tumbled 462.96 points at the day's low in mid-afternoon trade.

Five Indian states go to the polls in the next few weeks in what is widely seen as a test of the popularity of the country's main political parties viz. the Congress and the BJP, ahead of national elections in the first half of calendar year 2009. Polls will be held in two phases on 14 November 2008 in Chhattisgarh, followed by Madhya Pradesh on 25 November 2008. Delhi and Mizoram will go to the polls on 29 November 2008 and Rajasthan on 4 December 2008. The results of these five states are expected on 8 December 2008.

Asian markets, which opened before Indian markets, dropped in volatile trade on gloomy US corporate news overnight. Key benchmark indices in Singapore, Japan, Taiwan, Hong Kong, and South Korea were down by between 0.43% and 1.29%. China's Shanghai Composite rose 0.84%

US aluminium maker Alcoa said on Tuesday, 11 November 2008, it plans to cut 3,50,000 tonnes of worldwide aluminum-making capacity due falling demand and a weak global economy. Another US firm Tyco International gave a dismal future outlook and US coffee chain operator Starbucks Corp provided more evidence that consumers are cutting back in a harsh economic environment.

European markets, which opened after Indian market, rose in choppy trade as mining stocks tracked firmer metals prices and banks advanced after recent losses. Key benchmark indices in UK, Germany and France were up by between 0.18% and 0.55%.

US index futures reversed earlier gains. Trading in US index futures indicated the Dow could fall 2 points at the opening bell

India's industrial production rose 4.8% in September 2008, much higher than an upwardly revised 1.4% growth in August 2008, data released by the government at about 12:00 IST today showed. But there has been a steep slowdown in growth this year. The cumulative increase in industrial production during April-September 2008 period was 4.9% as against 9.5%, during the corresponding period last year.

Another data that reflected slowdown in industrial activity and trade was a 5% fall in excise and customs collection during October 2008. The data was released by the government on Tuesday, 11 November 2008.

The BSE 30-share Sensex was down 303.36 points or 3.08% to 9,536.33. The S&P CNX Nifty lost 90.20 points, or 3.07%, to 2,848.45.

Nifty November 2008 futures were at 2,836.35, a discount of 12.10 points as compared to spot closing. Turnover in NSE's futures & options (F&O) segment surged to Rs 49,617.63 crore from Rs 40,386.80 crore on Tuesday, 11 November 2008.

The market had witnessed a sharp fall in the past two trading sessions. The BSE Sensex has declined 999.83 points or 9.48% in the past two trading sessions from 9,536.33 on 10 November 2008. The Sensex had tumbled 696.47 points or 6.61% to 9,839.69 on Tuesday, 11 November 2008 on dip in exports in October 2008 for the first time in any month in five years and on weak global cues.

The barometer index is down 10447.30 points or 51.49% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 11367.08 points or 53.60% below its all-time high of 21,206.77 struck on 10 January 2008.

The market breadth, indicating the overall health of the market, was weak on BSE with 1678 shares declining as compared with 848 that advanced. 74 shares remained unchanged.

The BSE mid-cap index fell 2.25% to 3,281.27 and the BSE small-cap index lost 1.92% to 3,813.38

The total turnover on the BSE amounted to Rs 3680 crore as compared to Rs 3,731.03 crore on Tuesday, 11 November 2008.

Among the 30-member Sensex pack, 28 declined while the rest gained.

India's largest dam builder Jaiprakash Associates tumbled 9.13% to Rs 77.10 on 87.11 lakh shares after foreign fund BSMA on Tuesday, 11 November 2008 sold around 1.97 crore shares at Rs 87.25 a share to another foreign fund Copthall Mauritius Investments in a buck deal on BSE. The scrip was the biggest loser from the Sensex pack.

Hindustan Unilever (down 4.81% to Rs 234.60), Reliance Infrastructure (down 4.40% to Rs 553), and Larsen & Toubro (down 4.13% to Rs 828.20), tumbled from the Sensex pack.

Realty shares declined on concerns the global credit crunch and a rise in borrowing costs will lead to a shortage of funds and thereby impact profitability. Unitech (down 3.04% to Rs 49.50), DLF (down 8.28% to Rs 245.50), and Indiabulls Real Estate (down 13.05% to Rs 113.60), dropped. The BSE Realty index tumbled 7.34% to 2046.64 and was the worst performing sectoral index on BSE.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) lost 3.56% to Rs 1164 in volatile trade on concern of further weakening in gross refining margins given sluggish global demand for petroleum products. The stock had plunged 7.37% on Tuesday, 11 November 2008, on reports of a likely delay for two key oil and gas projects.

Bank shares slipped on worries about bad loans in a slowing economy. Bankex was down 4.38% at 5,187.67. India's largest private sector bank by net profit ICICI Bank slumped 8.10% to Rs 399 after its American depository receipt (ADR) plunged 11.26% on Tuesday, 11 November 2008 on the NYSE.

India's second largest private sector bank by net profit HDFC Bank slipped 0.85% to Rs 1014 as its ADR shed 8.60% on Tuesday, 11 November 2008. India's top state-run bank by market capitalisation State Bank of India fell 4.14% to Rs 1172.10

Metal shares declined after commodity prices plunged on the London Metal Exchange on Tuesday, 11 November 2008. The BSE Metal index was down 3.67% at 5,041.89. Sterlite Industries (down 4.49% to Rs 237.55), Hindalco Industries (down 5.58% to Rs 56.65), and Tata Steel (down 2.41% to Rs 186.30), slipped.

Shanghai copper futures fell to their weakest in almost four years on Wednesday, 12 November 2008, chasing sharp losses overnight in London Metal Exchange (LME) on gathering gloom about the global economy. A measure of six metals traded on the London Metal Exchange (LME) declined 4.2% yesterday (11 November 2008) to the lowest level since September 2004.

Auto shares extended losses for the second running day after data showed automobile sales in the festive month of October fell 14.42%. The BSE auto index was down 2.59% at 2,542.19. Mahindra & Mahindra (down 4.30% to Rs 342), Tata Motors (down 3.22% to Rs 150.30), and Maruti Suzuki India (down 1.06% to Rs 566), edged lower.

The total number of automobiles (which include cars, commercial vehicles, two-wheelers etc) sold in October 2008 slipped to 8.65 lakh compared with 10.11 lakh units sold in October 2007. The key reason for the sharp decline in sales was the credit squeeze as 70% of vehicle sales in the country (90% in case of commercial vehicles) are financed through loans.

India's largest oil exploration firm by market capitalisation Oil and Natural Gas Corporation lost 3.27% to Rs 711. ONGC chairman R S Sharma on Tuesday, 11 November 2008, said it will lose Rs 300-400 crore annually if it followed a finance ministry directive to keep 60% of its surplus cash with state-run banks.

The government on Tuesday, 11 November 2008, asked Central public sector enterprises (CPSEs) to park at least 60% of their surplus funds amounting to over Rs 1,00,000 crore with public sector banks (PSBs) and desist from calling for competitive bids for making such deposits.

IT pivotals came off from higher levels but most of them managed to post small gains on weak rupee. The BSE IT index was down 0.08% to 2,632.89, and was the best performing sectoral index on BSE. India's fourth largest IT exporter by sales Wipro rose 0.89% to Rs 250 after hitting a high of Rs 261.25. India's second largest IT exporter by sales Infosys rose 0.18% to Rs 1257.90, off day's high of Rs 1305. India's largest IT exporter by sales Tata Consultancy Services eased from day's high of Rs 552.80, to settle 0.22% higher at Rs 527.25.

However India's third largest IT exporter by sales Satyam Computer Services fell 1.19% to Rs 266 as its ADR fell 5.73% overnight. The stock declined from high of Rs 274.50 during the day.

The rupee was trading at 48.84 per dollar slipping more than 1% on heavy dollar buying by banks and pick-up in demand from importers amid weak Asian equity markets. A weak rupee benefits IT firms as they derive a lion's share of revenue from exports.

Telecom pivotals succumbed to selling pressure for the second running day on reports new telecom companies planning to enter the Indian market to offer 3G services may have to pay 3% of their aggregate revenues to the government. India's top mobile operator by market capitalisation, Bharti Airtel lost 3.70% to Rs 633.50, after sliding 7.20% on Tuesday, 11 November 2008. India's second largest cellular services provider by market capitalisation Reliance Communications fell 1.07% to Rs 218 after declining 6.39% on Tuesday, 11 November 2008

Tata Teleservices (Maharastra), a unit of Tata Teleservices, spurted 8.25% to Rs 18.10, on reports NTT DoCoMo Inc, Japan's biggest mobile phone carrier, is set to announce a plan to buy a stake in TTML's parent firm Tata Teleservices today (12 November 2008).

As expected the deal was announced after trading hours. NTT DoCoMo Inc, acquired a 26% stake for $2.7 billion (Rs 13,070 crore) in Tata Teleservices, to expand into the world's fastest-growing major wireless market, valuing the company at $10.4 billion. Seperately, DoCoMo also expects to make an open offer to acquire up to 20% of TTML through a joint offer with Tata Sons.

Shares of three state-run oil marketing firms rose after after the crude oil price fell to its lowest since March 2007. Bharat Petroleum Corporation (BPCL) (up 6.06% to Rs 321.40), Indian Oil Corporation (IOC) (up 4.93% to Rs 377), and Hindustan Petroleum Corporation (HPCL) (up 6.84% to Rs 214), rose.

Lower oil prices will reduce underrecoveries at the state-run oil firms on domestic sale of petrol, diesel, LPG and kerosene at a controlled price. Meanwhile, oil minister Murli Deora today, 12 November 2008, said the government may consider cutting fuel prices if global crude prices and the rupee stabilise.

US crude oil dipped 8 cents a barrel to $59.25 today, 12 November 2008 after falling as far as $58.32 the previous day, the lowest level since March 2007.

Reliance Industries topped turnover chart on BSE clocking turnover of Rs 350.35 crore followed by State Bank of India (Rs 230 crore), Reliance Capital (Rs 176 crore), ICICI Bank (Rs 162.40 crore) and Reliance Infrastructure (Rs 148.25 crore).

Tata Teleservices led the volume chart on BSE notching volumes of 1.75 crore shares followed by Suzlon Energy (1.74 crore shares), GVK Power & Infrastructure (1.61 crore shares), Jaiprakash Associates (87.20 lakh shares) and Reliance Natural Resources (86 lakh shares).

Among the side counters, Incap (up 15.40% to Rs 12.74), Ceekay Daikin (up 12.40% to Rs 28.10), Savera Hotel (up 11.11% to Rs 40), Mather & Pumps (up 10% to Rs 205), and JL Morison (up 9.97% to Rs 180.85), surged.

However RTS Power (down 17.06% to Rs 106), Vyapar Industries (down 16.21% to Rs 46), Lloyd Metal (down 15.70% to Rs 16.65), Simplex Project (down 14.23% to Rs 66), and Atul Auto (down 14.17% to Rs 20.60), slipped.

The market remains shut on Thursday, 13 November 2008 on account of Gurunanak Jayanti