Sensex shrugs terror threat; regains 9,000 mark in highly volatile trade

Key benchmark indices eked out modest gains in a highly volatile trading session on reports that the operation to flush out terrorists at three spots in Mumbai was nearing end. Volatility was intense ahead of expiry of November 2008 derivative contracts. Expectations of a further rate cut by the central bank also supported the market. The BSE Sensex regained the psychological 9,000 level in highly volatile trade

A denial by the Railways of shooting taking place near the Chhattrapati Shivaji Terminus (CST) station in Mumbai lifted the market in mid-afternoon trade. Earlier, two television channels had reported firing at the station which had pulled the market lower in afternoon trade.

After battling terrorists for two days at the Oberoi-Trident hotel in Mumbai, the National Security Guards today cleared the hotel of terrorists, killing two of them while six bodies were recovered from the premises. Reports suggest that the operation to flush out terrorist at two other spots viz. the Nariman House and at Taj Hotel near the Gateway of India, is at a final stage. The battle between the police and terrorists was still going on in these two spots, more than 36 hours after the terror attacks in Mumbai on Wednesday, 26 November 2008

But the market breadth was negative as the terror attacks weighed on the sentiments which has already been hit by heavy outflow of foreign capital as a result of the global financial crisis which has hit markets worldwide.

Expectations of further cut in interest rates in India gathered momentum after Finance Minister Palaniappan Chidambaram Monday, 24 November 2008, said monetary policy was biased towards stimulating growth and the Reserve Bank of India (RBI) was likely to lower rates further as inflation cooled. Lower interest rates boost stocks as lower borrowing costs help lift corporate profits.

With corporate India forced to compete with the government domestically for raising finance, interest rates cannot drop meaningfully till either growth slows and demand for credit cools or the RBI continues to provide liquidity to banks, aggressively cutting interest rates, the cash reserve ratio (CRR) - the percentage of deposits banks have to keep with the central bank and statutory liquidity ratio (SLR) - the percentage of deposits bank have to hold in government and other approved securities.

India's economy grew at 7.6% in the September 2008 quarter from a year earlier, at its slowest pace in nearly four years as it battered by high borrowing costs, data released today morning showed.

The slowdown in the Indian economy and reduced availability and rising cost of funds are taking their toll on the performance of the corporate sector. Moreover, companies which have resorted to substantial overseas borrowing are seeing increase in cost of servicing the loan due to depreciation rupee which hit a record low of 50.60 against the dollar on 20 November 2008. Some companies have cut production to avoid higher inventories.

Volatility was high. After an initial fall caused by the terror attacks, the market bounced back with the global rating agency Standard & Poor's (S&P) stating that attacks were an isolated case and that it does not expect any negative implications on India's macro economic activities or the government's fiscal position from the attacks.

After moving in a narrow range, the market weakened again in early afternoon trade before bouncing back in the green in afternoon trade as as the latest data showed the economy grew at a slowest paces in nearly years. The market once again weakened TV reports of firing outside CST rail station. Railways' denial of the firing at CST lifted the market again in mid-afternoon trade. The BSE Sensex swung 268.44 points between the day's high and low.

Adding to the volatility was the November 2008 derivatives expiry today, 28 November 2008. As per reports, the Nifty rollover of positions from November 2008 series to December 2008 series stood at 54% while marketwide rollover was 60%, by end of trading on Wednesday, 26 November 2008. The stock exchanges had to postpone expiry of November 2008 contracts as the markets were shut on Thursday after the terror attacks. The November contracts were to expire on Thursday. All the financial and commodity markets remained shut on Thursday, 27 November 2008, after the major terror strikes in India's financial capital.

European markets slipped as investors paused for breath following the stellar gains over the week. Key benchmark indices in UK, Germany and France slipped between 0.69% and 1.14%. Trading in US futures indicated the Dow could fall 40 points at the opening bell.

Asian markets rose on bargain hunting after recent heavy losses. Key benchmark indices in Hong Kong, Japan, Taiwan, Singapore and South Korea were up by between 0.15% and 2.48%. However China's Shanghai Composite slipped 2.44%.

The BSE 30-share Sensex was up 66 points or 0.73% to 9,092.72. The Sensex opened 137.54 points lower at 8,889.18, which was also its day's low. At the day's high of 9,157.62, the Sensex gained 130.90 points in mid-afternoon trade.

The S&P CNX Nifty rose 2.85 points or 0.10% to 2755.10, underperforming the Sensex, weighed by non-Sensex stocks. All the top 3 Nifty losers Unitech (down 11.30%), National Aluminium (down 7.74%), and Zee Entertainment (down 4.60%), don't form part of the 30-share Sensex pack.

The barometer index BSE Sensex is down 11194.27 points or 55.17% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 12114.05 points or 57.12% 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 negative on BSE with 1258 shares declining as compared with 1061 that rose. 84 shares remained unchanged.

Among the broader indices, the BSE Mid-Cap index rose 0.29% to 2,885.76 while the BSE Small-Cap index fell 10.28 points or 0.31% to 3,304.61.Both these indices underperformed the Sensex.

The turnover was sharply down. The total turnover on the BSE amounted to Rs 2383 crore as compared to Rs 3233 crore on Wednesday, 26 November 2008.

Sectoral indices on BSE displayed mixed trend. However only the BSE FMCG index (up 0.82% to 1,936.60), the BSE IT index (up 3.67% to 2,558.94), the BSE Auto index (up 1.43% to 2,330.56), the BSE Teck index (up 2.45% to 2,001.63), outperformed the Sensex.

The BSE Oil & Gas index (down 0.53% to 5,618.16), the Bankex (up 0.44% to 4,645.40), BSE Realty index (down 0.97% to 1,561.03), the BSE Capital Goods index (down 0.28% to 6,387.32), the BSE Consumer Durables index (down 0.38% to 1,793.56), the BSE HealthCare index (up 0.30% to 2,887.83), the BSE PSU index (down 0.77% to 4,585.83), the BSE Power index (down 0.04% to 1,631.69), the BSE Metal index (down 0.74% to 4,383.38) underperformed the Sensex.

Among the 30-member Sensex pack, 16 advanced while the rest declined. NTPC (down 3.74% to Rs 158.15), Grasim (down 4.03% to Rs 880), and Ranbaxy (down 2.63% to Rs 207.60), edged lower from the Sensex pack.

Bharti Airtel (up 2.46% to Rs 670.80), Hindalco (up 1.81% to Rs 53.50), and Tata Power (up 1.20% to Rs 662.70), edged higher from the Sensex pack.

Most IT pivotals advanced on a weaker rupee. India's largest software services exporter TCS jumped 6.63% to Rs 561.95. It was the top gainer from the Sensex pack

Infosys Technologies (up 4.95% to Rs 1246), Satyam Computer Services (up 2.68% to Rs 243.20), rose. However India's third largest software services exporter Wipro was down 0.41% to Rs 240 after striking day's high of Rs 252.

The rupee weakened today, 28 November 2008 in the wake of terrorists attacks and heavy demand for the US currency from importers. The partially convertible rupee was at 49.72/74, compared with Wednesday's close of 49.89/90 per dollar. A weak rupee benefits IT firms as they derive a lion's share of revenue from exports.

India's top power equipment maker by sales, Bharat Heavy Electricals surged 5.65% to Rs 1374 on reports the company intends to acquire companies in the non-conventional energy and transmission businesses to more than double its turnover to Rs 50000 crore in the next five years.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) saw high volatility in late trade. It ended 0.10% lower at Rs 1136.15, after striking a high of Rs 1164.70. Earlier the stock rebounded sharply from the day's low of Rs 1037. Recent reports suggested the company wants to restart selling petrol and diesel after margins on the two fuels turned positive. The Mukesh Ambani-run company had reportedly shut all of its 1,432 petrol pumps around March 2008 after it could not compete with public sector companies, who sold fuel at rates much lower than their cost, as they got government subsidies.

Auto shares rose on hopes lower interest rates would spur demand which is mainly driven by finance. Mahindra & Mahindra (up 3.86% to Rs 280), and Maruti Suzuki India (up 1.07% to Rs 538), gained.

However India's largest commercial vehicle maker by sales Tata Motors lost 2.54% to Rs 136.20 on reports the company is shedding up to 3,000 temporary jobs at its Pune factory, weeks after its decision to cut production and dismiss a similar number of temporary workers at its Jamshedpur plant. The latest cuts could take the overall layoffs to around 6,000 workers.

Private sector banking shares reversed early losses on hopes of a rate cut by the central bank following a further fall in inflation. ICICI Bank (up 0.71% to Rs 353, off day's low of Rs 331), HDFC Bank (up 0.73% to Rs 913.85, off day's low of Rs 882.30), rose. However India's largest state-run bank by assets State Bank of India was down 1.85% to Rs 1083.90. The stock came off the day's low of Rs 1061.25

Inflation based on the wholesale price index (WPI) rose 8.84% in the 12 months to 15 November 2008, a tad below the previous week's annual rise of 8.9%, data released by the government on Thursday, 27 November 2008, showed. Inflation has been softening ever since it struck a 16-year peak of 12.91% on 2 August 2008.

India's largest copper maker by sales Sterlite Industries rose 0.97% to Rs 233.25, extending Wednesday's over 12% surge on recent reports the company is still eyeing Asarco, which operates three copper mines in Arizona, but an agreement could only be reached at a substantially reduced price. Sterlite originally offered $2.6 billion to buy Asarco but withdrew from the deal in October 2008 because of falling metals prices.

Steel shares declined after reports steel makers JSW Steel, Ispat Industries and Essar Steel are likely to slash prices of steel in the spot market by 5-6% or Rs 2,000 per tonne next month. India's largest private sector steel maker by sales Tata Steel slipped 2.87% to Rs 150.45. Sail (down 3.50% to Rs 66.25), JSW Steel (down 1.83% to Rs 190.05), Ispat Industries (down 1.08% to Rs 10.08), slipped.

Real estate stocks declined on reports property prices may remain soft as global economic crisis shatters home buyers' confidence. DLF (down 0.15% to Rs 198.10), Unitech (down 9.27% to Rs 23.50), and Ansal Infrastructure (down 1.89% to Rs 25.95), dropped.

Infrastructure stocks were pounded on reports technical evaluation will delay Rs 65,000 crore National Highway Authority of India projects. Reliance Infrastructure (down 2.41% to Rs 507), Larsen & Toubro (down 2.99% to Rs 728.10), and Lanco Infratech (down 1.60% to Rs 111.05), GMR Infrastructure (down 2.28% to Rs 53.55), slipped.

Hospitality shares dropped after the two main hotels -- Taj Mahal Hotel and Oberoi-Trident in Mumbai were hit by the terror attacks. Indian Hotels Company, which operates the Taj group of hotels, plunged 16.20% Rs 40.60. Advani Hotel (down 18.42% to Rs 26.35), Viceroy Hotels (down 4.84% to Rs 28.50), declined. However EIH, which operators the Oberoi group of hotels, gained 5.54% at Rs 98.05, after sliding to low of Rs 83.15.

Shares of Jet Airways, Kingfisher Airlines, and SpiceJet fell by between 4.63% to 6.82% on concerns terror attack on Mumbai could hit the tourism industry for at least next two to three months.

Multiplex chain operators slipped after the state government as a precautionary measure ordered all cinema managements to suspend screening of films till further notice, post the Mumbai the terror attacks late evening on Wednesday, 26 November 2008. PVR (down 11.36% to Rs 64), Fame (down 3.26% to Rs 14.85), and Adlabs Films (down 2.02% to Rs 152.45), declined.

Mumbai has 75 multiplexes and 20 single-screen theatres and the state government order would thus affect about 450 shows on a daily basis. Theatre owners stand to lose business worth around Rs 2 lakh per day from ticket sales alone. They will also lose substantial revenues from food and beverage sales, which account for a major chunk of their total collections.

Reliance Industries was the top traded counter on BSE with a turnover of Rs 239.40 crore followed by Educomp Solutions (Rs 147 crore), SBI (Rs 114.70 crore), bhel (Rs 106.60 crore) and ICICI Bank (Rs 103.90 crore).

Unitech led the volumes chart on BSE clocking volumes of 2.99 crore shares followed by GVK Power Infrastructure (1.16 crore shares), Suzlon Energy (99.35 lakh shares), Cals Refineries (90.50 lakh shares) and Reliance Natural Resources (40 lakh shares).

GTL Infrastructure surged 11.58% to Rs 45.30 at 15:30 IST on BSE, on reports the US-based American Tower Corporation (ATC) have earmarked an investment of about $500 million to acquire a stake in an small- and medium-sized Indian telecom tower company

Vishal Retail hit upper circuit of 5% to Rs 67.50 on recent reports it is planning a major rejig of the business to beat the slowdown. It will launch 60 new stores over the next few months, all of them would be franchises.

Educomp Solutions rose 9.82% to Rs 2,261.45 on reports the company is planning to enter the higher education space by setting up a private university in New Delhi

All the financial and commodity markets remained shut on Thursday, 27 November 2008, in the wake of the major terror strikes in Mumbai, India's financial capital late on Wednesday, 26 November 2008.