Five-year bull run ends as Sensex tumbles 52% in 2008 on global financial crisis

Profit booking after two-day gains pulled key benchmark indices lower on the last trading day of 2008. Selling pressure in index heavyweights in the second half of the day's trade pulled the market lower. Volatility was the hallmark of the day's trading session with indices swinging wildly throughout the day. The BSE 30-share Sensex lost 68.85 points or 0.71%, shedding 178.59 points from the day's high. The market shed more than half its value in 2008, its worst performance ever, and the outlook remained downbeat in the near term on dismal corporate earnings outlook.

Volatility was high. After a firm start triggered by positive cues from the global markets, the Sensex soon slipped into the red. The market soon bounced back. It, however, pared gains soon before recovering again later in volatile trade. Fall in index heavyweight Reliance Industries (RIL) pulled the market into the red in afternoon trade. It later gained positive zone. The market weakened in mid-afternoon trade on fall in banking shares and further decline in RIL.

The BSE Sensex had gained 387.24 points or 4.15% in previous two trading sessions on hopes of rate cuts and a second stimulus package from the government. But hopes for hefty rate cuts were dented after a television channel quoted finance ministry officials as saying rate reductions may not be steep. The television channel also cited unnamed bankers as saying they were not in a position to cut deposit rates due to competition from the government's small savings plans. This meant they can not lower lending rates as well.

Expectations of cut in interest rates by the central bank have strengthened after the central bank governor D. Subbarao met Prime Minister Manmohan Singh on Monday, 29 December 2008. Budget constraints are forcing India to rely more on interest-rate cuts to buoy the economy.

Yet, the market is awaiting a second government stimulus package for the economy. Planning Commission Deputy Chairman Montek Singh Ahluwalia on Monday said the government will come out with a second stimulus package for this fiscal and another package for fiscal year 2009-10 in the next few days to spur economic growth. With industrial production contracting by 0.4% in October 2008, for the first time in 15 years, and the exports declining by over 12% during the month, the government came out with a stimulus package on 7 December 2008 to spur growth and help the industry combat the impact of global financial meltdown.

As part of the stimulus package, the government cut excise duty by 4% across the board, except on petroleum products, and announced raising of the public expenditure by Rs 20,000 crore to boost demand.

European markets were firm on overnight gains on Wall Street. UK's FTSE 100 index rose 0.86% and France's CAC 40 index gained 0.94%.

Asian stocks were mixed. Key benchmark indices in Hong Kong and Taiwan rose by 0.05% to 1.07%. However, indices in China and Singapore were down by 0.66% and 0.51. Japan and South Korea markets were shut.

US stocks ended higher on Tuesday, 30 December 2008 after the government expanded its bailout of the auto industry, bolstering hopes that lawmakers would continue to take steps to minimize the severity of the year-long recession. The Dow Jones Industrial Average rose 184.46 points, or 2.17%, at 8,668.39. The Standard & Poor's 500 Index gained 21.22 points, or 2.44%, at 890.64 and the Nasdaq Composite Index advanced 40.38 points, or 2.67%, at 1,550.70.

The Bush Administration said late Monday, 29 December 2008, it would extend an additional $1 billion loan to General Motors (GM) and take a $5 billion stake in the automaker's financing arm, GMAC, in the latest move to ease the credit crisis.

The BSE 30-share Sensex lost 68.85 points or 0.71% at 9647.31. At the day's high of 9,825.90, the Sensex rose 109.74 points in early trade. The Sensex declined 128.24 points at the day's low of 9,578.92 in mid-afternoon trade.

The S&P CNX Nifty lost 20.35 points or 0.68% at 2959.15. Nifty January 2009 futures were at 2965.10, at a premium of 5.95 points as compared to the spot closing. Turnover in NSE's futures & options (F&O) segment was Rs 30,033.26 crore, lower than Rs 33,326.10 crore on Tuesday, 30 December 2008.

The barometer index lost 10639.68 points or 52.44% in the calendar year 2008 from its close of 20,286.99 on 31 December 2007, on global financial crisis. It is 11559.46 points or 54.50% below its all-time high of 21,206.77 struck on 10 January 2008. Nifty lost 3179.45 points or 51.79% in 2008.

The BSE Sensex saw a sustained bull run in the past five years gaining 47.10% in 2007, 46.7% in 2006, 42.3% in 2005, 13.1% in 2004, 73% in 2003 and 3.52% in 2002.

The market breadth, indicating the overall health of the market, was strong on BSE with 1488 shares advancing as compared with 967 that declined. 103 shares remained unchanged.

The BSE Mid-cap index rose 0.59% to 3,235.05 and the BSE Small-Cap index gained 1.31% to 3,683.11. The BSE Mid-cap index lost 6554.44 points or 66.95% and the BSE Small-Cap index slipped 9665.26 points or 72.40% to 3,683.11, in 2008.

The total turnover on the BSE amounted to Rs 3733 crore as compared to Rs 3412 crore on Tuesday, 30 December 2008.

The BSE Auto index (up 0.95%), the BSE Realty index (down 0.41%), the BSE Capital Goods index (up 0.49%), the BSE Teck index (down 0.28%), the BSE IT index (up 0.09%), the BSE Power index (up 0.27%), the BSE FMCG index (down 0.12%), the BSE PSU index (down 0.05%), the BSE Consumer Durables index (up 1.56%), the BSE HealthCare index (up 0.62%), the BSE Metal index (up 0.18%), outperformed the Sensex.

The Bankex (down 1.29%), and BSE Oil & Gas index (down 0.98%), underperformed the Sensex.

Among the 30-member Sensex pack, 21 declined while the rest advanced. Ranbaxy (up 3.29%), Tata Power (up 1.05%), and Hindalco (up 2.07%), edged higher from the Sensex pack.

Grasim (down 1.43%), Jaiprakash Associates (down 1.07%), and Bhel (down 1.02%), edged lower from the Sensex pack.

India's fourth largest IT exporter by sales Satyam Computer Services jumped 8.03% to Rs 173.50, extending gains for the fourth day in a row, on reports the world's largest personal-computer maker Hewlett-Packard Company is evaluating the possibility of acquiring a stake in the company. It was the top gainer from the Sensex pack.

The stock had jumped 18.52% in the preceding two trading sessions on speculation of a change in management.

However other IT pivotals declined on a firm rupee. India's second largest IT exporter by sales Infosys fell 0.89% to Rs 1115. India's fourth largest IT exporter by sales Wipro lost 1.04% to Rs 233. India's largest IT exporter by sales Tata Consultancy Services slipped 1.10% to Rs 477.

Rupee firmed against the dollar tracking rise in some Asian markets and due to some month-end dollar demand from importers and oil refiners. The partially convertible rupee was at 48.42/43 per dollar compared with Tuesday's close of 48.47. A firm rupee negatively impacts operating margins of IT firms as IT firms derive a lion's share from exports to the US.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) shed 1.82% to Rs 1226.20, after global rating agency Standard & Poor's revised its rating outlook on the company to negative from stable, citing its increased debt and pressure on profitability. The stock moved in a volatile range of Rs 1217.05 and Rs 1265 in the day.

Banking shares declined as hopes for hefty rate cuts by the central bank were dented after a television channel quoted finance ministry officials as saying rate reductions may not be steep India's largest mortgage lender by total income HDFC lost 2.91% to Rs 1485 and was the top loser from the Sensex pack.

India's largest private sector bank by net profit ICICI Bank lost 2.46% to Rs 446.80. The bank said during trading hours today, 31 December 2008, it had bought back and extinguished overseas bonds worth $84.58 million. The bonds which it has bought back include 6.625% bonds totalling $79.58 million, and another $5 million worth of 5.75% bonds issued by an overseas branch.

India's second largest private sector bank by net profit HDFC Bank fell 2.57% to Rs 992. India's biggest bank in terms of total assets and branch network, State Bank of India, slipped 0.10% to Rs 1287.75.

India's top copper producer by sales Sterlite Industries fell 1.77% to Rs 260.35 after its American depository receipt slipped 1.12% overnight on the New York Stock Exchange.

India's second largest cellular services provider by sales Reliance Communications (RCom) retraced from day's high of Rs 237.90 to close 0.35% lower at Rs 227.30, on profit taking. The stock had risen 7.16% yesterday, 30 December 2008, after company announced the rollout of GSM-based cellular services, which will be available in 11,000 towns countrywide from Wednesday, 31 December 2008. The company made the announcement during trading hours on Tuesday. GSM services would be available in 24,000 towns within a few months, RCom said positioning it to better take on market leader Bharti Airtel, India's largest cellular services provider by sales. Bharti shares fell 1.23% to Rs 713.50

Realty shares slipped as hopes of a sharp interest rate cut suffered a blow. DLF (down 1.51% to Rs 281), Housing Development & Infrastructure (down 3.60% to Rs 129.90), and Indiabulls Real Estate (down 0.76% to Rs 130.70), slipped.

India's largest engineering and construction company by sales Larsen & Toubro gained 0.26% to Rs 772 on hopes lower interest rates would keep order flows strong and aid project funding.

However India's largest power equipment maker by sales Bharat Heavy Electricals (Bhel) fell 1.02% to Rs 1360, on profit booking after advancing 5.69% in the preceding two trading days boosted by a large order win. The company said on Friday, 26 December 2008, it had secured a Rs 5,040-crore contract from Jindal Power for setting up 2,400 megawatt power plant in Chhatisgarh.

Punj Lloyd rose 1.41% to Rs 147.35 after the company's Singapore unit bagged an order worth Singapore $44.70 million. The stock had risen 0.5% to Rs 145.30 on Tuesday, 30 December 2008, when the company announced the order win during trading hours.

India's largest oil exploration firm by market capitalisation ONGC fell 0.45% to Rs 668 after it acquired control over Imperial Energy with nearly 97% shareholders tendering shares in the open offer. ONGC's acquisition of Imperial pegged at 1.3 billion pounds ($1.9 billion) is seen expensive given the sharp fall in oil prices. Oil prices are now hovering at $40 a barrel as compared to $147 per barrel in July 2008 when ONGC decided to acquire Imperial, a Russia focussed oil exploration firm.

Auto shares extended yesterday's, 30 December 2008 gains, on reports the government is likely to remove an additional excise duty of Rs 10,000-20,000 on large cars and sports-utility vehicles as part of the package for the automobile industry which is facing downturn in sales for want of cheap retail credit. India's biggest commercial vehicles maker by sales Tata Motors rose 0.47% to Rs 156.85. India's biggest small car maker by sales Maruti Suzuki India gained 0.25% to Rs 518.90. India's top utility vehicles maker by market share Mahindra & Mahindra advanced 1.87% to Rs 275.50

Punjab Tractors jumped 5.26% to Rs 98 after the company signed an agreement to sell its entire 14.04% stake in its joint venture company to Japan's Sumitomo Corporation.

Satyam Computer Services was the top traded counter on BSE wit turnover of Rs 465.81 crore followed by Reliance Industries (Rs 254.80 crore), Reliance Natural Resources (Rs 162.45 crore), DLF (Rs 149.44 crore) and Reliance Capital (Rs 136.97 crore).

Reliance Natural Resources led the volume chart with trades of 2.79 crore shares followed by Satyam Computer Services (2.72 crore), Unitech (2.36 crore), GVK Power & Infrastructure (2.25 core) and Suzlon Energy (1.72 crore).

Consumer durable stocks gained on hopes of recovery in sales led by growth in the rural economy. Videocon Industries (up 4.31%), Titan Industries (up 0.45%), and Blue Star (up 5%), gained.

Sugar shares rallied after Bajaj Group chairman Rahul Bajaj bought 3.99 crore shares or 28.2% of outstanding equity of sugar producer Bajaj Hindusthan in two block deals on the Bombay Stock Exchange (BSE) on Tuesday, 30 December 2008 at an average price of Rs 64.50 each as part of a family settlement. Bajaj Hindusthan jumped 9.98% to Rs 72.70. Balrampur Chini Mills (up 3.22% to Rs 49.75), and Shree Renuka Sugars (up 4.71% to Rs 73.40), surged.

Aurobindo Pharma gained 4.78% to Rs 168.80 on receiving final approval for launch of a drug in United States. The company made the announcement of the approval during trading hours today, 31 December 2008.

Oil slid below $39 a barrel on Wednesday, 31 December 2008, closing out its worst year ever after falling 60 percent, with a rapid reversal in the economic outlook having brought it crashing back from a mid-year record high. US crude was down 74 cents to $38.29 a barrel. Fresh sets of dismal data from the United States on Tuesday, 30 December 2008, added pessimism that oil demand in 2009 will suffer further, countering any support from Middle East tensions and hopes for another Saudi output cut.