IT, banking stocks lead 2.5% Sensex slide

IT, banking, realty and capital goods shares led losses after a sharp drop in advance tax payments by Indian companies in the third quarter pointed towards dismal quarterly earnings next month. The BSE 30-share Sensex lost 239.80 points, or 2.51%, shedding close to 380 points from the day's high. A statement by a finance ministry official that there is no scope for relaxing overseas borrowing rules, also weighed on the market.

The market breadth, indicating the overall health of the market, turned weak in the second half of the trading session. The breadth was strong earlier in the day.

The market had surged in early trade on expectations of a second government stimulus package for the slowing economy and on hopes of further rate cuts by the central bank. It pared gains in early afternoon trade. The Sensex slipped into the red in afternoon trade before cutting losses. It fell sharply in mid-afternoon trade on reports of lower advance tax paid by the corporate sector in the third quarter. It extended the losses in the late trade.

Investors are bracing for poor Q3 December 2008 results. The government said during trading hours today, 26 December 2008, advance taxes paid by companies declined 22% to about Rs 42600 crore in the December 2008 quarter over the December 2007 quarter, reflecting economic slowdown. The Indian economy has slowed down after a strong growth in the past three years.

A finance ministry official today, 26 December 2008, said there is no scope for relaxing overseas borrowing rules as of now. Planning Commission's deputy chairman's advisor Gajendra Haldea had said on, 19 December 2008, that the norms for external commercial borrowing (ECB) would be liberalied further in about a week's time.

The RBI had relaxed ECB norms in October 2008 to ease the pressure on funds with the sources dwindling as a fall out of global financial meltdown. Now, the companies are allowed to bring in funds up to US $500 million for rupee or foreign currency expenditure under the automatic route.

Meanwhile, the softening stance of inflation continues. Inflation based on the wholesale price rose 6.61% in the year through 13 December 2008, below the previous week's annual rise of 6.84%, data released by the government at about 12:00 IST today, 26 December 2008, showed.

Inflation had surged into double digits in early June this year after an increase in state-set retail fuel prices, and peaked at 12.91% on, 2 August 2008, the highest reading since annual numbers in the current data series became available in April 1995.

The sustained declined in inflation will provide room for the Reserve Bank of India (RBI) to further cut interest rates. Inflation is below RBI's target level of 7%.

Commerce Minister Kamal Nath after trading hours on Wednesday, 24 December 2008, said the government is considering another stimulus package to lift slowing growth. The new stimulus package may include steps to ease liquidity and relief measures for export and housing sectors, the trade minister said. He also said the government is looking at possible duty cuts for more goods to stimulate demand in the economy.

The first stimulus package announced early this month mainly involved additional government spending and an across-the-board cut in excise duties.

Japan's Nikkei average posted its highest close in six weeks on Friday, 26 December 2008, as investors bet a raft of government measures will help the global economy recover next year. The Nikkei 225 average rose 1.63%, as investors shrugged off a weak economic data. Data on Friday, 26 December 2008, Japan's industrial output dived at a record pace and core consumer inflation fell faster than forecast in November 2008, putting the shrinking economy on course for a spell of deflation next year.

But other Asian markets were mostly in the red. Key benchmark indices in China, South Korea and Singapore were down by between 0.05% to 0.94%. Taiwan's Taiwan Weighted rose 0.26%.

US stocks edged higher in a holiday-shortened session on Wednesday, 24 December 2008, after a barrage of economic data signalled the economy was weak, but not as bad as feared, while the fall in crude oil prices and bargain hunting helped retail and airline stocks.on Wednesday, 24 December 2008. The Dow Jones Industrial Average gained 48.99, or 0.58%, to 8,468.48. The S&P 500 index futures advanced 4.99 points, or 0.58%, to 868.15. The Nasdaq composite index rose 3.36 points, or 0.22%, to 1,524.90.

A government report on Wednesday showed US consumers cut spending for the fifth straight month in November 2008, while incomes shrank, suggesting intensifying recessionary pressures. Still, the data was not as bad as feared, sparking a glimmer of hope that the economy had seen its worst. Data that showed US mortgage rates fell to the lowest level in 37 years and applications for mortgage loans hit a five-year high also offered some reason for optimism.

US durable goods orders, which are orders for long-lasting manufactured goods such as washing machines and refrigerators, fell 1% in November 2008 -- less than forecast.

Among the gloomy news, a US Labour Department report measuring initial applications for unemployment benefits showed a 30,000 jump last week to a 26-year high of 586,000 versus the 556,000 in the previous week.

The BSE 30-share Sensex was down 239.80 points, or 2.51%, to 9,328.92. At the day's low of 9,294.98, the Sensex fell 273.74 points in late trade. The Sensex gained 137.66 points at the day's high of 9,706.38 hit in early trade.

The S&P CNX Nifty was down 59.60 points, or 2.04%, to 2,857.25.

The BSE Sensex has lost 770.99 points or 7.63% in last four trading sessions from a high of 10,099.91 on 19 December 2008. Before the fall, the market had risen sharply. From a recent low of 8,739.24 on 2 December 2008, the Sensex had jumped 1,360.67 points or 15.56% in nine trading sessions to 10,099.91 on 19 December 2008.

The barometer index is down 10,958.07 points or 54.01% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 11,877.85 points or 56% below its all-time high of 21,206.77 struck on 10 January 2008.

The BSE clocked a turnover of Rs 3,162 crore today lower than Rs 3,189.50 crore on Wednesday, 24 December 2008. The market was closed on Thursday, 25 December 2008 on account of Christmas.

Nifty January 2009 futures were at 2866.35, at a premium of 9.10 points as compared to the spot closing of 2857.25. Turnover in NSE's futures & options (F&O) segment was Rs 24,153.90 crore, much lower than Rs 45,355.58 crore on Wednesday, 24 December 2008.

The BSE Mid-Cap index fell 1.24% while, the BSE Small-Cap index slipped 1.43%. Both the indices outperformed the Sensex.

The BSE IT index (down 3.92%), the BSE Realty index (down 3.82%), the BSE Consumer Durables index (down 3.58%), the BSE Bankex (down 2.99%), the BSE Capital Goods index (down 2.95%), the BSE Metal index (down 2.77%) underperformed the Sensex.

The BSE HealthCare index (up 0.5%), the BSE FMCG index (down 1.09%), the BSE Auto index (down 1.72%), the BSE Oil & Gas index (down 1.78%), the BSE Power index (down 2.27%), the BSE Teck index (down 2.3%), the BSE PSU index (down 2.39%) outperformed the Sensex.

The market breadth, indicating the overall health of the market, was weak. On BSE, 866 shares rose as compared with 1,597 that declined. 69 shares remained unchanged.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 2.35% to Rs 1,212 on concerns the recent sharp fall in crude prices will hit refining margins. Its subsidiary Reliance Petroleum (RPL) commissioned its refinery at Jamnagar in the state of Gujarat with a crude oil processing capacity of 5.80 lakh barrels per day. RPL was up 6.93%.

India's largest state-run oil exploration firm by revenue ONGC fell 3.96% after the oil prices tumbled 9.3% on Wednesday, 24 December 2008. The oil price recovered today climbing above $36 a barrel, after the UAE joined Saudi Arabia in deepening oil supply curbs to comply with the Organisation of Petroleum Exporting Countries (Opec) biggest-ever output cut last week, telling refiners it would stiffen shipping limits on exports of its main grades. Crude for February 2009 delivery was trading up 82 cents at $36.17.

Real estate shares slipped after initial gains on recent reports property rates are expected to fall by 20-25% as demand has dropped sharply over the past 9-10 months due to high interest rates. Indiabulls Real Estate, DLF and Unitech fell by between 2.24% to 5.97%. Fall in property prices is expected to hit the margins of developers already hit by the demand slowdown. Additionally, developers are facing a sever cash crunch that is hindering the execution of ongoing projects and grounding new launches.

Metal stocks declined on worries a weakening domestic and global economy will hit demand. Sterlite Industries, Hindalco Industries, Tata Steel, Steel Authority of India fell by between 2.74% to 4.21%.

Auto stocks fell on concerns about the weakening domestic demand. Mahindra & Mahindra, Tata Motors and Hero Honda Motors fell by between 2.41% to 4.65%.

However, India's top small car maker by sales, Maruti Suzuki India, rose 1.68% on reports sales of small cars in India has risen smartly following an across-the board excise duty cut early this month.

Tyre-maker CEAT declined 1.65% after the company said it has temporarily shut down two its plants in Maharashtra to avoid inventory pile-up.

Capital goods stocks fell on worries a slowing economy will crimp orders. Larsen & Toubro, Bharat Heavy Electricals and ABB fell by between 2.13% to 3.86%.

Banking stocks fell as fears of rising defaults in a weakening economy offset hopes lower interest rates may boost lending growth.

India's largest private sector bank by net profit ICICI Bank fell 5.7%. Its advance tax payment declined 6% to Rs 470 crore in Q3 December 2008 over Q3 December 2007. ICICI Bank said on Friday, 19 December 2008, joint managing director Chanda Kochhar would succeed Chief Executive K.V. Kamath who retires in April 2009. Kamath, chief executive since 1996, will become non-executive chairman from May 2009 replacing N. Vaghul who retires.

India's largest commercial bank State Bank of India (SBI) fell 3.28%. On Saturday, 20 December 2008, SBI slashed its lending rate by 75 basis points, to be effective from 1 January 2009. The bank also cut its deposit rates by 25 to 100 basis points across maturities.

India's second largest private sector bank by net profit HDFC Bank fell 1.38% even as insurance giant and a top domestic institution Life Insurance Corporation of India increased its stake to over 5% in the private sector bank.

India's largest home loan lender by operating income Housing Development Finance Corporation (HDFC) fell 1.1%. It cut its retail lending rates by 50 basis points, effective 22 December 2008.

Cholamandalam DBS Finance jumped 9.93% after the company said promoters would subscribe to Rs 300 crore worth of convertible preference shares.

The Reserve Bank of India (RBI) has aggressively cut rates to shield the domestic economy from the global economic recession. The RBI, had on 6 December 2008, announced a 100-basis point cut in the repo rate and the reverse repo rate each. Repo rate is the rate at which RBI lends to commercial banks and reverse repo rate is the rate at which RBI accepts deposits from banks.

Outsourcing firms dropped as fears a weak global economy would cut the amount firms spent on technology offset a weaker rupee.

India's third largest IT exporter by sales Wipro fell 2.3% as its ADR slipped 2.67% on Wednesday. The company said on Tuesday, 23 December 2008 it is buying Citi Technology Services (CTS), the India-based captive provider of information technology services and solutions to Citi entities worldwide, for $127 million in an all cash deal.

India's second largest IT exporter by sales Infosys fell 5.33%. Infosys sees the Indian IT industry going through a slow phase of growth for some time, its chief executive said last week. India's largest IT exporter by sales Tata Consultancy Services slipped 1.24%.

Satyam Computer Services, India's fourth largest IT major by sales rose 0.41% as investors speculated the company's board would set a higher price at a share buyback it is scheduled to consider on Monday, 29 December 2008. Satyam on Thursday, 25 December 2008, said it has asked the World Bank to withdraw "inappropriate" statements about the Indian outsourcer and to issue an apology for harm done to the company. On Tuesday, 23 December 2008, the World Bank had issued a statement saying Satyam was debarred from getting direct contracts from it under its corporate procurement programme for eight years from September this year. The company was declared ineligible for contracts for providing improper benefits to bank staff and for failing to maintain documentation to support fees charged for its sub-contractors, the World Bank had said.

The World Bank, had, however, clarified that there was no evidence of Satyam being involved in malicious attacks on the bank's information system. Media reports had earlier said that data theft was one of the reasons why the World Bank had barred Satyam from doing business with it for eight years.

In a volatile trade on Friday, the rupee gave up its early gains and fell sharply in the afternoon session on fresh dollar demand from importers. The rupee was traded at 48.46/47 against the previous close of 48.06/08 a dollar. The rupee touched a high of 47.73 in early trade on stronger inflows. A weaker rupee benefits the IT sector which earns most of the revenues from exports.

Organic Coatings galloped 9.94% after its promoter raised stake in the company through open market purchases

Ready-to-eat food product maker Kohinoor Foods gained 0.59% after the company said Temptation Foods has increased its stake in the firm.

Jubilant Organosys fell 1.13% after the company said its board would consider buying back of foreign currency convertible bonds.

Reliance Natural Resources clocked the highest volume of 2.04 crore shares on BSE. Reliance Petroleum (1.72 crore shares), Unitech (1.54 crore shares), Suzlon Energy (1.39 crore shares) and Satyam Computer Services (1.17 crore shares) were the other volume toppers in that order.

Bharti Airtel clocked the highest turnover of Rs 194.06 crore on BSE. Reliance Industries (Rs 187.27 crore), DLF (Rs 177.58 crore), Reliance Capital (Rs 176.90 crore) and Satyam Computer Services (Rs 163.23 crore) were the other turnover toppers in that order.