IT, metal stocks lead a near 3% Sensex slide

Index heavyweight Reliance Industries (RIL), metal and IT stocks pulled the market down in a highly volatile trade as concerns about the weakening global economy, lower European markets and media reports of a shootout at New Delhi's international airport early on Friday, 5 December 2008, marred the investor sentiment. The BSE 30-share Sensex lost 264.55 points, or 2.87%, shedding 375.49 points from the day's high.

Volatility was high. The barometer index swung 426.31 points between the day's high and low. A likely stimulus package from the government and the Reserve Bank of India (RBI) to pump prime the economy triggered a strong rebound after an initial fall caused by media reports of a shootout at New Delhi's international airport early on Friday, 5 December 2008. However, the market soon slipped into the red again in morning trade on likely lower opening of European shares and due to Indo-Pak tensions in the aftermath of last week's terror attacks in Mumbai.

The market cut losses in afternoon trade on a likely stimulus package from the government and the Reserve Bank of India (RBI) to pump prime the economy, firm Asian markets and on higher US index futures. The market weakened again in mid-afternoon trade as European shares dropped in early trade and as the US index futures slipped into the red.

European markets fell on Friday, 5 December 2008, tracking overnight losses in the US market, as the prospect of a deep economic downturn and deteriorating corporate outlook kept investors on edge ahead of US jobs data. The key benchmark indices in France, Germany and UK were down by between 0.99% to 2.98%.

Investors are worried that the November 2008 US employment report due later in the day will show a further deterioration in the US job market.

US drug giant Merck said Thursday that 2009 would be worse than Wall Street had expected as the company prepares to deal with a strengthening dollar and a weakening economy. US retailer Macy's Inc. on Thursday, 4 December 2008, said its same-store sales for November 2008 fell 13.3%. Another retailer Target Corp. said its same-store sales for the month fell 10.4%.

AT&T announced Thursday that it plans to lay off 12,000 people and curb spending on new equipment a sign that the telecommunications industry is beginning to feel the pain of the economic downturn. Chemicals maker DuPont on Thursday said it will cut 2,500 jobs, mostly in automotive and construction units, and forecast a fourth-quarter loss.

Trading in US index futures indicated the Dow could fall 25 points at the opening bell. The US index futures moved between positive and negative zone during trading hours in India.

Asian shares edged higher following record rate cuts by central banks in Europe. The key benchmark indices in Hong Kong, China, South Korea, Singapore were up by between 0.86% to 2.14%. But Japan's Nikkei average edged down 0.1% as bank shares fell on fears about the potential fallout if big US automakers file for bankruptcy and ahead of what is expected to be a dismal US employment data due later in the day.

On Thursday the European Central Bank dropped its benchmark rate by 0.75 percentage point, while Sweden lopped 1.75 percentage points and the Bank of England cut rates by 1 percentage point. Governments are also taking action. South Korea repeated on Friday pledges to do more to keep Asia's fourth-largest economy on tack, and listed automobile, semiconductor and petrochemical firms as those hardest hit by the global downturn.

Closer home, a television channel reported that two sharp sounds had sparked a security scare at the New Delhi international. But no one was hurt. The police and commandos closed down the area by the heavily guarded airport, while an sports utility vehicle with a lone occupant sped away. Police gave chase but lost the vehicle, a television channel said.

Several attackers may have survived the three-day siege of Mumbai that killed 171 people last week, media reports said on Thursday.

The Indian government is reportedly considering various options including a strike on Pakistan to dismantle its terror bases in response to the recent Mumbai terror attacks. As a strike on Pakistan could lead to a full scale war between the two nuclear armed countries, India is maintaining a cautious approach and wants to gauge every possible ramification of its decision, reports suggest.

Tension between India and Pakistan have mounted after the Mumbai attacks. India has blamed Islamist militants based in Pakistan for the attacks.

Meanwhile, as per the market buzz, the Reserve Bank of India (RBI) is expected to cut repo and reverse repo rates to the extent of 200 basis points and 125 basis points respectively on Saturday, 6 December 2008, in an attempt to shield the domestic economy from the global economic slowdown. 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.

On Thursday, 4 December 2008, the RBI governor D Subbarao said the outlook for India was mixed and a period of painful adjustment was inevitable. The RBI government will hold a news conference on Saturday.

The Indian government is slated to announce a slew of measures on Saturday to pump prime the economy. The likely measures include a Rs 2000-crore export package, a further relaxation in external commercial borrowings norms and Rs 15,000-crore budgetary support for infrastructure.

Commerce Minister Kamal Nath today, 5 December 2008, said lowering interest rates and an interest subsidy on bank loans to exporters could form part of a stimulus package likely to be announced by the government and the Reserve Bank on Saturday, 6 December 2008.

The BSE 30-share Sensex was down 264.55 points, or 2.87%, to 8,965.20. At the day's high of 9,340.69 hit in mid-morning trade, the Sensex rose 110.94 points. The Sensex lost 315.37 points at the day's low of 8,914.38 in mid-afternoon trade.

The S&P CNX Nifty was down 73.60 points, or 2.64%, to 2,714.40.

The BSE clocked a turnover of Rs 3,745 crore today as compared to a turnover of Rs 3,747.69 crore on 4 December 2008.

Nifty December 2008 futures were at 2711.65, at a discount of 2.75 points as compared to the spot closing of 2714.40. Turnover in NSE's futures & options (F&O) segment surged to Rs 36,708.86 crore from Rs 34,123.92 crore on Thursday, 4 December 2008.

The barometer index BSE Sensex is down 11,321.79 points or 55.8% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 12,241.57 points or 57.72% below its all-time high of 21,206.77 struck on 10 January 2008.

The BSE Consumer Durables index (down 4.37% to 1,658.77), the BSE IT index (down 4.36% to 2,357.36), the BSE Realty index (down 3.5% to 1,692.16), the BSE Metal index (down 3.42% to 4,639.73), the BSE Oil & Gas index (down 3.3% to 5,495.33), the BSE Teck index (down 3.28% to 1,917.36), underperformed the Sensex.

The BSE Auto index (up 0.23% to 2,248.32), the BSE HealthCare index (down 0.9% to 2,823.43), the BSE Capital Goods index (down 1.51% to 6,408.77), the BSE Power index (down 1.66% to 1,648.59), the BSE FMCG index (down 1.81% to 1,919.28), the BSE Bankex (down 2% to 4,707.45) and the BSE PSU index (down 2.28% to 4,561.20), outperformed the Sensex.

The market breadth, indicating the overall health of the market, turned negative from a strong breadth earlier in the day. On BSE, 985 shares rose as compared with 1,104 that declined. 71 shares remained unchanged.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) slipped 3.51% to Rs 1,118.60 off day's high of Rs 1,182, on concerns a global slowdown would hit demand for petrochemicals. Meanwhile, as per reports the government has clarified that the selling price of RIL's gas from the Krishna Godavari basin, off the Indian east coast, will be $4.2 per unit excluding transportation costs and taxes. This will pave the way for RIL to gear up the gas production.

Real estate stocks declined on a recent brokerage report that realty prices are set to correct by 30% in the coming months given the general slowdown in the economy. Realty majors, Indiabulls Real Estate, DLF, Housing Development & Infrastructure slipped by between 4.55% to 5.69%.

Metal stocks declined on worries a weakening domestic and global economy will hit demand. Hindalco Industries, Sterlite Industries, Steel Authority of India, National Aluminum Company fell by between 0.85% to 6.09%.

Banking stocks fell after earlier gains as fears of rising defaults in a weakening economy offset hopes that a further fall in interest rates will boost lending growth. India's largest commercial bank State Bank of India (SBI) fell 2.88%. India's second largest private sector bank by net profit HDFC Bank fell 2.63% as its American depository receipt (ADR) fell 1.23% on Thursday.

India's largest private sector bank by net profit ICICI Bank slipped 1.58%.

India's largest home loan lender by operating income HDFC was down 4.84%.

IT stocks fell on weak ADRs, a stronger rupee and on worries about the US economy which is already into a recession for a year now. India's fourth largest IT exporter by sales Wipro fell 2.26% as its ADR slipped 6.46%. India's third largest IT exporter by sales Satyam Computer Services slipped 3.5% as ADR lost 6.96% on Thursday, 4 December 2008. India's second largest IT exporter by sales Infosys fell 4.94%, as ADR was down 5.45% overnight. As per reports Infosys has decided to freeze its annual hiring cycle following the global economic slowdown. India's largest IT exporter by sales Tata Consultancy Services slipped 5.1%.

IT firms earn more than 50% of their revenues from exports to US. A dismal a US November 2008 employment data is expected later in the day. Meanwhile, The Indian rupee trimmed gains in afternoon trade on Friday as losses in the domestic share market raised concerns over foreign fund flows while some dollar demand from oil refiners also weighed. The partially convertible rupee was at 49.72/73 per dollar, off a high of 49.54/50 but still stronger than its previous close of 49.87/89. It had hit a record low of 50.65 on Tuesday 2 December 2008. A stronger rupee affects operating margins of IT firms negatively as they earn most of their revenues from exports.

Capital goods stocks fell on worries a slowing economy will crimp orders. Bharat Heavy Electricals, Praj Industries, Areva T&D fell by between 1.38% to 8.08%.

India's largest engineering and construction firm by sales Larsen & Toubro fell 2.52% on reports it has deferred its entry into the commercial shipbuilding business and has also decided to scale back its investment for a new shipyard near Chennai.

Auto stocks rose on hopes lower interest rates will spur demand which is mainly driven by finance and on possible measures by the government to boost the commercial vehicles sector. Maruti Suzuki India and Hero Honda Motors rose by between 0.56% to 1.54%.

India's largest commercial vehicle maker by sales Tata Motors was up 1.46% gaining for the second day in a row on reports the government may cut excise duty cut on commercial vehicles as a part of the package to boost the economy. While, India's largest tractor maker by sales Mahindra & Mahindra fell 0.83%.

Ashok Leyland rose 0.14% despite a 60.22% fall in sales to 2307 units in November 2008 over November 2007.

Cement stocks rose on hopes likely government measures to boost the infrastructure sector will spurt demand. Birla Corporation of India, Ultratech Cement, Ambuja Cements and Grasim Industries rose by between 0.15% to 3.68%.

India's largest cement producer by sales ACC rose 0.04% on reports it has raised Rs 200 crore via bond issue. The tenure of a bond is five years and the coupon rate will be 11.3%, payable annually. The amount raised will be used to part finance the company's capital expenditure requirement.

Binani Cement surged 4.43% after the domestic rating agency CARE upgraded its ratings on the cement manufacturer.

Consumer durables stocks fell on slackening demand in a slowing economy. Videocon Indusries, Blue Star and Titan Industries fell by between 4.51% to 5.34%.

PSU OMCs slipped on reports the government is mulling a hefty reduction in fuel prices. BPCL, HPCL and Indian Oil Corporatin fell by between 3.63% to 6.51%.

As per reports, the government is planning to reduce the price of petrol by up to Rs 10 a litre, diesel by Rs 3 a litre and cooking gas by Rs 20 per refill in the wake of sharp fall in global crude oil prices.

India's second largest telecom services provider by sales Reliance Communications rose 0.15% on reports the Communications and IT Ministry will refund about Rs 112 crore which the company had paid as part of the entry fee while taking approval for offering dual technology in 2007. The refund is on account of the company surrendering the permission for dual technology in six circles where it already has GSM services.

Unitech clocked the highest volume of 3.3 crore shares on BSE. Suzlon Energy (1.86 crore shares), Housing Development & Infrastructure (1.13 crore shares) and GVK Power & Infrastructure (1.07 crore shares) and Reliance Natural Resources (74.47 lakh shares) were the other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 315.20 crore on BSE. ICICI Bank (Rs 268.62 crore), State Bank of India (Rs 228.53 crore), Educomp Solutions (Rs 183.17 crore) and Reliance Capital (Rs 139.08 crore) were the other turnover toppers in that order.

Marg was locked at 5% upper limit at Rs 36.10 at 15:21 IST on BSE, extending gains for the fourth consecutive day, on share buy back plan.

Mcleod Russel India soared 6.17% after the Reserve Bank of India raised the foreign invesment ceiling in the company.

Zicom Electronic Security Systems was locked at upper limit of 5% at Rs 59.70 on BSE on reports of the company bagging a Rs 8.50-crore order from Gurgaon police for security products.

Aurobindo Pharma rose 6.73% on receiving US approval for a new drug.

Wockhardt gained 0.46% on receiving US approval for a new drug.