Market bounces back in choppy trade

Higher US index futures which indicated a recovery in US stocks after Monday's (1 December 2008) sharp slide, reports that India is not contemplating a military action against Pakistan and hopes of a further cut in interest rates by the Reserve Bank of India (RBI) triggered a solid rebound on the domestic bourses in late trade. The BSE 30-share Sensex was down 100.63 points, or 1.14%, recovering close to 270 points from the day's low.

Earlier, concerns about the weakening domestic and global economy had pulled the Sensex down 372.24 points or 4.21% in mid-morning trade.

Volatility was high. After a weak opening triggered by weak global equities, the domestic bourses recovered from lower level after Australia's central bank slashed interest rates by a full percentage point and as higher US index futures indicated that the US markets will recover after Monday's (1 December 2008) sharp slide. But the recovery proved short-lived and the market weakened again in mid-morning trade on weak Asian stocks.

The market cut losses in early afternoon trade following Bank of Japan's (BoJ) plan to ease an acute squeeze in corporate funding in Japan. The market weakened again in afternoon trade on weak opening of European stocks. The market cut losses in mid-afternoon trade soon after Foreign Minister Pranab Mukherjee said the government is not considering military action in response to Islamist militant attacks in Mumbai that killed at least 183 people last week.

Tension between India and Pakistan have mounted after the Mumbai attacks. India has blamed Islamist militants based in Pakistan for the attacks. Meanwhile, Pakistan has proposed a joint investigating mechanism to probe Mumbai terror attacks, Pakistan foreign minister Shah Mahmood Qureshi said. Current situation does not allow blame-game or finger-pointing. Pakistan wants to continue constructive bilateral engagement, he added.

India has said it was awaiting Pakistan's response to a demarche issued in the wake of the Mumbai terror strikes, asking Islamabad to handover fugitives who have taken shelter in the neighbouring country.

There are expectations that the Reserve Bank of India (RBI) will cut rates further to shore up confidence battered by the global financial crisis and the series of attacks around the city. Lower interest rates may hep revive demand over the medium term.

Recent dismal economic data has added to the concerns about the weakening domestic economy. India's exports fell an annual 12.1% in October 2008 to $12.82 billion, the first year-on-year fall in nearly three years, as slowing output at home and weakening economies in key overseas markets slashed demand. The data released by the government during trading hours on Monday, 1 December 2008, showed.

On the same day, a survey showed India's manufacturing output shrank for the first time in 3-1/2 years in November 2008 as credit conditions tightened and the global financial crisis hurt sentiment and reduced demand. The ABN AMRO Bank purchasing managers' index (PMI), based on a survey of 500 companies, fell sharply to a seasonally adjusted 45.8 in November 2008, the first time it has contracted since the survey began in April 2005 and well below October 2008's 52.2.

A reading above 50 signals economic expansion while a figure below 50 suggests contraction.

Meanwhile, trading in US futures indicated the Dow could rise 168 points at the opening bell. The US index futures surged after it moved between positive and negative zone earlier in the day.

European shares turned positive by mid-morning on Tuesday as US stock index futures rose and energy companies gained after crude prices pared losses. The key benchmark indices in France, Germany and UK were up by between 1.35% to 2.48%. Earlier, the key benchmark indices in these three nations were were down by between 1.41% to 1.98%.

The BoJ today unveiled a new lending scheme and other measures to ease an acute squeeze in corporate funding. The central bank, which kept interest rates steady at 0.3% at the emergency meeting where it introduced the new measures, said it would accept a wider range of corporate debt as eligible collateral as the financial crisis cuts the access of Japanese companies to funding over the end of the year.

But the Nikkei 225 average in Japan was down 6,35% and Hong Kong's Hang Seng was down 4.98% as signs of a deepening global economic slump slammed stocks worldwide the previous day. Key benchmark indices in China, South Korea, Singapore and Taiwan were down by between 0.26% to 3.57%.

The Reserve Bank of Australia today cut its cash rate by a full percentage point to 4.25%, a bigger margin than the market had expected, and said the perilous state of the global economy left the door open for yet more cuts. Notwithstanding the rate cut, the All Ordinaries index in Australia was down 4.02%.

The US economy entered a recession a year ago this month, the panel that dates American business expansion said on Monday, 1 December 2008. Federal Reserve Chairman Ben Bernanke on Monday said the central bank is mulling extreme policy measures such as buying more government bonds to revive growth.

An array of reports on Monday, 1 December 2008, showing manufacturing activity around the world contracted at the sharpest pace in a decade or more put focus on the pain the credit crisis has inflicted on companies and households.

The BSE 30-share Sensex was down 100.63 points, or 1.14%, to 8,739.24. At the day's high of 8,785.04 hit in late trade, the Sensex fell 54.83 points. The Sensex sank 372.24 points at the day's low of 8,467.43 hit in mid-morning trade.

The S&P CNX Nifty was down 25.10 points, or 0.94%, to 2,657.80.

The market breadth, indicating the overall health of the market, was negative. On BSE, 957 shares declined as compared with 647 that rose. 57 shares remained unchanged.

The BSE clocked a turnover Rs 2595 crore today, lower than Rs 2,922.03 crore on Monday 1 December 2008.

As per the provisional figures on BSE, foreign institutional investors (FIIs) sold shares worth Rs 323.01 crore today, 2 December 2008 while domestic funds bought shares worth Rs 105.31 crore.

The barometer index BSE Sensex is down 11,547.75 points or 56.92% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 12,467.53 points or 58.79% below its all-time high of 21,206.77 struck on 10 January 2008.

Nifty December 2008 futures were at 2654, at a discount of 3.80 points as compared to the spot closing of 2657.80. Turnover in NSE's futures & options (F&O) segment increased to Rs 33,471.48 crore from Rs 32,155.44 crore on Monday, 1 December 2008.

Sectoral indices on BSE displayed mixed trend. The BSE Realty index (up 2.14% to 1,509.27), the BSE FMCG index (up 1.04% to 1,903.7), the BSE Power index (up 0.48% to 1,577.63), the BSE HealthCare index (down 0.24% to 2,833.37), the BSE Teck index (down 0.64% to 1,961.11), the BSE Bankex (down 0.66% to 4,436.27), the BSE PSU index (down 0.98% to 4,450.06), the BSE Metal index (down 1.08% to 4,304.90) outperformed the Sensex.

The BSE Auto index (down 3.04% to 2,154.75), the BSE Consumer Durables index (down 2.61% to 1,668.75), the BSE Oil & Gas index (down 2.45% to 5,397.87), the BSE IT index (down 2.45% to 2,476.86), the BSE Capital Goods index (down 2.02% to 6,021.49), underperformed the Sensex.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) slipped 3.1% to Rs 1,074..65 on concerns a global slowdown would hit demand for petrochemicals.

Oil exploration shares fell on slide in crude oil prices. India's largest oil exploration firm by revenue ONGC slipped 2.61% while Cairn India dipped 4.33%. Falling crude oil prices will affect the realization from crude sales.

PSU OMCs were mixed as fall in oil product sales in October 2008 offset lower crude oil prices. BPCL and Indian Oil Corporation fell by between 0.54% to 2.47%. While, HPCL rose 2%. The sale of industrial fuel and diesel declined 1.7% to 10.1 million tonnes in October 2008 over October 2007, government data showed on Monday 1 December 2008.

Crude oil fell to the lowest in more than three years on signs the US, the world's largest energy consumer, may be in the longest slump since World War II. Crude oil for January delivery dropped as much as $1.92, or 3.9%, to $47.36 a barrel on the New York Mercantile Exchange.

Real estate stocks rose on hopes further rate cuts by the Reserve Bank of India would spur demand which is mainly driven by finance. Realty majors, Indiabulls Real Estate, DLF, Omaxe and Unitech rose by between 1.96% to 7.29%.

Banking stocks fell on fears of rising defaults in a weakening economy. India's largest private sector bank by net profit ICICI Bank fell 0.71% as its American depository receipt (ADR) lost 13.48% on Monday, 1 December 2008. India's second largest private sector bank by net profit HDFC Bank slipped 1.56% as ADR skidded 11.15% on Monday. India's largest commercial bank State Bank of India (SBI) slipped 1.49%.

IT stocks slipped on US recession worries and a stronger rupee. India's third largest IT exporter by sales Satyam Computer Services skidded 1.19% as its American depository receipt (ADR) fell 7.23% on Monday 1 December 2008.

India's second largest IT exporter by sales Infosys declined 1.91%, as ADR slipped 6.12%. India's fourth largest IT exporter by sales Wipro shed 0.41% after it said it is seeing a few customers cancel contracts and more delaying or downsizing deals. Its ADR slumped 14.29%. India's largest IT exporter by sales Tata Consultancy Services fell 5.21%.

Indian IT firms derive a large part of revenue from exports to the United States. Meanwhile, the rupee strengthened after hitting a record low on Tuesday as the domestic stock market pared some losses on bargain buying and as positive US stock futures eased selling pressure. The partially convertible rupee was at 50.17/19 per dollar, off a record low of 50.65, and stronger than Monday's close of 50.30/32. A stronger rupee affects IT firms negatively as they earn most of their revenues from exports.

Auto stocks fell on dismal monthly sales figures by most auto firms. India's largest commercial vehicle maker by sales Tata Motors slipped 3.28% after it reported 30% decline in total vehicle sales to 32,696 units in November 2008 over November 2007.

India's largest tractor maker by sales Mahindra & Mahindra slumped 8.23% after total vehicle sales (excluding tractors) down 41% at 10,430 units in November 2008 over November 2007.

India's largest motorbike maker by sales Hero Honda Motors rose 0.11% after two-wheeler sales rose a marginal 0.5% to 2,89,426 units in November 2008 over November 2007.

India's largest scooter maker by sales Bajaj Auto fell 2.26% on 37% fall in two-wheelers sales to 1,32,421 units in November 2008 over November 2007.

India's largest car maker by sales Maruti Suzuki India declined 5.24% on 24.4% fall in sales to 52,711 units in November 2008 over November 2007. The company unveiled the monthly sales data during trading hours on Monday, 1 December 2008.

Capital goods stocks fell on worries a slowing economy will crimp orders. Larsen & Toubro, Thermax, Crompton Greaves, Suzlon Energy fell by between 3.46% to 7.38%. India's largest electric equipment maker by sales Bharat Heavy Electricals rose 0.33%, bucking the weak trend.

Metal stocks declined on worries a weakening domestic and global economy will hit demand. Hindalco Industries, National Aluminum Company, Tata Steel, JSW Steel, Sterlite Industries, Steel Authority of India fell by between 0.09% to 3.3%.

Consumer durables stocks fell on worries of slackening demand in a slowing economy. Videocon Indusries, Blue Star and Titan Industries fell by between 1.96% to 4.41%.

Power stocks fell on recent reports that banks are wary of large exposure to the power sector. Tata Power Company, , Reliance Power, Power Grid Corporation of India fell by between 0.29% to 1.45%. However Reliance Infrastructure rose 1.15%.

India's largest telecom services provider by sales Bharti Airtel gained 3.05% after the global rating agency Fitch upgraded the long-term foreign currency issuer default rating.

Airline stocks slipped on fears of likely cancellation of tickets by travellers in the aftermath of the terror attack in Mumbai. Kingfisher Airlines, Jet Airways and SpiceJet were down by 1.54% to 4.07%.

Four firms in which Citigroup held stake fell on reports the US bank is offloading shares in these companies to raise money to offset its sub-prime related losses. Polaris Software Lab, Northgate Technologies, Tanla Solutions and Havells India fell by between 1.62% to 5.29%.

Hotel shares slipped on fears of likely cancellation of bookings from foreign tourists in the aftermath of the terror attack in Mumbai. Indian Hotels Company, EIH, and Hotel Leela Ventures were down by 1.66% to 7.01%.

Sun TV Network surged 14.32% on reports that the promoters bought peace with the Karunanidhi family of the Tamil Nadu state chief minister and DMK patriarch M Karunanidhi.

Sandesh rose 0.21% on a decision to buy back own shares.

Supreme Industries jumped 2.82% snapping three sessions of losses, after the company said its buyback offer will open on 8 December 2008.

Dr Reddys Laboratories surged 4.35% extending gains for the fourth day in a row, after the company launched GlaxoSmithKline's Imitrex tablets in the US market.

US stocks slumped on Monday, 1 December 2008. The Dow Jones Industrial Average 679.95 points or 7.7% to 8,149.09. The S&P 500 index lost 80.03 points or 8.93% at 816.21. The tech laden Nasdaq Composite index plunged 137.50 points or 8.95% at 1,398.07.