Sensex down nearly 3% on weak economic data

Weak European markets, fall in US index futures and dismal economic data which added to the concerns about the weakening domestic and global economy pulled the domestic bourses to intraday low in late trade. The BSE 30-share Sensex lost 252.85 points, or 2.78%, shedding 486.81 points from the day's high. The market reversed earlier strong gains in the second half of the trading session.

Volatility was high. After an initial surge triggered by a reshuffle of key government posts on Sunday, 30 November 2008, the market pared gains in mid-morning trade as a survey showed fall in India's manufacturing output in the month just gone by. The market firmed up again in early afternoon trade but it shortly pared gains. From that low, the market once again firm up in afternoon trade.

Data showing fall in exports in October 2008, weak European markets and a further fall in US index futures pulled the domestic bourses lower in mid-afternoon trade. The Sensex swung 523.34 points between the day's high and low.

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 hit the market at about 14:20 IST.

Meanwhile, 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.

Trading in US index futures indicated the Dow could fall 158 points at the opening bell on grim manufacturing figures from China. China's manufacturing industry slumped in November 2008 as new orders, especially from abroad, tumbled in the face of deepening economic gloom and financial uncertainty, two separate surveys on Monday, 1 December 2008, showed.

Asian markets were mixed. Japan's Nikkei average fell 1.35% as global recession fears prompted investors to book profits after last week's rally, with exporters such as Toyota Motor Corp slipping on a firmer yen. Key benchmark indices in South korea and Singapore were down by between 1.58% to 1.62%. But key benchmark indices in China, Hong Kong and Taiwan were up by between 1.25% to 1.59%.

European shares extended losses on Monday, 1 December 2008, after a strong rally last week, with banks and miners falling on lower prices. Key benchmark indices in France, Germany and UK were down by between 2.29% to 2.82%.

Closer home, Prime Minister (PM) Dr Manmohan Singh took charge of the finance portfolio after P Chidambaram was named the home minister on Sunday, 30 November 2008, to replace Shivraj Patil, who resigned over the Mumbai terror attacks. Singh was the architect of India's economic reforms in the 1990s.

The PM, the architect of early 1990s economic reforms, holding additional charge of the finance ministry will also be perceived as a positive sign by the stock markets in terms of ensuring continuity and signaling a pro-reform image even though just a few months are left as parliamentary elections must be held before May 2009.

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. There has been criticism in recent weeks that a series of policy measures of the RBI were being driven by the finance ministry with Chidambaram in charge of the ministry. But now with the Prime Minister himself a former RBI governor, holding additional charge of the finance ministry, the prospects of the governor coming into his own are far greater.

Meanwhile, the National Security Guard (NSG) on Saturday, 29 November 2008, took control over Taj Hotel at the Gateway of India, in Mumbai, ending a nearly 60-hour operation to flush out terrorists.

The BSE 30-share Sensex was down 252.85 points, or 2.78%, to 8.839.87. At the day's high of 9,326.68 hit in mid-morning trade, the Sensex gained 233.96 points. The Sensex fell 289.38 points at the day's low of 8,803.34 hit in late trade.

The S&P CNX Nifty was fell 72.20 points, or 2.62%, to 2,682.90.

The BSE clocked a turnover of Rs 2,914 crore today as compared to a turnover of Rs 2,396.44 crore on Friday, 28 November 2008.

Nifty December 2008 futures were at 2680, at a discount of 2.90 points as compared to the spot closing of 2682.90. Turnover in NSE's futures & options (F&O) segment was Rs 32,155.44 crore, lower than Rs 44,951.66 crore on Friday, 28 November 2008.

The barometer index BSE Sensex is down 11,447.12 points or 56.42% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 12,366.90 points or 58.31% below its all-time high of 21,206.77 struck on 10 January 2008.

The market breadth, indicating the overall health of the market, turned negative from the strong breadth earlier in the day. On BSE, 970 shares rose as compared with 1,160 that declined. 65 shares remained unchanged.

Among the 30-member Sensex pack, 24 stocks fell while the rest rose.

As per the provisional figures on BSE, foreign institutional investors (FIIs) bought shares worth Rs 28.64 crore today,1 December 2008 and domestic funds bought shares worth Rs 49.19 crore.

Sectoral indices on BSE displayed mixed trend. The BSE Realty index (down 5.34% to 1,477.65), the BSE Auto index (down 4.64% to 2,222.33), the BSE Consumer Durables index (down 4.47% to 1,713.39), the Bankex (down 3.87% to 4,465.82), the BSE Capital Goods index (down 3.79% to 6,145.41), the BSE Power index (down 3.78% to 1,570.06) underperformed the Sensex.

The BSE Metal index (down 0.72% to 4,351.87), the BSE IT index (down 0.99% to 2,533.69), the BSE Teck index (down 1.4% to 1,973.70), the BSE Oil & Gas index (down 1.51% to 5,533.37), the BSE HealthCare index (down 1.65% to 2,840.24), the BSE PSU index (down 2% to 4,494.24),the BSE FMCG index (down 2.71% to 1,884.09) outperformed the Sensex.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 1.99% to Rs 1,109.05 on concerns a global slowdown would hit demand for petrochemicals. The stock came off day's high of Rs 1,176.80.

India's largest copper maker by sales Sterlite Industries India rose 0.74% after a block deal of three lakh shares was executed on BSE at Rs 243.70 a share.

Auto stocks fell a weak outlook for the sector. Maruti Suzuki India extended losses falling 9.4% on 24.4% fall in vehicle sales to 52,711 units in November 2008 over November 2007.

India's largest commercial vehicle maker by sales Tata Motors fell 2.64% on plan to raise deposits from public. Tata Motors will pay as much as 11% annual interest on deposits held for three years, the company said today in a newspaper advertisement.

Mahindra & Mahindra, Hero Honda Motor fell by between 3.37% to 5.69%. India's largest scooter maker by sales Bajaj Auto lost 4.33% as the total vehicle sales fell 32% to 1,59,747 units in November 2008 over November 2007.

High interest rates and sluggish consumer spending have dented demand for automobiles, including for trucks, motorcycles and scooters.

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, Omaxe slipped by between 1.99% to 9.96%.

Banking stocks slipped after early gains as worries of rising defaults offset hopes of a further cut in interest rates by the RBI. India's largest commercial bank State Bank of India (SBI) fell 2.84% to Rs 1,055.95 off the day's high of Rs 1,125.85. India's largest private sector bank by net profit ICICI Bank fell 7.21% to Rs 326.05, off the day's high of Rs 364.50. The ICICI Bank American depository receipt (ADR) gained 7.8% on Friday, 28 November 2008.

India's second largest private sector bank by net profit HDFC Bank fell 2.29% even as ADR added 5.54% on Friday.

India Infoline rose 2.65% on a decision to buyback own shares at a price not exceeding Rs 43.20 a share, a 17.23% premium to the ruling market price

IT stocks slipped on US recession worries offset a weaker rupee and rise in ADRs on Friday, 28 November 2008. India's third largest IT exporter by sales Satyam Computer Services fell 2.94% even as its American depository receipt (ADR) rose 0.87% on Friday.

India's second largest IT exporter by sales Infosys slipped 0.59% even as ADR gained 3.46%. India's fourth largest IT exporter by sales Wipro fell 3.9% even as ADR rose 1.2%. However, India's largest IT exporter by sales Tata Consultancy Services rose 1.06%.

The Indian rupee weakened in afternoon trade on Monday as sharp losses in the share market raised concerns of further capital outflows, but likely central bank intervention prevented a further fall. The partially convertible rupee was at 50.33/36 per dollar, 0.5% weaker than Friday's close of 50.09/12. It had hit record low of 50.60 on Nov. 20..A weaker rupee augurs well for the sector as IT firms earn most of their revenues from exports.

Cement stocks were mixed on reports cement manufacturers have urged the government to rationalise the tax structure for the industry to help achieve a strong economic growth. ACC, Ultratech Cement, Birla Corporation of India fell by between 0.15% to 1.24%. Ambuja Cements and Grasim Industries rose by between 0.48% to 175%.

Metal stocks declined on worries a weakening domestic and global economy will hit demand. Hindalco Industries, Steel Authority of India fell by between 1.73% to 4.27%.

But India's largest steel maker by sales Tata Steel rose 1.69% on reports the domestic steel industry is all set to get more help from the government. The centre, which already imposed import restrictions on a number of steel products, has now initiated anti-dumping investigations on imports of a wide range of stainless steel and steel items from countries including China, Japan, South Korea, the US and the EU.

Capital goods stocks fell on worries a slowing economy will crimp orders. Bharat Heavy Electricals, Larsen & Toubro and Suzlon Energy fell by between 3.22% to 6.71%.

Airline stocks were mixed after state-run oil companies on Saturday, 29 November 2008, again cut Aviation Turbine Fuel (ATF) prices by Rs 2,480 per kilolitre, effective 1 December 2008. Jet Airways fell by 1.24%, Kingfisher Airlines was flat at Rs 27.50, and SpiceJet rose by 0.65%. Fall in ATF prices would improve the bottomline of airliners as jet fuel forms more than 50% of the operating cost.

Hospitality shares were mixed after the two main hotels -- Taj Mahal Hotel and Oberoi-Trident in Mumbai were hit by the last week's terror attacks. Indian Hotels Company, which operates the Taj group of hotels, fell 0.62% whereas EIH, which operators the Oberio group of hotels, rose 2.05%.

Unitech clocked the highest volume of 2.51 crore shares on BSE. Suzlon Energy (94.07 lakh shares), GVK Power & Infrastructure (92.55 lakh shares), Reliance Natural Resources (63.96 lakh shares) and ITC (56.21 lakh shares) were the other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 265.01 crore on BSE. State Bank of India (Rs 204.92 crore), Educomp Solutions (Rs 165.18 crore), Reliaence Capital (Rs 129.39 crore) and ICICI Bank (Rs 114.98 crore) were the other turnover toppers in that order.

Rajshree Sugars & Chemicals rose 1.21% on reports New York-based Bunge is in talks with the company to pick up a substantial stake.

Zicom Electronic Security Systems was locked at upper limit of 5% at Rs 49.20 on BSE on hopes the recent terror attack in Mumbai may boost demand for security products across India.

Arvind soared 1.65% after its board approved demerging its brands and retail business divisions into separate units.

Astra Microwave Products surged 4.4% on BSE, on bagging an order worth Rs 57.31 crore.