Sensex underperforms its global peers

Doubts as to how much stimulus the already stretched government budget will be able to finance, pulled the market sharply off the higher level in late trade. The BSE 30-share Sensex rose 197.42 points or 2.2%, shedding 269.49 points from the day's high. The Indian market underpeformed its global peers which put up a strong show.

As per the provisional data released by the stock exchanges after trading hours, foreign funds today, 8 December 2008, bought shares worth a net Rs 350.34 crore. Domestic funds dumped stocks worth a net Rs 617.05 crore.

Volatility was high with the Sensex swinging 336.41 points between the day's high and low. After an initial surge triggered by the fiscal stimulus package by the government and rate cut by the central bank, both, announced over the weekend, the market soon cut gains as the fiscal stimulus package fell short of market expectation. The market firmed up again later, with the Sensex surging 466.91 points or 5.20% in mid-afternoon trade, tracking higher US index futures and on a likely firm opening of European markets.

The market cooled off a bit after the solid surge on doubts how much stimulus the already stretched government budget will be able to finance. A sell-off gripped the market in the last one hour of trade.

European indices surged tracking gains in the US market on Friday, 5 December 2008 and in Asia today, 8 December 2008. Key benchmark indices in France, UK and Germany were up by between 4.41% and 6.32%. Asia stock markets rose on Monday, 8 December 2008, with investors taking heart from a rescue plan for US automakers and hopes that the sharp drop in oil prices will ease some of the pain for households facing mounting layoffs. Key benchmark indices in China, Hong Kong, Japan, South Korea, and Taiwan were up by between 3.57% and 8.66%.

White House and congressional negotiators sought on Sunday, 7 December 2008, to resolve remaining differences over an emergency rescue for the struggling US auto industry, a stark symbol of the deepening US economic crisis. Trading in US index futures indicated the Dow could rise 161 points at the opening bell.

Oil jumped $2.44 to $43.25 a barrel, but the plunge to a four-year low near $40 a barrel is providing some relief to the bleak landscape of tightening credit and job losses that are hitting consumers around world.

US stocks jumped on Friday, 5 December 2008 as investors bet that a steep drop in oil prices will boost consumer spending, lifting retail stocks and offsetting government data showing half a million jobs were lost in November 2008. The Dow Jones Industrial Average gained 259.18 points, or 3.09%, to 8,635.42, the Standard & Poor's 500 index climbed 30.85 points, or 3.65%, to 876.07 and the Nasdaq Composite index rose 63.75 points, or 4.41%, to 1,509.31.

Closer home, the Indian government on Sunday, 7 December 2008 unveiled a Rs 30,700-crore fiscal stimulus package mainly comprising additional spending and excise duty cuts aimed at boosting consumption. The stimulus package has Rs 20,000 crore in additional expenditure, an across-the-board 4% excise duty cut amounting to Rs 8,700 crore and benefits worth Rs 2,000 crore for exporters.

The government will also take steps to ensure that already budgeted expenditure of Rs 300000 crore will actually be spent over the next four months of the current fiscal to end-March 2009

However, analysts feel that to make an impact on the economy, a much higher public investment is required. Analysts, meanwhile, expect the fiscal deficit to top 3% of gross domestic product in 2008/09, compared to a budget estimate of 2.5% for 2008/09. State and central government deficit is set to exceed 7% of gross domestic product in 2008/2009.

The BSE 30-share Sensex rose up 197.42 points or 2.2% to 9,162.62. The Sensex opened 311.69 points higher at 9,276.89. At the day's high of 9,432.11, the Sensex gained 466.91 points in mid-afternoon trade. The Sensex rose 130.50 points at the day's low of 9,095.470 in late trade.

The S&P CNX Nifty gained 69.60 points or 2.56% at 2784. Nifty December 2008 futures were at 2788.90, at a premium of 4.90 points as compared to the spot closing. Turnover in NSE's futures & options (F&O) segment surged to Rs 39,051.16 crore from Rs 36,708.86 crore on Friday, 5 December 2008.

The barometer index BSE Sensex is down 11,124.37 points or 54.83% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 12,044.50 points or 56.79% below its all-time high of 21,206.77 struck on 10 January 2008.

The market breadth, indicating the overall health of the market, was positive on BSE with 1379 shares advancing as compared with 1037 that declined. 89 shares remained unchanged.

The BSE Mid-Cap index (down 0.27% to 2,885.03) and the BSE Small-Cap index (up 0.59% to 3,343.20), underperformed the Sensex.

The total turnover on the BSE amounted to Rs 3231 crore as compared to Rs 3,755.84 crore on Friday, 5 December 2008

All sectoral indices on BSE except the BSE Healthcare index, logged gains. The BSE Consumer Durables index (up 2.78% to 1,704.91), the BSE Realty index (up 5.27% to 1,781.37), the BSE Metal index (up 3.05% to 4,781.22), the BSE Teck index (up 2.66% to 1,968.38), outperformed the Sensex.

The BSE Oil & Gas index (up 0.48% to 5,521.59), the BSE IT index (up 1.21% to 2,385.98), the BSE Auto index (up 1.43% to 2,280.48), the BSE HealthCare index (down 0.07% to 2,821.44), the BSE Capital Goods index (up 1.88% to 6,529.39), the BSE Power index (up 2.78% to 1,694.41), the BSE FMCG index (up 0.83% to 1,935.16), the Bankex (up 1.71% to 4,787.85) and the BSE PSU index (up 1.64% to 4,636.03), underperformed the Sensex.

Among the 30-member Sensex pack, 28 advanced while only 2 of them slipped.

Real estate shares rallied after the Reserve Bank of India (RBI) on Saturday, 6 December 2008, announced several measures, including a refinance facility for the National Housing Bank and priority sector status for housing loans up to Rs 20 lakh, to facilitate credit flow into the cash-strapped real estate sector. India's top real estate developer by market capitalisation DLF galloped 9.77% to Rs 223 on high volumes of 76.09 lakh shares and was the top gainer from the Sensex pack.

Unitech (up 6.33% to Rs 32.75), Parsvnath Developers (up 1.26% to Rs 40.20), and Housing Development Infrastructure (up 1.53% to Rs 89.50), rose.

Banking shares vaulted on hopes rate cut will boost lending growth. India's largest private sector bank by net profit ICICI Bank gained 3.19% to Rs 369.90 after its American depository receipt (ADR) jumped 9.65% on Friday, 5 December 2008. The bank on Saturday, 6 December 2008, announced reduction in its home loan rate from 13% to 11.5% for loans of up to Rs 20 lakh. The new rate, however, is applicable for new customers only as there has been no change in the bank's prime lending rate (the interest rate which a bank charges its best borrowers).

India's second largest private sector bank by net profit HDFC Bank rose 1.22% to Rs 899.70 on reports it has applied to the Reserve Bank of India to buy 10% stake in the MMTC-Indiabulls promoted commodity exchange, which is expected to be operational by March 2009.

India's largest state-run bank by net profit State Bank of India advanced 2.15% to Rs 1160.

Housing finance companies advanced after the RBI while announcing reduction in key lending rates on 6 December 2008 also said that the National Housing Bank (NHB) will be being given liquidity support to the extent of Rs 4000 crore to provide liquidity support to housing finance companies (HFC). HDFC (up 5% to Rs 1508.10), LIC Housing Finance (up 4.58% to Rs 221.20), and Dewan Housing Finance (up 10% to Rs 84.50), gained.

The RBI, 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. The RBI also announced steps to improve liquidity and shore up economic activity.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) came sharply off the higher level and ended flat on news of a small fire at Reliance Petroleum's new refinery. The stock settled at Rs 1119, off the day's high of Rs 1175. The fire at the unit was put out and the complex was operating normally, reports suggest. Reliance Petroleum rose 3.45% to Rs 75.

India's largest oil exploration firm by market capitalisation Oil and Natural Gas Corporation rose 0.63% to Rs 659 on reports the sharp fall in global crude prices has not impacted its capital expenditure plan of Rs 18,000 crore earmarked for this fiscal.

Steel shares advanced after government abolished export duty on iron ore. Tata Steel (up 6.26% to Rs 194.25), Steel Authority of India (up 2.94%), and JSW Steel (up 3.99%), jumped.

Steel makers surged as the government's abolishment of export duty on iron ore, a key raw material used in manufacturing steel, will reduce production cost.

India's second largest telecom services provider by sales Reliance Communications surged 4.82% to Rs 206.75 on recent reports the Communications and IT Ministry has decided to refund about Rs 112 crore to the company which it had paid as part of the entry fee at the time of taking the approval for offering dual technology in 2007.

Bharti Airtel (up 5.59% to Rs 702.50), Hindustan Unilever (up 3.07% to Rs 242), and Ranbaxy laboratories (up 2.51% to Rs 214), edged higher from the Sensex pack.

Power generation stocks gained as the government has decided to eliminate the import duty on naphtha used for power generation. Tata Power Company (up 2.72% to Rs 687.10), and NTPC (up 3.26% to Rs 166.50), rose.

Naphtha is used as a fuel in power sector generation. The elimination of import duty will bring down the price of naphtha which would in turn reduce the cost of power generated from naphtha. This will help the power producers to bring down the tariff of power that they sell to transmission companies. Currently, naphtha attracts a customs duty of 5%.

India's top small car maker by sales Maruti Suzuki India rose 1.37% to Rs 497. The stock swung in volatile trade between the day's high of Rs 523.40 and low of Rs 477 in the day. The company has reduced prices of all its models by 4% effective from midnight, 8 December 2008, following reduction in excise duties by the government.

However India's top tractor maker by sales Mahindra & Mahindra slipped 2.85% at Rs 245 after it on Saturday, 6 December 2008 said that it would shut down its five manufacturing plants that produce cars, utility and commercial vehicles for 3-6 days this month, due to easing demand. It was the top loser from the Sensex pack.

Infrastructure shares rallied after the government announced a stimulus plan to shore up the sector. Reliance Infrastructure (up 4.08% to Rs 554.20), Jaiprakash Associates (up 3.32% to Rs 68.55), and GMR Infrastructure (up 4.39% to Rs 60.70), jumped.

IT pivotals, though up, were off early highs on a firmer rupee. India's fourth largest IT exporter by sales Wipro rose 5.13% to Rs 238.80. The stock came off day's high of Rs 244.90.

India's second largest IT exporter by sales Infosys rose 2.23% to Rs 1161. The stock retraced from day's high of Rs 1197.

India's third largest IT exporter by sales Satyam Computer Services climbed up 0.27% to Rs 225. The stock slipped from day's high of Rs 235.

India's largest IT exporter by sales Tata Consultancy Services, too, eased from day's high of Rs 547.80 and settled 0.63% higher at Rs 525

The rupee was trading at 49.25/26 per dollar, higher than its previous close of 49.57/58 on selling of dollar by banks and fresh inflow of funds. A stronger rupee affects operating margins of IT firms negatively as they earn most of their revenues from exports.

Capital goods heavyweights rose on hopes the government's thrust on the infrastructure sector, will boost orders. India's largest power equipment maker by sales Bharat Heavy Electricals gained 1.27% to Rs 1356. India's largest engineering & construction company by sales Larsen & Toubro rose 1.55% to Rs 740.05

The government hopes to precipitate infrastructure projects worth Rs 100,000 crore through faster clearances of public-private partnership projects, and ensure their easier financing by way of a tax break on fund raising by the India Infrastructure Finance Company, a specialist lender to the infrastructure sector.

Cement shares gained after the government on Sunday, 7 December 2008 on cut in excise duty. Ambuja Cements (up 7.11% to Rs 58), Grasim Industries (up 1.61% to Rs 955), ACC (up 1.38% to Rs 434.25), and UltraTech Cement (up 2.81% to Rs 298.20), advanced. The government has cut the ad valorem component of the excise duty cement from 12 to 8%. As per reports, cement prices may come down by Rs 8 - Rs 10 per 50 kilogram bag after the cut in duty.

State-run oil marketing companies (OMCs) slipped as reduction in retail fuel prices will bring down sales realization. HPCL (down 0.25% to Rs 223.65), BPCL (down 4.52% to Rs 325), and IOC (down 0.65% to Rs 381.50), declined.

The price cut came into effect from midnight on Friday and would lead to a revenue loss of Rs 6,000 crore to the state-run oil marketing companies (OMCs) in the current fiscal.

Reliance Industries was the top traded counter on BSE with turnover of Rs 282.50 crore followed by DLF (Rs 167 crore), SBI (Rs 157 crore), Tata Steel (Rs 149.40 crore) and ICICI Bank (Rs 133.25 crore).

Unitech led the volumes chart on BSE clocking volumes of 2.40 crore shares followed by Suzlon (1.30 crore), GVK Power Infrastructure (1.11 crore), DLF (76.20 lakh) and Tata Steel (76 lakh).

Karuturi Global rose 4.57% to Rs 11.68 on bagging an export order for supply 50 million roses from Edeka, one of the largest super market network in Germany, for an undisclosed sum. The company announced the order win during trading hours today, 8 December 2008.

Khaitan Weaving Mills gained 4.42% to Rs 157 after the board approved a 10-for-1 stock split at a meeting held on 6 December 2008

Indo Tech Transformer rose 2.62% at Rs 284.05 after a Mexican firm made an open offer to acquire 21.24 lakh shares at Rs 406 a share, a 41.22% premium over the ruling market price. The open offer was triggered by Indo Tech's promoters inking an agreement to sell 54.35% stake to Mexican Prolec GE International. The offer will open on 29 January 2009 and close on 17 February 2009.

Deccan Chronicle Holdings soared 4.70% to Rs 45.65 after it said its board will meet on 16 December 2008 to consider buyback of shares. The company made the announcement after market hours today, 8 December 2008.

Around the world, policymakers kept up their efforts to try and revive their economies. US President-elect Barack Obama said over the weekend that he plans the biggest increase in infrastructure investment since the 1950s with the goal of creating at least 2.5 million jobs. Chinese economic leaders are reportedly meeting this week on measures to keep growth above 8%.

Indian stock market remains closed tomorrow, 9 December 2008 on account of Bakri-Id.