Tata Steel soars in volatile market

Congress party head Sonia Gandhi's statement that India wants peace with all its neighbours helped the market stage a rebound from lower level in mid-afternoon trade. Easier margining norms, hopes of government measures to pump prime the economy and firm Asian stocks supported the domestic bourses. But lower US index futures, weak European stocks and on concerns about the weakening global economy capped gains. The BSE 30-share Sensex was up 8.19 points, or 0.09%, recovering close to 145 points from the day's low.

The market was highly volatile and moved between positive and negative zone throughout the day. After a firm start on easier margining norms and hopes of government measures to pump prime the economy, the market shortly slipped into the red as lower US index futures, paring of gains by Asian markets and global recession worries marred investor sentiment. The market bounced back later as Asian equities regained strength.

But the recovery proved short-lived as tension between India and Pakistan in the aftermath of terror attacks in Mumbai, weak European markets, lower US index futures and concerns about the global economic recession weighed on the market.

The market cut losses later. The Sensex swung 253.40 points between the day's high and low.

The Congress President at an election rally near the ceasefire line with Pakistan today, 3 December 2008, said India wants peaceful relations with all its neighbours, but this should not be taken as a weakness.

Tension between India and Pakistan have mounted after the Mumbai attacks. India has blamed Islamist militants based in Pakistan for the attacks. As per reports, the government is considering various options including a strike on Pakistan to dismantle its terror bases in response to the recent Mumbai terror attacks. The government will discuss the issue of attacking Pakistan with US Sectretary of State Condoleezza Rice who arrived in New Delhi today, 3 December 2008. 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.

The stock market regulator Securities & Exchange Board of India (Sebi), after trading hours on Tuesday, 2 December 2008, extended the facility of cross margining across cash and derivatives segments to all categories of market participants. So far, this benefit had been restricted to institutional trades. The move will lower margin payment for traders, who are holding opposite positions in the cash and futures segment of the same stock. This will come has a big relief to broking firms as cost of working capital has risen sharply in the past few months.

Meanwhile, the government is set to announce a slew of measures at the weekend to pump prime the economy, media reports suggest. The likely measure include cheap credit to exports and low-cost housing as well as making available additional funds worth Rs 50000 crore to the infrastructure sector. There is also possibility of the Reserve Bank of India (RBI) announcing another set of cuts in key policy rates like the cash reserve ratio (CRR), the repo rate and the reverse repo rate.

CRR is the ratio of bank deposits that commercial banks are required to keep with the central bank. 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.

Weak data on euro zone services sector pulled European markets lower. The key benchmark indices in France, Germany and UK were down by between 1.06% to 2.19%.

Euro zone services activity fell further than initially thought in November, to a fresh record low, while inflationary pressures continued to subside, a key survey showed.

Trading in US futures indicated the Dow could fall 141 points at the opening bell. The US index futures were volatile.

But most of the Asian markets were firm. The Nikkei 225 average in Japan was up about 1.79% as a decision by global industrial bellwether General Electric on Tuesday, 2 December 2008, to leave its dividend intact despite the worsening economy, sparked optimism. Key benchmark indices in Singapore, China and Hong Kong were up by between 0.76% to 4.01%. The indices in these four Asian markets were up by between 0.91% to 1.84% earlier. However, Key benchmark indices in Singapore and Taiwan were down by between 0.05% to 1.14%.

The outlook for the global economy continues to weaken, with Australia saying on Wednesday, 3 December 2008, that growth in the last quarter was at its slowest pace in eight years. Corporate profits worldwide are also under threat as consumers cut back spending. US auto makers on Tuesday, 2 December 2008, posted a nearly 37% plunge in monthly sales that brought levels to their lowest in since 1982, reinforcing their plea for a bailout from the US government.

The BSE 30-share Sensex was up 8.19 points, or 0.09%, to 8,747.43. At the day's high of 8,854.81 hit in early trade, the Sensex rose 115.57 points. The Sensex lost 137.83 points at the day's low of 8,601.41 hit in late trade.

The S&P CNX Nifty was down 1.35 points, or 0.05%, to 2,656.45.

The BSE clocked a turnover of Rs 2,948 crore today, higher than Rs 2,603.16 crore on 2 December 2008.

Nifty December 2008 futures were at 2647, at a discount of 9.45 points as compared to the spot closing of 2656.45. Turnover in NSE's futures & options (F&O) segment increased to Rs 33,606.23 crore from Rs 33,471.48 crore on Tuesday, 2 December 2008.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1,180 shares rose as compared with 930 that declined. 78 shares remained unchanged.

The barometer index BSE Sensex is down 11,539.56 points or 56.88% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 12,459.34 points or 58.75% below its all-time high of 21,206.77 struck on 10 January 2008.

As per the provisional figures on BSE, foreign institutional investors (FIIs) sold shares worth Rs 452.11 crore today, 3 December 2008 while domestic funds bought shares worth Rs 366.24 crore.

Sectoral indices on BSE displayed mixed trend. The BSE Metal index (up 3.39% to 4,451.04), the BSE Realty index (up 3.34% to 1,559.69), the BSE Consumer Durables index (up 2.7% to 1,713.68), the BSE Bankex (u 2.5% to 4,547.01), the BSE PSU index (up 1.13% to 4,500.52), the BSE Capital Goods index (up 1.08% to 6,086.58), the BSE Auto index (up 0.85% to 2,173.11), the BSE Power index (up 0.53% to 1,586.05) outperformed the Sensex.

The BSE IT index (down 3.08% to 2,400.09), the BSE Teck index (down 2.16% to 1,918.77), the BSE Oil & Gas index (down 0.56% to 5,367.91), the BSE HealthCare index (down 0.36% to 2,823.25), the BSE FMCG index (down 0.11% to 1,901.60), underperformed the Sensex.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) slipped 0.48% to Rs 1,069.50, off day's high of Rs 1,125, on concerns a global slowdown would hit demand for petrochemicals.

India's largest oil exploration firm by revenue ONGC fell 1.76% as crude oil hovered near record lows. Falling crude oil prices will affect the realization from crude sales.

PSU OMCs were mixed amid fall in oil product sales in October 2008. Indian Oil Corporation and HPCL rose by between 0.17% to 0.32%. BPCL fell 1.13%. 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 rebounded from a three-year low on speculation OPEC will cut production further this month to check the collapse in prices. Crude oil for January delivery rose as much as $1.14, or 2.4 %, to $48.10 a barrel in electronic trading on the New York Mercantile Exchange.

Steel makers rose as sentiments improved after the sector bellwether Tata Steel reported strong consolidated Q2 September 2008 results after trading hours on Tuesday, 2 December 2008. Jindal Steel, JSW Steel, Steel Authority of India, Ispat Industries, Maharashtra Seamless were up by between 1% to 4.56%.

Tata Steel, the world's sixth largest steel maker jumped 10.8% as consolidated net profit soared 215.77% to Rs 4703.64 crore on a 36.17% increase in total income to Rs 44283.34 crore in Q2 September 2008 over Q2 September 2007.

Realty stocks rose on reports the government will next week unveil measures for the realty sector, which may include incentives for low-cost housing and lower loan rates. Indiabulls Real Estate, DLF, Unitech rose by between 0.59% to 5.44%.

Realty firm Parsvnath Developers surged 4.86% on reports it has cut salaries of its employees by up to 20% to prune costs amid a slowdown in the real estate sector.

Banking stocks edged higher on rate cut hopes. India's largest private sector bank by net profit ICICI Bank rose 3.44% as American depository receipt (ADR) gained 7.14% on Tuesday, 2 December 2008. India's largest commercial bank State Bank of India (SBI) jumped 5.5%. However, India's second largest private sector bank by net profit HDFC Bank fell 0.4% as ADR rose 6% on Tuesday.

India's largest home loan lender by operating income HDFC rose 1.62%.

Bank of Baroda gained 2.07% after a block deal of 4.96 lakh shares was executed on NSE at Rs 247 per share.

IT stocks slipped as a stronger rupee offset firm ADRs. India's second largest IT exporter by sales Infosys fell 4.29%, even as ADR rose 3.47% overnight. India's fourth largest IT exporter by sales Wipro fell 4.23% even as ADR rose 3.09%. India's third largest IT exporter by sales Satyam Computer Services slipped 1.27% even as ADR gained 4.49% on Tuesday, 2 December 2008. However, India's largest IT exporter by sales Tata Consultancy Services rose 0.06%.

The Indian rupee was mostly steady in afternoon trade on Wednesday as a choppy share market failed to provide adequate cues on the direction of fund flows while some defence-related dollar demand kept pressure on the currency. The partially convertible rupee was at 49.95/50.00 per dollar, off an early high of 49.75 but still stronger than 50.15/16 at close on Tuesday. A stronger rupee affects IT firms negatively as they earn most of their revenues from exports.

Auto stocks extended losses of the last two trading session on dismal monthly sales figures by most auto firms. India's largest tractor maker by sales Mahindra & Mahindra dipped 2.8% after total vehicle sales (excluding tractors) fell 41% at 10,430 units in November 2008 over November 2007.

India's largest motorbike maker by sales Hero Honda Motors slipped 2.13% as the company expects sales to be under pressure with the festive season over.

However, India's largest commercial vehicle maker by sales Tata Motors rose 3.74% on reports Company aims to raise up to Rs 2700 crore through term deposits to tide over a cash crunch. The company had reported 30% decline in total vehicle sales to 32,696 units in November 2008 over November 2007, after trading hours on Monday, 1 December 2008.

Force Motors was locked at upper limit of 20% at Rs 74.40 on its decision to sell stake in a joint venture.

Power stocks rose on reports the likely government measures to boost the economy may include special credit window for the power sector. Tata Power Company, Reliance Infrastructure, Power Grid Corporation of India jumped by between 0.54% to 3.09%.

Steel makers rose as sentiments improved after the sector bellwether Tata Steel reported strong consolidated Q2 September 2008 results after trading hours on Tuesday, 2 December 2008. Tata Steel, Jindal Steel, JSW Steel, Steel Authority of India, Ispat Industries, Maharashtra Seamless were up by 1.65% to 10.8%.

Tata Steel's consolidated net profit soared 215.77% to Rs 4703.64 crore on a 36.17% increase in total income to Rs 44283.34 crore in Q2 September 2008 over Q2 September 2007.

Meanwhile, reports suggested that domestic steel makers are set to cut prices of hot rolled coils, a base product determining the prices of various downstream products, by around Rs 1,000 - Rs 1,500 a tonne.

Capital goods stocks rose on hopes government efforts to pump prime the economy will boost orders. Larsen & Toubro, Suzlon Energy, Crompton Greaves and Thermax rose by between 1.81% to 2.3%. However India's largest electric equipment maker by sales Bharat Heavy Electricals fell 0.34%.

Consumer durables stocks rose on hopes further rate cuts by the Reserve Bank of India would spur demand which is mainly driven by finance. Videocon Indusries, Rajesh Exports and Titan Industries rose by between 0.04% to 4.27%.

Defense equipment makers rose on expectations that the government will raise defence spending after recent terror attacks in Mumbai. Astra Microwave, Zen Technologies and Bharat Electronics rose by 3.65% to 17.96%.

Infrastructure stocks rose on hopes a likely government package to boost the economy will give thrust to the infrastructure sector. Hindustan Construction Company, Nagarjuna Construction Company, Era Infra Engineering, IVRCL, Infrastructure & Projects, Larsen & Toubro rose by between 0.42% to 9.88%.

Cement stocks were mixed on hopes likely government measures to boost the infrastructure sector will spurt demand. Birla Corporation, UltraTech Cement, and Grasim Industries rose by between 0.03% to 3.94%

India's largest cement maker by sales ACC fell 0.81% even as cement shipments rose 9.5% to 1.73 million tonnes in November 2008 over November 2007. Ambuja Cements, India's third-largest cement maker, fell 0.56% even its shipments rose 8.8% to 1.48 million tones in November 2008 over November 2007.

Kingfisher Airlines galloped 5.74% on reports it has received government nod to operate flights on nine international routes.

Aurobindo Pharma declined 3.66% on reports US drug major Eli Lilly has sued the company for patent infringement on an antidepressant drug.

Indo Tech Transformers rose 8.99% on reports a global power major is set to buy out promoter stake in the company.

Kalindee Rail Nirman Engineers gained 4.31% on bagging an order worth Rs 99.99 crore.