Weak Asian stocks weigh on the domestic bourses

Bears were in command as market declined for the second straight day on setback in Asian stocks and caution ahead of the expiry of the near month derivatives contracts. Banking, realty and capital goods led the decline. The BSE Sensex provisionally lost 251.08 points, or 2.53%. India's fourth largest software firm by revenue, Satyam Computer Services, plunged 14.25% on rumours its founder and chairman Ramalinga Raju had resigned from the board.

All the sectoral indices on the BSE were in the red. The market breadth, indicating the overall health of the market, was weak.

Volatility was high. An intraday recovery was witnessed on a number of occasions on expectations of a further rate cut by the central bank and on a likely second government stimulus package for the economy. In its mid-year review of the economy, the finance ministry today, 23 December 2008, said there is a considerable scope for monetary easing over the next six to 12 months and an aggressive monetary policy may be necessary if the global economic turmoil continues to adversely affect manufacturing.

Lower interest rates and the government's fiscal stimulus package for the economy may revive the economy. The Indian economy has slowed down after a strong growth in the past three years. As per the market buzz, the government is likely to come out with a second stimulus for the economy. The first stimulus package announced early this month mainly involved additional government spending and an across-the-board cut in excise duties.

The near month December 2008 derivatives contracts will expire on Wednesday, 24 December 2008, as the markets are closed on Thursday, 25 December 2008, for Christmas.

Asia stock markets retreated for a third straight day on Tuesday, 23 December 2008 on deepening worries about the global economic outlook. The Shanghai Composite fell 4.55% after China's central bank trimmed interest rates by 27 basis points after trading hours on Monday, 22 December 2008, disappointing some investors in a move that was smaller than expected given the aggressive actions by other central banks. Key benchmark indices in Hong Kong, South Korea, Singapore and Taiwan were down by between 1.21% to 2.75%. The Japanese financial markets were closed for a national holiday.

European stocks were mostly higher in early trade on Tuesday, as investors bought banks, which have endured a battering this year, and energy shares. The key benchmark indices in France, Germany and UK were up by between 0.27% to 0.77%.

Trading in US index futures indicated the Dow could rise 21 points at the opening bell. US stocks slid on Monday, 22 December 2008, on more evidence the year-long recession will keep eating into corporate profits, while retailers tumbled on worry the holiday shopping season could be the worst in nearly 40 years. The Dow fell 59.34 points, or 0.69%, to 8,519.77. The S&P 500 index slipped 16.25 points, or 1.83%, to 871.63, and the Nasdaq composite index declined 31.97 points, or 2.04%, to 1,532.35.

Economic and corporate data around the world remains weak. New Zealand's economy contracted by the biggest amount in eight years in the third quarter, reinforcing the case for more central bank rate cuts, data on Tuesday showed. On Monday, figures showed Japanese exports plunging at the fastest annual pace on record in November 2008, while Toyota Motor Corp said it would post its first-ever annual operating loss.

Top US staffing company Manpower on Monday scrapped its profit outlook and No. 1 drug store chain Walgreen Co posted a weaker-than-expected profit and slowed its expansion plans.

As per the provisional figures, the BSE 30-share Sensex was down 251.08 points, or 2.53%, to 9,677.27. At the day's low of 9,643.56, the Sensex fell 284.79 points in mid-afternoon trade. The Sensex fell 89.97 points at the day's high of 9,838.38 hit in early trade.

The S&P CNX Nifty was down 72.15 points, or 2.37%, to 2,967.15 as per the provisional figures.

The BSE clocked a turnover of Rs 3,364 crore, lower than Rs 3,861.10 on 22 December 2008.

The market breadth, indicating the overall health of the market, was weak. On BSE, 735 shares rose as compared with 1,770 that declined. 66 shares remained unchanged.

The BSE Mid-Cap index fell 2.51% while the BSE Small-Cap index dipped 2.51%. Both the indices outperformed Sensex.

Ranbaxy Laboratories, Reliance Infrastructure, Hindustan Unilever, ITC, Grasim Industries fell by between 1.36% to 4.4%.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 1.92% to Rs 1,260 on recent reports it may face pressure from the US to stop selling gasoline to Iran. As per reports, eight American lawmakers have asked the Export-Import Bank of United States (Ex-Im US) to immediately suspend all financial assistance to Reliance Industries (RIL) till it agrees to stop selling gasoline to Iran.

In a letter written to Ex-Im Bank president James Lambright, the American lawmakers stated that RIL is a major supplier of gasoline to Iran which is detrimental to the national security interests of the US and the loan is in direct collision with its foreign policy on Iran.

Oil exploration firms ONGC and Cairn India fell between 1% to 2.68% as crude dropped below $40 a barrel on signs the global economic downturn is further drying up fuel demand. Crude oil for February 2009 delivery fell as much as 61 cents, or 1.5%, to $39.30 a barrel.

Banking stocks fell as the recent rate cuts raised concerns about a fall in net interest margin (NIM). India's largest commercial bank State Bank of India (SBI) fell 0.87%. On Saturday, 20 December 2008, SBI slashed its lending rate by 75 basis points, to be effective from 1 January 2009. The bank also cut its deposit rates by 25 to 100 basis points across maturities. SBI's rate cut raised expectations other banks would follow suit.

India's second largest private sector bank by net profit HDFC Bank slipped 4.39% as its American depository receipt (ADR) fell 4.02% on Monday, 22 December 2008.

India's largest private sector bank by net profit ICICI Bank slashed 4.27% as its American depository receipts (ADR) dipped 3.8% on Monday, 22 December 2008. Its advance tax payment declined 6% to Rs 470 crore in Q3 December 2008 over Q3 December 2007. ICICI Bank said on Friday, 19 December 2008, joint managing director Chanda Kochhar would succeed Chief Executive K.V. Kamath who retires in April 2009. Kamath, chief executive since 1996, will become non-executive chairman from May 2009 replacing N. Vaghul who retires.

India's largest home loan lender by operating income Housing Development Finance Corporation (HDFC) fell 1.32% after it cut its retail lending rates by 50 basis points, effective 22 December 2008. HDFC announced the rate cut after trading hours on Friday, 19 December 2008.

PSU banks Indian Overseas Bank, Union Bank of India, Punjab National Bank, Bank of Baroda fell by between 2.76% to 6%.

Capital goods stocks slipped on worries a slowing economy will crimp orders. Larsen & Toubro , Bharat Heavy Electricals and ABB fell by between 1.74% to 5.73%.

Real estate shares dipped on reports property rates are expected to fall by 20-25% as demand has dropped off sharply over the past 9-10 months due to high interest rates. Indiabulls Real Estate, DLF and Unitech fell by between 4.35% to 7.82%. Fall in property prices is expected to hit the margins of developers already hit by the demand slowdown. Additionally, developers are facing a sever cash crunch that is hindering the execution of ongoing projects and grounding new launches.

Outsourcing firms declined as fears a weak global economy would cut the amount firms spent on technology offset a weaker rupee.

Satyam Computer fell 14.25% on rumours its founder and chairman Ramalinga Raju had resigned from the board. As per unconfirmed reports, Raju has put in his papers and he awaiting the company board's decision on the issue. The company had said on Thursday, 18 December 2008 its board will meet on 29 December 2008 to consider buyback of shares, a move aimed at boosting investor confidence. The stock had slumped 30.22% to Rs 158.05 on Wednesday 17 December 2008 after it called off a deal to buy Maytas Properties and Maytas Infra, the two firms promoted by the family of promoter and chairman Ramalinga Raju, bowing to investor pressure.

India's second largest IT exporter by sales Infosys fell 0.47% even as its ADR rose 2.03% on Monday. Infosys sees the Indian IT industry going through a slow phase of growth for some time, its chief executive said last week. India's largest IT exporter by sales Tata Consultancy Services slipped 2.13%. India's fourth largest IT exporter by sales Wipro fell 0.81% as its ADR slipped 3.58% on Monday.

The Indian rupee eased to its lowest in nearly two weeks on Tuesday, as a wobbly stock market raised concerns about foreign fund withdrawals. The partially convertible rupee was at 48.48/49 per dollar, off a trough of 48.535, its lowest since 12 December 2008 and about 1 % lower than Monday's close of 48.01/03.A weaker rupee augurs well for IT firms which derive a lion's shares of revenue from exports.

India's largest commercial vehicle maker by sales Tata Motors fell 7.5% on reports the company may have to pump in at least $1 billion to revive premium British brands Jaguar and Land Rover that it bought earlier this year.

Hatsun Agro Product rose 1.78% on reports it would double its previously planned ice cream production capacity at its new facility coming up in Salem, Tamil Nadu.

Pyramid Saimira Theatre was locked at lower circuit limit of 10% at Rs 61.15 on reports the market regulator did not issue any advisory to the company's chairman regarding an open offer.