Market extends losses fall for the third day as heavyweights slide; Satyam recovers

Key benchmark indices, remained in negative zone throughout the day, extending losses for the third straight day on sustained selling in index pivotals. The BSE 30-share Sensex lost 296.42 points or 3.15% to 9,110.05. Concerns about corporate governance standards at Indian firms and weak global markets dampened investor sentiment offset an improved industrial production data.

Worries over the corporate governance standards at Indian firms continued to weigh on the market sentiment after last week' shocking accounting scam at IT major Satyam Computer Services. Satyam's promoter and chairman B Ramalinga Raju resigned on 7 January 2009 saying that he had fudged accounts of the firm. The accounting scandal at Satyam is estimated at over Rs 7,000 crore

Concerns that the Satyam scandal could trigger tighter regulations, also weighed on the market. In a significant decision, the Securities and Exchange Board of India (Sebi) has decided to set up a panel to review all records maintained by auditors on the quarterly results of companies which are a part of the 30-Sensex and the 50-share S&P CNX Nifty. The review will be taken up after the third quarter results (to be announced shortly) and the audited results for the year ended March 2008. The review will also cover some other companies outside the Sensex and Nifty list.

The auditor's main job is to check whether detailed processes have been followed by the company concerned and whether they are fair and accurate. Auditors maintain these papers as a matter of record. Also, if they have reservations about the truth of the numbers, they write to the audit committee and the board before they are carried in the annual reports. The Sebi panel will review all these papers.

Shares of Wipro, India's third largest software services exporter in terms of sales, tumbled 10.63% after the company said it was barred from bidding for contracts from the World Bank until 2011 after it offered employees of the institution shares in its initial public offering. The company made the announcement during trading hours today, 12 January 2009

The broad market was volatile. After an initial 3.29% slide triggered by weak global stocks, the market staged a strong recovery in early afternoon trade. The recovery gathered steam on a better-than-expected industrial production data which hit the market at about 12:00 IST. The recovery proved short-lived and the market weakened again. The market extended losses in mid-afternoon trade on weakness in banking shares and on lower European markets. After a steep slide, the market came off lower level in late trade.

European markets were mostly in the red today, 12 January 2009 amid growing economic concerns in the wake of bleak US jobs data that triggered a sell-off on Wall Street on Friday, 9 January 2009. Key benchmark indices in Germany and France were down by 0.24% and 0.18% respectively. However UK's FTSE 100 rose 0.21%.

Asian markets were weak today, 12 January 2009 as a relentless global economic slowdown renewed investor caution about taking on risk. Key benchmark indices in Taiwan, Hong Kong, China, Singapore, South Korea were down by between 0.24% and 2.83%. Japan's markets were closed for a public holiday.

US stocks fell on Friday, 9 January 2009, after government data showed the labor market deteriorated further in December 2008, raising investor concerns about the outlook for profits, spending and a deepening recession. The Dow Jones industrial average lost 143.28 points or 1.64% to 8,599.18. The Standard & Poor's 500 Index slid 19.38 points or 2.13% to 890.35. The Nasdaq Composite Index fell 45.42 points or 2.81% to 1,571.59.

US payrolls report for December 2008 showed more than half a million jobs were lost in the world's biggest economy. The data also showed unemployment rate in the US was highest since 1993.

The BSE 30-share Sensex lost 296.42 points or 3.15% to 9,110.05. The Sensex opened 99.73 points lower at 9,306.74. The Sensex lost 382.02 points at day's low of 9,024.45 in mid-afternoon trade. At the day's high of 9,327.30, the Sensex fell 79.17 points in early trade.

The S&P CNX Nifty lost 99.90 points or 3.48% at 2,773.10. Nifty January 2009 futures were at 2748.15, at a discount of 24.95 points as compared to the spot closing.

The BSE Sensex has lost 1225.88 points or 11.86% in the last three trading sessions hit by the Satyam scandal. Before the sharp slide, the Sensex had risen 1,007.01 points or 10.79% to 10,335.93 on 6 January 2009 from a recent low of 9,328.92 on 26 December 2008.

The market breadth, indicating the overall health of the market, was weak on BSE with 1612 shares declining as compared with 834 that advanced. 89 shares remained unchanged.

The BSE Mid-Cap index slipped 2.27% at 3,050.01 and the BSE Small-Cap index fell 1.7% at 3,495.25. Both these indices outperformed the Sensex.

The total turnover on BSE amounted to Rs 3,203 crore as compared to Rs 4,207.30 crore on Friday, 9 January 2009. Turnover in NSE's futures & options (F&O) segment was Rs 44,953.49 crore, lower than Rs 47,709.01 crore on Friday, 9 January 2009.

All BSE sectoral indices edged lower. The BSE Metal index (down 5.62%), the BSE Realty index (down 4.87%), the BSE Capital Goods index (down 3.63%), the BSE IT index (down 3.80%), the BSE Oil & Gas index (down 3.28%), %), the BSE PSU index (down 3.50%), the BSE Power index (down 3.67%), the BSE Bankex (down 3.62%), underperformed the Sensex.

The BSE Consumer Durables index (down 1.18%), the BSE FMCG index (up 1.32%), the BSE Auto index (up 1%), the BSE HealthCare index (down 1.01), the BSE Teck index (down 3.09%) outperformed the Sensex.

Among the 30-member Sensex pack, 28 declined while only 2 of them managed to post gains.

India's fourth largest IT exporter by sales Satyam Computer Services galloped 44.66% to Rs 34.55 on hopes a newly constituted three-member board, appointed by the government, would help salvage the company's clients and staff. The centre on Sunday, 11 January 2009, appointed a three-man board in a bid to restore confidence in the outsourcing company rocked by the India's biggest corporate scandal.

The newly constituted three-member board began a meeting on Monday in Hyderabad to lay out a roadmap for clients and staff. The three members appointed on the Satyam's board are Deepak Parekh, chairman of Housing Development Finance Corporation, Kiran Karnik, former president of the National Association of Software and Service Companies, a technology lobbying group, and C Achutan, a former official at the Securities and Exchange Board of India (Sebi).

The Satyam stock had lost 86.68% in two trading sessions to Rs 23.85 on 9 January 2009 from Rs 179.10 on 6 January 2009 after Raju admitted of committing an accounting fraud during market hours on Wednesday, 7 January 2009.

Meanwhile, the National Stock Exchange (NSE) today said the Satyam Computer Services will be removed from the futures & options segment once all existing contracts expire on 29 January 2009. All existing contracts with expiry dates 29 January 2009, 26 February 2009 and 26 March 2009 will expire on 29 January 2009, the NSE said.

India's third largest IT exporter by sales Wipro tumbled 10.63% to Rs 224 after the company said it was barred from bidding for contracts from the World Bank until 2011 after it offered employees of the institution shares in its initial public offering (IPO). It was the top loser from the Sensex pack.

The company in a release to exchanges said it had offered a commonly utilised and Securities and Exchange Commission (SEC)-approved direct share programme (DSP) in 2000 that allowed employees and clients to purchase American Depository Shares at the IPO market price. Under the programme, Wipro representatives offered the World Bank, through its chief information officer and a senior staff, participation in the programme and they directed this offer to members of their family and friends, Wipro said. The aggregate number of shares purchased by them was 1,750 for approximately $72,000 at the IPO price, it said. All participants in the programme signed a conflict of interest statement that their purchase did not violate any ethics or conflict of interest of their company.

The programme's objective was to involve employees and customers with the public offering to expand the company's recognition and brand, Wipro said

Wipro said its revenues from World Bank were insignificant and the decision would not affect its business and results. It said the announcement was being made now under revised disclosure policies.

India's second largest software exporter by sales Infosys Technologies fell 3.36% to Rs 1155 on caution ahead of its Q3 December 2008 earnings on Tuesday, 13 January 2009. A section of the market expects Infosys to lower its revenue guidance in dollar terms for the year ending March 2009 due to cross currency headwinds.

India's largest IT exporter by sales Tata Consultancy Services shed 5.70% to Rs 505.10 as fears a weak global economy would cut the amount firms spent on technology offset a weaker rupee.

The Indian rupee fell to 48.74/75 a dollar from 48.28/29 on Friday, 9 January 2009 on weak Asian markets. A weak rupee benefits IT firms as the sector earns most of its revenues from exports.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) slumped 4.52% to Rs 1099, on worries the recent steep fall in crude oil prices would dent refining margins of the firm.

India's largest oil exploration firm by market capitalisation Oil & Natural Gas Corporation (ONGC) slipped 3.06% to Rs 650, on further fall in global crude oil prices. US light crude for February 2009 delivery fell 32 cents to $40.51 as a big increase in US unemployment renewed worries about energy demand in the world's largest consumer. The price has declined sharply from a record high of $147 a barrel in mid-2008.

State run oil marketing companies fell after Petroleum Minister Murli Deora had said in Mumbai on Saturday, 10 January 2009 that petrol, diesel and LPG (cooking gas) prices could be reduced by Rs 5 a litre, Rs 3 a litre and Rs 25 a cylinder, respectively. HPCL (down 3.37%), BPCL (down 5.46%), and IOC (down 3.75%) declined.

Banking stocks extended early losses on worries of rising bad loans in a slowing economy. India's largest private sector bank by net profit ICICI Bank fell 2.69% to Rs 442.60. India's second largest private sector bank by net profit HDFC Bank declined 0.69% to Rs 1005.30.

India's biggest bank in terms of total assets and branch network, State Bank of India slipped 4.15% to Rs 1165.40. after its chairman O.P. Bhatt today said the bank has an exposure of about Rs 500 crore to firms with the Maytas tag. Maytas Infra and Maytas Properties are owned by the family of Satyam's Raju.

Bhatt said that the exposure was fully collateralised with no problem as of now. He said the bank was reviewing the exposure.

Metal shares slipped on fall in commodity prices on the London Metal Exchange. India's top copper producer by sales Sterlite Industries slipped 4.43% to Rs 261 after its ADR plunged 8.11% on Friday, 9 January 2009.

Tata Steel (down 6.95% to Rs 199.60), and Hindalco Industries (down 4.94% to Rs 50), edged lower

India's largest engineering & construction company by sales Larsen & Toubro was down 3.24% to Rs 696.75, extending a sharp fall in the previous two trading sessions, as it will make huge losses on shares of Satyam it bought before the scandal. L&T had bought shares in Satyam earlier this month and holds 3.95% stake in the company, L&T chairman A M Naik said in a television interview on Friday, 9 January 2009. The company, which has a small outsourcing unit, had made the investment in Satyam in the hope of forming a strategic alliance, he said.

India's top pharma company by market capitalisation Sun Pharmaceuticals Industries rose 2.20% to Rs 1125 as index fund portfolio managers shuffled their positions after it replaced Satyam Computer Services in the 30-member Sensex pack from today, 12 January 2009. It was the top gainer from the Sensex pack.

The Satyam accounting scandal continued to weigh on realty and infrastructure shares on market perception that a number of realty and infrastructure firms do not strictly follow good corporate governance practices. Reliance Infrastructure (down 7.35%) and GVK Power Infrastructure (down 6.62%), IVRCL Infrastructure (down 2.82%) declined.

Among realty firms, DLF (down 4.64%), Housing Development & Infrastructure (down 4.53%), Indiabulls Real Estate (down 9.18%), and Unitech (down 6.13%), edged lower.

India`s biggest small carmaker by sales Maruti Suzuki India fell 1.45% to Rs 575.50, off day's high of Rs 594.70. The company reportedly said it had no plans to cut production and would continue with its expansion plans despite of slowing economy and adverse market conditions. The company had earlier announced plans to expand its production capacity of its Manesar plant in Haryana to 3 lakh units by end-January 2009.

India's top truck maker by sales Tata Motors fell 0.46% to Rs 162.50, off day's high of Rs 167.70, on reports, the company is seeking about 1 billion pound help from the British government to overcome a financial crunch facing the prized acquisitions Jaguar and Land Rover.

Telecom stocks slipped on concerns of tighter profit margins due to stronger competition following a nationwide rollover of the GSM-based cellular services by Reliance Communication (RCom), India's second largest telecom services provider by sales, recently. RCom fell 3.83% to Rs 179.50. India's largest telecom services provider by sales Bharti Airtel slipped 2.22% to Rs 623.

Reliance Industries was the top traded counter on BSE with turnover of Rs 238.50 crore followed by State Bank of India (Rs 211.50 crore), Satyam Computer Services (Rs 191 crore), Reliance Capital (Rs 173.70 crore) and DLF (Rs 163 crore).

Satyam Computer Services led the volume toppers on BSE with volumes of 5.30 crore shares followed by Reliance Natural Resources (1.85 crore), Unitech (1.74 crore), Suzlon Energy (1.40 crore) and DLF (78.70 lakh).