RIL, bank shares lead 2.5% Sensex fall

Fears that the global financial sector crisis would trigger more foreign fund outflows pulled the market lower in choppy trade. Record loses at British bank Royal Bank of Scotland helped revive concerns about the global banking sector. The BSE 30-share Sensex was down 229.02 points, or 2.45%. The market was in the red throughout the day today, 20 January 2009.

Volatility in US index futures caused volatility on the domestic bourses. US index futures though in the red witnessed recovery from lower level at least twice during trading hours in India.

The Indian market opened on a weak note on concerns that increasing woes in the global financial sector will deepen the world's economic downturn. It cut losses in early afternoon trade on recovery in US index futures and recovery in some Asian stocks. The intraday recovery proved short-lived and the market weakened in afternoon trade as US index futures tumbled again.

Gains in European shares and recovery in US index futures from lower level triggered recovery on the domestic bourses in mid-afternoon trade. A sharp slide was witnessed at about 15:00 IST. The market cut losses at the fag end of the trading session.

The market sentiment was edgy due to selling by foreign funds. Foreign funds have sold shares worth a net Rs 2644.40 crore this month, till 19 January 2009.

European stocks fell after early gains on weakness in commodity stocks. Key benchmark indices in France, Germany and UK were down by between 0.04% to 0.93%.

Some Asian stocks cut losses triggered by record losses at British bank Royal Bank of Scotland. In China, the Shanghai Composite Index moved into green from red. It was now up 0.37%. Hong Kong's Hang Seng was down 2.85%, recovering from a more than 3% slide earlier. Key benchmark indices in Japan, South Korea, Singapore, Taiwan were down by between 1.35% to 2.85%.

Record loses at British bank Royal Bank of Scotland helped revive concerns about the global banking sector. Royal Bank of Scotland on Monday, 19 January 2009, unveiled the biggest loss in UK corporate history. On the same day, the UK government launched a second bank rescue plan. The plan, however, failed to restore confidence in the wobbly financial sector. Royal Bank of Scotland said on Monday it was on course to report a 2008 loss of up to 28 billion pounds ($40.45 billion), leading the UK government to increase its stake in the lender to nearly 70%.

Trading in US index futures indicated that the Dow could fall 82 points at the opening bell on Tuesday. Barack Obama will be sworn in as the new US president later in the day, and his administration is expected to quickly roll out a hefty stimulus package and a revived plan to buy bad bank assets. US markets were closed on Monday for the Martin Luther King, Jr. Day holiday.

Governments worldwide are grappling with how to get their banks lending again to revive economies, despite already injecting billions of dollars and implementing other measures such as backing some of their debt. Central banks have also cut interest rates sharply in a bid to spark growth, but even that has failed to comfort investors.

The BSE 30-share Sensex was down 229.02 points, or 2.45%, to 9,100.55. The Sensex fell 169.81 points at day's high of 9,159.76 in early trade. The Sensex lost 296.02 points at the day's low of 9,033.55 in mid-morning trade.

The S&P CNX Nifty fell 49.60 points, or 1.74%, to 2,796.60.

The market breadth, indicating the overall health of the market, was weak on BSE with 1,044 shares advancing as compared with 1,371 that declined. 61 shares remained unchanged.

The BSE clocked a turnover of Rs 2,748 crore today higher than Rs 2,612.82 crore on Monday, 19 January 2009.

Nifty January 2009 futures were at 2769.45, at a discount of 27.15 points as compared to the spot closing of 2796.60. Turnover in NSE's futures & options (F&O) segment surged to Rs 35,511.58 crore from Rs 26,461.81 crore on Monday, 19 January 2009.

The BSE Metal index (down 3.76%), the BSE Realty index (down 3.31%), the BSE Bankex (down 3.11%), the BSE Oil & Gas index (down 2.6%), the BSE Auto index (down 2.58%), the BSE Teck index (down 2.47%), underperformed the Sensex.

The BSE Power index (up 1.44%), the BSE PSU index (up 0.33%), the BSE FMCG index (down 0.64%), the BSE HealthCare index (down 0.94%), the BSE IT index (down 1.04%), the BSE Consumer Durables index (down 1.28%), the BSE Capital Goods index (down 1.99%) outperformed the Sensex.

The BSE Sensex has lost 546.76 points or 5.66% so far in 2009 from its close of 9647.31 on 31 December 2008. The barometer index had lost 10639.68 points or 52.44% in the calendar year 2008

From the 30 stocks from the Sensex pack, 27 stocks rose while rest fell. Bharti Airtel, Jaiprakash Associates, ACC, HDFC, Reliance Communications fell by between 3.37% to 4.86%.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 3.84% after Anil Dhirubai Ambani group (ADAG) firm Reliance Natural Resources (RNRL) on Monday, 19 January 2009, asked the Bombay High Court (HC) not to lift the stay on the sale of gas from Reliance Industries (RIL)'s block in the Krishna-Godavari basin.

In May 2007, the Bombay HC in an interim order had asked RIL not to create third-party interest for 40 mscmd (million standard cubic metres per day) of gas from the KG basin committed to NTPC and RNRL under their respective agreements with RIL. Both the companies are seeking gas from RIL at $2.34 per mBtu and fighting a legal battle with RIL at the Bombay HC. The government approved price for the gas is $4.20 per mbtu.

Profit taking also weighted on the RIL counter after the stock gained 7.54% in last two days to Rs 1,229.65 on Monday,19 January 2009 from Rs 1,143.35 on Thursday, 15 January 2009 after the company during trading hours on 15 January 2009 said its unit Reliance Petroleum (RPL) will start fuel exports from its new refinery this month. RPL, last month, commissioned its 5,80,000-barrels-per-day only for exports refinery at Jamnagar in Gujarat.

India's largest oil exploration firm by revenue ONGC fell 1.12% as crude oil prices fell. But lower oil prices boosted PSU OMCs. HPCL, BPCL and Indian Oil Corporation rose by between 1.15% to 2.48%. Lower oil prices will reduce losses of the state-run oil firms on domestic sale of LPG and kerosene at a controlled price. The oil marketing firms are making profit on sale of petrol and diesel thanks to a sharp slide in oil prices from a record high of $147 a barrel struck in July 2008.

Oil fell about $3 a barrel as more gloomy economic news emerged and gas supplies resumed from Russia.

Mangalore Refinery and Petrochemicals fell 4.68% after it posted a net loss of Rs 285.41 crore in Q3 December 2008 compared to a net profit of Rs 346.6 crore in Q3 December 2007.

Some healthcare stocks rose on defensive buying. Aventis Pharma, Lupin, Dr Reddy's Laboratories, Fortis Healthare rose by between 0.63% to 3.26%.

Power stocks gained in late trade after the Central Electricity Regulatory Commission (CERC) raised the return on equity for power units to 15.5% from existing 14%. Power Grid Corporation of India, Torrent Power, NTPC, CESC, Reliance Power, Tata Power Company, Reliance Infrastructure rose by between 0.84% to 10.73%.

The CERC said that the new RoE would be applicable for the period from 2009 to 2014. The RoE for projects completed on schedule is at 16%, a CERC statement said.

Rate sensitive realty stocks fell on reports falling interest rates have failed to revive housing demand. DLF, Unitech and Indiabulls Real Estate fell by between 2.95% to 4.9%.

Metal stocks declined on fall in metal prices on the London Metal Exchange. Hindalco Industries, Steel Authority of India, National Aluminum Company, Sterlite Industries fell by between 1.47% to 4.75%.

India's largest steel maker by sales Tata Steel tumbled 6.34% after its Thailand-based unit reported its biggest quarterly loss since 2003.

Bank stocks fell on weak sentiment for bank shares globally as record losses reported by British bank Royal Bank of Scotland fueled concerns among investors that the industry crisis is deepening. India's largest bank in terms of assets and branch network State Bank of India fell 3.06%. India's second largest private sector bank by net profit HDFC Bank slipped 2.99%. India's largest private sector bank by net profit ICICI Bank fell 3.81%.

Outsourcing focussed IT firms fell as fears a weak global economy would cut the amount firms spent on technology. India's third largest software services exporter, Wipro fell 1.75%. The company will announce its Q3 December 2008 earnings on Wednesday, 21 January 2009.

India's second largest software services exporter Infosys Technologies fell 0.81%. India's fifth largest IT exporter by sales HCL Technologies fell 3.93%.

TCS, India's largest software services exporter by sales fell 0.92% to Rs 496.10 even as the company said it had signed a multi-million dollar, multi-year deal with Ducati Motor Holding to deliver technology-based services to the Italian bikemaker and its subsidiaries in Europe. TCS had reported a lower-than-expected rise in net profit in Q3 December 2008 with the management cautioning about the tough business environment at the time of declaring results after market hours on Thursday, 15 January 2008.

India's fourth largest software services exporter Satyam Computer Services rose 5.5% to Rs 26.85 off the day's low of Rs 23.05. A US-based client had reportedly canceled its contract, and after the Indian government widened its probe to two firms linked to Satyam viz. Maytas Properties and Maytas Infra, the two firms Satyam tried to take over in mid-December 2008 before hastily backing down in the face of a shareholder revolt. Satyam's ex CEO Ramalinga Raju had resigned on 7 January 2009 after admission of accounting fraud in the company.

IT pivotals fell despite a weaker rupee. The rupee weakened on Tuesday following weak Asian stock markets and the dollar's rise against some regional currencies. The partially convertible rupee was at 49.17 per dollar, below Monday's close of 48.65. A weaker rupee improves operating margin of IT firms as they earn most of their revenues from exports.

Auto stocks fell as high interest rates and sluggish consumer spending have dented demand for automobiles in India. Mahindra & Mahindra, Tata Motors and Maruti Suzuki India fell by between 2.96% to 3.34%. India's largest motorbike maker by sales Hero Honda Motors fell 0.42%.

India's largest FMCG major by sales Hindustan Unilever fell 2.84% on reports the company has cut prices of key soaps and detergent brands to pass on to consumers the excise duty reduction announced a month ago.

Satyam Computer Services clocked the highest volume of 4.6 crore shares on BSE. Cals Refineries (2.71 crore shares), Unitech (2.47 crore shares), GVK Power & Infrastructure (1.01 crore shares) and Suzlon Energy (98.48 lakh shares) are the other volume toppers in that order.

Educomp Solutions clocked the highest turnover of Rs 198.69 crore on BSE. Reliance Industries (Rs 185.93 crore),Reliance Infrastructure (Rs 152.1 crore), Reliance Capital (Rs 150.74 crore) and Satyam Computer Services (Rs 120.19 crore) were the other turnover toppers in that order.