Sensex sheds 3.45% as US bank crisis deepens

Weak global equities and a deepening banking crisis in the United States pulled the domestic bourses lower in choppy trade. Nevertheless, the market cut sharp intraday losses as index heavyweight Reliance Industries (RIL) and IT pivotals recovered from lower level. The BSE 30-share Sensex lost 323.75 points, or 3.45%, off 100.12 points from the day's low. Data showing a fall in inflation to 11-month low which will provide room for the central bank to further cut interest rates, helped the market cut steep intraday losses.

Selling by foreign funds pulled the market down. Foreign funds sold shares worth a net Rs 484.33 crore, as per provisional data released by the stock exchanges after trading hours. Domestic funds bought shares worth a net Rs 175.12 crore, as per the provisional data.

After opening on a weak note, the market bounced back after the inflation data which hit the market at about 11:30 IST. But the recovery proved short-lived with the Sensex tumbling 4.52% in mid-afternoon trade. The market cut losses in late trade.

Inflation for the year through 3 January 2009 fell to a 11-month low of 5.24% from 5.91% in the previous week, government data released during market hours today, 15 January 2009 showed. The Reserve Bank of India (RBI) has eased monetary policy over the past few months to soften the impact of the global financial crisis and economic recession in key world economies on the Indian economy.

US stocks fell to six-week lows on Wednesday, 14 January 2009, on worries about steeper losses at banks worldwide and as US retail sales data pointed to a deepening recession. The Dow Jones industrial average lost 248.34 points, or 2.94%, to 8,200.22. The S&P 500 slid 29.12 points, or 3.34%, to 842.67 and the Nasdaq Composite shed 56.82 points, or 3.67%, to 1,489.64.

Citigroup shares tumbled as investors and analysts worried whether the bank can be profitable as it unravels its business model. It is expected to post a multibillion-dollar loss this week.

Fears about the banking sector were exacerbated after Morgan Stanley analysts forecast HSBC, Europe's biggest bank, is likely to halve its dividend and may need to raise up to $30 billion of capital, while Germany's Deutsche Bank said it lost more than $6 billion last quarter. Highlighting the strain banks are under, The Wall Street Journal reported that the US government is close to extending billions more aid to Bank of America Corp, sending the bank's stock lower after trading hours in the United States.

European shares fell for the seventh session in a row in volatile trade on escalating fears over the beleaguered banking sector. Key benchmark indices in UK, Germany and France were down by between 0.09% and 0.66%.

Asian markets tumbled today, 15 December 2009, on weak US retail sales and a record fall in Japanese machinery orders. Key benchmark indices in China, Hong Kong, Japan, Singapore, South Korea, and Taiwan fell by between 0.45% and 6.03%.

Data on Wednesday showed US retail sales dropped a steep 2.7% in December 2008 as the economic slowdown made consumers cut back on spending during retailers' crucial holiday selling period. Consumer spending accounts for about two-thirds of US economic activity, making it a key pillar of corporate profits.

Core Japanese machinery orders fell a record 16.2% in November 2008 to a two-decade low, in another sign that the global crisis has stalled capital investment, data on Thursday, 15 January 2009, showed.

The BSE 30-share Sensex lost 323.75 points or 3.45% at 9,046.74. The Sensex opened 369.87 points lower at 9,000.62. The Sensex lost 423.87 points at day's low of 8,946.62 in mid-afternoon trade. The Sensex fell 246.71 points at day's high of 9,123.78 in afternoon trade.

The S&P CNX Nifty lost 98.60 points or 3.48% at 2,736.70. Nifty January 2009 futures were at 2718.60, at a discount of 18.10 points as compared to the spot closing.

The market breadth, indicating the overall health of the market, was weak on BSE with 1633 shares declining as compared with 736 that rose. 95 shares remained unchanged.

The BSE Mid-Cap index slipped 1.72% at 3,010.81 and the BSE Small-Cap index fell 2.16% at 3,410.48. Both these indices outperformed the Sensex.

The total turnover on BSE amounted to Rs 2,896 crore as compared to Rs 2,818.60 crore on Wednesday, 14 January 2009. Turnover in NSE's futures & options (F&O) segment increased to Rs 40,218.44 crore, from Rs 36,766.76 crore on Wednesday, 14 January 2009.

All BSE sectoral indices posted losses. The BSE Metal index (down 4.53%), the BSE Teck index (down 3.77%), BSE IT index (down 4.11%), the BSE Bankex (down 5.69%), BSE Realty index (down 4.72%), underperformed the Sensex.

The BSE Oil & Gas index (down 2.82%), BSE HealthCare index (down 1.76%), the BSE PSU index (down 2.61%), the BSE Power index (down 2.98%), BSE Capital Goods index (down 1.68%), BSE Consumer Durables index (down 1.66%), the BSE FMCG index (down 1.31%), the BSE Auto index (down 0.92%), outperformed the Sensex.

Among the 30-member Sensex pack, 26 declined while the rest gained. Tata Steel (down 7.38%), Sterlite Industries (down 6.59%), and Reliance Communications (down 6.15%), edged lower from the Sensex pack.

Maruti Suzuki India (up 0.24%), Grasim (up 0.01%), Ranbaxy (up 0.09%) and Mahindra & Mahindra (up 0.02%), edged higher from the Sensex pack.

Banking stocks tumbled on fears of rising defaults in a slowing economy. India's largest private sector bank by net profit ICICI Bank slumped 7.27% to Rs 409.05 after its ADR lost 3.17% on Wednesday, 14 January 2009. The stock rebounded from early low of Rs 398.20.

India's second largest private sector bank by net profit HDFC Bank shed 5.95% to Rs 919.20 after its ADR slipped 5.39% on Wednesday, 14 January 2009. The stock had lost 1.14% yesterday, 14 January 2009, after the bank's gross net performing assets (NPA) rose 120.47% to Rs 1911.41 crore as at 31 December 2008 from Rs 866.97 crore as on 31 December 2007, the private sector bank said at the time of announcing Q3 results during trading hours

India's biggest bank in terms of total assets and branch network, State Bank of India fell 4.23% to Rs 1149, off day's low of Rs 1136.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) was down 2.47% to Rs 1149.10, off day's low of Rs 1109, on reports its unit Reliance Petroleum (RPL) will start fuel exports from its new refinery this month. RPL was down 3.18%. RPL, last month, commissioned its 5,80,000-barrels-per-day only for exports refinery at Jamnagar in Gujarat.

The RIL stock had slumped as much as 5.8% in early trade today, 15 January 2009, after a television report after trading hours on yesterday said RIL has denied rumours that it had reached an out-of-court settlement on a dispute on gas sales with Reliance Natural Resources (RNRL). The stock had surged 9.48% yesterday, 14 January 2009 on speculation of an out-of-court settlement of the dispute. RNRL slipped 4.98%.

The Bombay High Court's interim order in May 2007 had directed RIL not to create third party interest for the disputed volume of 40 million standard cubic metres per day (mscmd) of gas from the K-G basin.

RIL and Anil Dhirubhai Ambani group firm Reliance Natural Resources (RNRL) had agreed on a price of $2.34 per million British thermal units (mBtu) in July 2006, but RIL wanted to charge more after gas prices rose and costs climbed. The government in September 2007 set the price of gas from the K-G field for potential buyers at $4.2 per million mBtu. The price was linked to crude oil equal to or more than $60 a barrel.

India's largest state run oil exploration firm by market capitalisation Oil and Natural Gas Corporation (ONGC) slipped 3.10% to Rs 625 and India's largest private sector oil exploration firm by market capitalisation Cairn India lost 3.82% to Rs 149.90 on fall in crude oil price.

State run oil marketing companies were mixed and outperformed the Sensex on reports the cabinet committee on economic affairs is unlikely to take up the issue of reducing petrol, diesel and domestic LPG prices at a meeting scheduled today, 15 January 2009. HPCL (up 1.60%), and BPCL (up 1.17%), while IOC (down 1.59%), outperformed the Sensex. As per latest reports state-run oil companies are currently making Rs 9.70 a litre profit on sale of petrol, Rs 3.70 a litre on diesel, but are loosing Rs 31.70 per LPG cylinder and Rs 11.69 on every litre of kerosene.

There has been speculation that the government will announce a cut in petrol, diesel and LPG prices on Thursday, 15 January 2009

US light crude for February 2009 delivery fell by 71 cents to $36.57 a barrel today, 15 January 2009 on grim economic data from the world's major economies.

Outsourcing focussed IT firms fell as fears a weak global economy would cut the amount firms spent on technology offset a weaker rupee. India's largest software services exporter TCS lost 5.46% to Rs 509.25, after sliding to day's low of Rs 495.60. The company will declare its Q3 December 2008 results today, 15 January 2009.

But India's second largest software services exporter Infosys Technologies recovered from the day's low of Rs 1215.10 and ended 3.83% lower at Rs 1254.85 after its chief financial officer said during market hours today, 15 January 2009, that bankruptcy filing by its client Nortel Networks will have any material impact on the company's operations or financial condition. Nortel's contribution to revenues is less than half a percent of yearly revenues based on the current revenue run rate, Infosys said.

India's third largest software services exporter, Wipro, too, recovered from low of Rs 218.30 to settle with 2.07% loss to Rs 238.90 after Manish Dugar, chief financial officer of Wipro said during market hours today, 15 January 2008, a major portion of Nortel Networks business is expected to continue even after the telecom equipment maker filed for bankruptcy in the United States on Wednesday, 14 January 2009

Nortel, accounts for less than 1.5% of its information technology business revenue, Manish Dugar, chief financial officer of Wipro Technologies, said in a statement. Dugar said the outstanding amount from North America's biggest telephone equipment maker was $15 million, subject to arbitration.

India's fourth largest software services exporter Satyam Computer Services slumped 31.72% to Rs 20.45 after Economic Affairs Secretary Ashok Chawla today, 15 January 2009, said the government is not at the moment considering any financial bailout package for the fraud-hit firm.

Satyam's founder and former chairman B Ramalinga Raju during trading hours on Wednesday, 7 January 2009, admitted to a nearly Rs 7000-crore financial fraud. The market has been agog with speculation that the government will pump cash into the technology outsourcing company to ensure its survival.

Sasken Communication Technologies plunged 19.59% to Rs 43.50 after Nortel Networks Corp which holds a 9.5% stake in the Indian firm, filed for bankruptcy in the United States on Wednesday, 14 January 2009.

Indian rupee depreciated against the dollar today, 15 January 2009 as dollar demand increases amid weakening local stocks. The rupee was trading at 49.01/02 against the greenback over Wednesday's close of 48.82/84 a dollar. A weak rupee benefits IT firms as the sector earns most of its revenues from exports.

The mega accounting scandal at Satyam which was unearthed last week weighed on realty and infrastructure shares on market perception that a number of realty and infrastructure firms do not strictly follow good corporate governance practices.

India's largest dam builder Jaiprakash Associates tumbled 8.32% to Rs 64.50 and was the top loser from the Sensex pack.

Reliance Infrastructure (down 3.90%), IVRCL Infrastructure (down 2.07%)and GMR Infrastructure (down 8.25%) declined from the infrastructure pack.

Among realty firms, Housing Development & Infrastructure (down 6.26%), Indiabulls Real Estate (down 5.40%), edged lower.

India's largest real estate firm by market capitalisation DLF slumped 3.66% to Rs 204 on reports it is planning to turn down its special economic zone (SEZ) plans, battered by low demand for real estate. The company is planning to start five of its SEZs after 2010 when demand revives.

Unitech plunged 9.57% to Rs 31.65 after the global rating agency Fitch downgraded long-term debt rating of the realty firm to below investment grade.

Maytas Infra hit 5% lower circuit to Rs 123.15 on reports a section of the United Progressive Alliance government wants cancellation of the Hyderabad Metro Rail project awarded to the firm.

Metal stocks declined on fall in metal prices on the London Metal Exchange. India's largest copper maker by sales Sterlite Industries (India) slumped 6.59% to Rs 255.10 after its American depository receipt (ADR) lost 2.55% on Wednesday, 14 January 2009.

Tata Steel (down 7.38% to Rs 197.70), and Hindalco Industries (down 4.55% to Rs 48.30), slipped from the metal pack.

India's largest cellular services provider by sales Bharti Airtel fell 3.08% to Rs 605 after foreign brokerage firm JPMorgan Chase & Co. cut its rating on the stock to neutral from overweight.

Reliance Industries was the top traded counter on the BSE with turnover of Rs 257.35 crore followed by Reliance Natural Resources (144.90 crore), Reliance Capital (Rs 132.85 crore), Satyam Computer Services (Rs 122.30 crore) and ICICI Bank (Rs 119 crore).

Satyam Computer Services led the volume chart on BSE clocking volumes of 5.60 crore shares followed by Reliance Natural Resources (2.82 crore), Unitech (1.48 crore), Jaiprakash Associates (71 lakh) and GVK Power Infrastructure (65.35 lakh).

FMCG shares were mixed and outperformed the Sensex on defensive buying. Hindustan Unilever (down 1.99%), Colgate Palmolive India (down 1.63%), Nestle India (down 0.07%), United Spirits (up 1.98%), and Procter & Gamble (down 0.38% to Rs 802), and Nirma (down 0.95%), though down, outperformed the BSE Sensex.

Fertiliser shares gained on reports Reliance Industries is likely to start gas production from its Eastern Offshore KG-D6 block by the month-end. National Fertilisers (up 15.71%), RCF (up 3.52%), GSFC (up 1.84%), Nagarjuna Fertiliser (up 2.23%), and Chambal Fertilisers & Chemicals (up 0.78%), gained.

Dr Reddys Laboratories slumped 6.96% to Rs 444.10 on reports its consignment worth $500,000 has been seized in transit by Dutch customs officials on charges of patent infringement