Market snaps three-day gains in volatile trade

Media reports of the finance ministry is drafting a proposal to remove the securities transaction tax
(STT) and news that the Centre has eased some foreign direct investment (FDI) norms triggered a solid rebound on the bourses in late trade. Despite the sharp intraday recovery, the key benchmark indices ended slightly lower, ending three-day winning streak.The BSE 30-share Sensex fell 28.93 points or 0.30%, recovering 158.95 points from the day's low.

The market bounced back after a near 2% slide in early trade caused by investors concern that a revamped plan by the United States to shore up banks may not be enough to alleviate the credit crisis. The market breadth turned positive in late trade, reversing early weakness. US index futures which indicated the Dow could rise 44 points at the opening bell on Wednesday, also aided the rebound on the domestic bourses.

Volatility was high. After an initial slide caused by overnight sharp slide in US stocks, the market recovered in mid-morning trade on recovery in Chinese shares. But the market weakened again in early afternoon trade as intraday rebound in Chinese shares proved short-live. The market staged a solid rebound in late trade.

As per media reports, the finance ministry has drafted a proposal to remove the securities transaction tax (STT) in a move aimed at boosting the stock market sentiment. At present a 0.125% tax is levied on all transactions of securities traded on stock exchanges and for derivatives STT stands at 0.017%.

Easier FDI norms also aided the rebound in Indian stocks. Foreign investment through an investing Indian company will not be taken into account in determining the sector FDI cap, the government on Wednesday said. The Cabinet Committee on Economic Affairs (CCEA) approved the changes in the guidelines for calculating total foreign investment, direct and indirect, in Indian companies. Home Minister P Chidambaram said the objective is to make it simple and transparent, according to the Department of Industrial Policy and Promotion (DIPP).

European markets were slightly lower as investors feared a $2 trillion US bank rescue plan would not be enough to prop up the troubled financial system. Key benchmark indices in UK, Germany and France were down by between 0.06% and 0.45%.

Chinese stocks fell 0.19% after data on Wednesday after data showed Chinese exports and imports slumped in January 2009 for the third month in a row, underlining how badly the world's third-largest economy has been hit by the global financial crisis. Earlier, Chinese stocks had reversed intraday losses. Key indices in Hong Kong and South Korea fell 2.46% and 0.72% respectively. Japanese markets were closed today for a public holiday. Indices in Taiwan and Singapore rose 1.10% each.

US markets plunged on Tuesday, 10 February 2009, as investors soured on the financial rescue plan and seemed to ignore the Senate's approval of its $838 billion economic stimulus package. The Dow Jones industrial average slumped 381.99, or 4.62%, to 7,888.88. Broader stock indicators also tumbled, with the Standard & Poor's 500 index down 42.73, or 4.91%, to 827.16 and Nasdaq Composite index down 66.83 points or 4.2% to 1,524.73.

The US government on Tuesday, 10 February 2009 announced details of the new bank rescue plan. The 'financial stability plan,' as it's now called, consists of four main components. It will set up a public-private fund to mop up to $500 billion of spoiled bank assets. It will also set up a consumer-lending facility to support up to $ 1 trillion in new lending. The plan will devote up to $50 billion to help stem home foreclosures and provide new funding to banks after a "stress test" to determine if the bank is healthy

Meanwhile, the US administration's $800-billion-plus stimulus bill -- a mix of tax cuts and public spending measures -- was approved by the Senate on Tuesday, but that version must be reconciled with one passed by the House of Representatives, which may require several days of negotiations.

The BSE 30-share Sensex fell 28.93 points or 0.3%, to 9,618.54. The Sensex opened 185.33 points lower at 9,462.14. At the day's low of 9,459.59, the Sensex lost 187.88 points in early trade. At the day's high of 9,648.39 hit in late trade, the Sensex rose 0.92 points.

The S&P CNX Nifty slipped 8.8 points, or 0.3%, to 2,925.70. Nifty February 2009 futures were at 2933.05, at a premium of 7.35 points as compared to the spot closing.

The domestic bourses have spurted in the past few days on expectations the forthcoming interim budget will contain fiscal incentives to revive sagging growth. Buying by foreign funds aided the surge. The BSE Sensex jumped 556.69 points or 6.12% in the three trading sessions to 9,647.47 on 10 February 2009 from its close of 9090.88 on 5 February 2009. The barometer index is down 28.77 points or 0.29% in the calendar 2009 from its close of 9647.31 on 31 December 2008.

Foreign institutional investors (FIIs) bought shares worth a net Rs 416.20 crore on Tuesday, 10 February 2009, data released by the stock market regulator Securities & Exchange Board of India (Sebi) after trading hours today showed. Foreign funds had bought shares worth a net Rs 289.10 crore on Monday, 9 February 2009. There has been a substantial outflow of foreign funds in 2009. FII outflow in calendar year 2009 totaled Rs 3631.10 crore (till 10 February 2009).

The Congress party-led coalition government will unveil an interim railway budget on Friday, 13 February 2009 followed by a mini general budget on 16 February 2009, ahead of national elections due by May 2009.A full budget for 2009-2010 will come only after a new government takes over. Foreign Minister Pranab Mukherjee, who is also responsible for finance and will present the mini budget, said on 6 February 2009 the government would take measures to boost growth, especially in sectors where jobs are at stake.

The market is agog with talks that the forthcoming interim budget may offer tax sops and sector-specific stimulus package. The government has so far announced two stimulus packages including tax cuts and the capital injections for banks.

The market breadth, indicating the overall health of the market, turned positive in late trade after a weak start. On BSE, 1293 shares advanced as compared with 1128 that declined. A total of 98 shares remained unchanged.

The BSE Mid-cap index rose 0.37% to 2,965.14 and BSE Small-cap index gained 0.25% to 3,350.97. Both these indices outperformed the Sensex

The total turnover on BSE amounted to Rs 3267 crore, lower than Rs 3,726.87 crore on Tuesday, 10 February 2009. Turnover in NSE's futures & options (F&O) segment fell to Rs 32,988.37 crore, from Rs 39,017.91 crore on Tuesday, 10 February 2009.

Sectoral indices on BSE displayed mixed trend. The BSE HealthCare index (down 1.20%), BSE IT index (down 0.65%), BSE Metal index (down 1.19%), BSE Oil & Gas index (down 0.82%), underperformed the Sensex.

The BSE Bankex (up 0.02%), BSE Realty index (up 0.03%), BSE Capital Goods index (down 0.18%), the BSE Auto index (up 0.80%), BSE Teck index (up 0.04%), BSE Consumer Durables index (up 0.25%), the BSE FMCG index (up 0.17%), the BSE PSU index (down 0.08%), the BSE Power index (up 0.20%), outperformed the Sensex.

Among the 30-member Sensex pack, 16 slipped while the rest gained.

Reliance Infrastructure (down 3.56%), Grasim (down 3.70%), and Sun Pharma (down 2.04%), edged lower from the Sensex pack. Jaiprakash Associates (up 2.54%), ACC (up 4.08%), and HDFC (up 2.85%), edged higher from the Sensex pack.

India's top small car maker by sales Maruti Suzuki India gained 4% to Rs 632.50, rebounding sharply from day's low of Rs 585, on reports the government is considering an excise duty cut for automobiles in addition to enhancing depreciation benefit on commercial vehicle purchases in the interim budget.

However, India's largest truck maker by sales Tata Motors shed 2.35% to Rs 135.60 mirroring a 4.94% slide in American depository receipt (ADR) on Tuesday, 10 February 2009. India's top tractor maker by sales Mahindra & Mahindra slipped 0.85% to Rs 281.10 on profit booking after a 3.35% rally on Tuesday, 10 February 2009.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 0.89% to Rs 1389 on profit booking following a 21.76% surge in a month to Rs 1401.50 on 10 February 2009 from Rs 1151.05 on 9 January 2009. Nevertheless, the stock recovered from the day's low of Rs 1362.20.

India's largest state-run oil exploration firm by market capitalisation ONGC fell 0.86% to Rs 711 after US light, sweet crude for March 2009 delivery fell $2.01 or 5% to $37.55 a barrel on Tuesday, 10 February 2009 on the New York Mercantile Exchange (NYMEX) on a downward revision by the US government on its oil demand forecasts and doubts over the effectiveness of the US government's bank rescue plan. A sharp fall in crude oil prices would result in lower realizations from crude sales for the oil exploration firm.

State run oil-marketing companies gained on lower crude prices. HPCL (up 0.35%), BPCL (up 2.42%), and IOC (up 1.12%), rose. Lower crude oil prices will reduce under-recoveries of state run firms on sale of fuel at controlled prices. They are currently making profit on sale of petrol and diesel, but continue to make losses on sale of kerosene and liquefied petroleum gas.

Banking shares were mixed caught between fears of rising defaults in a weakening economy and recovery in bond prices. India's second largest private sector bank by net profit HDFC Bank lost 1.20% to Rs 935.50. However India's largest private sector bank by net profit ICICI Bank rose 1.85% to Rs 436. India's largest bank in terms of assets and branch network State Bank of India was unchanged at Rs 1164.

Higher bond prices could boost treasury income of banks. Government bond prices rose on Wednesday, ending a two-day slide, on speculation the central bank will cap yields by purchasing securities from investors amid record debt sales by the government.

Central Bank of India (up 2.5%), UCO Bank (up 4.12%), and Vijaya Bank (up 3.14%), rose after India's Cabinet today, 11 February 2009, approved a government proposal to infuse Rs 3800 crore into these three state-run banks in two tranches spread over financial years 2009 and 2010.

IT pivotals declined as investors feared the new bank rescue plan announced by the US government may not be enough to revive the economy from a deepening recession. TCS, India's largest software services exporter by sales slipped 1.70%. India's third largest software services exporter, Wipro declined 1.57% after its ADR lost 5.58% on Tuesday, 10 February 2009. India's second largest software services exporter Infosys Technologies shed 0.33% as its ADR declined 7.60% on Tuesday, 10 February 2009.

India's fifth largest IT exporter by sales HCL Technologies fell 1.95%. IT firms derive a lion's share of revenue from export to the US.

Telecom shares were in demand after latest data showed GSM operators have added a record 9.3 million subscribers in January 2009. India's largest cellular services provider by sales Bharti Airtel gained 2.15% to Rs 677.05 on adding 2.73 million more customers in January 2009. Idea Cellular jumped 7.21% on adding 2 million new users. India's second largest cellular services provider by sales Reliance Communications advanced 0.82% to Rs 173.05.

However, as per a report by the global rating agency Fitch, the wireless average revenue per user (ARPUs) are expected to fall severely in calendar 2009 due to increased competition. Also, incremental subscribers are now mainly coming from the smaller cities, who are mostly prepaid customers with lower minutes of usage.

India's largest private sector power generation form by market capitalisation Tata Power rose 2.13% to Rs 810.45. As per reports the company has signed a memorandum of understanding with Hirco, listed in London's Alternative Investment Markets to provide power supply and distribution solutions to residents and tenants of Hirco's Panvel special economic zone.

Metal shares slipped on persistent worries about global demand with key global economies in recession. Sesa Goa (down 2.41%), Jindal Steel & power (down 2.77%), and Sterlite Industries (down 0.40%), slipped.

India's largest private sector steel maker by sales Tata Steel dropped 3.02% to Rs 191 after the world's largest steelmaker, ArcelorMittal reported a 42% drop in fourth-quarter core profit on Wednesday after a sharp slump in demand, forecast a very weak first quarter and cut its dividend.

India's largest real estate firm by market capitalisation DLF lost 1.77% to Rs 149.80, after surging 14.75% to Rs 152.50 on 10 February 2009 from Rs 132.90 on 3 February 2009.

Educomp Solutions topped the turnover chart on BSE with a turnover of Rs 227.50 crore followed by Reliance Industries (Rs 190.50 crore), Reliance Capital (Rs 180.65 crore), Reliance Infrastructure (Rs 167.25 crore) and United Spirits (Rs 145 crore).

Satyam Computer Services led the volume chart on BSE with volumes of 2.98 crore shares followed by Unitech (2.15 crore shares), IFCI (2.10 crore shares), GVK Power (1.37 crore shares) and Cals Refineries (83 lakh shares).

Fertiliser shares rose after India's cabinet approved a plan to help fertiliser plants use natural gas instead of fuel oil and naphtha. Chambal Fertilisers & Chemicals (up 3.19%), Nagarjuna Fertilizers & Chemicals (up 6.34%), Zuari Industries (up 4.46%), National Fertilizer (up 14.29%), and Rashtriya Chemicals & Fertilizers (up 8.82%), spurted.

Fertilizer companies consume 70% of the gas available in the country. However, inadequate supply of gas forces them to operate at 50-60% of their capacity.

Zee Entertainment tumbled 11.65% to Rs 114.50 while Axis Bank gained 2.74% to Rs 432.60 after the National Stock Exchange said the later will replace the former in the S&P CNX Nifty index from 27 March 2009.

Shoppers Stop galloped 20% to Rs 104.40 after the company said promoters had revoked a substantial portion of the shares they had pledged. The company made this announcement during trading hours today, 11 February 2009.

Meanwhile, the Bombay Stock Exchange (BSE), has announced the shifting of 20 scrips from B group to A group, effective from 16 February 2009, an exchange release late Tuesday, 10 February 2009 said.

The scrips which are shifted from group B to group A include Andhra Bank, Apollo Hospitals Enterprises, Cadila Healthcare, Castrol (India), Central Bank of India, Corporation Bank, Everest Kanto Cylinder, Fortis Healthcare, Glaxosmithkline Consumer, GTL, Hindustan Copper, Koutons Retail India, Madras Cements, Mahindra & Mahindra Financial Services, Moser Baer India, Procter & Gamble Hygiene, PTC India, Religare Enterprises, Syndicate Bank and Tulip Telecom.

The BSE also announced shifting of 20 scrips from group A to group B, which includes Adlabs Films, Bajaj Finserve, Bajaj Hindustan, BGR Energy Systems, Blue Star, Bombay Dyeing, Deccan Chronicle Holdings, Edelweiss Capital, Essar Shipping Ports & Logistics, Future Capital Holdings, Gammon India, Indiabulls Securities, New Delhi Television, Omaxe Ltd, Onmobile Global Ltd, Parsvnath Developers, Patni Computer Systems, Phoenix Mills, Triveni Enginnering & Industries and United Breweries (Holdings).