Post Session Commentary - Feb 16 2009

Indian market today ended sharply lower after interim budget failed to accomplish investor’s expectations regarding stimulus plan for sectors such as autos and construction. Interim budget 2009-10 disappointed market sentiments that led the huge selling pressure throughout of trading session. Weak cues from the global markets also weighed on the sentiments. Both, NSE Nifty and BSE Sensex nosedived more than 3%.

The domestic market today opened on weak note tracking feeble cues from other Asian markets. Asian stocks fell after a government report showed that Japan’s gross domestic product slumped 12.7% in the fourth quarter. Japan’s economy shrank the most since 1974. Negative sentiment was also fueled by the lower closing of the US stock market on Friday on the back of selling pressure emerged among the financials. The Dow Jones industrial average once again closed below the 8000 mark at its lowest close since last November. Further, benchmark indices continued to extend their losses on negative sentiments led by the announcement that the export rate dropped to 17.1% during first nine months of current fiscal. Market lost further ground after Pranab Mukherjee, holding the charge of Finance Ministry, presented the budget. Market slipped sharply lower during final trading on investors’ nervousness on the concerns of weakening economy and uncertainty for the execution of expectations of stimulus from the interim budget. BSE Sensex ended around 9,300 mark and NSE Nifty closed below 2,850 level. From the sectoral front, all indices ended in red. Besides, Metal, Capital Goods, Bank, Reality, Oil & Gas, Power and PSU stocks witnessed most of the selling pressure from these baskets. Midcap and Smallcap stocks also remained under pressure during the trading session.

Among the Sensex pack 29 stocks ended in red territory and 1 in green. The market breadth indicating the overall health of the market remained weak as 1598 stocks closed in red while 776 stocks closed in green and 108 stocks remained unchanged in BSE.

The BSE Sensex closed lower by 329.29 points at 9,305.45 and NSE Nifty ended down by 99.85 points at 2,848.50. Broader market indices were in red as BSE Mid Caps and Small Caps ended with losses of 88.20 points and 71.44 points at 2,924.75 and 3,324.14 respectively. The BSE Sensex touched intraday high of 9,637.04 and intraday low of 9,279.10.

Losers from the BSE Sensex pack are JP Associates (7.88%), Reliance Infra (6.35%), ICICI Bank (5.79%), RCom (45.78%), Tata Steel (5.20%), Reliance (5.17%), L&T Ltd (4.96%), SBI (4.86%), Sterlite Industries (4.70%), BHEL (4.47%) and Wipro Ltd (3.62%).

Only gainer from the BSE Sensex pack is ITC Ltd (0.75%).

The government in its interim budget gives importance to infrastructure investment. The investments in Infrastructure to be raised to 9% of GDP by 2014. However, 54 infra projects under PPP projects were given in-principle or final approval with an investment of Rs 67,700 crore. In line with this, the budgetary support increased for Ministries of Rural Development as well as Road Transport & Highway, Power, Railways, Industrial Policy & Promotion and IT. Bharat Nirman to get Rs 4900 crore and JNNURM gets Rs 11842 crore. In addition to this, the India Infrastructure Finance Company will raise Rs 10,000 crore from market by end of March 2009. Along with this, The India Infrastructure Finance Company will raise Rs 30,000 crore from market in next fiscal year. Adding to this, the rural infrastructure development scheme to be expanded through suitable allocations. The spending in FY 10 seen at 9.53 lakh crore. The Fiscal deficit for FY 09 at 6% of GDP.

The budget also gives support to agricultural sector. The agriculture credit has been increased by three fold to Rs 250,000 crore. Along with this, the fertiliser subsidy increased by Rs 44,863 crore from about Rs 14,000 crore (Rs 140 billion) during 2008-09. The annual rate of growth in agriculture was 3.7%. The production of food grain increased by 10 mn tonnes each year to all time high of 230 mn tonnes in 2007-08. The minimum support price for wheat increased to Rs 1,080 per quintal from Rs 630.

On the global markets front, the Asian markets ended in down as Japan’s recession get worst since 1974. Japan''s fourth quarter GDP numbers were a sobering reminder of the toll on Asia''s export-driven economies. The world''s second-biggest economy shrank 3.3% from the previous quarter, or at an annual rate of 12.7%. Hang Seng, Nikkei 225, Straits Times and Seoul Composite index ended down by 98.79, 29.23, 22.33 and 16.97 points at 4,373.44, 7,750.17, 1,683.31 and 1,175.47 respectively.

European markets which opened after the Indian market are also trading down. FTSE 100 is trading lower by 31.09 points at 4,158.5 and the DAX index is trading down by 39.95 points at 4,373.44.

The BSE Metal stocks under performed the benchmark indices as ended down by (4.75%) or 251.07 points at 5,031.02. Main losers are JSW Steel (7.07%), Jindal Steel (6.79%), Gujarat NRE C (6.49%), Welspan Guajrat SR (6.46%), Nalco (6.29%) and Tata Steel (5.20%).

The BSE Reality index ended lower by (4.58%) or 72.99 points to close at 1,519.37 in absence of any Ansal Infra (6.28%), Housing Dev (6.22%), Unitech Ltd (5.34%) and Mahindra Life (3.16%) ended in negative territory.

The BSE Bank index ended down by (4.58%) or 230.14 points at 4,794.78 after acting Finance Minister Pranab Mukherjee proposed an increase in government borrowing, sending bond yields higher. Main losers are ICICI Bank (5.79%), Bank of India (5.40%), Union Bank (5.21%), IDBI Bank (5.20%) and SBI (4.86%).

The BSE Capital Goods index faced heavy selling pressure and closed with decrease of (4.55%) or 297.94 points at 6,249.48. Scrips that lost are Gammon Indi (8.58%), Everest Kanto (5.78%), ABB Ltd (5.48%), Alstom Proje (5.31%), Crompton Greaves (5.15%) and Siemens Ltd (4.98%).

The BSE Oil & Gas index dropped by (4.23%) or 276.90 points to close at 6,264.67. Aban Offshore (5.49%), Reliance (5.17%), Reliance Petroleum (5.05%), Reliance Natural Resources (5.03%) and Essar Oil Ltd (4.88%) ended in red.

The BSE Power index also ended lower by (3.95%) or 73.25 points at 1,779.53. Losers are Lanco Infra (7.23%), GVK Power (6.58%), Reliance Infra (6.35%), Neyveli LIG (5.90%), ABB Ltd (5.48%) and Reliance Power (5.18%).

Punjab National Bank closed down by 4.36%. The Bank will be raising Rs 500 crore as PNB Upper Tier II Bond Issue Series VII through private placement with an option to retain oversubscription. The proposed date of opening is February 18, 2009 and proposed date of closing is February 18, 2009.