Sensex falls below 9,000 on weak global stocks

Weak global markets pulled the domestic bourses lower with the barometer index BSE Sensex falling below the psychologically important 9,000 level. Nevertheless, a late recovery helped cut the market cut steep intraday losses. The Sensex lost 199.42 points, or 2.21% at 8,843.21, off 80.13 points from the day's low.

Weak European bourses, lower US index futures and sustained selling pressure by foreign institutional investors (FIIs), whose outflow in calendar year 2009 has totaled Rs 5094.30 crore (till 18 February 2009), weighed on the sentiment. As per the provisional data on BSE, FIIs today, 20 February 2009, sold shares worth a net Rs 201.17 crore while mutual funds bought shares worth a net Rs 167.18 crore.

The market opened on a weak note on weak global markets. An intermittent recovery from lower level was witnessed during the day. The recovery from lower level in early afternoon trade was triggered by Finance Minister Pranab Mukherjee's comments that the government will provide additional resources to stimulate demand and provide more help to key sectors such as housing, infrastructure and real estate. However, the intraday recovery proved short-lived as the market came off the higher level later.

A sell-off gripped the market in mid-afternoon trade as European markets, which opened after Indian markets, declined sharply in early trade. At the day's low of 8763.08, the Sensex shed 3.09% in mid-afternoon trade. After the sharp slide, the market immediately witnessed a rebound from lower level as the finance minister's statement raised hopes for more measures from the government for the economy. Rate cut hopes also aided the intraday rebound in late trade.

The government has so far announced two stimulus packages including tax cuts and the capital injections for banks to shield the domestic economy from the impact of the global financial sector crisis and recession in key global economies.

Meanwhile Commerce minister Kamal Nath is likely to announce an export booster package later this month which would address some of the crucial concerns of the exporters. The sops under consideration include simplification of rules for service tax refund, extension of time given to exporters to meet export obligation and an increase in rates of input duty reimbursement schemes like drawback and DEPB for some sectors.

Global cues were weak. Trading in US index futures showed the Dow could fall 130 points at the opening bell on Friday, 20 February 2009. European shares fell sharply on Friday, 20 February 2009, with banks the worst performers, as investors continued to fret about the outlook for the global economy. Key benchmark indices in UK, Germany and France were down by between 2.38% and 3.08%.

Asian markets declined today, 20 February 2009, after Wall Street tumbled to six-year low on Thursday, 19 February 2009, as a gloomy US unemployment data reinforced fears the world's largest economy is in a severe slump. Key benchmark indices in Hong Kong, Japan, Singapore, South Korea and Taiwan were down by between 2.03% and 3.72%. However, China's Shanghai Composite rose 1.54%.

US markets tumbled on Thursday, 19 February 2009 on mounting concerns about the fate of major banks and signs that the recession is deepening, pushing the Dow to its lowest level in more than six years. The Dow Jones industrial average lost 89.68 points, or 1.19%, at 7,465.95. The Standard & Poor's 500 Index fell 9.48 points, or 1.2%, at 778.94. The Nasdaq Composite index shed 25.15 points, or 1.71%, at 1,442.82.

US government data showed a record number of continuing unemployment claims, at nearly 5 million, and a surprisingly sharp drop in manufacturing in the mid-Atlantic states.

The BSE 30-share Sensex lost down 199.42 points or 2.21% at 8,843.21. The Sensex opened 98.85 points lower at 8,943.78, also its day's high. At the day's low of 8,763.08, the Sensex lost 279.55 points in mid-afternoon trade.

The S&P CNX Nifty lost 52.90 points or 1.9% to 2736.45. Nifty February 2009 futures were at 2722, a discount of 14.45 points as compared to the spot closing.

The barometer index BSE Sensex is down 804.10 points or 8.33% in calendar 2009 from its close of 9,647.31 on 31 December 2008. The Sensex currently trades at a PE multiple of 10.19 based on projected earnings per share (EPS) of about Rs 867 for the 30-Sensex firms in the year ending March 2010.

The market breadth, indicating the overall health of the market, was weak on BSE with 1631 shares declining as compared with 793 that advanced. A total of 88 shares remained unchanged.

BSE clocked a turnover of Rs 2591 crore, lower than Rs 2,428.97 crore on Thursday, 19 February 2009. Turnover in NSE's futures & options jumped to Rs 43149.65 crore compared with Rs 30637.67 crore on Thursday, 19 February 2009.

All the sectoral indices on BSE were in the red. The BSE Power index (down 1.41%), the BSE Auto index (down 1.11%), the BSE PSU index (down 1.56%), BSE Consumer Durables index (down 1.09%), BSE Realty index (down 1.93%), the BSE Capital Goods index (down 1.95%), and the FMCG index (down 0.28%), BSE Healthcare index (down 1.12%), BSE Oil & Gas index (down 2.17%), outperfomed the Sensex.

The BSE TECk index fell 2.21%, in line with Sensex's fall.

The BSE IT index (down 2.69%), BSE Bankex (down 3.49%), and BSE Metal index (down 2.67%), underperformed the Sensex.

Among the 30-share Sensex pack 26 declined while only 4 of them managed gains. DLF (up 0.74%), ACC (up 0.66%), and Maruti Suzuki India (up 0.55%), gained from the Sensex pack.

Banking stocks were hard hit as fears of rising defaults in a weakening economy and overnight fall in American Depository Receipts (ADRs), offset hopes of rate cuts from the Reserve Bank of India (RBI). India's largest private sector bank by net profit ICICI Bank plunged 7.03% to Rs 336.10 on a 1.36% fall in its ADR on Thursday, 19 February 2009. It was the top loser from the Sensex pack.

India's second largest private sector bank by net profit HDFC Bank lost 2.12% to Rs 866.10 as its ADR fell 0.26% on Thursday, 19 February 2009. After market hours on 19 February 2009, the bank on a private placement basis issued unsecured, non-convertible, redeemable subordinated bonds in the nature of debentures towards tier - II capital as with upper tier - II bonds for an amount aggregating Rs 200 crore and lower tier - II bonds for an amount aggregating Rs 150 crore.

India's largest bank in terms of assets and branch network State Bank of India shed 0.73% to Rs 1051.80

India's largest dedicated housing finance company by total income Housing Development Finance Corporation dropped 2.35% to Rs 1359.90 as the company expects 2009/10 loan growth at about 20%, slightly lower than the previous year's rise, as property demand falls.

Inflation rose at the lowest level in 13-months at 3.92% in the year through 7 February 2009, much lower than previous week's annual rise of 4.39%, data released by the government on Thursday, 19 February 2009, showed. Falling inflation provides room for the Reserve Bank of India (RBI) to cut interest rates further to shield the domestic economy from the global financial sector crisis and recession in key global economies.

Only on Wednesday, 18 February 2009, the Reserve Bank of India Governor D Subbarao said that there is room to cut interest rates further. The statement comes at a time when the market is expecting further action from the central bank.

Market men see a bigger role for RBI to shield the domestic economy from the global financial sector crisis and recession in key global economies in the coming months as election code will be in force by the end of the month which means that there cannon be any policy action from the government.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) shed 2.99% to Rs 1255 on fears a worsening global economy will hit demand for petrochemicals. Nevertheless the stock recovered from day's low of Rs 1241.30.

India's second largest cellular services provider by sales Reliance Communications (RCom) slumped 4.36% to Rs 155.60 on reports the government on Thursday, 19 February 2009 reportedly informed the Parliament that it will do a special audit on the books of RCom and its subsidiaries over allegations that the telecommunications company had diverted revenues earned from its mobile services to a subsidiary to bring down the total amount it had to pay to the government as licence fee and spectrum charge.

India's largest private sector power generation firm by sales Reliance Infrastructure slipped 3.04% to Rs 493.05. The finance ministry late evening on 18 February 2009 reportedly told Parliament that companies Reliance Infrastructure and Reliance Petroleum were being investigated for alleged violation of norms governing insider trading and overseas borrowings, respectively. Reliance Petroleum fell 2.01% to Rs 78.10

IT shares declined after research firm Gartner warned of an unprecedented deceleration in IT spending across markets and geographic regions in 2009, after its annual global survey of Chief information officer (CIOs).

India's third largest software services exporter, Wipro slipped 2.16% to Rs 215.60 despite a 1.12% rise in ADR on Thursday, 19 February 2009. India's second largest software services exporter Infosys Technologies lost 2.33% to Rs 1180 as its ADR fell 1.71% on Thursday, 19 February 2009. India's largest software services exporter by sales TCS slipped 3.01% to Rs 475 and India's fifth largest IT exporter by sales HCL Technologies declined 5.08% to Rs 103.60.

Shares of computer hardware firms HCL Infosystems (down 2.50%), Moser Baer India (down 5.08%), CMC (down 1.07%), Tata Elxsi (down 1.85%), declined.

Overall, the total IT market globally is expected to grow by only 0.5% in 2009, the Gartner report added.

Educomp Solutions tumbled 11.86% to Rs 1776.60 on reports the market regulator Securities & Exchange Board of India (Sebi) is probing the dealings in the shares of education software firm on bourses.

IT shares fell despite a weak rupee. Indian rupee slipped today on concerns of capital outflows following decline in global markets. The partially convertible rupee was at 49.86/88 per dollar against previous close of 49.62. A weaker rupee boosts operating margins of IT firms which earn a lion's share of revenue from exports.

Rate sensitive real estate shares rebounded in late trade on hopes lower rates will spur housing demand. India's largest realty developer by market capitalisation DLF rose 0.74% to Rs 157.50, off day's low of Rs 147.50. Foreign brokerage Goldman Sachs in its recent research report lowered DLF's 12-month target price to Rs 124 post weak Q3 December 2008 results.

Unitech (down 1.40% to Rs 28.20, from day's low of Rs 27.60), HDIL (down 2.15% to Rs 77.60 after touching day's low of Rs76.50), and Indiabulls Real Estate (down 3.97% to Rs 93.20 after hitting day's low of Rs 92.50), fell.

India's largest engineering and construction firm by sales Larsen & Toubro fell 2.47% to Rs 624.80 after its chief A M Naik said it will decide on Satyam deal after evaluating the Company Law Board's order on the bidding process for the fraud-hit IT firm. L&T is the single largest shareholder in Satyam with a 12% stake.

India's largest power equipment maker by sales Bharat Heavy Electrical (Bhel) fell 0.58% to Rs 1374.25, off sharply from day's low of Rs 1347.10. The early fall came on reports quoting Chairman K. Ravi Kumar said the company expects profit growth to slow to 10% in the year ending March 2009 on higher raw material costs and wages, compared with 18% in March 2008.

ABB rose 1.82% to Rs 400.35 after the company reported higher than expected net profit in the year ended December 2008. ABB's net profit rose 11.3% to Rs 547.41 crore on a 16.1% increase in total income to Rs 6967.45 crore in the year ended December 2008 over December 2007. The company has recommended a dividend of Rs 2.20 per share of face value Rs 2 each for the year ended on December 2008.

Metal stocks fell on worries a weakening domestic and global economy will hit demand for metals. India's largest copper maker by sales Sterlite Industries India (down 3.02% to Rs 248.75), Sail (down 2.50%), Sesa Goa (down 6.22%), Nalco (down 2.02%), declined.

India's largest private sector steel maker by sales Tata Steel dropped 2.44%

India's largest private sector aluminium maker by sales Hindalco Industries fell 1.50% to Rs 39.50. As per recent reports, the company plans to raise Rs 25000 crore by pledging assets and future earnings of its units.

Auto stocks fell on profit booking after a recent rise. The BSE Auto index was down 1.11% to 2,544.47 today, 20 February 2009. The BSE Auto index rose 2.15% in one month to 19 February 2009.

Tata Motors (down 0.45%), Mahindra & Mahindra (down 3.62%), Hero Honda Motors (down 1.81%) declined. However Bajaj Auto (up 0.76%) and Maruti Suzuki India (up 0.55%), rebounded from day's low.

FMCG shares were mixed, outperforming the Sensex, on defensive buying. Hindustan Unilever (down 0.22%), Britannia Industries (down 0.28%), ITC (down 0.03%), United Spirits (down 1.38%), and Nestle India (down 0.26%), declined. Some FMCG shares Dabur India (up 0.11%), Tata Tea (up 4.36%) and Marico Industries (up 0.60%) rose

Educomp Solutions was the top traded counter on BSE with turnover of Rs 293.70 crore followed by Reliance Industries (Rs 170.30 crore), United Spirits (Rs 153.30 crore), ICICI Bank (Rs 127 crore) and State Bank of India (Rs 92 crore).

Satyam Computer Services topped volumes chart on BSE clocking volumes of 1.44 crore shares followed by Firstsource Solutions (80.20 lakh shares), Wire & Wireless India (76.67 lakh shares), Unitech (74.40 lakh shares) and Spice Communications (65.67 lakh shares).

Great Eastern Shipping Company climbed 2.56% to Rs 172.05 as Baltic Exchange's chief sea freight index Baltic Dry Index which tracks rates to ship dry commodities, hit a four-month high on Thursday, 19 February 2009.