Sensex holds 9,000 level in volatile trade

Key benchmark indices saw divergent trend in what was a highly volatile trading session. While the 30-share BSE Sensex fell, the broader based S&P CNX Nifty rose. Trend in global markets influenced trade on the domestic bourses. The Sensex fell 19.82 points, or 0.22%, up 85.56 points from the day's low but off 97.81 points from the day's high. The barometer index managed to settle above the psychologically important 9,000 mark.

As per the provisional data released by the stock exchanges after trading hours, foreign funds today, 18 February 2009, sold stocks worth a net Rs 288.45 crore. Domestic funds bought shares worth a net Rs 102.34 crore.

The market was volatile. It tumbled in opening trade mirroring a fall in global stocks caused by worsening world economic situation and worries about the global banking system. Volatility was high with the market alternatively moving between positive and negative zone. But the market soon cut losses as investors chased bargains in the battered market that had dropped 6.2% in the previous two sessions on disappointment from Monday's (16 February 2009) interim general budget and on weak global stocks. It weakened again later on weakness in global stocks.

The market cut losses in early afternoon trade on higher US index futures. The market moved into positive zone after the Reserve Bank of India (RBI) governor D Subbarao said the impact of the global recession on India was sharper than expected. His comments stoked speculation of more interest rates cuts to shield the domestic economy from the global financial sector crisis and recession in key global economies.

After hitting the day's high in mid-afternoon trade, the market weakened again later as European markets moved into the red from green and as US index futures pared gains.

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. Once the model code of conduct comes into force after the announcement of poll dates, any announcement by the government will be subject to Election Commission's (EC) scrutiny.

The EC is likely to announce the poll date for the parliamentary elections by the end of this month. The elections are likely to be held in April-May 2009

Meanwhile, the Centre today sought parliament's approval for Rs 10765 crore in extra spending for this fiscal year. In its interim budget the government said the fiscal deficit is seen at 6% of GDP at end 2008-09, far higher than the initial target of 2.5% set for the current year.

But the deteriorating fiscal position of the government has raised fears of downgrade of India's sovereign rating by international ratings agencies. Both Standard & Poor's and Fitch Ratings have already indicated that they are likely to lower the country's credit rating. India's fiscal deficit is one of the highest in the world and the two stimulus packages announced in recent months to shore up sagging growth have put pressure on finances, while tax collections have slowed sharply.

Standard and Poor's currently rates India's local currency rating at BBB- (minus), the lowest investment-grade level, with a stable outlook. Fitch has a similar rating but with a negative outlook, while Moody's pegs it at one notch lower at speculative grade.

If India's sovereign rating is downgraded, it will significantly raise the cost of borrowing of Indian firms in global markets - something the government had banked on to ease the domestic credit crunch. The financial meltdown had already reduced these inflows; a rating downgrade will put an end to them altogether.

European shares turned negative as banks gave up early gains and stocks trading without rights to dividend weighed on a key benchmark. Key benchmark indices in UK, Germany and France were down by between 0.54% and 0.95%.

Some Asian indices moved into green from red. Hang Seng rose 0.55%, Straits Times advanced 0.80% and Taiwan Weighted index gained 0.15%. But Key benchmark indices in Japan, South Korea, and China were down by between 1.24% and 4.72%. Earlier in the day, there was an across-the-board decline in Asian markets on deepening economic gloom and on fears about the global finance sector.

Trading in US index futures indicated the Dow could rise 21 points, cutting sharp gains at the opening bell on Wednesday, 18 February 2009

US markets tumbled on Tuesday, 17 February 2009 with the S&P 500 and the Dow industrials closing at near three-month lows, as regional manufacturing data signaled the recession is worsening while fresh worries about European banks underscored the global nature of the downturn.

The Dow Jones Industrial Average slumped 297.81 points, or 3.79% to 7,552.60. The Nasdaq Composite index fell 63.70 points, or 4.15%, to close at 1,470.66 and the S&P 500 fell 37.67 points, or 4.6%, to 789.17.

A report showing that manufacturing production in New York state fell to a record low in February stirred worries about the deepening recession and added to fears that the new US economic stimulus package won't be a quick fix.

US President Barack Obama signed the $787 billion economic stimulus bill into law on Tuesday, but investors are fearful that the plan will not blunt the impact of the recession soon enough. The White House hopes the package will save or create 3.5 million jobs.

Obama is likely outline today, 18 February 2009, another big piece of his recovery effort later - a $50 billion plan to help stem foreclosures in Arizona, one of the states hardest hit by the mortgage defaults that are at the center of the nation's economic woes.

Meanwhile the US auto industry needs even more help from the government to survive than originally thought. General Motors on Tuesday said it could need up to $30 billion from the Treasury Department to keep operating. Included in that amount is $13.4 billion the company has already received. Previously, GM had said it could need as much as $18 billion. General Motors Corp. and Chrysler LLC said Tuesday they will need billions more in government loans than they predicted just two months ago.

Stocks fell across Europe on Tuesday, 17 February 2009 on deepening financial crisis in eastern Europe as fears escalate that troubles in former communist countries could wallop western Europe's already-stressed banking system. Moody's Investors Services on Tuesday warned that banks in Eastern Europe with large loan books faced downgrades and their parent banks' ratings could also weaken.

Closer home, 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.

The BSE 30-share Sensex was down 19.82 points or 0.22%, to 9,015.18. The Sensex opened points 95.62 lower at 8,939.38. At the day's low of 8,929.62, the Sensex lost 105.38 points in early trade. At the day's high of 9,112.99, the Sensex rose 77.99 points in mid-afternoon trade.

While the Sensex fell, the broader based S&P CNX Nifty rose albeit marginally. It rose 5.65 points or 0.20% at 2776.15.

Gains in some stocks which are part of the Nifty but are not in Sensex, helped Nifty score gains even when Sensex fell. Power Grid Corporation rose 2.75%, Unitech gained 2.83%, and BPCL surged 5.18%. Power Grid Corporation holds a 2.14% weight in Nifty and Unitech and BPCL enjoy 0.87% and 0.27% weightage respectively.

The barometer index BSE Sensex is down 632.13 points or 6.55% in calendar 2009 from its close of 9,647.31 on 31 December 2008.

The market breadth, indicating the overall health of the market, was negative on BSE with 1377 shares declining as compared with 994 that advanced. A total of 117 shares remained unchanged.

BSE clocked a turnover of Rs 2791 crore as compared to Rs 2,392.06 crore on Tuesday, 17 February 2009. Turnover in NSE's futures & options (F&O) segment rose to Rs 41,094.83 crore from Rs 38,956.24 crore on Tuesday, 17 February 2009.

The BSE Healthcare index (down 0.37%), BSE Consumer Durables index (down 1.70%), the BSE Bankex (down 0.37%), underperfomed the Sensex.

The BSE Metal index (up 0.18%), the BSE IT index (down 0.14%), and BSE Oil & Gas index (up 1.39%). BSE Realty index (up 3.18%), BSE Power index (up 0.51%), the BSE PSU index (up 0.39%), the BSE Capital Goods index (down 0.05%), the BSE Auto index (up 0.27%), and the FMCG index (down 0.07%), outperformed the Sensex.

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

Rate sensitive realty shares reversed early losses on hopes lower interest rates will spur housing demand mostly driven by finance.

India's largest real estate firm by market capitalisation DLF jumped 9.57% to Rs 162 on high volumes of 87.92 lakh shares, rebounding from day's low of Rs 142.10. It was the top gainer from the Sensex pack. As per reports a consortium of private equity funds, including UAE's leading financial institution Taib Bank, the Blackstone group and JP Morgan, are in advanced negotiations with promoters of the DLF to pick up a majority stake worth around $400-450 million in affiliate company DLF Assets.

Unitech (up 2.83%), HDIL (up 2.06%), Indiabulls Real Estate (up 3.09%), rose.

India's largest small-car maker by sales Maruti Suzuki India advanced 4.39% to Rs 624.80 on reports it expects sales growth for the ongoing month to be around 5-7%. The company achieved total sales of 7,64,842 units for the 2007-2008 fiscal. It sold 71,779 vehicles in January 2009, its highest-ever monthly sales.

India's top truck maker by sales Tata Motors rose 1.75% to Rs 133.80 after its ADR rose 1.8% on the NSE on Tuesday, 17 February 2009.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) gained 1.88% to Rs 1291.45, off day's high of Rs 1316. Earlier the stock rebounded sharply from day's low of Rs 1248. RIL may reportedly restart crude oil production from its predominantly gas-rich KG-D6 fields next month. The field in KG-D6 had commenced crude oil production in September 2008 and had produced over 790,000 barrels up to 9 December 2008, when output ceased due to equipment failure.

State-run oil marketing companies (OMCs) surged after US light, sweet crude for March 2009 delivery fell $2.58 or 6.88% to $34.93 a barrel on Tuesday, 17 February 2009 on New York Mercantile Exchange (NYMEX) as grim economic indicators battered markets and raised concerns about slumping demand.

HPCL (up 4.25%), BPCL (up 5.53%), and IOC (up 2.92%), edged higher.

The fall in crude oil prices will reduce under-recoveries for the PSU OMCs for selling fuel at controlled prices. PSU OMCs are currently making profit on sale of petrol and diesel. But they continue to make losses on the sale of kerosene and liquefied petroleum gas.

Cement companies gained on hopes of higher demand after the interim budget 2009-10 presented in parliament on Monday, 16 February 2009 allocated Rs 40,900 crore to the the Bharat Nirman scheme, a time-bound plan for building rural infrastructure.

ACC (up 4.12%), India Cement (up 3.05%), UltraTech Cement (up 2.89%), and Shree Cement (up 4.27%), and gained on from the cement pack.

However most banking and financial shares remained subdued on worries about the global banking system. India's largest dedicated housing finance company by total income Housing Development Finance Corporation (HDFC) slumped 4.36% to Rs 1370.

India's largest private sector bank by net profit ICICI Bank lost 3.99% to Rs 370.50 on a 13.63% slide in its ADR on Wednesday, 17 February 2009. India's largest bank in terms of assets and branch network State Bank of India slipped 2.72% to Rs 1069.80.

India's second largest private sector bank by net profit HDFC Bank rose 0.43% to Rs 884 despite its ADR sliding 7.72% on Tuesday, 17 February 2009.

Moody's Investors Services on Tuesday threatened to downgrade euro zone banks with significant exposure to the weakening economies in Eastern and Central Europe, and Standard & Poor's said it may review emerging Europe bank ratings.

India's second largest private sector power generation firm by market capitalisation Reliance Infrastructure slumped 4.34% to Rs 496.40 on reports the company violated external commercial borrowings (ECB) rules and invested $300 million in debt mutual fund.

IT pivotals were mixed as fears a weak global economy would cut the amount firms spent on technology offset weak rupee.

India's third largest software services exporter, Wipro fell 0.52% on a 6.65% fall in ADR on Tuesday, 17 February 2009. India's largest software services exporter by sales TCS slipped 1.21% while India's fifth largest IT exporter by sales HCL Technologies rose 0.27%.

India's second largest software exporter by sales, Infosys Technologies rose 0.33%. The company reportedly sees a 5% cut in IT budgets of its clients in Europe this year

The rupee tumbled to 50.01/02 against the dollar from its close of 49.70/72 on Tuesday, 17 February 2009 on concerns of capital outflows from stock market following weakness in global markets. A weaker rupee boosts operating margins of IT firms as the sector earn most of its revenue from exports.

India's largest private sector aluminium maker by sales Hindalco Industries shed 1.90% to Rs 41.40. After market hours on 16 February 2009, the company announced its board had approved the proposal to use $1.8 billion in its reserve to write-off costs relating to its foreign acquisition and domestic expansion.

India's largest cigarette maker by sales ITC fell 1.08% to Rs 178.60. Reports the Supreme Court has restrained the customs department from taking any action against the company which has been held responsible for importing around 1,000 tonnes of 'hazardous municipal waste', had pulled stock to day's high of Rs 182.50 in intra-day trade.

Reliance Industries topped the turnover chart on BSE with a turnover of Rs 250.80 crore followed by Educomp Solutions (Rs 232.50 crore), Reliance Infrastructure (Rs 188.90 crore), United Spirits (Rs 138.70 crore) and DLF (Rs 134.50 crore).

Unitech led the volume chart on BSE clocking volumes of 1.26 crore shares followed by Cals Refineries (93.30 lakh), Satyam Computer Services (89.20 lakh), DLF (88 lakh) and Suzlon Energy (69.75 lakh).

Maytas Infra was locked at upper limit of 5% at Rs 56.85 after the government approached the Company Law Board to supersede the boards of Maytas Infra and Maytas Property.

SREI Infrastructure Finance galloped 12.46% to Rs 36.55 after a consortium of the company secured a contract worth Rs 6000 crore. The company announced the new order win during trading hours today, 18 February 2009.

KEC International rose 0.33% to Rs 138 on bagging orders aggregating to Rs 365 crore. The company announced the new orders during trading hours today, 18 February 2009.