Post Session Commentary - March 5 2009

Indian market tanked more than 2.5% to its lowest in more than four months as rate cut by the central bank late on Wednesday was not enough to bring back confidence. On 4th March 2009, the RBI announced the slash in repo and reverse repo rates, each by 50 basis points with immediate effect. Along with this, drop in inflation number for the week ended 21st Feb 2009, to 3.03% was also unable to bring any sign of recovery. Further, uncertainty over health of global economy also dampened the sentiments.

The domestic market opened on positive note tracking firm cues from the markets all over the world The US stock markets break the five session of loosing streak and closed higher on Wednesday, after the Federal officials announced details of the mortgage-rescue plan to stem mortgage defaults. However, shortly after positive opening, benchmark indices surrounded by the negative sentiments that interest rates cut by the RBI failed to motivate the economy. Further, benchmark indices continued to extend its losses on significant selling pressure over the ground. Incessant Sharp slide was clogged only on the closing of trading. Most of the Asian markets also came off the day’s high to close lower and European stocks are also trading lower. BSE Sensex ended around 8,200 mark and NSE Nifty closed below 2,600 level. From the sectoral front, most of the indices ended in red and among those heavy selling was contributed mainly by Bank, Oil & Gas, Power, FMCG, Capital Goods, PSU and Metal stocks. BSE Mid Cap and Small Cap stocks also followed the same trend. However, Consumer Durable index was in limelight as witnessed most of the buying from this basket.

Among the Sensex pack 25 stocks ended in red territory and 5 in green. The market breadth indicating the overall health of the market remained extremely negative as 1686 stocks closed in red while 699 stocks closed in green and 85stocks remained unchanged in BSE.

The BSE Sensex closed lower by 248.57 points at 8,197.92 and NSE Nifty ended down by 68.50 points at 2,576.7. BSE Mid Caps and BSE Small Caps ended with losses of 45.25 points and 54.16 points at 2,603.11 and 2,936.01 respectively. The BSE Sensex touched intraday high of 8,535.03 and intraday low of 8,166.97.

Losers from the BSE Sensex pack are Ranbaxy Lab (9.27%), ICICI Bank (5.17%), Tata Power (5.07%), Reliance (5%), HDFC Bank (4.54%), HUL (4.5%) and NTPC Ltd (3.84%).

Gainers from the BSE Sensex pack are Sun Pharma (2.19%), JP Associates (1.91TCS Ltd (0.42%), Wipro Ltd (0.19%) and Sterlite Industries (0.04%).

Inflation slipped seven year low to 3.03% for the week ended February 21 as against 3.36% reported in the previous week. This fall was mainly due to lower prices of food items such as fruits, vegetables, tea and some manufactured items. The annual inflation was at 3.36% in the week before and at 5.69% in the corresponding week last year.

On 4th March 2009, the Reserve Bank of India announced the cut in repo and reverse repo rates, each by 50 basis points with immediate effect. Along with this, the repo, the rate at which the RBI lends short-term funds to banks, currently stands at 5% from 5.5% and the reverse repo, the rate at which the RBI borrows from banks, at 3.5% from 4%.

On the global markets front the Asian markets which opened before the Indian market, ended mixed after losing initial gains. Sentiments turned weak as there was no declaration of awaited additional stimulus package by China. Shanghai Composite and Nikkei 225 ended up by 22.97 and 142.53 points at 2,221.08 and 7,433.49 respectively. However, Hang Seng, Straits Times index and Seoul Composite ended lower by 119.91, 25.70 and 1.08 points at 12,211.24, 1,518.64 and 1,058.18 respectively.

European markets which opened after the Indian market are trading in red. In London FTSE 100 is trading lower by 51.33 points at 3,594.54 and in Frankfurt the DAX index is trading down by 58.48 points at 3,832.42.

The BSE Bank index lost (4.15%) or 161.49 points at 3,728.22 on fears of rising defaults in a weakening economy. Losers are Kotak Bank (7.54%), Axis Bank (6.74%), Yes Bank (5.22%), ICICI Bank (5.17%) and Karnataka (4.69%).
The BSE Oil & Gas index closed with decrease of (3.71%) or 216.99 points at 5,625.26. Scrips that lost are Aban Offshore (9.84%), Reliance Nat Res (7.31%), Reliance (5%), Reliance Pet (5%) and HPCL (2.41%).

The BSE Power index also lost (3.26%) or 54.41 points to close at 1,615.49. Suzlon Energy (5.23%), Tata Power (5.07%), Siemens Ltd (4.28%), GVK Power (4.20%) and NTPC Ltd (3.84%) ended in red.

The BSE FMCG index ended lower by (3.26%) or 63.49 points to close at 1,886.73. HUL (4.50%), Britania (3.89%), ITC Ltd (3.57%), Colgate Palm (1.84%) and United Spr (1.76%) ended in positive territory.

The BSE Capital Goods index ended down by (2.63%) or 148.12 at 5,476.75 on worries that a slowing economy will crease orders. Losers are Gammon Indi (7.03%), Alstom Proje (6.54%), Everest Kant (6.01%), Suzlon Energy (5.23%) and Praj Indus (5.13%).

The BSE Consumer Durables stocks gained (0.52%) or 7.69 points to close at 1,482.18. Gainers are Videocon Ind (1.68%), Titan Ind (1%) and Rajesh Export (0.22%).

Canara Bank lost 4.14%. The bank has slashed the interest rates for the housing loans as well as the vehicle loans and the domestic term deposits effective from March 11. For home loans up to Rs30 lakh, the interest rate would be at 8.25% for the first one year while 9.25% for the next 48 months. While the BPLR minus 2.50% subject to a minimum of 10% thereafter.

JSW Steel dropped 0.34%. The company has reported a growth of 8.5% in Steel production in February 2009 compared to that of corresponding month in the last fiscal year. However, the production in February rose 3% from January.

Ranbaxy tumbled 9.27% despite securing USFDA approval for Quinapril+HCTZ Tablets. The company has received an approval from the USFDA for its Abbreviated New Drug Application (ANDA) and Quinapril Hydrochloride & Hydrochlotothiazide (Quinapril + HCTZ) Tablets, 10mg/12.5mg, 20 mg/12.5mg and 20mg/225mg.

Infosys Technologies fell 1.26% to Rs. 1,208.50 after foreign broker Wachovia Capital Markets slashed rating on the stock to ''underperform'' from ''market perform''.

ICICI Bank plunged 5.17%. S&P has lowered their credit rating to A-1 from A-1+ on ICICI’s $375 million Bank of America-backed commodity paper program as ICICI commercial paper holders will be paid directly by Bank of America on maturity.