Sensex at three-year closing low; realty shares slump

Key benchmark indices dropped and the market breadth, indicating the overall health of the market, was weak as subdued-to-weak trend in global markets, a dismal US job data, a weak rupee and concerns of sustained outflow by foreign funds weighed on the domestic bourses. Nevertheless, the market cut losses in late trade as index heavyweight Reliance Industries (RIL) came off the lower level.

The BSE 30-share Sensex lost 165.42 points or down 1.99%, to settle at 8,160.40, its lowest closing in more than three years. The barometer index recovered 50.30 points from the day's low.

Volumes were low as day-traders and other short-term traders stayed away ahead of holidays. BSE clocked a turnover of Rs 2188 crore, much lower than Rs 3,338.61 crore on Friday, 6 March 2009. The market remains closed on Tuesday, 10 March 2009 and Wednesday, 11 March 2009, on account of public holidays on those two days.

Trading in US index futures showed the Dow could fall 106 points at the opening bell on Monday, 9 March 2009

After a weak opening triggered by subdued Asian stocks, the market extended losses in early afternoon trade. The Sensex cut losses soon after that. It weakened again later. The market once again recovered in afternoon trade. However, the recovery was derailed and the market slumped in mid-afternoon trade on lower start of European markets, which opened after the Indian market. The market once again cut losses in late trade.

Indian stocks dropped today, 9 March 2009, despite signs that the stimulus packages announced by the government since December 2008 and an aggressive rate cuts announced by the central bank since October 2008 have started having some positive impact - lower interest rate have helped automobile sales rebound in the past few months.

Further, a large government spending plan may help pump-prime the economy. The economy will also get another stimulus in the form of a huge spending by the political parties for the forthcoming Lok Sabha elections. As per reports, around Rs 6,000 crore would be pumped into the system as political parties and candidates splurge on their campaign and the Election Commission pays a huge bill for conducting the election. And the main beneficiary would be the services sector that often spurs growth.

Further, the forthcoming Indian Premier League (IPL) - the domestic cricket series - will result in a substantial business to the Indian advertising, media and entertainment industry

Another plus point is that prospects look bright for the Rabi harvest in contrast to the previous kharif harvest which saw coarse grains recording lower output. Agriculture remains the mainstay of the economy and if rabi output increases as has been projected, rural demand may rise in the coming months, though perhaps not as much as had been hoped.

According to Aditya Puri, Managing Director, HDFC Bank, Indian banks are flush with funds and interest rates have dropped drastically over the past few months. According to him, the regulators should allow Indian banks to raise long term funds without cash reserve ratio (CRR) and statutory liquidity ratio (SLR) requirements for such funding. This in turn will enable banks to provide long-term lending to corporates and long-gestation infrastructure projects.

But the investor sentiments remains weak due to sustained selling by foreign funds. Foreign institutional investors (FIIs) have pressed heavy sales this year. FII outflow in February 2009 totaled Rs 2707 crore. FII outflow in calendar year 2009 totaled Rs 9128.30 crore (till 5 March 2009). Globally, investors are pulling out money from hedge funds, forcing hedge fund managers to dump assets.

At the same time, global banks and insurers are selling assets after amassing $1.2 trillion of credit losses and writedowns since the start of 2007. More recently, fears have intensified about the exposure of Western European banks and companies to deteriorating economic conditions in Eastern Europe.

Domestic institutional investors (DIIs) have been absorbing selling by foreign funds.

However, due to political uncertainty, investors are unlikely to build large positions with general election to be held in mid-April 2008 to mid-May 2009. More so at a time when it is highly unlikely that either Congress or BJP comes to power on its own i.e. without the support of other smaller/regional parties.

The market may recover if a coalition led either by Congress or BJP comes to power. But the recovery will be subject to BJP or Congress led coalition coming to power without a support from the Left front which is against key economic reforms. The market will then look for whether the new government which comes to power undertakes second generation reforms that could bring India back on a strong growth path witnessed in five years between 2003 and 2008.

Meanwhile, volatility in the rupee and global commodity prices have added to the woes of India Inc. The recent sharp slide in the rupee will increase in the cost of servicing overseas debt to the extent of the rupee's slide unless the company (which has overseas borrowings) has adopted an effective hedging strategy.

European markets were subdued today, 9 March 2009, as banks slipped after the UK government increased its stake in Lloyds Banking Group. Key benchmark indices in UK, Germany and France were down by between 1% and 2.25%.

Asian markets dropped on concerns corporate earnings will deteriorate further as the World Bank predicted the global economy to shrink for the first time since World War II. Key benchmark indices in China, Hong Kong, Singapore, and Taiwan were down by between 0.55% and 4.84%.

Japan's Nikkei 225 index fell 1.21% to 7,086.03, its lowest close since October 1982.

However, South Korea's Seoul Composite index rose 1.58% after reports quoting a Finance Ministry official indicated South Korea will allow local banks to roll over $720 million in loans maturing today, 9 March 2009 and inject an additional $50 million.

Meanwhile an Asian Development Bank report said the value of global financial assets including stocks, bonds and currencies, probably fell by more than $50 trillion in 2008, equivalent to a year of world gross domestic product. Global stock markets lost about $28.7 trillion in 2008, the report added. Adding to the gloomy picture, the World Bank said on 8 March 2009, the global economy is likely to shrink for the first time since World War II, and trade will decline by the most in 80 years.

US markets recovered in late trade to end on a mixed note, on Friday, 6 March 2009, on reports that Lloyds Banking Group reached an asset-protection deal with the UK government wherein the UK government will pick 77% stake in Lloyds Banking Group after agreeing a deal to underwrite $370 billion of risky assets. Meanwhile the US government said unemployment rate in February 2009 had risen to the highest in 25 years

The Dow Jones Industrial Average gained 32.50 points or 0.49% to 6,626.94 and the S&P 500 index rose 0.83 points or 0.12% to 683.38. However the Nasdaq Composite fell 5.74 points or 0.44% at 1293.85

The BSE 30-share Sensex lost 165.42 points or down 1.99%, to settle at 8,160.40, its lowest closing since 2 November 2005. Sensex opened 66.60 points lower at 8,259.22, also its day's high. At the day's low of 8,110.31, the Sensex lost 215.51 points in mid-afternoon trade.

The S&P CNX Nifty fell 47 points or 1.79% to 2573.15, its lowest closing since 20 November 2008. Nifty March 2009 futures were at 2545.50, at a discount of 27.65 points as compared to the spot closing. Turnover in NSE's futures & options (F&O) segment was Rs 37,897.25 crore, much lower than Rs 48,734.94 crore on Friday, 6 March 2009.

The Sensex is down 1486.91 points or 15.41% in calendar 2009 from its close of 9,647.31 on 31 December 2008. The S&P CNX Nifty is down 386 points or 13.04% in calendar 2009 from its close of 2,959.15 on 31 December 2008.

The market breadth, indicating the overall health of the market, was weak on BSE with 1577 shares declining as compared with 811 that advanced. A total of 89 shares remained unchanged.

The BSE Mid-Cap index (down 1.27%) and BSE Small-Cap index (down 1.55%) outperformed the Sensex.

The BSE Oil & Gas index (down 1.58%), BSE Capital Goods index (down 1.94%), the BSE Power index (down 1.34%), the BSE Metal index (down 1.90%), the BSE Consumer Durables index (down 1.61%), the BSE Auto index (up 0.07%), the BSE PSU index (down 1.71%), the BSE Healthcare index (down 1.03%), outperformed the Sensex.

The BSE IT index (down 2.27%), the BSE TECk index (down 2.58%), the BSE Bankex (down 2.78%), the BSE Realty index (down 3.21%), the BSE FMCG index (down 2.78%), underperfomed the Sensex

Among the 30-member Sensex pack, 26 slipped while only 4 of them rose.

Infrastructure stocks slipped after the government data on Friday, 6 March 2009 showed, that infrastructure sector output grew 1.4% in January 2009 from a year earlier, below an unrevised 2.3% in December 2008.

India's largest dam builder Jaiprakash Associates plunged 5.75% to Rs 65.55 and was the top loser from the Sensex pack.

Reliance Infrastructure (down 3.23%), GMR Infrastructure (down 1.87%), and GVK Power Infrastructure (down 2.73%), declined.

Infrastructure sector output had risen by 3.6% in January 2008, and in the 2007/08 fiscal year it rose 5.6% from a year earlier.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 0.65% to Rs 1163 on fears the worsening global economy will hit demand for petrochemicals. Nevertheless, the stock rebounded strongly from day's low of Rs 1140

India's largest state-run oil exploration firm by sales Oil and Natural Gas Corporation was down 0.88% to Rs 667.50 even as the company trashed a report by investment banking firm Goldman Sachs, saying Goldman's analysis of explorer was devoid of basic facts and was aimed at hurting the company's image. The Goldman report had on Friday, 6 March 2009 questioned corporate governance in ONGC because it was subsidising fuel prices under government orders.

Subsidy discounts to public sector oil marketing companies is a practice of the government since 2003-04, it said. Subsidy discounts are applicable to crude produced from nominated blocks only, where there is no production sharing or profit oil sharing with the government, it added.

Subsidy discounts to public sector oil marketing companies is a practice of the government since 2003-04, it said. “Subsidy discounts are applicable to crude produced from nominated blocks only, where there is no production sharing or profit oil sharing with the government, it added. ONGC said there will be no subsidy burden for ONGC in Q4 March 2009.

ONGC further said it acquired 43 overseas oil and gas assets in lands in just six years. It acquired properties abroad through its foreign arm ONGC Videsh (OVL). OVL had only one property in 2003. The percentage of overseas production to total production of ONGC group has moved from 7.23% in 2002-2003 to 15.42% in 2007-08. The company added 255.01 million tonne oil equivalent (MTOE) of reserves through acquisition of overseas properties since 2003-04, it said.

Pointing at the cash flow of its wholly-owned subsidiary, ONGC said OVL has already paid back a loan amount of Rs 11,820 crore. The parent company has extended total Rs 25,684 crore to OVL as loans.

India's largest private sector oil exploration firm by sales Cairn India gained 0.78% after the price of crude oil rose to its highest in about six weeks. Crude oil for April 2009 delivery rose 97 cents to $46.49 a barrel today, 9 March 2009 on the prospect of production cuts by organisation of petroleum exporting countries (OPEC).

State-run oil marketing firms declined after the price of crude oil rose to its highest in about six weeks. HPCL (down 6.81%), BPCL (down 7.22%), and IOC (down 5.89%), slipped.

Crude oil for April 2009 delivery rose 97 cents to $46.49 a barrel today, 9 March 2009 on the prospect of production cuts by organisation of petroleum exporting countries (OPEC). Oil marketing firms suffer under-recovery on domestic sale of petrol, diesel, LPG and kerosene at a controlled price.

Banking shares declined as fears of rising defaults in a weakening economy offset firm American depository receipt (ADRs) on Friday, 6 March 2009.

India's largest private sector bank by net profit ICICI Bank fell 2.32% to Rs 263.05 despite its ADR rising 2.07% on Friday, 6 March 2009. India's second largest private sector bank by operating income HDFC Bank slipped 0.14% to Rs 800. Its ADR rose 2.10% on Friday, 6 March 2009.

India's largest bank in terms of assets and branch network State Bank of India shed 4.81% to Rs 895.60.

India's largest dedicated housing finance company by total income HDFC advanced 2.92% to Rs 1260.10 and was the top gainer from the Sensex pack. The stock had surged 6.4% on Friday, 6 March 2009 after foreign fund house Growth Fund of America Inc picked up 1.7% stake in HDFC worth Rs 560 crore through bulk deal. The name of the seller was not known.

Rate sensitive realty stocks fell on recent reports falling interest rates have failed to revive housing demand. India's largest real estate developer by sales DLF plunged 4.65% to Rs 138.55

Indiabulls Real Estate (down 3.84%), Housing Development & Infrastructure (down 7.41%), and Omaxe (down 2.44%) fell. Most of the realty deals including sale of commercial property and housing sales are driven by finance.

Auto shares outperformed the Sensex after Society of Indian Automobile Manufacturers (SIAM) data showed 10.61% rise in auto sales to 10.4 lakh units in February 2009 over February 2008.

India's top tractor maker by sales Mahindra & Mahindra rose 0.35% to Rs 318 on reports the company expects an improvement in sales witnessed last month to continue in March 2009. M&M had reported 1% rise in total vehicle sales to 19,894 units in February 2009 over February 2008.

India's largest small car maker by sales Maruti Suzuki India rose 0.06% to Rs 649.50.

However India's largest truck maker by sales Tata Motors slipped 1.08% to Rs 137. Reportedly the company is considering setting up a new assembly line for the Rs 1-lakh car Nano in Pune, on land leased till recently to Mercedes-Benz, to boost production.

India's largest FMCG major by sales Hindustan Unilever (HUL) fell 2.95% extending a fall of 8.44% in the previous three trading session triggered by foreign brokerage JPMorgan Chase & Company cutting its rating on the stock to 'underweight' from 'neutral', citing weakening growth and increasing competition.

HUL's sharp slide weighed on other FMCG stocks. ITC (down 4.19%), Britannia Industries (down 3.25%), Bata (down 1.53%), and Tata Tea (down 2.16%), declined.

India's largest pharma company by sales Ranbaxy Laboratories lost 4.81% to Rs 134.50, reversing early gains. The stock had risen as much as 3.18% to Rs 145.80 earlier in the day after it received final approval from the US Food and Drug Administration (USFDA) to market and manufacture Ramipril capsules in the strengths of 5 milligrams (mg) and 10 mg respectively. Ramipril helps to reduce the risk of myocardial infarction, stroke or death from cardiovascular causes.

On Friday, 6 March 2009, Ranbaxy received an approval from Australia's Therapeutic Goods Administration (TGA) to market its anti-fungal tablets Serbifin Terbinafine in that country.

India's largest pharma company by market capitalisation Sun Pharmaceuticals plunged 4.08% to Rs 979.60. After market hours on Friday, 6 March 2009, Sun Pharma said it extended its tender offer to Taro Pharmaceuticals till 20 March 2009. The extension was to comply with an order issued by the Supreme Court of Israel prohibiting the closing of the offer until the court decides on the appeal made by Taro's non-promoter directors against the offer.

Capital goods stocks fell on worries a slowing economy will crimp orders. ABB (down 1.65%), Bharat Heavy Electricals (down 0.94%), and Siemens (down 3.45%), slipped.

India's largest engineering & construction company by sales Larsen & Toubro shed 2.87% to Rs 563.50 after the company reportedly said it will go ahead with a bid for beleaguered software firm Satyam Computer Services. L&T is the single largest shareholder in Satyam with a 12% stake.

Meanwhile Satyam Computers jumped 14.96% after it said today it was commencing a competitive bidding process to sell a 51% stake

India's top private sector steel maker by sales Tata Steel fell 3.06% to Rs 152.05 despite the company recording a 47% rise in domestic sales in February 2009 over February 2008. Production of hot metal, crude steel and saleable steel in February 2009 rose 19%, 12% and 21%, respectively, over February 2008, the company said after market hours on Friday, 6 March 2009.

Outsourcing focussed IT firms declined on fears a weak global economy would cut the amount firms spent on technology. India's third largest software services exporter, Wipro fell 3.19% even as its ADR rose 0.54% on Friday, 6 March 2009. India's largest software services exporter by sales TCS lost 4.12%. India's second largest software services exporter Infosys Technologies declined 1.66% even as its ADR gained 1.22% on Friday, 6 March 2009. India's fifth largest IT major by sales HCL Technologies shed 3.62%.

KLG Systel jumped 20% to Rs 62.60 on bagging orders worth Rs 40 crore. The company announced the new orders on Saturday, 7 March 2009.

Indian rupee fell against the dollar today, 9 March 2009 on expectation of capital outflows owing to subdued global stock markets. The partially convertible rupee was at 51.81/83 per dollar, lower than previous close of 51.63/65.

A weak rupee boosts revenues of IT firms in rupee terms as IT companies earn a lion's share of revenue from exports.

Satyam Computer Services was the top traded counter on BSE with turnover Rs 168.51 crore followed by ICICI Bank (Rs 132.83 crore), Reliance Industries (Rs 131.53 crore), Akruti City (Rs 127.86 crore) and State Bank of India (Rs 99.19 crore).

Satyam Computer Services also topped volume charts on BSE clocking volumes of 3.52 crore shares followed by Indian Overseas Bank (1.29 crore), Rolta India (74.25 lakh), Cals Refineries (71.87 lakh) and Allied Computes (70.32 lakh).

SpiceJet soared 9.30% to Rs 13.40 on reports the company may either merge or acquire a controlling stake in Wadia group-owned unlisted budget airline GoAir.

Sun TV Network slumped 6.26% to Rs 146 after the company said a promoter has pledged 1.65 crore shares which is 4.19% of the equity capital of the company. The company made this announcement during trading hours today, 9 March 2009.

The National Stock Exchange had earlier said that trading would continue in the normal course from 5 March 2009 to 19 March 2009 despite Sun Outage between 11:45 IST to 12:25 IST. The exchange has advised members to use alternative mode of connectivity instead of VSAT during the above mentioned period for continuing trading without any disruptions on account of Sun outage.

Earlier on 25 February 2009, the Indian Space Research Organization (ISRO) had informed the NSE that there would be Sun Outage from 5 March 2009 to 19 March 2009 between 11:45 IST to 12:25 IST due to which trading members may face connectivity problems at different times on different dates based on geographical location during this period.