Sensex tumbles to 3-year low on global rout in equities

Key benchmark indices slumped in the week ended 6 March 2009 with the BSE Sensex sliding to 3-year low as grim economic data pulled world stocks to six-year low. Heavy selling by foreign institutional investors (FIIs) also weighed on the sentiment. Market declined in 3 out of 5 trading sessions in the week.

World stocks tumbled to six-year lows on grim global economic data. Mortgage delinquencies in the US climbed to the highest level on record, the Mortgage Bankers Association said on Thursday, 5 March 2009. More than 600,000 Americans filed claims for jobless benefits for the fifth-straight week, the worst performance since 1982, Labor Department figures showed on Thursday.

The European Central Bank (ECB) on Thursday, 5 March 2009, cut its main interest rate by a half point to 1.50%, and ECB chief Jean-Claude Trichet said it could well go even lower. On the same day, the Bank of England (BOE) cut its main lending rate by half a point to 0.50%, an all-time low for the 315-year-old institution, and said it would create fresh funds to spur activity, a method known as quantitative easing.

ECB cautioned that global demand is likely to remain very weak this year adding that the world economy has weakened substantially in recent months due to financial market turmoil.

Foreign institutional investors (FIIs) have been pressing substantial sales, with their outflow totaling Rs 2707 crore in February 2009. FII outflow in calendar year 2009 stood at Rs 8519.30 crore (till 4 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.

The 30-share BSE Sensex lost 565.79 points or 6.36% to 8,325.82 in the week ended 6 March 2009. The 50-unit S&P Nifty lost 143.50 points or 5.19% to 2620.15 in the week.

The BSE Mid-Cap index declined 171.99 points or 6.24% to 2,586.30, while the BSE Small-Cap index fell 194.28 points or 6.25% to 2,911.73. Both the indices outperformed the Sensex.

Trading for the week began on a weak note with the market sliding on negative global cues and data showing slide in India's exports for the fourth month in a row in January 2009. The BSE 30-share Sensex lost 284.53 points, or 3.2%, to 8,607.08, its lowest closing since 20 November 2008. The S&P CNX Nifty lost 89.05 points, or 3.22%, to 2,674.60.

Key benchmark indices slumped in late trade on Tuesday, 3 March 2009 on deepening concerns about the global economy. The BSE 30-share Sensex lost 179.79 points, or 2.09%, to 8,411.30, its lowest closing since 10 November 2005. The S&P CNX Nifty fell 52.20 points, or 1.95%, to 2,622.40.

A rebound in global indices helped key benchmark indices log small gains on Wednesday, 4 March 2009. The BSE 30-share Sensex rose 19.20 points, or 0.23%, to 8,446.49 and the S&P CNX Nifty was up 22.80 points, or 0.87%, to 2,645.20.

Weak global markets pulled the Sensex to 3-year closing low on Thursday, 5 March 2009. A surprise cut in policy rates by the Reserve Bank of India (RBI) failed to draw bulls. The BSE 30-share Sensex slumped 248.57 points, or 2.94%, to 8,197.92, its lowest closing since 2 November 2005. The S&P CNX Nifty lost 68.50 points, or 2.59%, to 2,576.70, its lowest closing since 20 November 2008.

Key benchmark indices reversed early losses on Friday, 6 March 2009 as investors mopped up battered blue chip stocks. The BSE 30-share Sensex gained 127.90 points, or 1.56%, to 8,325.82 and the S&P CNX Nifty advanced 43.45 points, or 1.69%, to 2,620.15

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 7.47% to Rs 1170.55 in the week after combined crude processing at its two export-focused plants at Jamnagar in Gujarat dived 12.1% to 6,68,450 barrels per day (bpd) in January 2009 over January 2008. Reliance commissioned its new 5,80,000 bpd plant in December 2008, turning Jamnagar into the world's biggest refining complex with capacity of 1.24 million bpd.

The board of Reliance Industries on Monday, 2 March 2009, approved the absorption of its unit Reliance Petroleum (RPL) and set a share swap ratio giving it direct control of the world's largest refinery complex. Reliance Industries said it would issue one share for every 16 held in RPL, which runs a refinery. Shares of Reliance Petroleum fell 6.04% to Rs 71.60.

Meanwhile, RIL said its absorption of its unit RPL will be tax neutral for both the entities i.e. both the refineries will retain their tax benefits.

India's largest oil exploration firm by sales Oil & Natural Gas Corporation fell 2.56% to Rs 673.45 after foreign brokerage Goldman Sachs said the government took $20 billion cash from the company without consulting minority shareholders.

Banking stocks fell as fears of rising defaults in a weakening economy offset hopes a further fall in interest rates may boost lending growth. India's largest private sector bank by net profit ICICI Bank lost 17.92%. Recently, Life Insurance Corporation of India hiked its stake in ICICI Bank by 2.04% to 9.38%.

India's largest bank in terms of assets and branch network State Bank of India fell 8.4% after the bank reduced deposit rates by 40 to 50 basis points across maturities. The new rates would be effective from 9 March 2009. India's second largest private sector bank by net profit HDFC Bank slipped 9.46%.

Select metal stocks rose as metal prices surged on the London Metal on China's plan to boost spending. Hindalco Industries (up 1.81%), and Sterlite Industries (up 2.06%), gained. However, National Aluminum Company (down 1.58%), and Tata Steel (down 8.99%), fell.

China is the world's largest consumer of a number of industrial commodities. It is the world's biggest consumer of copper.

India's largest car maker by sales Maruti Suzuki India fell 4.21% to Rs 649.10. Its vehicle sales rose 24.1% to 79190 units in February 2009 over February 2008. It was a record monthly sales by the car maker.

India's largest commercial vehicle maker by sales Tata Motors declined 7.33% to Rs 138.50. Tata Motors' total domestic sales for the month of February 2009 at 42,493 units, were the highest in the last 4 months. Domestic commercial vehicle sales at 23,454 units were the highest since September 2008 and domestic passenger vehicle sale at 19,039 units were was the highest since May 2008. The total domestic sales, however, declined 15% in February 2009 over February 2008.

However India's largest tractor maker by sales Mahindra & Mahindra rose 2.26% to Rs 316.90. M&M recorded 10.8% growth in total volumes to 29,017 units in February 2009 over February 2008.

Outsourcing focussed IT firms outperformed the Sensex as a weak rupee offset fears a weak global economy would cut the amount firms spent on technology. India's third largest software services exporter, Wipro rose 2.82% to Rs 213.20. India's largest software services exporter by sales TCS rose marginally by 0.04% to Rs 480.80. But India's second largest software services exporter Infosys Technologies fell 0.98%.

Satyam Computer Services rose 1.45% after company received approval from Securities and Exchange Board of India on late on Thursday, 5 March 2009, to kickstart a process to sell a 51% stake, in a move likely to attract more bidders. Satyam said it expects to soon invite expressions of interest from qualified investors, with more than $150 million in net assets, under a global bidding process.

The Indian rupee dropped to a record low 52.20 on Tuesday, 3 March 2009, on heightened fears of rising capital outflows from the stock market. A weak rupee boosts revenues of IT firms in rupee terms as IT companies earn a lion's share of revenue from exports.

Rate sensitive realty stocks fell on fears falling property prices will hit profit margins. DLF (down 4.22%), Indiabulls Real Estate (down 4.68%), and Unitech (down 7.45%), declined.

Property prices have slumped in the past few months as buyers have postponed purchases anticipating further fall in prices.

India's largest FMCG major by sales Hindustan Unilever slumped 11.76% to Rs 223.95 after foreign brokerage JPMorgan Chase & Company cut its rating on the stock to 'underweight' from 'neutral', citing weakening growth and increasing competition

India's largest drug maker by sales Ranbaxy Laboratories plunged 12.67% to Rs 141.30 on reports the Australian drug regulator is investigating allegations by US drug regulators that one of Ranbaxy's plants falsified data for drug approvals. The stock also hit a 52-week low of Rs 134.75 on 6 March 2009.

A recent investigation by the US food and drug administration had found that Ranbaxy Laboratories had falsified data and test results of medicines manufactured at its Himachal Pradesh facility in India to obtain marketing approval in the United States.

Chief economic adviser to the finance ministry Arvind Virmani on Friday, 6 March 2009 said the economic slowdown would continue until September 2009. He is, however, optimistic that the government will able to meet its fiscal responsibility targets.

The infrastructure sector output grew 1.4 %in January 2009 from a year earlier, below an unrevised 2.3% rise in December 2008, government data showed on Friday, 6 March 2009. Output rose an annual 3.6% in January 2008. The infrastructure sector accounts for 26.68% of India's industrial output.

The Reserve Bank of India (RBI) after the market hours on 4 March 2009, announced cut in repo rate and reverse repo rate by 50 basis points each, with immediate effect. Repo rate is the rate at which RBI lends to commercial banks and reverse repo rate is the rate at which RBI accepts deposits from banks.

As per initial estimates available with the commerce ministry released on Thursday, 5 March 2009, exports dropped 13.7% in February 2009, registering fall for the fifth consecutive month. Meanwhile, imports also fell for second consecutive month by 18.2% during the period.

Triggered by falling commodity prices, inflation based on the wholesale-price-index dropped to 3.03% in the week ended 21 February 2009, an around six-and-half year low, government data released on 5 March 2009 showed. Inflation rose 3.36% in the previous week ended 14 February 2009.

Indian manufacturing activity shrank for a fourth straight month in February 2009 as the global downturn hurt demand and soured business sentiment, a survey showed on Monday, 2 March 2009. The ABN AMRO Bank purchasing managers'index (PMI), based on a survey of 500 companies, rose to a seasonally adjusted 47 in February 2009 from January's 46.7. A reading above 50 signals economic expansion while a figure below 50 suggests contraction. Manufacturing makes up about 16% of India's gross domestic product.

On Monday, 2 March 2009, N Gopalaswami, the Chief Election Commissioner, announced that Lok Sabha elections will begin on 16 April 2009 and the 15th Lok Sabha will be constituted by 2 June 2009.