Market slips in volatile trade on political uncertainty

Key benchmark indices fell for the third straight day led by fall in realty, capital goods and auto stocks. Volatility in banking stocks and index heavyweight Reliance Industries caused volatility in the key benchmark indices. The BSE 30-share Sensex was down 80.57 points or 0.74% off close to 220 points from the day's high and up close to 100 points from the day's low.

Political uncertainty weighed on the market with polling for India's 15th Lok Sabha underway. The month-long parliamentary elections that began on 16 April 2009 will conclude on 13 May 2009 with results due on 16 May 2009. Poll estimates point to a fractured mandate.

The Sensex fell below psychological 11,000 mark. It had moved past the 11,000 level earlier in the day today, 22 April 2009.

Stocks were volatile. The market surged in early trade as a rate cut by the central bank to boost domestic demand announced during trading hours yesterday, 21 April 2009, bolstered sentiment. The market weakened in mid-morning trade. It extended losses later as US index futures dropped. Volatility ruled the roost in mid-afternoon trade.

European shares ticked higher on Wednesday as banks gained ground, offsetting the impact of Roche which tumbled after a cancer drug setback while company results sent mixed signals. Key benchmark indices in France, Germany and UK were up by between 0.09% to 0.4%.

Britain's unemployment rate in the three months ending in February 2009 rose to 6.7%, up from 6.1% in the previous quarter, the Office for National Statistics reported Wednesday. The unemployment level rose to 177,000 in the same period to 2.1 million. The number of persons claiming jobless benefits in March 2009 rose a smaller-than-expected 73,700 to 1.46 million. Economists had forecast a rise of 1,20,000.

British Chancellor of the Exchequer Alistair Darling is expected to announce a modest package of breaks and incentives designed to boost the nation's flagging housing sector when he releases the government's annual budget on Wednesday, according to reports.

The Bank of England's Monetary Policy Committee voted unanimously to maintain interest rates at 0.5% and continue with the central bank's 75 billion pound ($110 billion) asset repurchase program at its meeting earlier this month, according to the minutes released on Wednesday.

Some Asian stocks rose after US Treasury Secretary Geithner on Tuesday, 21 April 2009, said the vast majority of US banks have more capital than they need to be considered well capitalized. Key benchmark indices in Japan, South Korea and Taiwan rose by between 0.08% and 1.44%. However, indices in Hong Kong, China and Singapore were down by between 2.32% and 2.94%.

China's urban unemployment rate rose to 4.3% at the end of March 2009, up from 4.2% at the end of December 2008, according to a report. The urban jobless rate stood at 4% at the end of September 2008. The urban figure excludes migrant workers, among others, and understates the nationwide unemployment rates.

Trading in US index futures indicated the Dow could fall 33 points at the opening bell today, 21 April 2009. US banking giant Morgan Stanley reports earnings today.

Some reassurances on the capitalization of large US banks sent Wall Street surging on Tuesday, 21 April 2009. The Dow Jones industrial average gained 127.83 points, or 1.6%, to 7,969.56. The S&P 500 index rose 17.69 points, or 2.1%, to 850.08, and the Nasdaq Composite index rose 35.64 points, or 2.2%, to 1,643.85.

The Federal Reserve is overseeing assessments of the health of the 19 biggest US banks, with results to be released on 4 May 2009.

Closer home, the Reserve Bank of India (RBI) on Tuesday, 21 April 2009 cut its key short-term rates by 25 basis points each to shore up faltering growth in the face of the global economic slowdown. The Reserve Bank also repeated a call for banks to pass on its rate cuts to customers and said deposit rates should also fall. "There is scope for the overall interest rate structure to move down within the policy rate easing already effected by the Reserve bank," it said, adding its latest rate cut reinforced the case.

Reacting to the RBI rate cut, ICICI Bank, India's largest private sector bank by net profit, announced a reduction in both deposit and lending rates after trading hours on Tuesday, 21 April 2009.

The RBI cut is growth estimate for the year ended March 2009 (FY 2009) to 6.5% to 6.7%, from 7% projected earlier. It has forecast growth of around 6% for the year ending March 2010 (FY 2010).

The fiscal and monetary stimulus measures initiated during 2008-09 coupled with lower commodity prices could cushion the downturn in the growth momentum during 2009-10 by stabilizing domestic economic activity to some extent, RBI said in a statement. However, any upturn in the growth momentum is unlikely in view of the projected contraction in global demand during 2009, particularly decline in trade, it added.

Strong rural demand, lagged impact of monetary and fiscal stimuli, softening of domestic input prices, investment demand from brown-field expansion projects and some restructuring initiatives are expected to have a positive impact on industrial production in the coming months, the RBI said.

While moderation in internal accruals has an adverse effect on corporate investment, decline in input prices and reduction in borrowing costs may have a favourable impact on profitability of the corporate sector going forward, the RBI said.

The central bank said that managing large government borrowing in FY 2010 in a non-disruptive manner would be a major challenge, and said it would used a mix of monetary and debt management tools to ensure this was done smoothly. Large borrowings also militate against the low interest rate environment that the RBI is trying to maintain to spur investment demand in keeping with the stance of monetary policy, the central bank said in its policy statement.

The RBI said wholesale-priced based inflation was expected to turn negative early in the current fiscal year, but this should not be interpreted as deflation for policy purposes. It projected WPI inflation would be around 4% at the end of FY 2010.

The RBI said a planned April 2009 review of the policy on foreign banks in India would now not go ahead until there was greater clarity regarding stability, recovery of the global financial system and better global coordination on regulation and supervision.

A good news for the economy is forecast of a near normal monsoon by the India Meteorological Department (IMD) on 17 April 2009. The IMD said rainfall in the June-September 2009 monsoon season was expected to be 96% of the long-term average. The outlook is among the nation's most widely watched indicator as monsoon rains are a major influence on output of key crops, economic activity and also affects sentiment in the country's financial markets.

Meanwhile, foreign funds turned sellers on Tuesday after recent heavy buying. Foreign institutional investors (FIIs) sold shares worth a net Rs 62.70 crore on Tuesday, 21 April 2009. FII inflow in April 2009 totaled Rs 4,547 crore (till 21 April 2009). FII outflow in calendar year 2009 totaled Rs 2,124.60 crore (till 21 April 2009).

FIIs had resorted to heavy selling of Indian stocks in the first two months of calendar 2009. Domestic institutional investors had absorbed the selling by FIIs.

The BSE 30-share Sensex was down 80.57 points or 0.74% to 10,817.54. At the day's high of 11,036.25, the Sensex rose 138.13 points in mid-morning trade. At the day's low of 10,715.66, the Sensex fell 182.45 points in afternoon trade.

The S&P CNX Nifty was down 35 points or 1.04% to 3,330.30.

The BSE clocked a turnover of Rs 5,003 crore, lower than Rs 5,109.37 crore on Tuesday 21 April 2009.

Nifty April 2009 futures were at 3333, at a premium of 2.70 points as compared to the spot closing of 3330.30. Turnover in NSE's futures & options (F&O) segment was Rs 70,645.94 crore, lower than Rs 72,749.77 crore on Tuesday, 21 April 2009.

The BSE Sensex is up 1,170.23 points or 12.13% in calendar 2009 from its close of 9,647.31 on 31 December 2008.

Coming back to today's trade, the BSE Mid-Cap index fell 1.15%. The BSE Small-Cap index fell 1.62%. Both the indices underperformed the Sensex.

The BSE Realty index (down 4.68%), the BSE Consumer Durables index (down 3.99%), the BSE Capital Goods index (down 2.8%), the BSE Auto index (down 2.23%), the BSE PSU index (down 1.62%), the BSE Power index (down 1.56%), the BSE Metal index (down 1.48%), the BSE Healthcare index (down 1.28%), the BSE Bankex (down 0.8%) underperfomed the Sensex.

The BSE FMCG index (up 0.18%), the BSE IT index (up 0.1%), the BSE Oil & Gas index (down 0.36%), the BSE TECk index (down 0.64%), outperfomed the Sensex.

The market breadth, indicating the overall health of the market, was weak in contrast to a strong breadth earlier in the day. On BSE, 1,072 stocks advanced as compared to 1,464 that declined. A total of 58 shares remained unchanged. The breadth was much stronger earlier in the day.

From the 30 share Sensex pack 23 stocks fell while rest gained.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) rose 0.59% to Rs 1,716.10 ahead of its Q4 March 2009 result to be declared tomorrow. The stock was volatile. It hit a high of Rs 1,732 and a low of Rs 1,692. Lower refining margin is likely to weigh on Reliance Industries (RIL)'s performance in Q4 March 2009. RIL's gross refining margin is expected to have fallen sharply to $10 a barrel to $11 a barrel in Q4 March 2009 from $15.5 a barrel in Q4 March 2008. However, a sharp fall in rupee against the dollar will mitigate the negative impact.

A total of 12 brokerages expect a between 17.1% fall to a 2.2% rise in RIL's net profit at between Rs 3242.70 crore to Rs 4000 crore in Q4 March 2009 over Q4 March 2008. These 12 brokerages expect a between 47.3% fall to a 13.5% growth in sales at between Rs 19640 crore to Rs 42310.30 crore in Q4 March 2009 over Q4 March 2008.

Banking stocks were volatile caught between fears of rising defaults in a weakening economy and hopes that lower interest rates will boost lending growth. India's largest bank in terms of assets and branch network State Bank of India (SBI) fell 1.81% to Rs 1,232.60. It hit a high of Rs 1,279.80 and a low of Rs 1,225.60. SBI chairman O.P. Bhatt on Tuesday said interest rate cuts by the Reserve Bank of India were a signal for commercial banks to lower their rates. He said a decision on whether SBI would lower rates would be taken after a meeting of the bank's asset-liability. SBI's advance tax payment jumped 27.64% to Rs 1810 crore in Q4 March 2009 over Q4 March 2008.

India's second largest private sector bank by operating income HDFC Bank rose 0.25% to Rs 1,089.20. It hit a high of Rs 1,100 and a low of Rs 1,066. Its American depository receipt (ADR) rose 5.17% on Tuesday. HDFC Bank announces Q4 March 2009 results tomorrow. A total of 13 brokerages expect a between 14% to 44% growth in HDFC Bank's net profit at between Rs 536.40 crore to Rs 676.90 crore in Q4 March 2009 over Q4 March 2008.

India's largest private sector bank by net profit ICICI Bank was up 0.35% to Rs 400.20. It hit a high of Rs 412.80 ad a low of Rs 390.60. ICICI Bank cut its lending rates by 50 basis points after the central bank cut official interest rates on Tuesday 21 April 2009. The benchmark advance rate, or the rate that it charges its top customers, now stands at 16.25% from 16.75%, effective from today.

ICICI Bank also cut rates for retail customers by 50 basis points. The rates on deposits have been cut between 25 to 50 basis points, with effect from Friday 24 April 2009, the bank said. Its American depository receipts (ADR) rose 2.21% on Tuesday 21 April 2009. ICICI Bank's advance tax payment remained unchanged at Rs 250 crore in Q4 March 2009 when compared to Q4 March 2008.

India's biggest dedicated housing finance firm by operating income HDFC was down 0.61% to Rs 1,736.60. It hit a high of Rs 1,795 and a low of Rs 1,707.25.

Capital goods stocks fell on worries a slowing economy will crimp orders. Larsen & Toubro, Bharat Heavy Electricals, ABB, Thermax fell by between 2.83% to 5.6%.

Metal stocks fell as copper prices fell on the London Metal Exchange (LME) after a recent sharp surge. Sterlite Industries, Tata Steel, Hindalco Industries, National Aluminum Company, Hindustan Zinc, Steel Authority of India fell by between 1.29% to 3.87%.

Auto stocks fell on profit taking after a recent sharp surge in prices. Tata Motors, Maruti Suzuki India and Mahindra & Mahindra fell by between 0.43% to 3.72%.

India's largest motorbike maker by sales Hero Honda Motors fell 1.73% even after net profit rose 34.64% to Rs 402.17 crore in Q4 March 2009 over Q4 March 2008.

Realty stocks fell on profit taking after a recent surge in prices. DLF, Indiabulls Real Estate and Unitech fell by between 4.3% to 8.86%.

Some FMCG stocks fell on profit taking after a recent solid surge triggered by expectations of a surge in sales due to forecast of a good monsoon this year. Hindustan Unilever, Tata Tea, Nestle India, Britannia Industries an Dabur India fell by between 0.45% to 2.13%. FMCG firms derive a substantial revenue from rural markets.

Healthcare stocks fell on profit taking after a recent solid surge triggered by expectations of better Q4 March 2009 results following reports of higher advance tax payment by these firms. Ranbaxy Laboratories, Sun Pharmaceutical Industries, Cipla, Biocon, Lupin fell by between 2.45% to 3.25%.

Outsourcing focussed IT firms fell in volatile trade on fears a weak global economy would cut the amount firms spent on technology. India's largest software services exporter by sales TCS fell 1.59% to Rs 542.95. It hit a high of Rs 561 and a low of Rs 528. India's fifth largest IT exporter by sales HCL Technologies fell 9.65%.

India's third largest software services exporter, Wipro rose 2.7% to Rs 281.65 as Q4 results beat market expectations. However stock came off the day's high of Rs 294.95. Wipro reported 14.8% rise in Q4 consolidated net profit at Rs 1010 crore on 13.5% rise in total income to Rs 6,583.20 crore in Q4 March 2009 over Q4 March 2008. The company announced the results before trading hours.

Wipro has forecast between $1.009 billion and $1.025 billion in revenue from information technology services in the quarter ending 30 June 2009, lower than the $1.058 billion posted in the three months ended 31 March 2009.

Wipro Chairman Azim Premji said the company did a major re-organization of its software business at the beginning of the last financial year and hopes to emerge stronger than before. Chief Financial Officer Suresh Senapaty said operating margins for the software business expanded to 21.8% during the quarter from 21% in year-earlier period, in spite of lower business volumes.

India's second largest software services exporter Infosys Technologies rose 1.56% to Rs 1,379.35. It hit a high of Rs 1,385 and a low of Rs 1,356.15. Its ADR rose 0.37% overnight.

India's largest cement maker by sales ACC rose 5.26% as net profit rose 13.2% to Rs 404.76 crore on 13.1% rise in total income to Rs 2,105.9 crore in Q1 March 2009 over Q1 March 2008.

Ultratech Cement rose 0.38% after net profit rose 9.39% to Rs 309.46 crore on 15.95% rise in total income to Rs 1888.86 crore in Q4 March 2009 over Q4 March 2008. The company announced the results after trading hours on Tuesday, 21 April 2009.

Ambuja Cements rose 1.41% ahead of its ahead of its Q1 March 2009 result today.