Sensex sheds 240 points from the day's high on fears of a fractured mandate in election

Fears of a fractured mandate in the parliamentary election pulled the market lower in what was a highly volatile trading session
. Volatility in index heavyweight Reliance Industries and banking and IT stocks caused volatility in the key benchmark indices. The BSE 30-share Sensex lost 138.38 points or 1.14%, off close to 240 points from the day's high and up close to 80 points from the day's low.

The BSE Sensex swung near the psychological 12,000 mark throughout the day. The barometer index settled above the 12,000 level

Even as the Sensex edged lower, select non-Sensex stocks surged. One among the prominent gainers was two wheeler major Bajaj Auto which jumped 7.4% to Rs 737.80

The market was volatile. The BSE Sensex dropped in early trade on profit taking after a firm opening triggered by gains in Asian stocks. The market recovered later in choppy trade with the Sensex regaining positive territory on firm Asian stocks. However, the recovery proved short-lived as the barometer index once again slipped into the red. The market extended losses in early afternoon trade on political uncertainty as no political party appeared likely to emerge as a clear in parliamentary elections.

The market cut losses later. The market surged to hit fresh intraday high in mid-afternoon trade. A sudden sell-off pulled the market lower later.

Volatility may remain high in the near futures ahead of the formation of the next government at the Centre. Pre-election surveys have pointed to a hung parliament, raising the prospect of a repeat of 1996 when the new administration collapsed after just 13 days.

Speculation that the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) is gaining in the elections triggered a solid surge on the domestic bourses on Tuesday, 12 May 2009. The BSE 30-share Sensex jumped 475.04 points or 4.07% to 12,158.03, its highest closing since 3 October 2008.

Before Tuesday's rebound, fears of a fractured mandate in the parliamentary polls had triggered a 3.58% fall in the BSE Sensex in two trading sessions to 11,682.99 on 8 May 2009 from 12,116.94 on 7 May 2009. The month-long parliamentary elections that began on 16 April 2009, concluded today, 13 May 2009.

The major news channels will start telecasting the exit poll results in a short while from now. The counting of votes takes place on Saturday, 16 May 2009. A party/alliance needs 272 seats in the 543-member parliament to claim power at the Centre.

With election for the final phase over just a while back, the ban on exit polls has been lifted - the Election Commission had put a ban on all exit polls in the country till the final phase elections are over. Major news channels such as CNN-IBN, TimesNOW, Star News, Aaj Tak, India TV and NDTV India are all set to telecast the exit polls today, based on their own permutations and combinations.

Indian stocks have risen sharply in the past two months on hopes the worst of the global economic recession may be over. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex jumped 3,997.63 points or 48.98% to 12,158.03 on Tuesday, 12 May 2009, its biggest closing in more than 7 months.

Heavy buying by foreign funds aided the rally. Foreign funds are aggressively buying Indian stocks. As per the provisional figures on NSE, foreign funds bought shares worth Rs 452.18 crore on Tuesday, 12 May 2009. FII inflow in May 2009 totaled Rs 4,692.70 crore (till 11 May 2009). FII inflow in calendar year 2009 totaled Rs 5,405.50 crore (till 11 May 2009).

European shares fell in choppy trade on Wednesday after the release of Bank of England's quarterly inflation Report in which it predicted British economy will shrink sharply in the coming months. Key benchmark indices in Germany, France and UK were down by between 1.17% to 1.74%.

The Bank of England (BoE) in its quarterly inflation report said its view on 2009 economic output is worse than in its February 2009 report, due to lower-than-expected activity in the first quarter. It could take longer for bank lending to return to normal than previously assumed, the BoE said. It also increased its estimate on inflation in the medium term, though it still sees CPI below its 2% target.

Most Asian stocks rose today 13 May 2009 on signs the global economic slowdown may be fading, with Nissan Motor powering ahead in Tokyo on hopes for an earnings turnaround. Key benchmark indices in China, Japan, South Korea, Singapore and Taiwan rose by between 0.33% to 1.74%. Hong Kong's Hang Seng fell 0.55%.

China's industrial production grew at a lower-than-expected rate of 7.3% in April 2009 as electricity output fell and exports tumbled. Industrial production had risen 8.3% in March 2009.

China's retail sales continued to expand at a rapid pace, data showed Wednesday. Retail sales rose 14.8% in April 2009 from a year earlier and in line with March 2009's 14.7% rise, according to data released by the National Bureau of Statistics. Expectations were for a rise between 14.5% and 15%. In the first four months of the year, retail sales were up 15%, a pace of growth unchanged from the first three months of the year.

The growth in retail sales adds to evidence that the Chinese government's 4 trillion yuan ($586 billion) stimulus plan is buoying domestic growth, while the global recession takes a toll on exports and related industries. Institutions with at least 80 billion yuan of assets in the past year will be allowed to set up financing companies to provide consumers with loans for buying appliances and other goods, according to draft rules issued by China Banking Regulatory Commission yesterday, 12 May 2009. Loans for cars and property are barred.

Trading in US index futures indicated Dow could fall 64 points in early trade on Wednesday, 13 May 2009.

Profit taking pulled US stocks lower for most of the session on Tuesday 12 May 2009. But markets picked up in the second half and finished mixed despite a lack of positive catalysts. Consumer and health care stocks rose, though weakness in technology and banks prevented larger gains. The Dow gained 50.34 points, or 0.6%, to 8,469.11. The S&P 500 index slipped 0.89 points, or 0.1%, to 908.35 and the Nasdaq fell 15.32 points, or 0.9%, to 1,715.92.

US foreclosure filings hit a record in April 2009, affecting one in every 374 housing units, and bank repossessions in particular may spike in the next few months, RealtyTrac reported today, 13 May 2009

Closer home, India's industrial output fell a steeper-than-expected 2.3% in March 2009 over March 2008, its third fall in four months government data showed on Tuesday. The manufacturing segment shrank by 3.3%. Mining rose by a modest 0.4% and electricity output climbed by a decent 6.3%. However, data showing a strong growth in consumer durables production in March 2009 reinforced expectations of a recovery of the economy. Production of consumer durables jumped 8.3% in March 2009 as compared to a 2% decline in March 2008.

The industrial production figure for February 2009 was revised to a 0.7% drop from a preliminary estimate of a 1.2% decline.

Meanwhile, initial estimates showed that India's exports dropped 33% to $10.7 billion in April 2009. Imports fell a sharper 35% to $16 billion in April 2009 on the back of low oil prices, falling exports and a deceleration in manufacturing activity and investment.

The BSE 30-share Sensex lost 138.38 points or 1.14% to 12,019.65. The Sensex rose 98.40 points at the day's high of 12,256.43 in mid-afternoon trade. At the day's low of 11,934.44, the Sensex fell 223.59 points in early afternoon trade.

The S&P CNX Nifty fell 45.85 points or 1.25% to 3,635.25. Nifty May 2009 futures were at 3629, at a discount of 6.25 points as compared to the spot closing of 3635.25. Turnover in NSE's futures & options (F&O) segment surged to Rs 64035.11 crore from Rs 53677.79 crore on Tuesday, 12 May 2009.

BSE clocked a turnover of Rs 9767 crore much higher than Rs 4,943.62 crore on Tuesday, 12 May 2009, thanks to a large block deal in DLF.

The market breadth, indicating the overall health of the market, was negative. The breadth swung between positive and negative zone in the second half of the trading session. On BSE, 1,166 shares rose as compared with 1,351 that fell. A total of 59 shares remained unchanged.

From the 30 share Sensex pack, 22 stocks fell and rest gained.

From 9,647.31 on 31 December 2008, the BSE Sensex has risen 2,372.34 points or 24.59% in calendar year 2009.

The BSE Mid-Cap index fell 0.13% and the BSE Small-Cap index slipped 0.48%. However, both these indices underperformed the Sensex.

The BSE Consumer Durables index (up 0.09%), the BSE Healthcare index (down 0.45%), the BSE Auto index (down 0.46%), the BSE Capital Goods index (down 0.56%), the BSE TECk index (down 0.85%), the BSE Realty index (down 0.96%), the BSE Power index (down 0.98%), outperformed the Sensex.

The BSE Bankex fell 1.14% and matched the performance of benchmark index BSE Sensex.

The BSE Metal index (down 2.07%), the BSE IT index (down 1.56%), the BSE FMCG index (down 1.54%), the BSE PSU index (down 1.47%), the BSE Oil & Gas index (down 1.39%), underperfomed the Sensex.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) fell 1.04% to Rs 1937.90 on profit taking after a recent surge. The stock was volatile. It hit the high of Rs 1,975 and a low of Rs 1,907.10. Analysts expect strong growth in bottom line in coming quarters from sale of gas which it started pumping last month from its deep-sea field off the east coast.

Ratnagiri Gas & Power, which supplies electricity to the western Indian state of Maharashtra, on Friday, 8 May 2009, agreed to buy natural gas from an offshore field operated by Reliance Industries.

Outsourcing focussed IT stocks fell in choppy trade on US government plans to scrap tax incentives that encourage American firms to ship jobs overseas. India's second largest software services exporter by sales Infosys was down 1.51% to Rs 1,573.85. The stock hit a high of Rs 1,598.80 and a low of Rs 1,558. Its American depository receipt (ADR) rose 2.58% on Tuesday.

India's largest software services exporter by sales TCS was down 2.36% to Rs 622.45. The stock hit a high of Rs 645 and a low of Rs 617. TCS said today it has been selected for a five-year IT services contract for auto maker Volkswagen group's operations in the United Kingdom.

India's third largest software services exporter by sales Wipro was down 0.13% to Rs 374.75. The stock hit a high of Rs 390.95 and a low of Rs 365.50. Its ADR rose 6.05% on Tuesday.

Analysts, however, feel that US government's plan to scrap tax incentives that encourages American firms to ship jobs overseas is unlikely to dent business for Indian outsourcers. On 4 May 2009, US president Barack Obama announced plans to reduce tax breaks for US-based multinationals shipping jobs to places like India. Instead, the tax incentives would now go to those creating jobs inside the US, in places like the Buffalo city, New York.

Currently, US businesses that invest overseas can take an immediate tax deduction for expenses supporting their overseas investments. They can also defer the payment of US taxes on the profits they make from such investments. But, now the Obama Administration wants to ensure that companies do not receive deductions for expenses supporting their offshore investments until they pay tax on their offshore profits. This is intended to dis-incentivise US companies from retaining profits abroad.

Infosys said the proposal, if implemented, was unlikely to reverse the outsourcing of a gamut of services by US firms to Indian companies. "The current proposal, as we understand, is to close corporate tax loopholes on US multinational corporations and crack down on their overseas tax havens," the company said in a statement. "We do not believe that it has anything to do with IT outsourcing done by US corporations.", Infosys said.

The Indian rupee was weak amid choppy trade. The rupee was at 49.64 per dollar, below its previous close of 49.26/28. A weak rupee boosts revenues of IT firms in rupee terms as IT companies earn a lion's share of revenue from exports.

Bank stocks fell in volatile trade on profit taking after a recent rally. India's biggest bank in terms of branch network State Bank of India was down 2.57% to Rs 1,262.15. The stock hit a high of Rs 1,309 and a low of Rs 1,255. SBI reported a forecast-beating 45.6% rise in net profit to Rs 2742.31 crore on a 34.6% increase in operating income to Rs 22060.61 crore in Q4 March 2009 over Q4 March 2008. Profit was boosted after gains from trading trebled and loan demand soared as borrowers scrambled for funds in a slowing economy. The bank announced the results on Saturday, 9 May 2009.

India's largest private sector bank by net profit ICICI Bank was down 1.61% to Rs 549.65. The stock hit a high of Rs 567.80 and a low of Rs 541.50.. Its American depository receipt (ADR) rose 3.88% on Tuesday, 12 May 2009.

India's second largest private sector bank by operating income HDFC Bank was down 2.21% to Rs 1,163.30. The stock hit a high of Rs 1,199 and a low of Rs 1,147. Its ADR fell 0.27% on Tuesday.

India's biggest dedicated housing finance firm by operating income HDFC rose 3.03%.

Metal stocks fell even as copper climbed for a second day in Asia as investors deemed April 2009's record Chinese imports a sign of improving demand in the world's top metals consumer. Tata Steel, Steel Authority of India, Sterlite Industries, National Aluminum Company, fell by between 2.95% to 3.67%.

China's purchases of copper and copper products reached a record 399,833 metric tons last month, compared with 374,957 tons in March 2009. Still, a deepening slump in the nation's exports, which declined 22.6% in April 2009 over April 2008, capped the metal's gains.

FMCG stocks fell on profit taking after they rose recently triggered by expectations of a surge in sales due to forecast of a good monsoon this year. ITC, Tata Tea, Nestle India, Dabur India, Britannia Industries fell by between 0.01% to 2.36%. FMCG firms derive a substantial revenue from rural markets.

India's largest FMCG major by sales Hindustan Unilever fell 1.51% as it reported a lower-than-expected rise of 3.68% in net profit to Rs 394.99 crore on a 6% rise in sales to Rs 3988.33 crore in Q4 March 2009 over Q4 March 2008. Profit fell short of expectations mainly due to provision for retirements and restructuring costs. The company announced the result on Sunday, 10 May 2009.

Realty stocks fell on profit taking after recent surge. Unitech, Omaxe, Akruti City fell by between 0.53% to 3.24%.

DLF fell 1.59% to Rs 232.50 after two block deals of 8.4 crore shares each were struck at an average price of Rs 233.50 a piece whereby the founders sold 16.8 crore shares, or nearly 10% of the firm's equity.

Before trading started, promoters of DLF had informed the stock exchanged today, 13 May 2009, that they will offload 16.8 crore shares, or nearly 10% of the firm's equity. DLF promoters said the funds raised through the share sale would be used to infuse capital in its property trust DLF Assets (DAL) and also to purchase private equity D.E. Shaw's stake in DAL. DE Shaw had invested $400 million in DAL in 2007 and is due to exit by the end of the month under an agreement.

Capital goods stocks fell on profit taking after a recently strong rally. India's biggest engineering & construction firm by revenue Larsen & Toubro (L&T), last month, lost 1.01%. L&T on 16 April 2009 said the company expects its order inflow to grow by 25-35% in the year ending March 2010 (FY 2010).

Bharat Heavy Electricals, Gammon India, Praj Industries, Areva T&D, fell by between 0.29% to 4.3%.

Suzlon Energy fell 5.07% to Rs 76.75 after about 3 crore shares, or 2% of its equity changed hands in a single block deal at Rs 82 a share on the National Stock Exchange.

Some healthcare stocks fell on profit taking after they rose recently as most of the healthcare firms reported better than expected Q4 March 2009 result. Dr Reddy's Laboratories, Piramal HealthCare, Biocon, Glenmark Pharmaceuticals, Sun Pharmaceutical Industries fell by between 0.85% to 3.67%.

Telecom stocks fell on recent reports the telecom regulator has notified mobile number portability (MNP) from September 2009. Reliance Communications and Idea Cellular, fell by between 1.32% to 2.22%, on fears that mobile users will hop service providers at a faster rate when MNP is introduced. Once MNP comes in force, it could force GSM operators to increase capital expenditure to improve service quality in the top-tier telecom zones in a bid to retain existing users.

But, India's largest telecom services provider by sales Bharti Airtel rose 0.35% after the company added 2.81 million mobile users in April 2009, taking total customers base to 96.7 million.

DLF clocked the highest volume of 17.98 crore shares on BSE. Cals Refineries (2.44 crore shares), Unitech (2.22 crore shares), Suzlon Energy (2.17 crore shares) and Birla Power Solutions (1.74 crore shares) were the other volume toppers in that order.

DLF clocked the highest turnover of Rs 4,1531.15 crore on BSE. Reliance Industries (Rs 284.08 crore), Reliance Capital (Rs 267.96 crore), ICICI Bank (Rs 256.81 crore) and Housing Development & Infrastructure (Rs 244.42 crore) were the other turnover toppers in that order.