Auto, FMCG stocks edge lower on worries over monsoon

Key benchmark indices edged lower in what was a highly volatile trading session. The BSE 30-share Sensex lost 77.11 points or 0.53%, off 232.84 points from the day's high, but up 84.48 points from the day's low. Auto and FMCG stocks led the losses on fears lower monsoon rains would hurt rural demand. Sustained selling by foreign funds also weighed on the sentiment.

The BSE Sensex has lost 1121.19 points or 7.24% from a multi-month closing high of 15,466.81 on 10 June 2009

Volatility was high today as traders rolled over positions from June 2009 series to July 2009 ahead of the expiry of June 2009 contracts. The June 2009 derivatives contracts expired today, 25 June 2009. Rollover in Nifty futures from June 2009 series to July 2009 series was about 41.05% at the end of Wednesday's (24 June 2009) trade. The rollover in Min Nifty futures was pegged at nearly 44%.

After a firm opening, the market soon pared gains on forecast of a below normal monsoon rains for the first time in four years. The BSE Sensex pared most of its earlier gains by mid-morning trade as selling from foreign funds weighed on the investor sentiment. The market recovered later on firm Asian stocks and higher US index futures. Volatility ruled the roost in afternoon trade.

The market weakened in mid-afternoon trade. It cut losses later. The market weakened again later with the Sensex hitting a fresh intraday low at about 15:00 IST. The market cut losses in choppy late trade.

There are concerns that poor rains could cap a recovery in the economy. Monsoon rains, which run from June to September, have weakened and are expected to be below normal, Prithviraj Chavan, minister of science and technology, said after trading hours on Wednesday, 24 June 2009 in a briefing in New Delhi. The minister said the 2009 monsoon rainfall would be 93% of the long-term average, lower than an earlier forecast of 96%.

However, the market has heaved a sigh of relief after the government ruled out the possibility of a drought

But foreign funds have been on a selling drive recently after aggressively buying during the past three months or so. As per the provisional figures on the NSE, foreign institutional investors (FIIs) sold shares worth Rs 791.85 crore on Wednesday, 24 June 2009 while domestic institutional investors purchased shares worth Rs 728.26 crore.

Inflation based on the wholesale price index remained in the negative zone for the second week in a row, data released by the government today, 25 June 2009, showed. Inflation based on the wholesale price index declined 1.14% in the year through 13 June 2009 government data released today, 25 June 2009 showed. The decline was, however, smaller than a 1.61% fall in the year through 6 June 2009. Inflation had dipped to negative in early June 2009 for the first time since 1977-78.

The next major trigger for the market is the Union Budget 2009-2010. Many equity analysts have been raising earnings forecasts of India Inc on hopes that the new government will provide thrust on the infrastructure sector and push economic reforms to boost growth. Citigroup expects the economy to grow by 6.8% in the year ending March 2010 (FY 2010) and 7.8% in the year ending March 2011 (FY 2011).

Finance Minister Pranab Mukherjee would present the budget on 6 July 2009. The Railway Budget will be presented on 3 July 2009 and the Economic Survey would be presented on 2 July 2009.

A comfortable victory last month for the Congress-led United Progressive Alliance (UPA) government in elections for the 15th Lok Sabha has raised hopes for economic reforms. Reforms virtually came to a halt in the past five years of the Congress-led alliance government at the centre, when the Communists provided support to the government from outside for a large part of the five-year term. Left parties are opposed to economic reforms.

Investor expectations from the new government are high. Investors expect financial sector reforms such as increase in the cap on foreign direct investment in insurance sector to 49%, from 26% at present.

European markets were subdued today, 25 June 2009 as the Federal Reserve disappointed investors by refraining from increasing bond purchases and the International Monetary Fund said banks in Ireland face losses of as much as $49 billion through 2010. Key benchmark indices in UK, Germany and France were down by between 0.74% and 1.34%.

But Asian stocks rose, led by mining and technology companies, as the US Federal Reserve said the pace of economic contraction is slowing and South Korea raised its gross domestic product forecast. Key benchmark indices in Hong Kong, China, Taiwan, South Korea, Singapore and Japan were up by between 0.09% and 2.15%.

The US Federal Reserve at the end of its two-day policy meet on Wednesday, 24 June 2009 signalled that a weak economy likely will keep prices in check despite growing concerns that the trillions it's pumping into the financial system will ignite inflation. Fed chairman Ben Bernanke and his colleagues held a key bank lending rate at a record low of between zero and 0.25%, and pledged again to keep it there for an extended period to help brace activity going forward.

Trading in the US index futures indicated the Dow could fall 8 points today, 25 June 2009.

US stocks rose broadly on Wednesday as durable goods orders jumped unexpectedly, reinforcing the belief the economy was healing, while quarterly results from software maker Oracle boosted technology shares. The Dow Jones Industrial Average was down 23.05 points, or 0.28%, at 8,299.86. But the Standard & Poor's 500 Index was up 5.84 points, or 0.65%, at 900.94 and the Nasdaq Composite index climbed 27.42 points, or 1.55%, at 1,792.34

In key economic data, the durable goods orders for May 2009 saw a 1.8% jump, beating the consensus estimates of 0.9% decline in total orders. A gauge of capital spending in the report also jumped. Orders for non-defense capital goods excluding aircraft rose by 4.8%, after decreasing 2.9% in April. It was the largest increase since 8.2% in September 2004. On the housing front, May 2009 new home sales data was down 0.6%. It showed an annualised rate of 342,000 units, below the 360,000 unit consensus.

The BSE 30-share Sensex lost 77.11 points or 0.53% to 14,345.62. The Sensex opened 53.42 points higher at 14,476.15. At the day's high of 14,578.46, the Sensex rose 155.73 points in early trade. The Sensex lost 161.59 points at the day's low of 14,261.14 in late trade.

The S&P CNX Nifty shed 51.10 points or 1.19% to 4,241.85. Nifty July 2009 futures were at 4278, at a substantial premium of 36.15 points as compared to the spot closing. Turnover in NSE's futures & options (F&O) segment surged to Rs 95,928.31 crore from Rs 82,940.03 crore on Wednesday, 24 June 2009.

The barometer index the BSE Sensex is up 4698.31 points or 48.70% in calendar year 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex has risen 6185.22 points or 75.79%.

BSE clocked a turnover of Rs 5623 crore, lower than Rs 5727 crore on Wednesday, 24 June 2009

Though the market breadth, indicating the overall health of the market, was positive, it weakened compared to a strong breadth in early trade. On BSE, 1429 shares advanced as compared with 1218 that declined. 78 shares remained unchanged.

The BSE Mid-Cap index fell 0.20% to 5,049.90 and the BSE Small-Cap index declined 0.45% to 5,693.02. Both these indices outperformed the Sensex

Sectoral indices on BSE displayed mixed trend. The BSE Capital Goods index (up 0.09%), the BSE TECk index (down 0.37%), the BSE IT index (down 0.37%), BSE Bankex (up 0.38%), and the BSE Realty index (up 0.53%), outperformed the Sensex

The BSE Power index (down 1.41%), the BSE Healthcare index (down 0.67%), the BSE Auto index (down 2.18%), the BSE Consumer Durables index (down 1.43%), the BSE FMCG index (down 0.99%), the BSE Oil & Gas index (down 2.10%), the BSE PSU index (down 1.71%), the BSE Metal index (down 0.82%), underperformed the Sensex.

Among the 30-member Sensex pack, 18 declined while the rest gained.

Auto stocks were in reverse gear on fears lower monsoon rains would hurt rural demand. Auto companies derive a substantial revenue from sales in the rural market.

India's largest commercial vehicle maker by sales Tata Motors slumped 5.88% to Rs 336 on reports the firm may report a consolidated loss of about Rs 300 crore for the first time in eight years due to poor performance by its UK subsidiary. The company is scheduled to announce its consolidated results tomorrow, 26 June 2009. It was the top loser from the Sensex pack.

India's largest car maker by sales Maruti Suzuki India fell 2.79%. India's largest tractor maker by sales Mahindra & Mahindra slipped 2.47%

Fears of a hike in fuel prices also weighed on auto counters. The government may increase petrol price by Rs 2 a litre and diesel by Re 1 on firming international crude prices, according to recent reports. State run oil marketing firms Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation are currently losing Rs 6.08 a litre on petrol and Rs 2.96 a litre on diesel sales. These PSU OMC's suffer revenue loss on sale of auto and cooking fuels as they sell these products at a controlled price.

FMCG companies edged lower on forecast of below normal monsoon rains for the first time in four years. Hindustan Unilever (down 2.21%), ITC (down 2.34%), Britannia Industries (down 0.71%), and Tata tea (down 2.31%), slipped. FMCG firms derive a substantial revenue from rural markets.

But liquor major United Spirits rose 6.39% to Rs 917.80 on reports the company will significantly deleverage its balance sheet within the next two weeks.

India's top dam builder by sales Jaiprakash Associates gained 2.74% to Rs 219.25 on reports its unlisted unit Jaiprakash Power Venture is set to merge with Jaiprakash Hydro-Power. The proposed move is reportedly aimed at helping Jaiprakash Power Venture raise funds though equity route. Jaiprakash Associates' holds 84.28% stake in Jaiprakash Power Venture and 63.34% in Jaiprakash Hydro-Power. It was the top gainer from the Sensex pack.

India's largest cement firm by sales ACC rose 2.21% after a unit of the company entered into an agreement with the Madhya Pradesh State Mining Corporation for setting up a joint venture company for coal mining. The company made this announcement after trading hours on Wednesday, 24 June 2009.

However diversified firm Grasim Industries slipped 0.79%. As per reports, the Aditya Birla group is looking at consolidating its cement business currently being run by Grasim Industries and UltraTech Cement following the exit of Larsen & Toubro (L&T) from UltraTech recently.

The move will create India's top cement firm, with a combined production capacity of 42 million tonnes a year, overtaking ACC controlled by Switzerland's Holcim that will have 30 million tonnes by 2010.

IVRCL Infrastructures & Projects rose 5.86% to Rs 346.20 on buzz the firm is likely to raise about Rs 250 crore by divesting up to 49% stake in its three build-operate-transfer (BOT) road projects to private equity investors. However, the company denied any such development in a communique issued on bourses after trading hours

Banking and financial shares rose mirroring firm ADRs and hopes of financial sector reforms in the Union Budget for 2009-10. India's largest mortgage finance firm Housing Development Finance Corporation gained 2.37%

India's largest private sector bank by net profit ICICI Bank gained 1.40% after its American depository (ADR) rose 0.39% on Wednesday, 24 June 2009. India's second largest private sector bank by net profit HDFC Bank rose 0.43% after its ADR advanced 3.25% on Wednesday, 24 June 2009.

However India's biggest bank in terms of branch network State Bank of India (SBI) slipped 0.44% to Rs 1709 after striking day's high of Rs 1740. The bank on Wednesday said it will cut its benchmark prime lending rate by 50 basis points to 11.75% per annum from 29 June 2009.

Kotak Mahindra Bank (up 1.59%), Axis Bank (up 1.09%), Canara Bank (up 1.24%), and Punjab National Bank (up 1.26%), edged higher

Indiabulls Financial Services jumped 4.68% after a block deal of ten lakh shares was executed on BSE at Rs 173.25 per share. The block deal constituted 0.39% of the company's equity.

The Reserve Bank of India today said it will announce its quarterly monetary policy in its quarterly meet scheduled to be held on 28 July 2009. The Reserve Bank of India reviews policy in April, July, October and January.

Metal shares gained after LMEX, a gauge of six metals traded on the London Metal Exchange, climbed 4.8% on Wednesday, 25 June 2009, the most since 19 March 2009. Copper jumped 3.1% in New York.

JSW Steel (up 0.29%), Sesa Goa (up 0.62%), Sterlite Industries (up 0.97%), Hindalco Industries (up 2.03%), gained. However India's largest private sector steel maker by sales Tata Steel slipped 2.35% ahead of its Q4 March 2009 results

JSL plunged 6.74% after the company posted a net loss of Rs 161.23 crore in Q4 March 2009 as compared to net profit of Rs 53.11 crore in Q4 March 2008. The company announced the results after market hours on Wednesday, 24 June 2009.

India's largest private sector firm by market capitalisation Reliance Industries (RIL) fell 1.45% to Rs 1971 extending a recent sharp slide triggered by an unfavourable court ruling on gas sales. The stock came off day's high of Rs 2028.80

The Bombay High Court has directed RIL and Reliance Natural Resources (RNRL) to sign gas supply deal. The court has asked RIL to supply 28 million metric standard cubic meters per day (mmscmd) of gas for 17 years at $2.34 per million metric British thermal unit (mmbtu) to RRNL. This is much lower than the price fixed by the government for gas sale from the RIL block in the KG basin at $4.2 million per metric British thermal unit. According to analysts the lower gas sale price will result in lower-than-expected earnings from gas sales for RIL.

India's largest oil exploration firm by sales Oil & Natural Gas Corporation (ONGC) dropped 1.05% to Rs 1040 after net profit declined 16% to Rs 2206.76 crore on a 12.30% fall in net sales to Rs 13703.80 crore in Q4 March 2009 over Q4 March 2008. The results were declared after market hours on Wednesday, 24 June 2009. The stock recovered from day's low of Rs 1005.

Outsourcing focussed IT stocks reversed early gains after the US Federal Reserve said the US economy is likely to remain weak. US is the biggest market for Indian IT firms. India's second largest software firm by sales Infosys Technologies slipped 0.46% even as its American depository receipt (ADR) rose 1.89% on Wednesday, 24 June 2009.

India's largest software services exporter by sales TCS slipped 0.20%. India's third largest software services exporter by sales Wipro fell 0.07% despite a 3.64% rise in its ADR on Wednesday, 24 June 2009.

Suzlon Energy topped the turnover chart on BSE with a turnover of Rs 231.00 crore, followed by Unitech (Rs 224.09 crore), Reliance Industries (Rs 193.16 crore), Educomp Solutions (Rs 192.27 crore) and Tata Steel (Rs 16,689 crore).

Unitech led the volume chart clocking volume of 2.70 crore shares followed by Suzlon Energy (1.93 crore shares), Jaiprakash Hydropower (1.53 crore shares), Cals Refineries (1.31 crore shares) and Reliance Natural Resources (1.24 crore shares).

HT Media slipped 2.93% after a block deal of five lakh shares was executed on BSE at Rs 97.50 per share. The block deal constituted 0.21% of the company's equity.

Unitech galloped 5.58% after the company said it was seeing a pick up in demand for new residential projects. Unitech is focusing on low-cost mass housing projects to prop up volumes and Unitech's managing director Sanjay Chandra said there was good demand.

Navneet Publications (India) jumped 10.15% after net profit vaulted 344.23% to Rs 9.24 crore in Q4 March 2009 over Q4 March 2008. The company announced the results during trading hours today, 25 June 2009.

Wyeth rose 4.04% after net profit surged 52.1% to Rs 18.50 crore in Q4 March 2009 over Q4 March 2008. The company announced the results after market hours on Wednesday, 24 June 2009.

Cadila Healthcare galloped 7.38% to Rs 370.45. Earlier this month, foreign brokerage Goldman Sachs & Co. raised its rating on the stock to 'buy' from 'neutral'.

Apollo Hospitals Enterprise climbed 7.14% to Rs 569.75. The company will declare its year ended March 2009 results on 29 June 2009. The International Finance Corporation, or IFC, a World Bank entity, recently granted a $50 million (Rs 241.2 crore) loan to Apollo Hospitals for expanding its network of Reach Hospitals. The chain is designed specifically for under-developed population centers.