Sensex off 13% from recent high

Trading for the week began on a subdued note as the key benchmark indices extending last week's sharp losses on weak Asian stocks. Nevertheless, the market cut intraday losses. The BSE 30-share Sensex fell 103.90 points or 0.77%, up close to 180 points from the day's low. The S&P CNX Nifty fell below the psychological 4,000 mark.

Realty, auto and metal stocks fell. Index heavyweight Reliance Industries also edged lower. But IT stocks gained for the second straight day after IT bellwether Infosys Technologies on Friday, 10 July 2009 raised the lower end of its annual forecast in dollar terms. India's largest state-run oil exploration firm by revenue ONGC rose in choppy trade. The market breadth was extremely weak.

The market edged lower at the onset of the trading session on weak Asian stocks. The market extended losses in early afternoon trade. A bout of volatility was witnessed later. The market cut losses in second half of the trading session even as volatility remained high

European equities edged higher in volatile trade. Key benchmark indices in Germany, France and UK were up by between 0.4% to 0.57%.

Asian shares fell on Monday, with Japan's Nikkei down for a ninth straight day, as concerns about company earnings outlooks weighed, while oil languished near a six-week low as faith in a rapid economic recovery faded. Key benchmark indices in China, Hong Kong, Japan, South Korea, Singapore and Taiwan were down by between 1.07% to 3.53%.

Trading in US index futures indicated Dow could fall 9 points at the opening bell on Monday, 13 July 2009.

The Dow Jones Industrial Average and S&P 500 edged lower on Friday, 10 July 2009. But the tech-laden Nasdaq Composite index finished with a slight gain. The Dow Jones was down 36.65 points or 0.45% at 8146.52 and S&P down 3.55 points or 0.4% at 879.13. The Nasdaq closed up 3.48 points or 0.2% at 1756.03. It was fourth straight week of losses on Wall Street. For the week, the Dow Jones lost 1.6%, while the S&P skidded 1.9% and the Nasdaq dropped 2.3%.

Chevron Corp warned about second-quarter earnings, raising the specter of a weaker-than-expected second-half economic recovery and anemic corporate profits.

Closer home, Finance Minister Pranab Mukherjee said on Saturday, 11 July 2009 that the government may take more steps to make cheaper and adequate funds available to the private sector, while ensuring the government's record-high borrowing plan proceeds smoothly. Mukherjee said the country aims to return to the higher growth of past years, for which the government has outlined a spending plan of Rs 10 lakh crore for the year to March 2010, largely funded through debt.

Markets were spooked on the budget day, 6 July 2009 after the government announced a Rs, 4,51,000 crore borrowing plan for 2009/10. High government borrowing plan may affect already ballooning fiscal deficit.

The government plans reforms affecting subsidies, taxes and stake sales to cut its fiscal deficit in coming years. But Junior trade minister Jyotiraditya Scindia today said there is no proposal to change current policy on FDI in retail. There were speculations that FDI in retail could be raised in the Union budget. He also said there is no plan yet to ease export ban on non-basmati rice.

Meanwhile, the southwest monsoon appears to have picked up momentum in several parts of the country with as many as 21 sub-divisions receiving normal to excess rains except the northwestern region. The country as a whole has received near normal rainfall last week and 21 out of the 36 meteorological sub-divisions received normal to excess rains, the weather office said on Sunday, 12 July 2009. In the rest 15 sub-divisions, rainfall was either deficient or scanty, it said. Central and northeast India also received near normal rainfall. However, rainfall was deficient by 59% over northwestern parts of the country.

India, where 60% of farms depend on the monsoons, may be hit by a bad drought if annual monsoon rains remain weak with the window for planting crops closing by mid-July, a report from a US Agricultural Department (USDA) attache said recently.

The market has entered a crucial period of earnings. The market expectations are that in Q1 June 2009, the 30 stocks that comprise Mumbai's benchmark Sensex index could see an annual fall in sales of 4-8% and fall in profit at between 9-13%.

The BSE 30-share Sensex fell 103.90 points or 0.77% to 13,400.32. At the day's low of 13,219.99, Sensex fell 284.23 points in early afternoon trade. The Sensex fell 42.54 points at the day's high of 13,461.68 in mid-afternoon trade.

The S&P CNX Nifty was down 29.85 points or 0.75% to 3,974.05. Nifty July 2009 futures were at 3967, at discount of 7.05 points over the spot closing of 3974.05. Turnover in NSE's futures & options (F&O) segment plunged to Rs 50298.51 crore from Rs 57891.12 crore on Friday, 10 July 2009.

BSE clocked a turnover of Rs 4,085 crore, lower than Rs 4,598.24 crore on Friday, 10 July 2009.

The market breadth was weak. On BSE, 564 shares rose as compared with 2,003 that fell. A total of 55 shares remained unchanged.

From the 30 shares Sensex pack, 19 fell and the rest rose.

From a recent closing high of 15,466.81 on 10 July 2009, the BSE Sensex has lost 2,066.49 points or 13.36%. Despite the recent fall, the barometer index is up 3,753.01 points or 38.9% in calendar year 2009, as on 10 July 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex has risen 5,239.92 points or 64.21% as on 9 July 2009.

Coming back to today's trade, the BSE Mid-Cap index was down 2.61% and the BSE Small-Cap index was down 3.21%. Both these indices underperformed the Sensex.

The BSE IT index (up 1.76%), the BSE TECk index (up 0.15%), the BSE Bankex (down 0.13%), the BSE FMCG index (down 0.72%), the BSE Healthcare index (down 0.73%), outperformed the Sensex.

The BSE Consumer Durables index (down 5.68%), the BSE Metal index (down 3.77%), the BSE Realty index (down 3.77%), the BSE Auto index (down 2.57%), the BSE Power index (down 2.39%), the BSE Capital Goods index (down 2.39%), the BSE PSU index (down 1.55%), the BSE Oil & Gas index (down 1.08%), underperformed the Sensex.

India's largest private sector firm by market capitalisation Reliance Industries (RIL) was down 1.72% to Rs 1,747.85, extending last week's losses after the Supreme Court declined to stay the Bombay High Court's verdict in a dispute over the sale of natural gas by Reliance Industries (RIL) to Reliance Natural Resources (RNRL). But, the came off the day's low of Rs 1,718.30.

The Supreme Court, last week, didn't grant RIL' plea to stay the order of the Bombay High Court until the resolution of the case and issued notices to the companies and the Centre. Both companies have to reply to appeals filed by each other by 20 July 2009, when the matter is scheduled to be heard. The government must also respond by then, the court said.

RIL had moved the Supreme court, challenging the Bombay High Court judgment asking it to supply gas to the former at a price that is 44% lower than fixed by the government. In its appeal filed in the Supreme Court on Saturday 4 July 2009, Reliance Industries contended that the high court had erred in deciding the three terms - quantity, tenure and price of gas supply to power plants of Reliance Natural Resources (RNRL) affiliates.

Meanwhile, as per media reports, the government is open to allowing private-sector refiners such as RIL and Essar Oil to access subsidy on domestic fuel sales.

Shares of oil exploration firms rose even as crude hovered near an eight-week low on speculation the global recession will sap demand for fuel and increase stockpiles. Cairn India rose 2.33%. India's largest state-run oil exploration firm by revenue ONGC rose 0.58% after changing direction a number of times.

Crude oil for August delivery was at $59.83 a barrel, down 6 cents, on the New York Mercantile Exchange. Fall in crude oil prices would result in lower realizations from crude sales for oil exploration firms.

PSU OMCs fell after oil minister Murli Deora on Thursday, 9 July 2009 said that the government will roll back the Rs 4 a litre hike in petrol prices and the Rs 2 a litre increase in diesel rates if international crude oil prices stabilize between $50 and 60 a barrel. HPCL, BPCL and Indian Oil Corporation fell by between 0.93% to 3.01%. At the beginning of this month, the Government had raised petrol and diesel prices citing spike in international crude oil prices to $70 a barrel.

The recent sharp slide in crude oil prices augurs well for PSU OMCs. Lower crude oil prices will reduce under-recoveries at the state-run oil firms on domestic sale of petrol, diesel, LPG and kerosene at a controlled price.

But contrary to market expectations, the Union Budget 2009-2010 did not include a roadmap for decontrol of fuel prices in the country even as the finance minister said an expert panel will be set up to look into the matter of fuel pricing.

IT stocks extended gains on better-than-expected Q1 June 2009 results from India's second largest IT exporter by sales Infosys on Friday, 10 July 2009. Infosys rose 2.4%, extending gains for the second day in a row, after the company raised the lower end of its annual forecast in dollar terms at the time of announcing Q1 June 2009 results before trading hours on Friday. The management comments that global information technology spending may recover in 2010 on a possible revival of the global economy, also boosted the counter. The stock had risen nearly 3% on Friday.

Infosys' consolidated net profit as Indian GAAP declined 5.3% to Rs 1527 crore on a 2.89% fall in revenue to Rs 5472 crore in Q1 June 2009 over Q4 March 2009. The results were better-than-market expectations. Its American depository receipt (ADR) rose 4.23% on Friday, 10 July 2009.

Other IT stocks rose for the second straight day after better-than-expected Q1 June 2009 results from Infosys. India's largest IT exporter by sales TCS rose 0.95%. India's third largest IT exporter by sales Wipro rose 1.3% as its American depository receipt (ADR) rose 1.68% on Friday.

A weak rupee also aided the rally in IT stocks. The rupee was at 49.09 against the dollar today, 13 July 2009, compared to Friday's close of $49.01/49.02, on dollar buying by banks. A weak rupee boosts revenues of IT firms in rupee terms as IT companies earn a lion's share of revenue from exports.

Realty stocks fell after the Finance Minister made no major announcement to boost the debt ridden sector reeling under slump in demand for new homes in the Budget last week. DLF, Unitech, Housing Development & Infrastructure, Indiabulls Real Estate, Omaxe, Akruti City fell by between 1.02% to 5.27%.

Auto stocks fell on fears a poor monsoon may hit rural sales. Tata Motors, Maruti Suzuki India, Hero Honda Motors and Mahindra & Mahindra fell by between 2.54% to 3.48%.

India's monsoon rains, which run between June to September, are critical to farm prospects, which account for a sixth of economic output. Up to 70% of Indians are dependent on farm incomes, and about 60% of India's farms depend on rains. Auto firms derive substantial revenue from rural and semi-urban India. According to industry estimates, about 40% of the sales of two-wheelers are in semi-urban and rural areas.

Metal stocks fell as LMEX, a gauge of six metals traded on the London Metal Exchnage fell 1.31% on Friday, 10 July 2009. Steel Authority of India, Hindalco Industries, Tata Steel, National Aluminum Company, Hindustan Zinc fell by between 2.86% to 8.34%.

But India's largest copper maker by sales Sterlite Industries rose 1.48% on reports its wholly-owned subsidiary Sterlite Energy may come out with a public offering in next 3-4 months to raise up to Rs 3,000 crore to part finance its expansion plans.

India's largest cellular services provider by market share Bharti Airtel fell 2.06% even after it added 28.2 lakh subscribers in June 2009.

Bank stocks rose on bargain hunting after recent steep slide triggered from disappointment in the Budget. Contrary to market expectations, the government did not announce financial sector reforms in the Budget. Market expectations on financial sector reforms were high. The government's annual economic survey released ahead of the Budget had called for a phased increase in the foreign direct investment limit in banks. Voting rights in banks should be aligned with equity holdings, the Survey had said.

India's largest private sector bank by net profit ICICI Bank rose 0.45% even as its ADR fell 0.95% on Friday.

India's biggest bank in terms of branch network State Bank of India (SBI) rose 0.16% after Chairman O P Bhatt said the bank's net interest margin may be over 2.5% in the year ending March 2010. He said interest rates in India may go up by 25 to 100 basis points in six months if liquidity in the system is not managed well.

Axis Bank rose 2.27% after its net profit rose 70.24% to Rs 562.04 crore on 33.64% rise in total income to Rs 3864.13 crore in Q1 June 2009 over Q1 June 2008.

But India's second largest private sector bank by net profit HDFC Bank fell 0.84% as its American depository receipt (ADR) fell 1.32% on Friday, 10 July 2009. Caution prevailed in the stock ahead of the announcement of Q1 June 2009 results on Tuesday, 14 July 2009.

India's biggest dedicated housing finance firm by operating income Housing Development Finance Corporation rose 0.38%.

FMCG stocks fell on profit taking after the recent gains triggered by the government's thrust on the agriculture sector in Union Budget 2009-2010. FMCG firms derives a substantial revenue from rural sector. Marico, United Spirits, Nestle India, Tata Tea, Nestle India, Hindutan Unilever, fell by between 0.02% to 4.4%.

Finance Minister Pranab Mukherjee, while presenting the Union Budget for 2009-10, said the government will ensure that agriculture grows by at least 4% per year.

The government has announced additional interest rate subvention of 1% to farmers who pay short-term farm loans on schedule. The government has also decided to extend agriculture debt waiver by six months and to provide additional Rs 1000 crore over interim budget for irrigation.

Capital goods stocks fell on profit taking after recent gains triggered by a thrust on infrastructure development in the Union Budget 2009-2010. BEML, Crompton Greaves, Punj Lloyd, Siemens, Larsen & Toubro, Praj Industries, Bharat Heavy Electricals fell by between 0.35% to 6.83%. Finance Minister Pranab Mukherjee on 6 July 2009, provided a thrust on various infrastructure projects in the Budget which may benefit capital goods firms in the form of increased orders. The government announced more spending for urban, water and road projects. The allocation to National Highway development program allocation was increased 23% to Rs 15948 crore.

Construction shares fell on profit taking despite a thrust on infrastructure development in the Union Budget 2009-2010. Punj Lloyd, Era Infra Engineering, IVRCL Infrastructure & Projects and Hindustan Construction Company, fell by between 1.26% to 4.87%.

Nagarjuna Construction Company fell 3.5% after the company said it dropped a proposal to issue share warrants to private equity firm Blackstone as the proposal did not receive regulatory approval.

Cement stocks fell on profit taking after a sharp surge recently triggered by the Budget's thrust on the infrastructure sector. ACC, ,Ambuja Cements, Ultratech Cements, fell by between 0.75% to .18%.

Unitech clocked the highest volume of 2.46 crore shares on BSE. Suzlon Energy (1.56 crore shares), Cals Refineries (1.01 crore shares), Reliance Natural Resources (.95 crore shares) and Mahindra Satyam (0.87 crore shares) were the other volume toppers in that order.

Educomp Solutions clocked the highest turnover of Rs 233.07 crore on BSE. Reliance Industries (Rs 192.17 crore), Axis Bank (Rs 177.69 crore), Unitech (Rs 160.43 crore) and Reliance Capital (Rs 152.71 crore) were the other turnover toppers in that order.