Auto, cement shares slide as market extends losses for the third day slide

The key benchmark indices extended losses for the third straight day on fears below-normal rains may hamper a nascent economic recovery. Concerns about the spread of the deadly swine flu and weak European stocks also weighed on the sentiment. The BSE 30-share Sensex lost 150.47 points or 0.99%, off close to 410 points from the day's high and up close to 110 points from the day's low. The Sensex fell below the psychological 15,000 mark in intraday trade but settled just above that level.

Auto, cement, capital goods and FMCG stocks fell even as IT stocks rose. Index heavyweight Reliance Industries (RIL) edged lower in volatile trade. The barometer index BSE Sensex has plunged 894.06 points or 5.62% in last three trading sessions. From a 14-month closing high of 15,924.23 on 3 August 2009, the Sensex has lost 914.46 points or 5.74% in last five trading sessions.

As per the provisional data, foreign funds today, 10 August 2009, dumped stocks worth a net Rs 639.92 crore. Domestic funds bought equities worth a net Rs 86.14 crore.

Intraday volatility was high. The market pared gains after a firm start triggered by better-than-expected US and Japanese economic data. It lost further ground later, slipping into the red from green as below normal monsoon rains and spread of the deadly swine flu in the country weighed on the sentiment. The Sensex fell below the psychological 15,000 mark. It soon regained that psychological level as the market cut losses in early afternoon trade. The market moved into the green from red in early afternoon trade. The market moved between positive and negative zone in mid-afternoon trade. The market tumbled to a fresh intraday low in late trade, once again falling below the 15,000 mark.

Investors are worried that scanty rains may hamper a nascent revival in the domestic economy. Media reports today, 10 August 2009, suggested that the monsoon deficit in the current season had widened to 28% on 8 August from 25% on 5 August 2009. On the flip side, rains are likely to improve in soybean-growing central Indian and cane-growing northwest region by Wednesday, 12 August 2009, reports suggest.

The South West monsoon rains were 64% below normal in the seven days to 5 August 2009, dipping for the second straight week at a crucial period for oilseeds and sugarcane, and raising concerns of rising food prices. The total rainfall from 1 June 2009 to 5 August 2009 was a quarter below average, the India Meteorological Department said on 6 August 2009.

The June-September rains are the main source of irrigation for farms and are crucial for Asia's third-largest economy as more than two-thirds of the people live in villages and 60% of the farm land depends on the annual rains.

The spread of the swine flu disease also weighed on investor sentiment. A 4-year-old Chennai boy died of swine flu in Chennai today, 10 August 2009, after a Pune doctor died in the morning, becoming the sixth fatality of the deadly swine flu in the country. Prime Minister Manmohan Singh on Sunday asked Union Health Minister Ghulam Nabi Azad to step up the preparedness and ensure closer coordination between the Health Ministry and the State governments to check the spread of the highly contagious disease.

Meanwhile, trade Minister Anand Sharma today said decline in exports is a matter of concern, but the stimulus measures already offered by the government have started working. India's exports fell an annual 27.7% in June 2009 to $12.8 billion, its ninth straight monthly fall, government data showed last week, as recessions at developed nations continue to slash demand for Indian goods.

The government will announce steps to encourage the export sector at the forthcoming trade policy review scheduled later this month, Sharma said. He also said the sharp fall in exports may have been halted in recent months, while the infrastructure sector was showing signs of improvement.

European shares were lower on Monday on profit taking after a four-week rally. Banking and commodity stocks led the decline. Key benchmark indices in France, Germany and UK were down by between 0.63% to 0.89%.

Asian stocks rose on better-than-expected US and Japanese data. Key benchmark indices in Hong Kong, Singapore, Taiwan rose by between 0.01% to 2.72%. But, China's Shanghai Composite fell 0.34%.

Japan's Nikkei rose 1.08%. Japanese machinery orders rose for the first time in four months in June 2009 and the current-account surplus widened, the latest signs that the nation's worst postwar recession is easing. Orders rose 9.7% from May 2009, the Cabinet Office said today in Tokyo, more than the 2.6% expected by economists. The surplus more than doubled in June 2009 from a year earlier to 1.15 trillion yen ($11.8 billion), expanding for the first time since February 2008 as exports improved.

Trading in US index futures indicated Dow could fall 26 points at the opening bell today, 10 August 2009.

US markets surged on Friday, 7 August 2009 on encouraging employment data. For the week, both the Dow and the S&P 500 closed with more than 2% gains. on Friday, the Dow soared 113.81, or 1.2%, to 9,370.07. The broader S&P 500 index rose 13.40, or 1.3%, to 1,010.48, while the Nasdaq composite index gained 27.09, or 1.4%, to 2,000.25.

In economic news, the jobs report came in better than expected. The report showed 2,47,000 jobs were cut from non-farm payrolls last month, which was less than the 320,000 expected. The unemployment rate eased for the first time since April 2009 by coming in at 9.4%, down from 9.5%.

Back home, the initial public offer (IPO) of NHPC, which opened for subscription on Friday 7 August 2009, was subscribed 3.73 times. At the end of second day of IPO, the NHPC IPO received bids for 626.48 crore shares compared to the issue size of 167.7 crore shares. NHPC is planning to raise Rs 6,040 crore at the upper end of the issue price band of Rs 36. The government kickstarts the divestment process by selling shares in NHPC.

Meanwhile, state-owned NMDC, India's biggest mining company, will reportedly tap the capital market in two phases. The government will first divest 8.38% of its equity stake through an initial public offer (IPO) in the current financial year, which will be followed by a follow-on offer (FPO) in 2010-11.

Investors feel economic reforms will boost economic growth and corporate earnings over the medium term. The Q1 June 2009 results of India Inc were encouraging, with lower costs helping bottomline growth. The combined net profit of 3,204 companies rose 17% to Rs 73665 crore on 5% fall in sales to Rs 724129 crore in Q1 June 2009 over Q1 June 2008.

The BSE 30-share Sensex fell 150.47 points or 0.99% at 15,009.77. The Sensex rose 257.10 points at the day's high of 15,417.34 in early trade. At the day's low of 14,902.02, the Sensex fell 258.22 points in late trade,

The S&P CNX Nifty fell 43.75 points or 0.98% to 4,437.65. Nifty August 2009 futures were at 4388.05, at a huge discount of 49.60 points as compared to the spot closing of 4437.65. Turnover in NSE's futures & options (F&O) segment rose to Rs 68,493.48 crore from Rs 65,231.26 crore on Friday 7 August 2009.

Foreign funds are selling equities this month after heavy purchases last month. FII outflow in August 2009 totaled Rs 889.30 crore (till 7 August 2009). FII inflow in calendar year 2009 totaled Rs 35,280.40 crore (till 7 August 2009).

Equities have risen sharply this year on the back of heavy buying by foreign funds. The Sensex was up 5362.46 points or 55.58% in calendar year 2009 as on 10 August 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex was up 6,849.30 points or 83.99% as on 10 August 2009.

Coming back to today's trade, the market breadth, indicating the overall health of the market, was weak. On BSE, 846 shares advanced as compared with 1796 that declined. A total of 76 shares remained unchanged. The breadth had turned weak in mid-morning trade compared to a strong breadth in early trade.

Among the 30-member Sensex pack, 23 fell while the rest gained.

BSE clocked a turnover of Rs 5,516 crore, higher than Rs 5442.57 crore on Friday, 7 August 2009.

The BSE Mid-Cap index was down 1.71% and the BSE Small-Cap index was down 1.95%. Both the indices underperformed the Sensex.

The BSE Auto index (down 4.52%), the BSE FMCG index (down 2.96%), the BSE Capital Goods index (down 1.49%), the BSE Realty index (down 1.66%), the BSE Consumer Durables index (down 1.49%), the BSE PSU index (down 1.33%), the BSE Bankex (down 1.3%), underperformed the Sensex.

The BSE IT index (up 2.64%), the BSE Teck index (up 0.97%), the BSE Healthcare index (down 0.04%), the BSE Oil & Gas index (down 0.43%), the BSE Metal index (down 0.63%), the BSE Power index (down 0.93%), outperformed the Sensex.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) fell 0.48% to Rs 1,986.35. The stock hit a high of Rs 2,038 and a low of Rs 1,973.35. Days after Anil Ambani, Chairman of Reliance Natural Resources (RNRL) unleashed a scathing attack against his elder brother and Chairman of petrochemical major Reliance Industries (RIL), on the issue of supply of gas from the Krishna Godavari basin (KG basin) by RIL to RNRL, the Mukesh Ambani group on Friday, 7 August 2009, rejected all the allegations as baseless and malafide.

Clarifying RIL's point, Atul Chandra, RIL's president for petroleum business, started by saying that Anil Ambani had attempted to convert a legal issue pending in the highest court of the country into a public matter for purely self serving interest aimed at personal and private gain, while overwhelmingly rejecting all of Anil's accusations. He said it was a smartly orchestrated campaign unleashed to malign RIL in the public domain even when the issue was subjudice.

Earlier, petroleum minister Murli Deora in Parliament on Thursday, 6 August 2009 said that the price approved by the empowered group of ministers (eGoM) for RIL gas from the KG D6 field was lower than the price it had approved for some of the other operators in the country. Deora said the price of $4.2 was lower than the price of $5.5 charged for gas from the Panna-Mukta-Tapti (PMT) field by a group consisting RIL, ONGC and British Gas. The Anil Ambani group (ADAG) had called the price of $4.2 exorbitant, pointing out that most of the natural gas in the country is being sold at $1.8 to $2.4 per unit.

The Ambani brothers have been at loggerheads since the death of their father in 2002, and a 2005 settlement saw the Reliance group split into two. The Supreme Court on 30 July 2009 said, it will give a date on 1 September 2009 to expedite the decision.

Shares of three public sector oil marketing companies fell on profit taking after recent rally triggered by expectations that a hike in retail fuel prices in early July 2009 may boost Q2 September 2009 results. Hindustan Petroleum Corporation (HPCL), Bharat Petroleum Corporation (BPCL) and Indian Oil Corporation (IOC) fell by between 3.11% to 6.22%. On 1 July 2009, the government had hiked petrol price by Rs 4 per litre and diesel by Rs 2 per litre.

The three public sector oil marketing firms reported strong Q1 June 2009 results as they incurred negligible underrecoveries on domestic sale of fuel at controlled prices. The strong performance was despite lack of any oil bonds from the government.

Auto stocks extended steep losses registered in the previous two trading sessions triggered by concerns over scanty rains. Auto firms derive substantial revenue from rural India. Mahindra & Mahindra, Bajaj Auto, Hero Honda Motors, Tata Motors, Maruti Suzuki India, TVS Motor Company fell by between 3.09% to 9.12%.

FMCG stocks fell on concerns over annual monsoon. FMCG firms derive substantial revenue from rural sector. Dabur India, ITC, United Spirits, REI Agro, Nestle India fell by between 0.45% to 5.03%.

India's largest FMCG maker by sales Hindustan Unilever dropped 3.4% after four lakh shares changed hands in two block deals on NSE.

IT stocks rose as better than expected US jobs data underpinned hopes for a recovery in the world's largest economy. India IT companies derive a lion's share of revenues from exports to the US.

India's largest IT exporter by sales TCS rose 6.02%. The company recently bagged an order from multi-brand discount chain The Loot. TCS will manage the back-end and software support system for the retail chain.

India's second largest IT exporter by sales Infosys rose 2.2%. The company, last week, signed an agreement with BanColombia SA for its Finacle software to be used by the Colombian bank and its overseas units.

India's third largest IT exporter by sales Wipro rose 2.8% as its ADR rose 1.25% on Friday. The company announced on Wednesday, 5 July 2009, that it has entered a five-year contract with US apparel retailer Charming Shoppes Inc. to provide information technology services.

Capital goods and construction shares fell on profit booking after recent strong gains triggered by of the government's thrust on the infrastructure sector in the Union Budget 2009-2010. Larsen & Toubro, Bharat Heavy Electricals, Crompton Greaves, Praj Indutries, ABB, BEML, Thermax, Siemens, fell by between 1.24% to 6%.

Among construction shares, Gayatri Projects, Nagarjuna Construction Company, Era Infra Engineering, Hindustan Construction Company, fell by between 0.69% to 6.66%.

Cement stocks fell on profit taking after a recent surge triggered by healthy July 2009 monthly sales. UltraTech Cement, Grasim Industries, Ambuja Cements, ACC fell by between 3% to 7.02%.

India's largest mobile services provider by sales Bharti Airtel fell 2.81% on concerns of a higher cash outgo in its proposed merger deal with South Africa's MTN to create a $23-billion entity.

India's second largest mobile services provider by sales Reliance Communications fell 0.96%.

Power stocks fell even as the NHPC IPO received robust investor response. Reliance Infrastructure, NTPC, PowerGrid Corporation of India, CESC, GVK Power & Infrastructure fell by between 0.35% to 3.06%.

Metal shares fell in volatile trade even as LMEX, a gauge of six metals traded on the London Metal Exchange, rose 1.7% on Friday, 7 August 2009. Tata Steel, Steel Authority of India, Jindal Steel, National Aluminum Company, JSW Steel, Hindustan Zinc, fell by between 0.04% to 4.05%.

Bank stocks fell on profit taking after recent strong gains. India's biggest bank in terms of branch network State Bank of India (SBI) fell 1.72%.

India's largest private sector bank by net profit ICICI Bank fell 2.54% as its ADR fell 2.41% on Friday, 7 August 2009. India's second largest private sector bank by net profit HDFC Bank fell 0.92% even as its ADR rose nearly 1% on Friday.

Rate sensitive realty shares declined on profit booking after recent strong gains triggered by of the government's thrust on housing sector in the Union Budget 2009-2010. Unitech, Phoenix Mills, Omaxe, DLF, Indiabulls Real Estate, Anant Raj Industries, Ackruti City, fell by between 1.33% to 8.01%.

Cals Refineries clocked highest volume of 2.19 crore shares on BSE. Mahindra Satyam (2.11 crore shares). Suzlon Energy (1.83 crore shares), Unitech (1.66 crore shares) and Firstsiurce Solutions (1.5 crore shares) were the other volume toppers in that order.

Mahindra Satyam clocked highest turnover of Rs 215.86 crore on BSE. Educomp Solutions (Rs 204.30 crore), Reliance Industries (Rs 194.19 crore), ICICI Bank (Rs 187.17 crore) and Tata Steel (Rs 169.62 crore) were the other turnover toppers in that order.