Market drifts lower amid volatile global stocks

The key benchmark indices edged lower in the week ended Friday 21 August 2009 on concerns the drought-like situation in India could hurt economic growth. But the market mostly tracked global markets with Chinese market in focus. The Sensex gained in 3 out of 5 trading sessions in the week. A late recovery was witnessed after Monday's sharp losses triggered by global sell off. The Sensex managed to close above the psychological 15,000 mark after flirting around this mark throughout the week.

The BSE 30-share Sensex fell 170.80 points or 1.11% to 15,240.83 in the week ended 19 August 2009. The S&P CNX Nifty fell 51.25 points or 1.11% to 4528.80 in the week.

The BSE Mid-Cap index fell 44.49 points or 0.79% to 5559.32. The BSE Small-Cap index rose 50.42 points or 0.79% to 6,462.98. Both the indices outperformed the Sensex.

Poor rains this year have raised worries about growth in India's domestic-demand driven economy. Annual monsoon rains, running between June to September, 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.

Finance Minister Pranab Mukherjee said on Friday, 21 August 2009, the government will take all the required steps to control drought. Addressing a gathering of state agriculture ministers, Mukherjee said the monsoon situation in the country is difficult and that 246 districts were drought hit. He added late rains could help winter crop and said the government will import grains if needed. He said that the government has good buffer stock of grains. However, water shortage will impact hydropower generation.

The rainfall deficit in the country narrowed to 26% during the period from 1 June 2009 to 19 August 2009 from 29% during the period from 1 June 2009 to 12 August 2009. Rains were 2% below normal in the week ended 19 August 2009, the Meteorological Department said on Thursday, 20 August 2009

India has attracted 8% higher foreign direct investment (FDI) to $2.58 billion in June 2009, from $2.39 billion in June 2008, Secretary in Department of Industrial Policy and Promotion Ajay Shankar said on 19 August 2009.

Equities have risen sharply this year on the back of heavy buying by foreign funds. The Sensex is up 5593.52 points or 57.98% in calendar year 2009 as on 21 August 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 7080.43 points or 86.76% as on 20 August 2009. FII inflow in calendar year 2009 totaled Rs 35,761 crore (till 19 August 2009).

Trading for the week started on a weak note. A disappointing US consumer sentiment report raised concerns about the global economic recovery triggering a sharp sell-off on the domestic bourses on Monday, 17 August 2009. Sustained bear hammering kept indices under pressure throughout the day. The BSE 30-share Sensex plunged 626.71 points or 4.07% at 14,784.92 on that day.

Recovery in global markets helped domestic bourses recover some of the Monday's sharp losses on Tuesday 18 August 2009. The BSE 30-share Sensex rose 250.34 points or 1.69% at 15,035.26 on Tuesday.

Key benchmark indices edged lower in choppy trade on Wednesday 19 August 2009 as world stocks fell led by a sharp slide in Chinese stocks. The BSE 30-share Sensex fell 225.62 points or 1.5% at 14,809.64 on Wednesday.

Firm global stocks helped Indian stocks edge higher in what was a volatile trading session on Thursday, 20 August 2009. Stocks rose across the globe led by a near 5% rally in China's Shanghai Composite index. The BSE 30-share Sensex gained 202.68 points or 1.37% to 15,012.32 on that day.

Broad-based buying propelled key benchmark indices to day's high in late trade in contrast to a subdued start on Friday, 21 August 2009. Gains in Chinese stocks, higher European markets and a rebound in US index futures triggered rally on the domestic bourses. The BSE Sensex rose 228.51 points or 1.52% to 15,240.83 on that day.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) fell 5.19% to Rs 1928.65. The government will speak in one voice on the Krishna-Godavari gas row, Law Minister M Veerappa Moily said after the ministerial panel set up to coordinate the government's position on the issue met for the second consecutive day late Thursday night.

Prime Minister Manmohan Singh had formed the panel to coordinate the government's legal stand over two overlapping disputes - supply of gas by Mukesh Ambani-headed Reliance Industries (RIL) to Anil Ambani's Reliance Natural Resources (RNRL), being heard in the Supreme Court, and between Reliance Industries and state-run power utility NTPC, which is being adjudicated in the Bombay High Court.

The dispute between Reliance Industries and Reliance Natural Resources (RNRL) is centered around the price and supply of gas from KG basin operating by RIL to RNRL for the power plants of Anil Dhirubhai Ambani group. NTPC-RIL case also deals with price and supply of gas to NTPC's power plants from RIL.

India's largest mortgage lender by total income Housing Development Finance Corporation rose 5.24% to Rs 2431.95. After trading hours on Thursday, 20 August 2009 HDFC announced the pricing and terms of a simultaneous issue of equity warrants and non-convertible debentures to qualified institutional buyers.

HDFC said each warrant is priced at Rs 275, with a right exercisable by the warrant holder to exchange each warrant with one equity share of face value of Rs 10 each, any time before the expiry of a period of 3 years from the date of its allotment, at a warrant exercise price of Rs 3,000 per equity share. The issue price of Rs 275 per warrant is neither adjustable with the warrant exercise price nor refundable by the company.

India's largest engineering and construction firm by sales Larsen & Toubro (L&T) fell 0.18% to Rs 1483.55 after the global rating agency Moody's on Thursday cut its rating outlook on the company to negative from stable. Moody's said outlook change on Larsen & Toubro (L&T)'s BAA2 rating reflects increase in consolidated debt.

India's largest electric equipment maker by sales Bharat Heavy Electricals rose 4.38% to Rs 2297.80. The company bagged an order worth Rs 2,630 crore. The announcement was made during trading hours on Friday.

India's largest copper maker by sales Sterlite Industries fell 5.09% to Rs 628.65 due to concerns over a bidding war for acquiring US bankrupt copper minter Asarco. Sterlite Industries on Thursday announced that it is increasing its offer for purchasing the operating assets of Asarco by about $ 500 million. The company also said it will support a plan of reorganization that is intended to pay Asarco's creditors in full their allowed amount of claims and full post petition interest.

With this hike, the revised total consideration will increase to approximately $ 2.1 billion, nearly matching Grupo Mexico's offer of $ 2.2 billion.

India's largest cellular services provider by sales Bharat Airtel rose 0.87% to Rs 411.50. Bharti Airtel and South Africa's MTN Group have extended until 30 September 2009 their exclusive talks aimed at merging their operations to create the world's third-largest mobile operator, Bharti said during trading hours on Thursday, 20 August 2009.

The two companies - Bharti and MTN said in separate but similar statements that discussions continued to progress satisfactorily, though no decision had yet been taken to acquire any shares or implement the potential transaction.

India's second largest cellular services provider by sales Reliance Communications (RCom) 3.9% to Rs 248.50. As per reports company is in talks with Mobile Telecommunications Company K.S.C., known as Zain, for a potential acquisition of its African operations. Zain is selling Celtel, the division that is present in 13 nations in the continent, valued at $10 billion. Zain acquired Celtel in 2005 for $3.36 billion.

Auto stocks rose after a survey on hiring trends in India found that recruitment in auto and ancillary units were up 11% in July 2009, compared with June 2009, raising optimism that the sector is once again poised for a high growth after the global economic slowdown hit auto firms hard last year

India's largest car market by sales Maruti Suzuki India rose 2.93%. India's largest tractor marker by sales Mahindra & Mahindra rose 1.65%.

India's second largest bike marker by sales Bajaj Auto gained 0.45%. India's largest bike marker by sales Hero Honda Motors rose 0.16%.

India's biggest bank in terms of branch network State Bank of India (SBI) fell 1.15% . O P Bhatt, Managing Director of State Bank of India said on Wednesday 19 August 2009, the bank hopes to maintain 40% growth in net profit in the year ending March 2010. He also ruled out rights issue by the bank in the near future.

Bhatt added that he does not see any possibility of interest rates going up till October or November. In fact, interest rates may decline by 25-50 basis points between now and the busy Diwali season, Bhatt added.

India's largest private sector bank by net profit ICICI Bank rose 0.2%. The bank has repaid $300 million of notes that matured on 18 August 2009, it said after market hours on Thursday, 20 August 2009.

IT stocks edged lower amid mixed economic data in the US, the biggest market for Indian IT firms. India's largest IT exporter by sales TCS fell 2.29%.

India's second largest IT firm by sales Infosys fell 0.56%. As per reports the company has bid for at least 10 large government projects as part of a drive to lower its dependence on the US market. India's third largest IT exporter by sales Wipro rose 0.35%.

Shares of Adani Power settled at Rs 100.05 on Thursday, on its debut in the secondary market, a marginal premium over initial offer price of Rs 100.