Market drifts lower on weak global stocks lower

Key benchmark indices edged lower in choppy trade as world stocks fell led by a sharp slide in Chinese stocks. Closer home, scanty rains, crucial for India's domestic demand driven economy, weighed on investor sentiment. Volatility in index heavyweight Reliance Industries (RIL) caused volatility in Sensex in the latter part of the trading session. Two other heavyweights L&T and ICICI Bank cut losses. HDFC rose. The BSE 30-share Sensex fell 225.62 points or 1.5%, off close to 285 points from the day's high and up close to 125 points from the day's low.

The barometer index BSE Sensex fell below the psychological 15,000 level. Metal, oil & gas and realty stocks led the decline.

As per provisional data, foreign funds today, 19 August 2009, offloaded stocks worth a net Rs 622.06 crore. Domestic funds bought shares worth a net Rs 83.77 crore

The market hovered in positive zone earlier in the day after moving between green and red at the onset of the trading session. A sustained fall was witnessed since 10:25 IST as most of Asian stocks moved into the red from green. An intraday recovery was witnessed in early afternoon trade. The market weakened again later as the intraday recovery proved short-lived. The market staged a strong rebound in mid-afternoon trade as index heavyweight Reliance Industries (RIL) & L&T recovered. But the intraday rebound in RIL could not be sustained with the stock weakening once again in late trade, weighing on the Sensex.

Weak monsoon rains have pushed India to the brink of drought, putting pressure on food prices and energy supplies and imperilling growth. Monsoon was 56% below normal in the week to 12 August 2009 and was 72% below normal in the soyabean growing central region in past one week, India Meteorological Department (IMD) said on 13 August 2009. Monsoon rains were 29% below normal during the period from 1 June 2009 to 12 August 2009.

Low rainfall has slowed the refilling of India's main reservoirs, threatening the supply of hydro-electric power which accounts for a quarter of India's generation and reducing availability of water to irrigate winter-sown crops such as wheat and rapeseed. Farm minister Sharad Pawar said on Monday that India needed to increase the planting of winter-sown crops and improve irrigation to make up for the damage to farms.

Finance Minister Pranab Mukherjee said on Tuesday he expected growth in 2009/10 to be over six percent, as forecast earlier and in line with a central bank estimate, despite the monsoon shortfall.

India's merchandise exports fell for the 10th straight month in July, but its balance-of-trade account improved as imports declined at a faster pace, Commerce Secretary Rahul Khullar said at a workshop on agricultural exports on Tuesday. The country's merchandise exports fell 26% from a year earlier in July as the economic crisis continued to hurt global demand, while the value of imports shrank 35%-36% he said.

European shares fell on Wednesday, after a sharp fall on China's stock market, and as doubts on global economic recovery persisted. The key benchmark indices in France, Germany and UK were down by between 0.36% to 0.63%.

Asian stocks fell, led by materials and finance companies, as China's fourth largest listed steelmaker, Maanshan Iron & Steel Company, reported a first-half loss and Japanese regulators said new guidelines will hurt insurers' solvency ratios. Key benchmark indices in Japan, Hong Kong, South Korea, Singapore and Taiwan were down by between 0.02% to 1.75%.

China's Shanghai Composite Index fell to a two-month low sliding 4.3% led by metal stocks, as the gauge approached levels signaling a so-called bear market.

Trading in the US index futures indicated the Dow could fall 67 points at the opening bell today, 19 August 2009.

US stocks made a broad-based rebound from the previous session's sharp decline, finishing near intra-day highs on Tuesday. The Dow gained 82.60 points, or 0.9%, to 9,217.94. The S&P 500 index gained 9.94 points, or 1%, to 989.67. The Nasdaq Composite Index added 25.08 points, or 1.3%, to 1,955.92.

The markets shrugged off some weak economic data. Housing starts dropped 1% in July 2009, well short of expectations after an upwardly-revised 6.5% jump in June 2008. Meanwhile, overall producer prices dropped by 0.9% last month, compared with a 1.8% gain in June. However, core prices made a surprise 0.1% decline, suggesting that inflationary pressures remain restricted.

Meanwhile, Hewlett-Packard reported better-than-expected quarterly earnings and revenue on Tuesday.

The BSE 30-share Sensex fell 225.62 points or 1.5% at 14,809.64. The Sensex rose 61.68 points at the day's high of 15,096.94 in early trade. At the day's low of 14,684.45, the Sensex fell 350.81 points in early afternoon trade.

The S&P CNX Nifty declined 64.80 points or 1.45% to 4,394.10. Nifty August 2009 futures were at 4402 at a premium of 7.90 points compared with the spot closing of 4394.10. Turnover in NSE's futures & options (F&O) segment rose to Rs 82896.50 crore from Rs 73,655.74 crore on Tuesday, 18 August 2009.

The market appears to be in a consolidation mode after a sharp and swift surge. From a recent high of 15518.49 on 13 August 2009, the Sensex has lost 708.85 points or 4.56% in the past four trading sessions. From a 14-month closing high of 15,924.23 on 3 August 2009, the Sensex has lost 1114.59 points or 6.99%.

Equities have risen sharply this year on the back of heavy buying by foreign funds. The Sensex is up 5162.33 points or 53.51% in calendar year 2009 as on 19 August 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 6,649.24 points or 81.48% as on 19 August 2009. FII inflow in calendar year 2009 totaled Rs 36,628.60 crore (till 17 August 2009).

Coming back to today's trade, the BSE Mid-Cap index was down 1.14% and the BSE Small-Cap index was down 0.52%. Both the indices outperformed the Sensex.

The BSE FMCG index (down 0.42%), the BSE Consumer Durables index (down 0.54%), the BSE Capital Goods index (down 0.73%), the BSE Bankex (down 1.01%), the BSE Healthcare index (down 1.17%), the BSE IT index (down 1.29%), the BSE Teck index (down 1.46%), outperformed the Sensex.

The BSE Oil & Gas index (down 2.68%), the BSE Metal index (down 2.33%), the BSE Auto index (down 2.14%), the BSE Power index (down 1.93%), the BSE PSU index (down 1.88%), the BSE Realty index (down 1.86%), underperformed the Sensex.

BSE clocked a turnover of Rs 5297 crore, higher than Rs 5189.12 crore on Tuesday, 18 August 2009.

The market breadth, indicating the overall health of the market, turned weak from a strong breadth earlier in the day. On BSE, 1130 shares advanced as compared with 1486 that declined. A total of 89 shares remained unchanged.

From 30 share Sensex pack, 27 stocks fell and rest rose.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) was down 3.23% to Rs 1883.45. Reliance Industries (RIL) has reportedly told the government that it is "ready and open" to scrutiny by any of its agencies, including Comptroller and Auditor General (CAG), for the expenditure it has incurred on discovering and developing the KG-D6 gas fields.

The latest twist in the battle between the two Ambani brothers, has seen Anil Ambani, chairman, Reliance Anil Dhirubai Ambani Group (ADAG) mount an all out blitzkrieg against elder brother Mukesh Ambani and the petroleum ministry. For the past three days, Reliance ADAG has issued front page advertisement campaign in leading financial dailies claiming that the national exchequer is being deprived of its rightful share and that Reliance Industries (RIL) will be making super-normal profits of Rs 50000 crore.

As per recent reports, Prime Minister Manmohan Singh has constituted a panel of four senior cabinet ministers that will continuously review the government's position in the Supreme Court case over allocation of gas from the Krishna-Godavari basin to ensure that their ministries don't speak in divergent voices on the vexed issue. The dispute between Reliance Industries and Reliance Natural Resources (RNRL) which 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.

Oil exploration stocks fell as crude edged lower after a sharp rally on Tuesday, 18 August 2009. India's largest state-run oil exploration firm by sales ONGC fell 1.99%.

Crude oil for September 2009 delivery was down 64 cents or nearly 1% at $68.55 a barrel on the New York Mercantile Exchange tracking a decline in Asia stocks. The price had jumped nearly 4% on Tuesday on rally in US equities.

Cairn India fell 1.88%. Cairn India, the domestic subsidiary of Edinburgh-based oil explorer Cairn Energy, is likely to start crude production from its Rajasthan oil fields later this month. The company has already reached pricing agreements for the crude with principal buyers, Indian Oil Corporation and Mangalore Refinery and Petrochemicals.

Auto stocks fell on concerns arising from scanty rains. Auto firms derive substantial revenue from rural India. Tata Motors, Hero Honda Motors, Mahindra & Mahindra fell by between 2.27% to 3.58%.

India's largest car maker by sales Maruti Suzuki India fell 0.12% to Rs 1301 even on reports the country's largest small-car maker is expecting a double digit growth over the next few months. The stock came off the day's low of Rs 1276.10.

Metal shares declined as copper prices fell on Wednesday, with Shanghai futures shedding more than 3% and London copper down by 2% pressure from a slide in Chinese equities. Steel Authority of India, Sterlite Industries, Tata Steel, Hindalco Industries, Hindustan Zinc, Jindal Steel & Power fell by between 0.41% to 3.93%.

IT stocks fell on weak US housing data. US is the biggest market for Indian IT firms. India's largest IT exporter by sales TCS fell 2.11%. India's third largest IT exporter by sales Wipro fell 1.43% even as its ADR rose 0.55% on Tuesday.

India's second largest IT exporter by sales Infosys fell 1.05% even as its American depository receipt (ADR) rose 0.71% on Tuesday. As per reports, the has bid for more than 10 large government projects in India

Realty shares fell on profit taking after recent gains. Phoenix Mills, Unitech, Akruti City, Omaxe, Ansal Properties, Anant Raj Industries fell by between 0.6% to 3.28%. There are hopes the government's thrust on housing sector in the Union Budget 2009-2010 may help extend recovery in housing demand witnessed in the past few months.

Banking stocks fell on profit taking. India's largest private sector bank by net profit ICICI Bank fell 0.41% to Rs 716.70 even as its ADR rose 3.28% on Tuesday. The stock came off the day's low of Rs 700.15.

India's biggest commercial bank in terms of branch network State Bank of India (SBI) fell 2.46%. Other PSU bank stocks, Union Bank of India, Bank of Baroda, Bank of India, fell by between 0.59% to 3.05%.

India's second largest private sector bank by net profit HDFC Bank rose 0.44% to Rs 1,447.20 as its ADR rose 3.63% on Tuesday. The stock came off the day's low of Rs 1,411.25.

India's largest dedicated home loan lender HDFC rose 1.56%, extending gains for the second day, on its plan to raise funds through a simultaneous issue of equity warrants and non-convertible debentures to qualified institutional buyers.

Construction, capital goods and cement shares fell on profit taking after recent gains triggered by government's thrust on infrastructure. Among construction shares, Era Infra Engineering, Gayatri Projects, Hindustan Construction Company, Jaiprakash Associates fell by between 0.44% to 2.8%.

But India's largest engineering and construction firm by sales Larsen and Toubro rose 0.22% to Rs 1481 on recent reports L&T Finance plans to foray into general insurance segment by 2010. The stock came off the day's low of Rs 1441.25. L&T holds 99.99% stake in L&T Finance.

Among cement shares, ACC, Ultratech Cement, Ambuja Cements, Grasim Industries, Birla Corporation fell by between 1.7% to 5.08%.

From the capital goods space, ABB, Siemens, Bharat Heavy Electricals, Praj Industries, Crompton Greaves fell by between 0.22% to 2.81%.

Higher government spending on infrastructure sector in 2009-2010 to provide a stimulus to the economy, may result in increase order flow for construction and capital goods firms and may help boost cement demand. Bidding is expected to start soon on 139 road projects covering 14,395 kilometres at a cost of about US$ 21 billion.

FMCG stocks fell on concerns over scanty rains. FMCG firms derive substantial revenue from rural markets. Dabur India, Marico, ITC, Hindustan Unilever fell by between 0.38% to 2.77%.

Sugar stocks fell, extending recent losses. Bajaj Hindustan, Balrampur Chini and Shree Renuka Sugars fell by between 3.03% to 4.45%. Agriculture minister Sharad Pawar today said sugar production prospects for next season are not bright

IFCI clocked the highest volume of 2.35 crore shares on BSE. Unitech (1.76 crore shares), Firstsource Solutions (1.63 crore shares), Cals Refineries (1.59 crore shares) and Suzlon Energy (1.49 crore shares) were the other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 286.06 crore on BSE. Tata Steel (Rs 158.07 crore), Unitech (Rs 145.51 crore), Reliance Capital (Rs 140.32 crore) and Suzlon Energy (Rs 126.80 crore) were the other turnover toppers in that order.