Market snaps seven day winning streak

The key benchmark indices took a breather after strong gains in the past seven trading sessions as a setback in Chinese stocks offset optimism arising from India's strong Q1 GDP growth data. The BSE 30-share Sensex fell 255.70 points or 1.61%, off close to 155 points from the day's high and up close to 80 points from the day's low. IT, metal, FMCG, capital goods stocks fell. Auto, realty stocks gained. Index heavyweights Reliance Industries (RIL), L&T and Infosys slumped.

The market breadth turned positive from negative in early trade as buying was witnessed in select mid-cap and small-cap stocks.

As per provisional data, foreign funds today, 31 August 2009, offloaded equities worth a net Rs 270.85 crore. Domestic funds bought shares worth a net Rs 18.65 crore

Intraday volatility was high. The market recovered soon after a weak opening triggered by a setback in Chinese stocks. Expectation that the latest data will show a further recovery in the economy, triggered the intraday recovery. But the intraday recovery could not be sustained. The market weakened again in morning trading. The Sensex cut losses once again after a strong Q1 GDP growth data hit the market at about 11:00 IST.

The intraday recovery gathered further strength in early afternoon trade. But the market weakened again in early afternoon trade on sharp slide in Chinese stocks and lower US index futures. The Sensex cut losses after tumbling to a fresh intraday low in afternoon trade. The market tumbled to a fresh intraday low in mid-afternoon trade before cutting losses.

India's gross domestic production (GDP) grew 6.1% in Q1 June 2009 compared with the year-earlier, figures released by the Central Statistical Organisation announced at 11:00 IST today, 31 August 2009, showed. The segment grouping financing, insurance, real estate and business services led growth in GDP, gaining 8.1% on year. The category including trade, hotels, transport and communication was also up 8.1%. Agriculture, forestry and fishing, by comparison, rose just 2.4% on year. Manufacturing was up 3.4% on year in the April-June 2009 quarter.

The GDP growth was lower than 7.8% achieved in Q1 June 2008 but it accelerated from the 5.8% expansion in Q4 March 2009. Planning Comission deputy chairman Montek Singh Ahluwalia the worst may be over for the economy. He said the economy is expected to improve in the coming quarters. Finance Secretary Ashok Chawla said the economy is slowly bouncing back.

European shares fell on Monday, with the leading index tracking sharp losses in Chinese stocks. Key benchmark indices in Germany and France fell by between 0.64% to 0.67%. London markets are closed for a holiday.

Chinese shares slumped 6.74% on Monday, 31 August 2009, on continued concerns about the impact of weakening bank lending on the economy. Reports that Metallurgical Corp. of China will start roadshows for a 16.85 billion yuan ($2.46 billion) initial public offering added to concerns about liquidity, also weighing on investor sentiment. Hong Kong's Hang Seng was down 1.86%.

The news came amid reports that new yuan loans made by Chinese lenders in August 2009 were likely to fall below 300 billion yuan, from 356 billion yuan in July 2009 and 1.53 trillion yuan in June 2009.

Japan's Nikeei 225 average was down 0.4%, reversing an initial rise of more than 2% to its highest intraday level for this year. The early gains were fueled by the Democratic Party of Japan win's of more than 300 of the 480 seats in the Lower House on Sunday, 30 August 2009, pushing out the Liberal Democratic Party after 54 years of nearly uninterrupted rule.

Shares of Japanese exporters of cars and electronics declined as the yen surged against the euro and dollar after the election outcome. Government reports showed factory output in Japan rose at the slowest pace in four months in July 2009 and retail sales fell, underscoring the challenge for the incoming government to sustain an economic recovery.

In other Asian markets, the key benchmark indices in Singapore, South Korea were down by between 1% to 1.89%. But Taiwan's Taiwan Weighted rose 0.24%.

Trading in US index futures indicated Dow could fall 60 points at the opening bell on Monday, 31 August 2009.

US stocks fell on Friday, 28 August 2009 despite some positive news from technology companies. The Dow slipped 36.43 points, or 0.4%, to 9,544.20. The S&P 500 index fell 2.05 points, or 0.3%, to 1,027.76, while Nasdaq Composite Index rose 1.04 points, or 0.1%, to 2,028.77.

Economic news indicated tough times for consumers. The Michigan consumer survey said its final index of confidence for August fell to 65.7 from 66.0 in July. This is the lowest number since April. It was however better than expectations.

Personal income for July 2009 was flat and spending was up 0.2%, while core personal consumption expenditures were up 0.1%. Each was essentially in-line with expectations.

Meanwhile, there were upside earnings surprises from Dell and Marvell Tech, along with strong revenue forecast from Intel.

Closer home, there has been a revival in monsoon rains this month. The monsoon rains were 5% below average in the week to 26 August 2009, coming in close to normal for the second successive week after a prolonged dry spell, the Meteorological Department said on 27 August 2009. Rainfall since 1 June to 26 August was 25% below normal, improving slightly from a deficit of 26% a week earlier.

India's monsoon rains, a quarter short of average since 1 June are likely to improve in September to end the four-month season with a total deficit of 20%, the head of the weather office said on Friday. More than two-thirds of the people live in villages and 60% of the farm land depends on the annual monsoon rains running between June to September.

India's deficient monsoons may affect the inflation outlook more than growth prospects, the Reserve Bank of India (RBI) said on 28 August 2009 adding that prolonged expansionary fiscal and monetary policies threatened to push up prices and eventually crimp growth. In its quarterly review of the monetary policy in late July 2009, RBI said it expects inflation to scale up to around 5% by March 2010.

The BSE 30-share Sensex fell 255.70 points or 1.61% to 15,666.64. The Sensex fell 100.95 points at the day's high of 15821.35 in early afternoon trade. The Sensex fell 332.54 points at the day's low of 15,589.80 in mid-afternoon trade.

The S&P CNX Nifty declined 70.25 points or 1.48% to 4,662.10. Nifty September 2009 futures were at 4669.10 at a premium of 7 points as compared to the spot closing of 4662.10. Turnover in NSE's futures & options (F&O) segment was Rs 59,415.63 crore, lower than Rs 60,109.07 crore on Friday, 28 August 2009.

BSE clocked a turnover of Rs 6612 crore, lower than Rs 6581.27 crore on Friday, 28 August 2009.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1639 shares advanced as compared with 1154 that declined. A total of 77 shares remained unchanged. The breadth turned positive from negative breadth in early trade.

Among the 30-member Sensex pack, 22 fell while rest rose.

The market had urged in the past seven days supported by positive global cues. The BSE Sensex jumped 1112.70 points or 7.51% in seven trading sessions to settle at 15,922.34 on Friday, 28 August 2009 from 14,809.64 on 19 August 2009.

Equities have risen sharply this year on the back of heavy buying by foreign funds. The Sensex is up 6019.33 points or 62.39% in calendar year 2009 as on 31 August 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 7506.24 points or 91.98% as on 31 August 2009. FII inflow in calendar year 2009 totaled Rs 40,284 crore (till 28 August 2009).

Coming back to today's trade, the BSE Mid-Cap index rose 0.33% and the BSE Small-Cap index rose 0.51%. Both the indices outperformed the Sensex.

The BSE Realty index (up 2.91%), the BSE Auto index (up 1.09%), the BSE PSU index (up 0.01%), the BSE Consumer Durables index (down 0.11%), the BSE Power index (down 0.35%), the BSE Bankex (down 0.7%), the BSE Healthcare index (down 0.81%), the BSE FMCG index (down 1.29%), the BSE Capital Goods index (down 1.35%), outperformed the Sensex.

The BSE IT index (down 2.26%), the BSE Metal index (down 2.18%), the BSE Teck index (down 2.1%), the BSE Oil & Gas index (down 1.71%), underperformed the Sensex.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) fell 3.2% to Rs 2004.10 on profit taking after recent gains. The Supreme Court, from 20 October 2009 will hear the Krishna-Godavari gas dispute between Mukesh Ambani's Reliance Industries (RIL) and Anil Ambani's Reliance Natural Resources (RNRL) for its final disposal. A bench headed by Chief Justice KG Balakrishnan on Friday fixed the date for an early decision in the case.

In June, the Bombay High Court had ruled that Reliance Industries should supply gas to Reliance Natural at $2.34 per million metric British thermal unit, nearly half the $4.20 price in an interim court order in January 2009.

PSU OMCs rose on fall in crude oil prices. BPCL, HPCL and Indian Oil Corporation rose by between 0.61% to 3.52%. Lower oil prices will reduce underrecoveries at the state-run oil firms on domestic sale of petrol, diesel, LPG and kerosene at a controlled price.

Crude oil fell today after last two days' gains. Crude oil for October delivery fell 2.2% to $ 71.14 a barrel on the New York Mercantile Exchange.

Cairn India rose 2.02% after the company on Saturday, 29 August 2009 began pumping crude from its Mangala oil field in the Rajasthan block.

India's largest oil exploration firm by market capitalisation ONGC rose 0.51% after the company on Friday, 28 August 2009, said it has discovered gas at a block in the north-eastern state of Tripura. The gas contains up to 96.3% methane. The announcement was made after trading hours on Friday

Auto stocks gained on revival in India's annual monsoon. Auto firms derive substantial revenue from rural sector. Indian largest tractor maker by sales Mahindra & Mahindra surged 4.15%. As per recent reports, the company is looking at options to buy a US facility for assembling its pickup trucks that would save it an import penalty.

Maruti Suzuki, India's top car maker by sales, rose 1.03%. The company expects its sales to rise more than 10% till October 2009, its chairman said on Friday, after growing sales at over 14% during four months to July 2009.

India's largest truck marker by sales Tata Motors was flat at Rs 489.35. The company reported a consolidated net loss of Rs 328.78 crore in Q1 June 2009 as compared to a net profit of Rs 719.69 crore in Q1 June 2008. The results were announced in late trade today.

India's largest motorbike maker by sales Hero Honda Motors rose 0.49%.

IT stocks fell for the second straight day after US confidence index fell to its lowest level in four months. US is the biggest market for IT firms. US consumer confidence fell to its lowest in four months in August 2009 on worries over high unemployment and dismal personal finances, though the mood improved from earlier this month, a survey showed on Friday, 31 August 2009. India's third largest software services exporter Wipro fell 2.37% as its ADR fell 1.67% on Friday.

India's second largest software services exporter Infosys Technologies fell 2.53% as its ADR fell 1.32% on Friday. A foreign brokerage, last week, reduced its rating on the stock 'underweight' from 'equal-weight', saying the stock's valuation is 'rich'. India's largest software services exporter TCS fell 2.5%.

In one of the largest deals, the top-three Indian vendors Infosys, TCS and Wipro along with IBM Corp bagged a slice of the $1.5 billion five year information technology (IT) outsourcing contract from British Petroleum Pcl (BP), one of the world's largest integrated oil and gas companies. The companies announced the BP deal last week.

Metal stocks fell as Shanghai copper fell more than 2% on Monday, after hitting a fresh 11-month high in early trade, as investors became cautious about the outlook for economic recovery.

Steel Authority of India, Jindal Steel & Power, Sterlite Industries, National Aluminum Company, Hindalco Industries fell by between 0.53% to 3.11%.

India's largest steel maker by sales Tata Steel fell 3.26%. Tata Steel reported a net loss of Rs 2208.68 crore in Q1 June 2009 on a consolidated basis compared with a net profit of Rs 3900.90 crore in Q1 June 2008. Total income fell 46% to Rs 23496.21 crore in Q1 June 2009 over Q1 June 2008. The result was announced during market hours on Thursday, 27 August 2009.

Construction and capital goods fell on profit taking after recent gains. 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.

Bharat Heavy Electricals, Crompton Greaves, BEML, Punj Lloyd fell by between 0.39% to 1.28 %.

India's largest engineering and construction firm by sales Larsen & Toubro (L&T) fell 2.91%. The company's chairman A M Naik said on Friday, 28 August 2009, the company expects to make a profit of up to Rs 250 crore on its shares in outsourcer Mahindra Satyam. He added that L&T is expected to sell Mahindra Satyam shares by March next year.

L&T had built a 12% stake in Mahindra Satyam, formerly Satyam Computer, before losing out in the race for a controlling stake in the firm earlier this year to Tech Mahindra.

From the construction space, Era Infra Engineering, Hindustan Construction Company, JP Associates, Valecha Engineering fell by between 0.5% to 2.15%.

Cement stocks edged higher ahead of the monthly dispatchment figures for the month of August 2009 due in the next two days. UltraTech Cement, Ambuja Cements, Grasim Industries, Birla Corporation rose by between 0.5% to 2.06%.

FMCG stocks dipped on concerns deficient monsoon rains may crimp rural sales. FMCG firms derive a substantial revenue from rural India. ITC, Nestle India, Marico, Hindustan Unilever, Tata Tea, United Breweries fell by between 0.1% to 2.34%.

India's largest mobile phone company by sales Bharti Airtel fell 2.32% on profit taking after recent rally. Last week, Bharti and South Africa's MTN extended, for a second time, talks aimed at creating the world's third-biggest mobile company.

The two firms agreed to extend talks to 30 September 2009, after previously extending discussions by a month to 31 August, as they negotiate a $23 billion cash and share-swap deal aimed at an eventual full merger.

Tata Power Company fell 2.23% extending Friday's fall even as consolidated net profit rose 160.47% to Rs 572.65 crore on 15.71% rise in total income to Rs 4781.89 crore in Q1 june 2009 over Q1 June 2008. The results were announced on Friday, 28 August 2009.

Other power stocks, CESC, Reliance Infrastructure, Torrent Power fell by between 1.95% to 2.63%.

But, India's largest power generation firm by sale NTPC rose 1.19% on reports the government is looking at divesting 10% stake in the largest power generation company. NTPC may also raise fresh equity to part finance its expansion programme. According to reports, NTPC is likely to hit the capital market with a follow-on public offer to raise nearly Rs 6,000 crore early next fiscal.

Realty stocks rose on reports demand for residential projects in major cities is picking up on lower home loan rates, property price cuts by developers and a recovery in the job market. Indiabulls Real Estate, Phoenix Mills, Unitech, DLF and Ackruti City rose by between 0.47% to 7.72%.

Realty market had slumped last year amid a global credit crunch and buyers fearing job losses.

Bank stocks fell as lower bond prices will result in diminution in value of bond holdings. The yield on the key 10-year government bond held at a 9-1/2 month high of 7.43% on Monday, 31 August 2009. Bond yields and bond prices are inversely related.

India's largest private sector bank by net profit ICICI Bank fell 1.85% as its American depository receipt (ADR) fell 1.21% on Friday. The bank has launched a special offer for new home loan borrowers effective from 20 August 2009. Under this, interest rates for home loans upto Rs 20-lakh will now be at 8.75%. For loans between Rs 20-Rs 50 lakh, the new rates will be 9.25% while those above Rs 50-lakh, the rate has been fixed at 9.75%.

India's biggest bank in terms of branch network State Bank of India (SBI) fell 2.16%. Bank's Chairman O P Bhatt said on Friday interest rates will remain stable for next six months. It is difficult to say whether rates have bottomed out, he said

Some PSU banks bucked the weak trend after the Reserve Bank of India said commercial banks, excluding local area banks and regional rural banks, are allowed access to the interest rate futures market for hedging and trading on their own books. Bank of Baroda, Bank of India, India Overseas Bank, Union Bank of India, rose by between 0.21% to 3.61%. Trading on interest rate futures began on the National Stock Exchange on Monday

India's second largest private sector bank by net profit HDFC Bank rose 0.85% as its ADR rose 1.26% on Friday.

Shares of tea makers fell on profit taking after a recent surge due to jump in tea prices caused by fall in production. Assam Tea Company, Warren Tea, Asian Tea & Exports fell by between 0.7% to 3.75%.

Fertiliser shares rose on slight revival in India's annual monsoon. Nagarjuna Fertilisers, Chambal Fertilisers & Chemicals, GSFC, GNFC, Rashtriya Chemicals & Fertilisers rose by between 0.01% to 2.5%.

Fertilizer sales are directly dependent on monsoon. A bountiful monsoon boosts sales whereas a drought hits sales adversely

Sugar stocks rose as the price of raw sugar in Nw York soared to its highest level in almost 30 years on Friday, 28 August 2009, driven by investors worries about tight supplies and strong global demand for the sweetener. Shree Renuka Sugars, Bajaj Hindustan, Dhampur Sugars and Balrampur Chini rose by between 3.13% to 6.23%.

Unitech clocked the highest volume of 4.7 crore shares on BSE. Mahindra Satyam (3.6 crore shares), Ispat Industries (2.54 crore shares), IFCI (2.15 crore shares) and IKF Technologies (1.68 crore shares) were the other volume toppers in that order.

Unitech clocked the highest turnover of Rs 504.94 crore on BSE. Mahindra Satyam (Rs 447.47 crore), Aban Offshore (Rs 250.35 crore), Tata Steel (Rs 203.26 crore) and Reliance Capital (Rs 179.60 crore) were the other turnover toppers in that order.