Sensex sheds 2.45% on profit taking

The Key benchmark indices nosedived in last one hour or so of trade led by fall in auto, metal, realty and FMCG stocks. The BSE 30-share Sensex lost 389.80 points or 2.45%, off close to 450 points from the day's high. The market breadth was weak.

The sharp slide materialised ahead of television reports at the fag end of the trading session that the monsoon rains were 66% below normal the week to 5 August 2009. Separate media reports suggested that monsoon rains during the period from 1 June 2009 to 4 August 2009 were 25% below normal. A weak monsoon may hamper economic growth as more than two-thirds of the people live in villages and 60% of the farm land depends on the annual rains.

There are signs that the Indian economy is recovering from a slowdown last year. Growth in India's manufacturing activity held steady in July 2009 amid robust local demand and a slight rebound in exports. However, intense competition curbed companies' pricing power even as raw material costs jumped, a survey released during trading hours on Monday, 3 August 2009, showed. The Markit Purchasing Managers' Index (PMI), based on a survey of 500 companies, was at 55.30 in July 2009, little changed from 55.34 in June 2009. It has been above the threshold of 50 -- which separates expansion from contraction -- for four straight months. The new orders index rose to 59.75, its highest in nine months, from 58.56 in June 2009.

The stock market was volatile today, 6 August 2009. The market drifted lower in early trade as weak Asian stocks and lower US index futures triggered profit taking after a recent strong rally. The market cut losses later as Asian stocks recovered. The recovery gathered steam with the Sensex moving to positive zone from negative territory as European stocks rose in early trade. The market pared gains in mid-afternoon trade. A sell-off gripped the bourses in the last one hour or so of trade.

Heavy purchases by foreign funds has triggered a solid rally on the bourses this year. The Sensex was up 5866.72 points or 60.81% in calendar year 2009 as on 6 August 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex was up 7353.60 points or 90.11% as on 6 August 2009.

Foreign institutional investors' (FIIs) inflow in calendar year 2009 totaled Rs 36,360.70 crore (till 5 August 2009). However, foreign funds sold shares worth Rs 480.40 crore on Wednesday, 5 August 2009.

Investors continue to bet that the government will undertake economic reforms which may boost economic growth and corporate earnings. The government kickstarts the divestment process with the initial public offer of state run hydro power generation firm NHPC opening for bidding on Friday, 7 August 2009. The company is selling 168 crore shares comprising of 5% divestment of stake by the government and infusion of 10% fresh equity.

Inflation based on the wholesale price index (WPI) declined 1.58% for the 12 months to 25 July 2009 compared to previous week's fall of 1.54% government data showed at 12:00 IST today. Inflation for the week ended 30 May 2009 was revised upwards to a rise of 0.9% from 0.13%. Finance Minister Pranab Mukherjee said on Thursday said the government will take appropriate action if needed to tame prices.

The Q1 June 2009 results of India Inc were encouraging, with lower costs helping bottomline growth. The combined net profit of 3,028 companies rose 17% to Rs 73716 crore on 5% fall in sales to Rs 722149 crore in Q1 June 2009 over Q1 June 2008.

European shares rose on Thursday, after the Bank of England (BoE) surprised the financial markets by raising the size of its quantitative easing programme. Key benchmark indices in France, Germany and UK were up by between 0.76% to 1.26%.

The BoE extended its quantitative easing programme, raising the size of its bond purchase scheme to an unexpectedly large 175 billion pounds from 125 billion, and held interest rates at unchanged at 0.5%. The European Central Bank (ECB) is scheduled to announce its decision on interest rates shortly.

Asian stocks rose as Alumina posted a smaller-than-estimated underlying loss and Australian employers unexpectedly added jobs, boosting confidence the global economy is recovering. Key benchmark indices in Hong Kong, South Korea, Taiwan and Japan rose by between 0.3% to 1.97%. But China's Shanghai Composite index was down 2.11% led by financial companies and commodities producers, on speculation the central bank will rein in lending to avert bubbles in equities and property.

China's central bank late on Wednesday repeated that monetary policy will remain growth friendly, sticking with its view that the recovery was not solid, though it said it would use market tools to fine tune policy after unprecedented loan growth in the first six months of the year.

US index futures reversed losses. Trading in US index futures indicated Dow could rise 11 points at the opening bell today, 6 August 2009.

Disappointing readings on the service sector and employment situation dragged US stocks lower on Wednesday, 5 August 2009. The Dow fell 39.22 points, or 0.4%, to 9,280.97. The S&P 500 Index fell 2.93 points, or 0.3%, to 1,002.72, while the Nasdaq Composite Index fell 18.26 points, or 0.9, to 1,993.05.

The ISM services index for July 2009 unexpectedly slipped to 46.4 from 47 in June 2009. The latest ADP employment report indicated that 3.71 lakh jobs were slashed in July.

The BSE 30-share Sensex was down 389.80 points or 2.45% to 15,514.03. The Sensex rose 65.98 points at the day's high of 15,969.81 in afternoon trade. The Sensex fell 460.61 points at the day's low of 15,443.22 in late trade.

The S&P CNX Nifty was down 108.65 points or 2.31% to 4,585.50. Nifty August 2009 futures were near spot price at 4585.10. Turnover in NSE's futures & options (F&O) surged to Rs 73,819.40 crore from Rs 63,729.03 crore on Wednesday, 5 August 2009.

BSE clocked a turnover of Rs 7139 crore, higher than 6009.87 crore on Wednesday, 5 August 2009.

The market breadth, indicating the overall health of the market, turned weak. On BSE, 1072 shares advanced as compared with 1617 that declined. A total of 71 shares remained unchanged. The breadth had turned strong in early afternoon trade from negative breadth in early trade.

Among the 30-member Sensex pack, 28 fell while the rest gained.

The BSE Mid-Cap index was down 2.39% and the BSE Small-Cap index was down 1.29%. Both the indices outperformed Sensex.

The BSE Auto index (down 4.43%), the BSE Realty index (down 3.65%), the BSE FMCG index (down 3.29%), the BSE Metal index (down 3.05%), underperformed the Sensex.

The BSE Healthcare index (down 0.69%), the BSE Oil & Gas index (down 1.58%), the BSE Bankex (down 1.67%), the BSE PSU index (down 1.87%), the BSE Teck index (down 1.88%), the BSE IT index (down 2.09%), the BSE Capital Goods index (down 2.12%), the BSE Consumer Durables index (down 2.13%), the BSE Power index (down 2.3%), outperformed the Sensex.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) fell 1.38% to Rs 2,046.55. It hit a high of Rs 2123.80 and a low of Rs 2020. Anil Dhirubhai Ambani Group (ADAG) company Reliance Power on Wednesday cast doubt on the government-appointed experts that approved the capital expenditure plan for the production of natural gas by rival Reliance Industries (RIL), drawing a sharp response from the Directorate General of Hydrocarbons (DGH).

Reliance Power chief executive officer J P Chalashani alleged that the London-based company Mustang Engineering and an academic P Gopalakrishnan who vetted RIL's higher capital spending plan were not independent because they could be linked to RIL and Mukesh Ambani.

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 pertaining to the Krishna-Godavari basin gas dispute between Mukesh Ambani's Reliance Industries (RIL) and Anil's Ambani's Reliance Natural Resources (RNRL). RNRL counsels Mukul Rohatgi and Mahesh Agrawal sought an early decision in the case.

Shares of three public sector oil marketing companies advanced as a revision 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) rose by between 0.05% to 1.63%. 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.

Rate sensitive auto stocks fell on profit taking after recent surge triggered by healthy monthly sales figures for July 2009 and good Q1 June 2009 results. Mahindra & Mahindra, Bajaj Auto, Hero Honda Motors, and Maruti Suzuki India, TVS Motor Company fell by between 4.14% to 5.34%.

India's largest truck market by sales Tata Motors fell 6.93%. Early this week, the global ratings agency Standard & Poor's downgraded long term corporate credit rating of the auto major to 'B' from 'B+'. The outlook is negative. At the same time, Standard & Poor's lowered the issue rating on the company's senior unsecured notes to 'B' from 'B+'.

IT stocks fell as weak US data on the services sector and private payrolls cooled recent optimism the recession was retreating. US is the biggest market for Indian IT firms. India's second largest IT exporter by sales Infosys fell 1.91% as its American depository receipt (ADR) fell 1.06% on Wednesday. The company's chief executive S Gopalakrishnan on Wednesday said company is looking at acquisitions of companies with $450-$500 million revenue. He further said the company is pursuing outsourcing deals worth $1 billion and that 2-15 deals are in pipeline.

India's largest IT exporter by sales TCS fell 2.39%. The company has 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 third largest IT exporter by sales Wipro was flat at Rs 498.25. 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. Its ADR rose 0.39% on Wednesday

FMCG stocks fell on concerns over annual monsoon. FMCG firms derive substantial revenue from rural sector. Hindustan Unilever, Tata Tea, ITC, United Spirtis, Marico, Dabur India, fell by between 0.72% to 4.02%.

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, Indiabulls Real Estate, Phoenix Mills, Omaxe, Anant Raj Industries, Ackruti City, fell by between 2.09% to 8.02%.

India's largest realty player by market capitalization DLF fell 2.9% after reports the company is looking to exit its life insurance joint venture with the US-based Prudential Financial as it continues to sell non-core businesses that demand fund infusion. The company is reportedly scouting for a potential buyer for its 74% stake in DLF Pramerica Life Insurance.

Metal shares fell as metal prices fell on the London Metal Exchange amid concerns that China's central bank will rein in lending. Tata Steel, Steel Authority of India, Sterlite Industries, National Aluminum Company, Hindalco Industries fell by between 1.48% to 4.79%.

Copper for three-month delivery on the London Metal Exchange fell as much as 3.1% to $6,010 a tonne. Among other London-traded metals, aluminum slid 2.2% to $2,025 a tonne, zinc dropped 2.2% to $1,883 a tonne and lead declined 1.5% to $1,920 a tonne. Nickel was 3.9% lower at $19,650 a tonne and tin declined 2 to $15,000 a tonne.

Rate sensitive bank stocks fell on profit taking after recent surge. India's biggest bank in terms of branch network State Bank of India (SBI) fell 2.57%

India's largest private sector bank by net profit ICICI Bank fell 0.98%. Its ADR was flat on Wednesday. India's second largest private sector bank by net profit HDFC Bank fell 2.33% as its ADR fell 0.51% on Wednesday.

India's largest electric equipment maker by sales Bharat Heavy Electricals (Bhel) fell 1.58%. The company has bagged a Rs 2,600-crore order from Hindal India Thermal Power for its 1,200 megawatt greenfield power project located at Derang in the Angul district of Orissa.

India's largest engineering and construction firm by sales Larsen & Toubro fell 1.89%. As per reports, the company has sought permission from market regulators to sell its stake in outsourcer Mahindra Satyam.

Other capital goods stocks, Crompton Greaves, Praj Indutries, , ABB, BEML, Thermax, Siemens fell by between 0.48% to 3.42%.

Cement stocks fell on profit taking after a recent surge triggered by healthy July 2009 monthly sales. UltraTech Cement, Ambuja Cements, ACC fell by between 0.14% to 1.94%.

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. Gayatri Projects, IVRCL Infrastructure & Projects, Era Infra Engineering, Hindustan Construction Company fell by between 1.57% to 5.69%.

Some power stocks fell on profit taking after recent surge on strong response to Adani Power's initial public offer. The IPO of Adani Power was subscribed over 21 times on 31 July 2009. CESC, Reliance Power, PowerGrid Corporation of India, Reliance Infrastructure, Torrent Power, GVK Power & Infrastructure, NTPC fell by between 1.37% to 3.91%.

Cals Refineries clocked highest volume of 2.97 crore shares on BSE. Ispat Industries (2.53 crore shares), Firstsource Solutions (2.02 crore shares), Unitech (1.83 crore shares) and Mahindra Satyam (1.67 crore shares) were the other volume toppers in that order.

ICICI Bank clocked highest turnover of Rs 343.18 crore on BSE. Reliance Industries (Rs 272.97 crore), Reliance Capital (Rs 229.44 crore), Tata Steel (Rs 185.36 crore) and Mahindra Satyam (Rs 180.29 crore) were the other turnover toppers in that order.