Sensex tanks 4.07% tracking global sell off

Global sell-off after a disappointing US consumer sentiment report reigniting concerns about the global economic recovery triggered a sharp sell-off on the domestic bourses. Sustained bear hammering kept indices under pressure throughout the day. The BSE 30-share Sensex fell 626.71 points or 4.07%, after cracking below the psychological 15,000 mark in early afternoon trade. Stocks across sectors collapsed with those from realty, metal, banking and auto gripped firmly under sell-off. All the 30 shares from Sensex pack declined.

European shares were lower on Monday, retreating for a second day as investors became cautious on global recovery hopes.The key benchmark indices in France, Germany and UK were down by between 1.92% to 2.52%.

Asian stocks dropped today for the first time in three days after an unexpected decline in a U.S. consumer confidence index raised concern about the strength of a revival in global growth. The key benchmark indices in China, Hong Kong, South Korea, Singapore and Taiwan fell by between 1.95% to 5.79%.

Japan's Nikkei 225 Stock Average fell 3.1% even as a government report showed the country's economy grew for the first time in five quarters. Gross domestic product expanded at an annual 3.7 % pace in the three months ended 30 June 2009, following an 11.7% decline in the previous quarter.

Trading at the US index futures indicated Dow could fall 176 points at the opening bell today, 17 August 2009.

Wall Street witnessed a broad based decline on Friday, 14 August 2009 as stocks slid snapping a four-week winning streak. A disappointing report on consumer sentiment sent the benchmark indices in the red but they closed off lows. The Dow Jones Industrial Average fell 76.79 points, or 0.8%, to 9,321.40. The S&P 500 index fell 8.64 points, or 0.9%, to 1,004.09, while the Nasdaq Composite Index fell 23.83 points, or 1.2%, to 1,985.52.

Contributing to the fall was the August consumer sentiment survey by the University of Michigan. The report showed sentiment unexpectedly dropped to 63.2, the lowest level since March. The reading was well below the 69.0 that was widely expected.

And, consumer prices were flat in July from June, but tumbled 2.1% from July last year, its largest decline since January 1950.

However, the industrial production rose 0.5% in June, the first increase in nine months, thanks to inventory rebuilding and the reopening of auto plants.

Back home, the government will announce on 27 August its foreign trade policy for the next five years starting from FY 2010, Trade Minister Anand Sharma said on Monday. The policy will address the problems of exporters, particularly the labour-intensive sector, but did not elaborate. India's exports fell an annual 27.7% in June 2009 to $12.8 billion, its ninth straight monthly fall, as recession at developed nations continue to slash demand for Indian goods.

A top finance ministry official said on Monday, the Indian government has no plan to go slow on its borrowing schedule for the first half of the 2009/10 fiscal year that began in April. The government will announce the details of the next auction later on Monday. The government had announced that it would borrow a total of Rs 2,99,000 crore in the first half out of its full-year borrowing target of a record Rs 4,51,000 crore.

Prime Minister Manmohan Singh said in his Independence Day speech on 15 August that returning to a high growth rate is the greatest challenge facing India, with a weak monsoon making the task harder, but the economy may improve by year-end. India has adequate stocks of foodgrains, and the government will keep food prices in check, Singh said. The goal is 4 % annual growth in agriculture, and I am confident it will be achieved in the next five years. he said.

The monsoon situation remains grim with the country heading into the worst drought year over the last two decades. Monsoon was 56% below normal in 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. However, India's weather office has ruled out an early withdrawal for this year's monsoon which has still one and half months to complete its full journey. The progress of monsoon is closely watched as more than two-thirds of the people live in villages and 60% of the farm land depends on the annual rains.

However, some of India's main reservoirs in the western and southern parts could reportedly be used to mitigate the impact of poor monsoon rains on summer-sown crops. Comfortable water levels of the reservoirs in the southern and western parts could help irrigate lentils, oilseeds, and rice, Agriculture Minister Sharad Pawar said. Government data last week showed water in India's main reservoirs rose to 38 % of their capacity, up 2 percentage points from a week ago.

The BSE 30-share Sensex fell 626.71 points or 4.07% at 14,784.92. The Sensex fell 127.40 points at the day's high of 15,284.23 in early trade. At the day's low of 14,740.63, the Sensex fell 671 points in late trade.

The S&P CNX Nifty was down 192.15 points or 4.2% to 4,387.90. Nifty August 2009 futures were at 4375.10, at a discount of 12.80 points as compared to the spot closing of 4,387.90. Turnover in NSE's futures & options (F&O) segment was Rs 70983.18 crore higher than Rs 63,891.72 crore, on Friday, 14 August 2009.

BSE clocked a turnover of Rs 4,956 crore lower than Rs 5,649.97 crore on Friday, 14 August 2009.

Equities have risen sharply this year on the back of heavy buying by foreign funds. The Sensex is up 5137.61 points or 53.25% in calendar year 2009 as on 15 August 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 6,624.52 points or 81.17% as on 15 August 2009. FII inflow in calendar year 2009 totaled Rs 36,571.70 crore (till 13 August 2009).

Coming back to today's trade, the BSE Mid-Cap index was down 3.9% and the BSE Small-Cap index was down 3.13%. Both the indices outperformed the Sensex.

The BSE Healthcare index (down 2.62%), the BSE IT index (down 2.76%), the BSE Teck index (down 2.86%), the BSE Power index (down 3.04%), the BSE PSU index (down 3.21%), the BSE Capital Goods index (down 3.78%), the BSE Consumer Durables index (down 3.8%), outperformed the Sensex.

The BSE FMCG index fell 4.07% and matched Sensex's 4.07% decline.

The BSE Realty index (down 7.58%), the BSE Metal index (down 6.15%), the BSE Auto index (down 4.77%), the BSE Oil & Gas index (down 4.42%), the BSE Bankex (down 4.08%), underperformed the Sensex.

The market breadth, indicating the overall health of the market, was weak. On BSE, 671 shares advanced as compared with 1924 that declined. 73 shares remained unchanged.

All the shares from the 30 share Sensex pack fell.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) fell 4.66% to Rs 1,939.60. Reliance Industries has reportedly found natural gas reserves in a well drilled on its NEC-25 block in Mahanadi basin, off the Orissa coast, the company's junior partner Niko Resources of Canada said. Niko Resources holds 10 % interest in the Mahanadi basin shallow water block covering an area of 10,755 square kilometer (sq km) in water depths ranging between 20-600 meters. RIL holds 90 % interest in the Bay of Bengal block.

As per recent report 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 oil prices extended losses on Monday, after posting their biggest loss in more than two weeks on Friday after a report showing weak U.S. consumer confidence darkened the economic outlook. Rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms.

India's largest state-run oil exploration firm by sales ONGC fell 4.59%. U.S. crude oil futures fell $1 to $66.51 a barrel on the New York Mercantile Exchange.

Cairn India fell 4.98%. As per recent reports, the company 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.

Bank stocks fell on profit taking. India's largest private sector bank by net profit ICICI Bank fell 5.28% as its ADR fell 2.93% on Friday.

India's biggest commercial bank in terms of branch network State Bank of India (SBI) fell 4.69%. Among other PSU banks, Bank of Baroda, Punjab National Bank, Bank of India, Union Bank of India fell by between 1.06% to 3.41%.

India's second largest private sector bank by net profit HDFC Bank fell 1.37% even as its ADR rose 0.59% on Friday.

India's largest dedicated home loan lender HDFC fell 2.54%. The lender last week reduced home loan rates by 50 basis points to 9% in the Rs 30 lakh to Rs 50 lakh segment for new loans.

Realty shares fell on profit taking. Phoenix Mills, Unitech, Omaxe, Indiabulls Real Estate, Ansal Properties, DLF, Anant Raj Industries fell by between 1.01% to 13.29%. Realty shares had risen sharply in the past few weeks on 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.

Metal shares fell after LMEX, a gauge of six metals traded on the London Metal Exchange, fell 3.05% on Friday, 15 August 2009. Steel Authority of India, National; Aluminum Company, Hindalco Industries, Tata Steel, Hindustan Zinc fell by between 3.63% to 7.35%.

Auto stocks fell on concerns arising from scanty rains. Auto firms derive substantial revenue from rural India. Maruti Suzuki India, Hero Honda Motors, Mahindra & Mahindra, TVS Motor Company fell by between 5.18% to 5.92%.

India's largest commercial vehicle maker by sales Tata Motors fell 6.67%. Tata Motors is reportedly planning to invest about Rs 8,000 crore during the next three-four years as capital expenditure and product development. The money is likely to be spent on launching new models and scaling up its operations.

Construction, capital goods and cement shares 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 and may help boost cement demand. Among construction shares, IVRCL Infrastructure & Projects, Hindustan Construction Company, Nagarjuna Construction Company, fell by between 4.51% to 6.28%.

Bidding is expected to start soon on 139 road projects covering 14,395 kilometres at a cost of about US$ 21 billion.

Capital goods stocks, Larsen & Toubro, Thermax, Punj Lloyd, ABB, Crompton Greaves, Praj Industries fell by between 0.8% to 7.14%.

From the cement pack, UltraTech Cement, Grasim Industries, ACC, Ambuja Cements, fell by between 0.75% to 4.84%.

FMCG stocks fell on concerns over scanty rains. FMCG firms derive substantial revenue from rural markets. Dabur India, Tata Tea, Nestle India, United Spirits, ITC, Hindustan Unilever fell by between 2.73% to 6.05%.

IT stocks fell on unexpected decline in a U.S. consumer confidence index after weak US retail sales and increase in weekly jobless claims. IT companies derive a lion's share of revenues from exports to the US. India's second largest IT exporter by sales Infosys fell 2.78% as its American depository receipt (ADR) fell 2.19% on Friday. India's third largest IT exporter by sales Wipro fell 2.7% as its ADR fell 1.53% on Friday India's largest IT exporter by sales TCS fell 1.9%.

Power companies fell after reports the power ministry is planning to cap the sale price of electricity sold in the open market if the projects claim tax benefits. CESC, Power Grid Corporation, Tata Power Company, Reliance Infrastructure, Jindal Steel and Power, GVK Power & Infrastructure fell by between 1.48% to 6.15%. The government is trying to prevent power companies from making windfall gains while enjoying the tax benefits report said.

Airline companies fell after state-run oil marketing firms raised jetfuel prices on account of rising global crude price. Jet Airways, Kingfisher Airlines and SpiceJet fell by between 3.97% to 8.58% declined as higher aviation turbine fuel (ATF) price would increase the operating cost of airlines.

State-run oil marketing companies (PSU OMCs) on 15 August 2009, hiked jet fuel prices by 4.5% in step with firming international oil rates, the second time in a month. The new price came into effect from Sunday, 16 August 2009. Jetfuel contributes 40-45% to the operating cost of an airline.

Shares of sugar companies fell on market talk government will hike levy sugar quota to 20 percent from 10 percent now.Shree Renuka Sugars, Bajaj Hindusthan and Balrampur Chini fell by between 2.06% to 3.43%.

Levy sugar is the amount government procures from sugar millers at a lower rate. This could affect the miller's profitability by 3%-4 % as they will have to sell the commodity at a lower price.

Fertiliser shares fell on concerns over progress of India's annual monsoon. GSFC, RCF, National Fertilisers, Chambal Fertilisers fell by between 3.07% to 7.41%.

Suzlon Energy clocked the highest volume of 1.87 crore shares on BSE. Firstsource Solutions (1.59 crore shares), IFCI (1.52 crore shares), Unitech (1.34 crore shares) and Mahindra Satyam (1.27 crore shares) were the other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 192.60 crore on BSE. Suzlon Energy (Rs 160.16 crore), Tata Steel (Rs 147.73 crore), Aban Offshore (Rs 129.23 crore), Mahindra Satyam (Rs 128.39 crore) were the other turnover toppers in that order.