Market extends losses for the fourth day in a row

The key benchmark indices extended losses for fourth straight trading sessions bucking firm global stocks on worries a surge in food prices may stoke inflationary pressures in the economy. Index heavyweights Reliance Industries and L&T lost ground. Another heavyweight ICICI Bank reversed intraday gains in choppy trade. The BSE 30-share Sensex lost 69.13 points or 0.45%, off close to 200 points from the day's high and up close to 40 points from the day's low.

Capital goods, auto, oil and gas and FMCG stocks fell. The market breadth, indicating the overall health of the market, was slightly positive, weakening from earlier strong breadth.

A bout of volatility was witnessed earlier in the day as the market recovered after falling into the red for a brief period following an initial surge triggered by firm Asian stocks. The market held positive zone amid range bound trade later. The Sensex once again slipped into the red for a short while in afternoon trade before regaining positive zone. The market weakened in late trade.

Analysts are concerned that a sharp surge in food prices in the past few days due to scanty rains may stoke inflationary pressures in the economy. Interest rates could rise on higher inflation which in turn may impact a nascent economic recovery and corporate profits.

The wholesale price index (WPI) declined 0.21% in the year to 22 August 2009 compared to previous week's annual decline of 0.95%, data released by the government at 12:00 IST today showed. The government revised upwards WPI for the week ended 27 June 2009 to a fall of 1% from an estimated decline of 1.55%.

On the positive side, a survey by HSBC on Thursday showed that the growth in services sector accelerated in August 2009, as a strong pipeline of new orders helped companies raise prices. The HSBC Markit Business Activity Index based on a survey of 400 firms rose to an 11-month peak of 54.9 in August from 54.7 in July. The index has been above 50, which separates expansion from contraction, for four months.

But a slowdown in the manufacturing sector and falling exports remains a cause for concern. The same survey had showed two days back that the growth in the manufacturing sector had slowed to a five-month low in August 2009.

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 on Monday, 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%.

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.

A good news is the revival of monsoon since mid-August 2009. India's monsoon rains were reportedly close to normal in the week to 2 September 2009, continuing the upturn in rainfall since mid-August. Rains for the week ended 26 August 2009 were 5% below normal, weather office data showed. Rainfall since the start of the monsoon season on 1 June was 25 percent below average a week ago.

Farm secretary T. Nanda Kumar on Wednesday 2 September 2009 said improved monsoon rains in recent days will boost crop prospects for rice and sugar cane. He said other crops would also gain.

European shares edged higher after moving between positive and negative zone ahead of a decision on interest rates by the European Central Bank's (ECB). Key benchmark indices in France, Germany and UK rose by between 0.36% to 0.55%. The ECB is expected to announce that it is keeping its key interest rate steady at 1%.

Chinese stocks led rally in Asian stocks on Thursday, 3 September 2009. The Shanghai Composite settled 4.79% higher on speculation regulators will adopt measures to boost the nation's equities following declines in the past month. The Xinhua News Agency reported that the China Securities Regulatory Commission would promote the stable and healthy development of the country's capital markets via measures such as strengthening the markets' infrastructure and ensuring the smooth operation of the Growth Enterprise Market when it is launched.

In other Asian stocks, key benchmark indices in Hong Kong, Singapore, South Korea and Taiwan rose by between 0.02% to 1.23%. But Japan's Nikkei 225 average lost 0.64%.

Trading in US index futures indicated Dow could rise 51 points at the opening bell today, 3 September 2009.

US markets fell for the fourth straight day on Wednesday, 2 September 2009, due to some disappointing economic data. The Dow Jones Industrial Average reported its fourth straight declined 29.93 points or 0.32% or to 9,280.67. The S&P 500 Index shed 3.29 points 0.33% to 994.75 and the Nasdaq Composite 1.82 points or 0.09% to 1,967.07.

The ADP employment change report showed private employers cut 298,000 jobs in August 2009. This was more than the 250,000 economists expected. Factory orders rose 1.3% in July. The pace was much slower than the 2.2% expected.

On the flip side, the Federal Reserve policy makers said they are confident the recession is ending.

The BSE 30-share Sensex fell 69.13 points or 0.45% to 15,398.33. The Sensex rose 130.72 points at the day's high of 15598.18 in early trade. The Sensex fell 110.74 points at the day's low of 15,356.72 in late trade.

The S&P CNX Nifty fell 14.80 points or 0.32% to 4,593.55. Nifty September 2009 futures were at 4580.50, at a discount of 13.05 points as compared to the spot closing of 4593.55.

BSE clocked a turnover of Rs 5104 crore, lower than Rs 5440.54 crore on Wednesday, 2 September 2009. Turnover on NSE's futures & options (F&O) segment declined to Rs 62,922.53 crore from Rs 63,487.76 crore on Wednesday, 2

The market breadth, indicating the overall health of the market, was positive, weakening from earlier strong breadth. On BSE, 1398 shares rose as compared with 1347 that fell. A total of 92 shares remained unchanged.

Among the 30-member Sensex pack, 21 rose while rest fell.

The BSE Sensex has lost 524.01 points or 3.29% in the last four days after gaining for seven straight days. The Sensex had 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 5751.02 points or 59.61% in calendar year 2009 as on 3 September 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 7237.93 points or 88.69% as on 3 September 2009. FII inflow in calendar year 2009 totaled Rs 39321.36 crore (till 2 September 2009)

Coming back to today's trade, the BSE Mid-Cap index rose 0.22% and the BSE Small-Cap index rose 0.71%. Both the indices outperformed the Sensex.

The BSE Consumer Durables index (up 0.75%), the BSE Metal index (up 0.59%), the BSE IT index (up 0.49%), the BSE Teck index (up 0.31%), the BSE Bankex (up 0.17%), the BSE Realty index (up 0.17%), the BSE PSU index (down 0.16%), the BSE FMCG index (down 0.35%), the BSE Power index (down 0.44%), outperformed the Sensex.

The BSE Oil & Gas index (down 1.12%), the BSE Healthcare index (down 0.73%), the BSE Capital Goods index (down 0.58%), the BSE Auto index (down 0.53%), underperformed the Sensex.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) fell 2.01% to Rs 1932.10. The stock hit a high of Rs 1987.30 and a low of Rs 1924.90. The government on Tuesday amended the special leave petition filed in the Supreme Court stating that the country's largest utility NTPC and Anil Ambani's Reliance Natural Resources (RNRL) were not on the same footing with regard to the supply of gas from the Krishna-Godavari basin by Reliance Industries (RIL). The price of gas to be paid by NTPC, the government said in its application, will be considered in-dependently of the RIL-RNRL case.

The biggest change in the government's stand on Tuesday is its categorical assertion that the government-set price of $4.20 per MMBTU was not applicable to a disputed contract between NTPC and RIL.

The Bombay High Court had asked RIL to supply 28 million standard cubic meters (mmscmd) of gas to RNRL at $2.34 per mmbtu. RIL has appealed this decision in the apex court. Subsequently, the ministry of oil and natural gas had also moved the apex court by filing an independent SLP. It was only an intervenor before the high court in the case.

India's largest thermal power producer by sales NTPC fell 0.72% and RNRL fell 1.1%.

India's largest oil exploration firm by market capitalisation ONGC fell 1.24%. ONGC had 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.

PSU OMCs rose as oil traded below $70 a barrel level after a recent sharp slide. BPCL, Indian Oil Corporation and HPCL rose by between 0.53% to 2.58%. Oil prices have fallen after a recent rally. 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.

Some FMCG stocks fell on worries over scanty rains. FMCG firms derive substantial revenue from rural sector. ITC, Marico, United Spirits and Nestle India fell by between 0.23% to 1.71%.

Auto stocks fell on profit taking after recent gains triggered by healthy sales in August 2009. Indian largest tractor maker by sales Mahindra & Mahindra fell 1.95%. Mahindra & Mahindra's (M&M) total vehicle sales rose 15% to 22,063 units in August 2009 over August 2008. The company announced August sales figures during market hours on Tuesday.

India's largest truck marker by sales Tata Motors fell 1.62%. The company's vehicle sales rose 14.23% to 49810 units in August 2009 over August 2008. The company announced August sales figures after market hours on Tuesday.

Maruti Suzuki, India's top car maker by sales, fell 0.2%. The company's total vehicle sales rose 41.6% to 84,808 units in August 2009 over August 2008. The company announced August sales figures during market hours on Tuesday.

India's largest motorbike maker by sales Hero Honda Motors fell 0.77%. The company's sales rose 36% in August 2009 over August 2008. But, TVS Motor company rose 1.09%. The two wheeler maker reported a 10.95% jump in sales to 126,842 units in August 2009 over August 2008. Both Hero Honda and TVS announced August sales figures during market hours on Tuesday.

Bajaj Auto jumped 3.04% after the company reported a 6% rise in total vehicle sales to 2.13 lakh units in August 2009 over August 2008. The company announced sales figures during market hours on Wednesday

India's second largest listed cellular service provider by sales Reliance Communication surged 5.31% on reports its telecom tower unit may revive a plan to raise funds through an initial public offer.

India's largest mobile services provider by sales Bharti Airtel fell 1.77%. Bharti and South African telecom operator MTN have been in negotiations since 25 May 2009 on a $23 billion cash and share-swap deal aimed at an eventual full merger. The deadline for the talks has been extended twice, most recently the deadline was put back another month to 30 September 2009.

IT stocks rose on hopes of a recovery in the US economy. US is the biggest market for IT firms. India's second largest software services exporter Infosys Technologies rose 1.06% as its ADR rose 0.7% on Wednesday. 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 was flat at Rs 532.95 after a foreign brokerage raised its rating on the stock to 'overweight' from 'neutral'. The brokerage said the company is a 'solid defensive investment'.

India's third largest software services exporter Wipro fell 0.71% as its ADR fell 1.53% on Wednesday.

Realty stocks rose on reports prices in key regions like New Delhi-NCR (National Capital Region) and Mumbai have moved up 10-15% on gradual return of residential property buyers. DLF, Unitech, Omaxe, Phoenix Mills, Ackruti City rose by between 0.17% to 1.92%.

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

Metal stocks rose on reports steel producers have increased the prices of flat steel products by Rs 1,000 to 1,500 a tonne or 3-5% in the domestic market.

India's largest public sector steel maker by sales Steel Authority of India rose 0.317% after company increased the prices of steel products by Rs 1,500 per tonne.

India's largest steel maker by sales Tata Steel rose 1% as company has increased prices by 3-4% in the domestic market. Its UK unit Corus, too, has increased prices of long products by 25-40 pounds sterling per tonne on improved demand.

Among other steel makers, JSW Steel, Jindal Saw, Bhushan Steel rose, by between 0.83% to 2.41%.

Hike in steel prices by the domestic steel producers will help improve their margins. Steel makers have hiked prices on the back of a robust demand in the domestic market from the automobile and construction sectors, and a jump in steel prices in the international market. Notably, steel prices in the international markets have moved up considerably since the last couple of months, and are higher by more than 30% since then, as the global steel outlook has improved.

India's largest copper maker by sales Sterlite Industries rose 1.64% on bargain hunting after the stock fell over 8% in the preceding two trading sessions. A US bankruptcy court has rejected Sterlite Industries' bid to acquire Asarco, six months after the Indian company had signed an agreement to acquire the beleaguered US copper miner. The bankruptcy court in Corpus Christi, Texas, recommended the offer of rival Grupo Mexico. The case has been sent to the US District Court Judge Andrew S Hanen in Texas for a final decision, which is expected in the next four to six weeks time. Sterlite has been chasing Asarco since last year.

Bank stocks were mixed after inflation data. India's largest private sector bank by net profit ICICI Bank was flat at Rs 736. The stock came off the day's high of Rs 752. Its American depository receipt (ADR) rose 0.55% on Wednesday. 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) rose 0.68%. 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.

India's second largest private sector bank by net profit HDFC Bank fell 0.12% even as its ADR rose 1.01% on Wednesday.

Shares of state-run hydropower generator NHPC fell 0.82% to Rs 36.10. A huge volume of 2.13 crore shares was recorded in the stock on BSE. The stock had settled at Rs 36.70 on BSE on the day of its debut on Tuesday, a premium of less than 2% over the IPO price.

Among other power stocks, Reliance Infrastructure, Torrent Power, Power Gid Corporation of India, CESC fell by between 0.3% to 2.17%.

Tata Power Company fell 1.34% extending recent decline 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.

Construction and capital goods fell on profit taking. 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.

From the capital goods space, Thermax, ABB, Siemens, Praj Industries, BEML, Punj Lloyd, fell by between 0.21% to 2.7 %.

India's largest engineering and construction firm by sales Larsen & Toubro (L&T) fell 1.14%. 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 pack, Nagarjuna Construction Company, Hindustan Construction Company, Gammon India, Gayatri Pojects, fell by between 0.29% to 4.07%.

Cement stocks were mixed after rise in cement dispatchment in August 2009. India's largest cement maker by sales ACC fell 1.1% even as cement dispatches rose 7.14% to 1.65 million tonnes in August 2009 over August 2008. ACC announced the sales figure during market hours on Wednesday.

Ambuja Cements rose 0.81% after cement sales rose, albeit slightly, to 1.43 million tonnes in August 2009 from 1.42 million tonnes in August 2008.

UltraTech Cement and Grasim Industries, rose by between 0.03% to 0.75%.

Fertilser stocks rose on a revival in India's annual monsoon in the second half of August 2009. Nagarjuna Fertilisers, Chambal Fertilisers & Chemicals, GSFC, GNFC, National Fertilzer rose by between 1.13% to 9.02%.

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

Shares of some tea makers rose on firm tea prices. Tea prices have risen in tea auction due to fall in production in Kenya, India and Sri Lanka. Assam Company, Harrison Malayalam, Warren Tea, Mcleod Russell rose by between 0.13% to 4.33%.

Suzlon Energy clocked the highest volume of 2.72 crore shares on BSE. NHPC (2.13 crore shares), Sanraa Media (1.62 crore shares), Unitech (1.05 crore shares) and Ispat Industries (0.97 crore shares) were the other volume toppers in that order.

Suzlon Energy clocked the highest turnover of Rs 272.40 crore on BSE. Aban Offshore (Rs 218.32 crore), Reliance Capital (Rs 205.72 crore), Reliance Industries (Rs 180.05 crore) and Reliance Communications (Rs 160.23 crore) were the other turnover toppers in that order.