Sensex dives below 16,000 amid heightened volatility

Relentless selling pushed the barometer index BSE Sensex below the psychological 16,000 mark as the market extended losses for the fifth consecutive session. A weak debut of power utility Indiabulls Power weighed on the investor sentiment. Telecom stocks were hammered on continued worries about price war in the sector. Index heavyweight Reliance Industries (RIL) dropped after it reported a fourth consecutive decline in quarterly profit in Q2 September 2009

The Sensex lost 156.44 points or 0.97%, off a whopping 464.60 points from the day's high and up 91.08 points from the day's low. The market breadth, indicating the overall health of the market was weak.

As per provisional data foreign funds today, 30 October 2009, bought stocks worth a net Rs 576.05 crore. Domestic funds bought equities worth a net Rs 592.93 crore

Intraday volatility on the bourses was immense. The market pared gains soon after an initial surge triggered by firm global stocks. The market was range bound in mid-morning trade. The market further pared gains later in early afternoon trade. It recovered from lower level later. But the intraday recovery proved short-lived. The market slumped in mid-afternoon trade. It soon cut losses later. The market weakened once again in late trade.

Debutant Indiabulls Power settled at Rs 39.25, a 12.80% discount over the initial public offer price of Rs 45. The stock debuted at Rs 44.95, a 0.10% discount over the issue price. The counter clocked high volume of 10.26 crore shares on the BSE. The stock hit a high of Rs 45.50 and a low of 35.

Auto stocks gained on expectations of strong sales in October 2009. Metal shares spurted on the back of firm metal prices on the London Metal Exchange. Bank shares also logged gains.

Derivatives contracts for October 2009 series, which expired on Thursday, 29 October 2009, saw healthy rollover. As per reports, rollover of Nifty positions from October 2009 series to November 2009 series was 76% as compared with 66% in the previous series. Marketwide rollover was 80% for the latest series as compared with 76% in the previous series.

European markets were mixed. Key benchmark indices in France and Germany's were down by 0.26% and 0.41% respectively. However UK's FTSE 100 index rose 0.27%.

Germany's retail sales fell 0.5% in September 2009 from the previous month, the Federal Statistics Office reported on Friday, 30 October 2009. The figure was below market expectations of a rise.

Most Asian markets rose after data on Thursday showed US gross domestic product (GDP) grew at a 3.5% pace in Q3 September 2009. This was the fastest pace in GDP growth for the US economy since the third quarter of 2007. The growth followed four quarters of contraction. Key benchmark indices in Hong Kong, China, Japan, Singapore were up by between 0.71% and 2.29%. But key indices in Taiwan and South Korea were down 0.21% and 0.33% respectively.

The Bank of Japan's (BoJ) policy board unanimously left its overnight call rate target at 0.1% Friday, as was widely expected. It also extended its special lending program at that rate through the end of the Japanese fiscal year in March 2010 in order to ensure ample liquidity until then. However, it said it would end outright purchases of corporate bonds and commercial paper in December 2009, when those increasingly less-used steps were already scheduled to expire.

BoJ board member Atsushi Mizuno was the lone the policy board dissenter opposing its decision to end the outright buys and also end the loan program in March 2010. Although the BoJ makes its decisions independently, the government has kept pressure on the bank to do all it can to support the economic recovery.

The Bank of Japan said in its half-yearly outlook report that the Japanese economy will experience three years of deflation. The pace of price decline will slow only gradually it said which means that the central bank will keep interest rates near zero at least until 2011.

Japan's joblessness rate declined to 5.3% in September 2009 from 5.5% in August 2009, the statistics bureau said today in Tokyo.

US stocks soared on Thursday, 29 October 2009 after four days of losses after data showed the world's largest economy grew for the first time in a year as a spate of stimulus measures brought an end to the longest period of contraction since the Great Depression. The Dow Jones industrial average jumped 199.89 points, or 2.1%, to 9,962.58. The broader S&P 500 index rose 23.48 points, or 2.3%, to 1,066.11, while the Nasdaq Composite Index rose 37.94 points, or 1.8%, to 2,097.55.

A separate government report showed that the number of Americans filing new claims for unemployment fell to 530,000 last week from 531,000 the previous week. Economists thought it would drop to 525,000.

Continuing claims, a measure of Americans receiving benefits for a week or more, fell to 5,797,000 from 5,945,000 the week before. Economists thought claims would fall to 5,905,000.

Trading in US index futures indicated Dow could fall 30 points at the opening bell today, 30 October 2009.

Closer home, Prime Minister Manmohan Singh said on Friday that the country will push forward with reforms and needs to increase investment in rural education, health and infrastructure to raise the economic growth rate up to 10%.

The unexpectedly strong re-election of a coalition led by the Congress party at national elections in May this year raised hopes of sweeping reforms, but apart from stake sales in some government firms no major steps have been taken yet.

Finance Minister Pranab Mukherjee said at a summit on Friday that the economic growth is likely to pick up from the October-December 2009 quarter and the country can return to 9% growth in the next two years.

Exports declined by 13.8% to $13.6 billion in September 2009 over September 2008, preliminary data showed on 29 October 2009. The fall in exports in September 2009 was the lowest in the current financial year, showing gradual signs of recovery in the country's export sector.

Commerce Secretary Rahul Khullar said exports are likely to touch $165-175 billion during 2009-10 if the current trend continues. The country had exported goods worth more than $168 billion during 2008-09.

Inflation based on the wholesale price index (WPI) rose 1.51% in the year through 17 October 2009, higher than previous week's annual rise of 1.21%, data released by the government showed on Thursday. Within the WPI, the food articles index rose 12.85%. The government revised upwards inflation for the year through 22 August 2009 to rise of 0.17% from an estimated fall of 0.21%.

The Reserve Bank of India at its monetary policy review early this week left its key rates unchanged, but raised the wholesale price-based inflation projection for end-March 2010 sharply to 6.5% with an upward bias, from 5% earlier.

The International Monetary Fund (IMF) said on Thursday the economies of India, China and Australia were recovering especially rapidly, suggesting it notices growing pressures for authorities there to tighten monetary policy ahead of others in the region. It called the three economies special cases, while adding a tightening of monetary policy seemed unnecessary elsewhere in the region in the near future.

It also advised Asian central banks not to raise interest rates only to calm asset price growth, saying lifting rates ahead of advanced economies could attract "carry trade-type" capital inflows and aggravate asset price pressures.

Coming back to stocks, the supply of paper by Indian firms appear limitless, raising concerns that additional share sales will suck liquidity from the secondary equity market. As per reports, Indian firms have garnered about $9 billion (Rs 32,400 crore at the current exchange rates) through sale of shares and convertible bonds to institutional buyers since April 2009. Indian companies are taking advantage of a surge in liquidity to recapitalize and fund capital expenditure after being starved of cash last year.

Unlisted Reliance Infratel announced on 22 September 2009 its intention to raise Rs 5,000 crore from the primary market. Divestment of state-run firms by the government may also increase the supply of paper in the market.

The government recently approved stake sales in state-run power producer NTPC and another unlisted power firm Satluj Jal Vidyut Nigam which reflects the country's resolve to speed up reforms and raise more resources for social schemes.

The government has approved a follow-on public offering of 20% of state run Steel Authority of India, the steel minister said on 21 October 2009. The Government of India owns nearly 86% of Sail. Also the government gave its approval for 15% follow on public offer for Rural Electrification Corporation on 29 October 2009.

The BSE 30-share Sensex lost 156.44 points or 0.97% to 15,896.28. The Sensex opened 83.15 points higher at 16,135.87. At the day's high of 16,360.88, the Sensex gained 308.16 points in early trade. The Sensex lost 247.52 points at the day's low of 15,805.20 in mid-afternoon trade. Intra-day volatility was intense with the Sensex oscillating 555.68 points between the day's high and low.

The S&P CNX Nifty fell 38.85 points or 0.82% to 4711.70. Nifty November 2009 futures were at 4695.90, at a discount of 15.80 points as compared to the spot closing of 4711.70. Turnover in NSE's futures & options (F&O) segment fell to Rs 78,337.49 crore from Rs 1,18,012.74 crore on Thursday, 29 October 2009.

The BSE Auto index (up 0.94% at 6,307.20), the BSE Bankex (up 0.49% at 9,336.16), the BSE Metal index (up 0.25% at 13,940.17), the BSE Realty index (up 0.17% at 3,827.13), the BSE Consumer Durables index (up 0.11% at 3,348.21), the BSE PSU index (down 0.44% at 8,400.20), the BSE Capital Goods index (down 0.46% at 12,873.48), the BSE IT index (down 0.49% at 4,425.52), the BSE FMCG index (down 0.60% at 2,808.97), and the BSE Healthcare index (down 0.89% at 4,377.20), outperformed the Sensex.

The BSE Power index (down 1.49% at 2,914.62), and the BSE Oil & Gas index (down 2.79% at 9,434.43), underperformed the Sensex.

The BSE Mid-cap index fell 0.54% at 6,014.30, and the BSE Small-cap index fell 0.77% at 7,058.72. Though in the red, both these indices outperformed the Sensex.

From a 17-month closing high of 17,326.01 on 17 October 2009, the Sensex has lost 1429.73 points or 8.25% in nine trading sessions to current 15,896.28. Yet, with foreign funds making heavy purchases, the Sensex is up 6248.97 points or 64.77% in calendar year 2009, as on 30 October 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 7735.88 points or 94.79%, as on 30 October 2009. FII inflow in October 2009 totaled Rs 9,162.70 crore (till 28 October 2009).

The market remains closed on Monday, 2 November 2009, on account of Guru Nanak Jayanti.

The market breadth, indicating the overall health of the market was weak. On BSE, 1630 shares declined as compared with 1056 shares that rose. A total of 84 shares remained unchanged. The breadth was strong earlier in the day.

Among the 30-member Sensex pack, 20 declined while the rest gained.

Telecom stocks tumbled after industry leader Bharti Airtel said it will be competitive in pricing. Concerns about price war in the sector has rattled telecom stocks in the past few weeks.

The mobile industry in India, the world's fastest-growing major market, is becoming increasingly competitive, with existing players cutting rates to attract subscribers before four new firms start operation this year. India's largest telecom company by sales Bharti Airtel slumped 6.38%.

The company's net profit rose 43.10% to Rs 2296.94 crore on a 7.5% increase in total income to Rs 8927.10 crore in Q2 September 2009 over Q2 September 2008. The result was announced during trading hours today, 30 October 2009

India's second largest telecom company by sales Reliance Communications plunged 7.37% to Rs 175.95 and was the top loser from the Sensex pack.

India's largest firm by market capitalisation and oil refiner Reliance Industries (RIL) dropped 3.62% after it reported a fourth straight decline in quarterly profits on shrinking refining margins and reduced exports due to a global economic downturn. The company posted a 6.4% fall in net profit at Rs 3,852 crore despite 6% rise in total income to Rs 47,476 crore in Q2 September 2009 over Q2 September 2008. Refining margins more than halved to $6 a barrel from $13.3 a barrel a year earlier. The results were announced after market hours on Thursday, 29 October 2009

The government on 27 October 2009 allocated additional 50 million cubic metres a day (mmscmd) of gas from Reliance Industries-operated east coast block D6. Power plants and refineries will get the bulk of Reliance Industries' gas from the Krishna-Godavari basin beyond the previously allotted 40 million metric standard cubic metres per day (mmscmd).

The empowered group of ministers (eGoM) also made some allotments for Reliance's petrochemical plants and refineries.

India's largest oil exploration firm by sales Oil & Natural Gas Corporation declined 2.84%. Net profit rose 5.9% to Rs 5,090 crore in Q2 September 2009 over Q2 September 2008 on account of lower subsidy outgo and higher realisation on crude oil sales. The results were announced after market hours on Thursday, 29 October 2009

Metal stocks advanced after LMEX, a gauge of six metals traded on the London Metal Exchange jumped 3.52% on Thursday, 29 October 2009.

India's largest non ferrous metal producer by sales Sterlite Industries India surged 3.41% on reports its subsidiary Sterlite Energy has filed a draft red herring prospectus with the market regulator Securities & Exchange Board of India to raise nearly Rs 5100 crore through an initial public offer. Its American depository receipt (ADR) jumped 4.88% on Thursday, 29 October 2009. It was the top gainer from the Sensex pack.

Tata Steel (up 0.75%), and Hindalco Industries (up 1.08%), were the other gainers from the metal pack.

But, Steel Authority of India (Sail) declined 2.11% after net profit fell 17.20% to Rs 1663.49 crore on 15.30% fall in total income to Rs 10575.28 crore in Q2 September 2009 over Q2 September 2008. The result was announced during market hours today.

India's largest private sector bank by net profit ICICI Bank rose 2.38% after net profit moved up 2.6% to Rs 1040.13 crore on a 12.7% decline in total income to Rs 8480.73 crore in Q2 September 2009 over Q2 September 2008. The result was announced during trading hours today, 30 October 2009.

Other banking shares were mixed. India's second largest bank by net profit HDFC Bank rose 0.39%. State Bank of India down 0.18%.

Diversified major Grasim Industries advanced 2.22% after net profit rose 60.73% to Rs 674.25 crore on 11.02% rise in net sales to Rs 2983.77 crore in Q2 September 2009 over Q3 September 2008. The results were announced after market hours on 29 October 2009.

IT pivotals fell on profit taking. India's largest software firm by sales TCS declined 1.03%. India's third largest software firm by sales Wipro shed 2.79%. India's second software firm by sales Infosys down 0.10%.

Auto stocks gained as auto firms are seen reporting robust sales for the current month, next week, boosted by the festive Diwali sales. India's top small car marker by sales Maruti Suzuki India rose 1.76%. The company's net profit jumped 92.5% to Rs 570 crore on a 46.6% increase in sales to Rs 7080.67 crore in Q2 September 2009 over Q2 September 2008. The results were announced on 24 October 2009.

India's largest truck marker by sales Tata Motors moved up 1.80% after net profit jumped 110.13% to Rs 729.14 crore on 11.87% rise in total income to Rs 8399.75 in Q2 September 2009 over Q2 September 2008. The company announced the results after market hours on 26 October 2009.

However, India's largest tractor maker by sales Mahindra & Mahindra slipped 0.63% on profit booking. The company's net profit soared 185% to Rs 702.94 crore on a 35.1% increase in total income to Rs 4691.08 crore in Q2 September 2009 over Q2 September 2008. The result was announced during trading hours on 29 October 2009.