Sensex snaps three-day winning streak; settles below 17,000 level

Telecom stocks led a setback on the bourses as trading resumed after a long weekend. The market fell as investors priced in a sharp weakness in global markets on Friday, 2 October 2009, when the Indian market was closed for a public holiday. The BSE 30-share Sensex lost 268.14 points or 1.56%, off 195.60 points from the day's high and up 30.61 from the day's low. The BSE Sensex dipped below the psychological 17,000 level. The 50-unit S&P CNX fell below the psychological 5,000 mark in late trade only to regain that level.

After opening with a downward gap, the market extended losses at the onset of the trading session. Buying in some defensive stocks helped the market soon cut initial losses. The market weakened again in mid-morning trade. The market moved in a narrow range later. A sell-off in Bharti Airtel pulled the market lower in afternoon trade. Fresh selling in index pivotals pulled the market to a fresh intraday low in mid-afternoon trade. The market extended losses in late trade.

As per provisional data, foreign funds today, 5 October 2009, offloaded stocks worth a net Rs 310.01 crore. Domestic funds dumped stocks worth a net Rs 567.75 crore.

The market breadth was weak. Telecom shares were the chief casualties of the day following reports of a likely delay in the third generation auction process. Bharti Airtel tumbled over 8% and Reliance Communications lost over 5%. Index heavyweights Reliance Industries and State Bank of India were down 1.74% and 3.66% respectively. Barring select FMCG and pharma stocks, which gained on defensive buying, selling was conspicuous across sectors.

Corporate affairs minister Salman Khursheed has warned firms against paying huge salaries to top company brass and said the government would keep a watch on executive compensation. "I think when we are working on this (austerity), we can hardly say that we (will) shut our eyes on what salary the CEOs are going to take," a news agency quotedKhursheed as saying. "I don't think anyone in India today, in politics or outside politics ... has reached the level of liberalism where vulgarity is also a fundamental right."

Some caution may prevail on the bourses ahead of assembly polls in three states viz. Maharashtra, Haryana and Arunachal Pradesh on 13 October 2009. The counting of votes will take place on 22 October 2009.

A section of the market is worried of hedge fund redemption after the one year moratorium on redemption ends this month. Buried under redemption pressure in the aftermath of the collapse of US investment bank Lehman Brothers, hedge funds took a moratorium period of one year in October last year.

The next trigger for the stock market is Q2 September 2009 results of India Inc. Infosys kickstarts the reporting season on 9 October 2009. There is optimism about Q2 September 2009 results after advance tax collections registered a positive growth in the second quarter after witnessing a negative growth in the first quarter. Corporate advance tax and advance personal income-tax were up by 14.7% and 1.7%, respectively in the September 2009 quarter.

European markets reversed early fall to turn positive as the euro zone's services sector returned to growth, data showed today. Key benchmark indices in Germany, France and UK were up by between 0.07% and 0.29%

Most Asian stocks were trading lower today, 5 October 2009 with sentiment hurt by Friday's weaker-than-expected US jobs report. Key benchmark indices in South Korea, Japan, and Singapore were down by between 0.59% and 2.29%. But Hong Kong's Hang Seng index reversed early fall to turn positive. It was up 0.26%. The Taiwan Weighted index rose 0.35%.

Chinese markets have been shut since 1 October 2009 for National day and Autumn festival celebrations. Trading will resume on 9 October 2009

Trading in US index futures indicated Dow could rise 43 points at the opening bell today, 5 October 2009.

US stocks ended lower on Friday, 2 October 2009, as investors worried that a worse-than-expected jobs report was further evidence that the rally has run ahead of improvement in fundamentals. The Dow Jones Industrial Average lost 21.61 or 0.23% to 9,487.67 while the S&P 500 index was down 4.64 or 0.45% to 1,025.21 and the Nasdaq Composite index shed 9.37 or 0.46% to 2,048.11.

In economic data, employers cut 263,000 jobs from their payrolls in September 2009 after cutting a revised 201,000 in August 2009, the Labor Department reported Friday, 2 October 2009. Economists were expecting 175,000 jobs cuts, on average.

The unemployment rate, generated by a separate survey, rose to 9.8% in September 2009, a 26-year high. That was in line with economists' forecasts and up from the 9.7% rate in August 2009.

A separate government report showed that factory orders plunged in September 2009 in contrast to economists forecast of rise in factory orders. The Commerce Department said factory orders fell 0.8% in September 2009 as compared with 1.4% rise in August 2009.

US stocks were hammered on Thursday, 1 October 2009, setting off declines in market's across the globe on Friday, 2 October 2009. The Dow had crashed over 200 points on Thursday, 1 October 2009, after weaker-than-expected readings on manufacturing and jobless claims sparked worries about the pace of the economic recovery.

Closer home, India's economy is likely to grow at 6.3% or more in the year to March 2010, Planning Commission deputy chairman, Montek Singh Ahluwalia, said today, 5 October 2009. He also added that annual inflation was likely to be around 5% by end March 2009. In July 2009, the central bank forecast GDP growth for 2009-10 at around 6%. Asia's third largest economy grew by 6.7% in 2008-09, sharply slower than the 9% or more in the previous three years.

India's monsoon rainfall running between June to September was the worst since 1972 with cumulative seasonal rainfall for the country as a whole being 23% below the Long Period Average (LPA), the India Meteorological Department (IMD) said on Thursday, 1 October 2009.

Considering district-wise rainfall during the period 1 June to 30 September, the rainfall was excess in 9%, normal in 32%, deficient in 51% districts and scanty in 8% of total districts of the country, the IMD release said. Monsoon has withdrawn from many parts of India and will gradually shift out of the country completely over the next few days.

Coming back to stock markets, a section of the market is concerned that a glut in share sales may suck liquidity from the secondary market. The corporate sector has raised large sums of money through equity and equity related instruments in the past six months or so to either to retire high cost debt or to fund expansion. The supply of paper by Indian firms appear limitless, raising concerns that additional share sales will suck liquidity from the secondary market.

As per one report, companies plan to raise at least Rs 40,000 crore through initial public offers (IPOs)/follow on public offers (FPOs) in the second half of the current financial year. Power companies such as GMR Energy, Indiabulls Power and JSW Energy and state-run Bharat Heavy Electricals and NTPC are likely to tap the primary market. A number of realty firms, too, have announced plans to raise funds through the primary market in the coming months.

Reliance Infratel also announced on 22 September 2009, its intention to raise Rs 5000 crore from the primary market. A number of realty firms have announced plans to raised funds through the primary market route. Further, many companies are also in the fray to raise funds by way of qualified institutional placement (QIP), reports suggest.

Divestment of state-run firms by the government may also increase the supply of paper in the market. A decent debut of Oil India on the bourses on Wednesday, 30 September 2009, may boost government's divestment plan. As per recent reports, the government is planning to announce a blueprint for selling its stake in state-owned firms in the first week of October 2009. The policy is expected to suggest how the government will eventually bring down its stake in public sector companies to 75% over a period of time.

The BSE 30-share Sensex fell 268.14 points or 1.56% to 16,866.41. The Sensex opened 72.54 points lower at 17,062.01, also its day's high. The barometer index lost 298.75 points at the day's low of 16,835.80 in late trade.

The S&P CNX Nifty lost 80.20 points or 1.58% to 5003.20. The index dipped below the psychological 5,000 level to touch day's low of 4991.95 in late trade. Nifty October 2009 futures were at 5012.90, at a premium of 9.70 points over the spot closing.

The BSE Sensex had gained 441.55 points or 2.64% in three trading days from 16,693 on 25 September 2009 to 17,134.55 on 1 October 2009.

The Sensex is up 7219.10 points or 74.83% in calendar year 2009 as on 5 October 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 8,706.01 points or 106.68% as on 5 October 2009. FII inflow in the calendar year 2009 totaled Rs 60125.60 crore (till 30 September 2009).

Turnover on BSE declined to Rs 5344 crore from Rs 6,551.16 crore on Thursday, 1 October 2009. Turnover in NSE's futures & options (F&O) segment rose Rs 56,090.77 crore from Rs 54,343.16 crore on Thursday, 1 October 2009.

The market breadth, indicating the overall health of the market was weak. On BSE, 2005 shares declined as compared with 820 that rose. A total of 68 shares remained unchanged.

The BSE Mid-Cap index fell 1.69% to 6,195.79 and the BSE Small-Cap index fell 2.12% to 7,426. Both the indices underperformed the Sensex.

All sectoral indices on BSE, barring the BSE FMCG index, edged lower. The the BSE FMCG index (up 1.47%), the BSE PSU index (down 1.48%), the BSE IT index (down 0.80%), the BSE Capital Goods index (down 0.80%), the BSE Consumer Durables index (down 0.58%), the BSE Healthcare index (down 0.35%), the BSE Oil & Gas index (down 1.18%), the BSE Power index (down 0.98%), outperformed the Sensex.

The BSE Teck index (down 2.67%), the BSE Bankex (down 2.01%), the BSE Auto index (down 1.76%), the BSE Metal index (down 2.48%), the BSE Realty index (down 3.53%), underperformed the Sensex.

Among the 30-member Sensex pack, 23 declined while the rest gained.

Telecom stocks were under pressure on reports the government is unlikely to keep its 7 December 2009 dateline for the auction of 3G airwaves, which are vital for high-end services such as video conferencing and ultra-fast internet on mobiles.

India's largest cellular services provider by sales Bharti Airtel slumped 8.27% to Rs 399.35 on high volume of 63.13 lakh shares. It was the top loser from the Sensex pack. The stock had jumped over 4% on 1 October 2009 after its proposed merger talks with South Africa's MTN Group to create the world's third-largest mobile operator were called off just a few hours before the end of the 30 September 2009 deadline for the talks. The deal was called off after South Africa's reluctance to allow a flagship corporate in the country to lose its national character.

India's second largest cellular services provider by sales Reliance Communications dropped 5.69%.

Among other cellular services provider, Idea Cellular was down 4.27% and Mahanagar Telephone Nigam shed 3.63%

The DoT was slated to release the Information Memorandum (IM), a key document containing all details of the auction, including availability of radio frequencies across circles, policy changes, the rules of the auction and mode of payment among several other issues to all potential bidders by 29 September 2009, but has failed to do so.

This has resulted in the 8 October 2009 deadline for submission of questions for pre-bid conference also being postponed. All other timelines, such as those for submission of bids and mock auctions, are also likely to be changed, which may push the December bid plan to early next year.

Shares of diversified firm Grasim plunged 7.43% after the company said on Saturday, 3 October 2009 it will transfer its cement business to its unlisted unit Samruddhi Cement. The demerger will be completed by March 2010 after which Samruddhi Cement will be listed. Samruddhi will then make an offer to UltraTech Cement for consolidation of the group's cement business. Foe every share, shareholders of Grasim will get one share of Samruddhi.

Meanwhile, UltraTech Cement said Monday, 5 October 2009, its board will meet on Tuesday, 6 October 2009 to consider a merger with the cement unit of Grasim Industries. Shares of UltraTech Cement were down 5.41%. Aditya Birla group Grasim and Ultratech Cement currently operate a combined production capacity of 42 million tonnes a year or a fifth of India's cement capacity

The Aditya Birla Group's cement sales jumped 15.8% to 2.77 million tonnes in September 2009 over September 2008. Production rose 14.6% to 2.74 million tonnes.

Ambuja Cement lost 1.76% after the company said September 2009 sales fell 0.7% to 1.35 million tonnes over the previous year.

India's largest cement firm by sales ACC declined 1.07% after the company's cement dispatches fell 2.40% to 1.63 million tonnes in September 2009 over September 2008. The company announced the monthly dispatches data after market hours on Thursday, 1 October 2009.

Other cement shares also edged lower. India Cement (down 2.78%), Shree Cement (down 2.30%), Madras Cement (down 1.57%), declined.

Shares of the Delhi-based JK Lakshmi Cement fell 1.81%. The company's sales for September 2009 rose 9% to 9.48 lakh tonne over the previous year.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) fell 1.74% to Rs 2132.70. The government may reportedly review RIL's Krishna-Godavari basin gas price along with the allocation of additional gas production from the D-6 block. Reports added that some consumers from fertiliser and power sectors have claimed the $4.20 per million British thermal unit (mBtu) price for KG gas approved during the previous UPA government is 'high' and warrants a 'review'.

Meanwhile, the Supreme Court on Thursday, 1 October 2009 dismissed National Thermal Power Corporation's (NTPC) special leave petition seeking quashing of a Bombay high court order giving permission to Mukesh Ambani's RIL to amend its written submissions in its on-going dispute with the India's largest power generation firm by sales NTPC on the supply of gas from the Krishna-Godavari basin. Shares of NTPC declined 0.45%.

Gulf Oil Corporation fell 0.84% to Rs 82.30. The stock rose to day's high of Rs 86.95 after the firm said it would issue 2.47 crore shares at Rs 32 per share on a rights basis. The announcement was made during trading hours today, 5 October 2009.

Most auto stocks fell despite healthy monthly sales data. India's top small car maker by sales Maruti Suzuki India lost 2.97%. The company's total sales rose 17.3% to 83,306 vehicles in September 2009 over September 2008. The figures were released during trading hours on 1 October 2009.

India's largest truck maker by sales Tata Motors lost 3.57%. The company's total sales rose 5.77% to 52,513 units in September 2009 over September 2008. But India's largest tractor maker by sales Mahindra & Mahindra gained 0.65%. Total sales of the company rose 10.94% to 28434 vehicles in September 2009 over September 2008. Both the companies sales figures hit the market on 2 October 2009.

India's second largest bike maker by sales Bajaj Auto's fell 1.81%. The company's total sales rose 14% to 249,795 units in September 2009 over September 2008. But India's largest bike maker by sales Hero Honda Motors rose 0.09% after total sales rose 4.16% to 4,01,290 units in September 2009 over September 2008. Both these companies announced sales figures were on 2 October 2009.

Ashok Leyland declined 2.87% after total sales fell 11.87% to 5,452 units in September 2009 over September 2008. The company unveiled the monthly sales figure on Saturday, 3 October 2009.

Profit taking weighed on bank shares. India's largest bank by net profit and branch network State Bank of India slipped 3.66%. The bank is reportedly planning to raise $1 billion by bond issuance as a part of the bank's Medium Term Note program or MTN, a tool that allows raising funds through various products including floating rate notes or on a fixed rate, subject to necessary regulatory approvals.

India's largest private sector bank by net profit ICICI Bank fell 1.67%. India's second largest private sector bank by net profit HDFC Bank eased 0.67%

IndusInd Bank fell 1.33% to Rs 111.50 after 5 lakh shares, or 0.14% equity, changed hands in a block deal at Rs 114.80 per share on BSE.

Metal stocks slipped after LMEX, a gauge of six metals traded on the London Metal Exchange fell 1.95% on Friday, 2 October 2009. Tata Steel (down 2.44%), Hindalco Industries (down 5.96%), Jindal Saw (down 5.69%), Steel Authority of India (down 3.61%), JSW Steel (down 1.88%), Hindustan Zinc (down 2.43%), and National Aluminium Company (down 2.35%), and Sterlite Industries (down 3.27%), declined.

Meanwhile the world's top steelmaker ArcelorMittal in a television interview clarified that it has no plans to exit its planned steel projects in India. Earlier, its chairman Lakshmi Mittal told the Financial Times newspaper in London the steel company is close to pulling out of a $20 billion plan to build two steel plants in India due to difficulties in buying land.

IT stocks were mostly lower after some weaker-than-expected jobs data ignited worries about the health of the US economy. US is the key market for Indian IT pivotals. India's largest software services exporter TCS lost 2.43%.

India's second largest software services exporter Infosys fell 0.25% despite a 1.27% rise in its ADR on Friday, 2 October 2009. Given the improved business conditions and stability in global financial markets, analysts expect Infosys management to revise earnings guidance for the year ending March 2010 (FY 2010) when the company announces Q2 results on Friday, 9 October 2009. At the time of announcing Q1 June 2009 results in July 2009, Infosys projected EPS of between Rs 94.59 to Rs 96 for FY 2010, a decline of between 8.2% to 9.6%.

India's third largest software services exporter Wipro rose 0.22% mirroring a 0.96% rise in its ADR on Friday, 2 October 2009

Realty stocks slipped on worries of increased supply of paper from the sector. DLF (down 4.06%), Indiabulls Real Estate (down 2.55%), Parsvnath Developers (down 5.12%), Unitech (down 4.93%), and Omaxe (down 3.65%), slipped.

Realty companies including Emaar MGF Land, Lodha Developers and Sahara Prime City have filed their draft red herring prospectuses on 29 September 2009 with the market regulator, Securities and Exchange board of India (Sebi), to raise a total of around Rs 9,800 crore through initial public offerings (IPO). In its second attempt at the primary market to raise funds, Emaar MGF is hoping to garner Rs 3,850 crore through its IPO.

Shares from FMCG and pharma pack gained on defensive buying. India's largest cigarette maker by sales ITC jumped 2.58% to Rs 238.50 and was the top gainer from the Sensex pack

Nestle India (up 2.16%), Colgate Palmolive (up 0.99%), Hindustan Unilever (up 0.43%), rose from the FMCG pack.

Tata Tea slipped 1.60% to Rs 877.10 after a block deal of 1.42 lakh shares was executed on NSE at Rs 880 per share. The block deal constituted 0.23% of the company's equity.

Venkys (India) rose 6.53%. Venkateshwara Hatcheries, a promoter group company, has hiked its stake to 49.64% from 49.58% after acquiring 6,155 shares in three different trenches between 29 September 2009 and 1 October 2009 through open market purchases. The company made this announcement during trading hours today, 5 October 2009.

Cipla (up 1.38%), Lupin (up 2.99%), Sun Pharma (up 2.33%), edged higher from the pharma pack

India's largest private sector power generation firm by sales Reliance Infrastructure rose 1.53% on reports the company is considering offering shares of its newly created subsidiaries to the public and looking to bring in strategic financial partners as part of value unlocking. It was the top gainer from the Sensex pack.

The report said that of the six subsidiaries formed as part of a demerger scheme, yet to be approved by the Bombay High Court, the company plans to list at least the power distribution companies, Reliance Energy and Reliance Power Transmission in addition to its metro projects.

Bharti Airtel was the top traded counter on BSE with turnover of Rs 258.68 crore followed by Educomp Solutions (Rs 193.73 crore), Reliance Industries (Rs 155.67 crore), Aban Offshore (Rs 144.14 crore), and HDIL (Rs 129.52 crore).

Cals Refineries clocked highest volume of 5.55 crore shares on BSE. Ispat Industries (1.56 crore shares), Unitech (93.11 lakh shares), Suzlon Energy (86.90 lakh shares) and 3i Infotech (68.78 lakh shares) were other volume toppers in that order.

Videocon Industries rose 1.80% after the company said it will buy an equity stake in loss-making Finnish electronics firm Elcoteq. The announcement was made during trading hours today, 5 October 2009.

Suashish Diamonds was locked at 20% upper limit after the company said its board will meet on 8 October 2009 to consider delisiting of equity shares from the Bombay Stock Exchange. The company made this announcement during trading hours today, 5 October 2009.

Koutons Retail India spurted 13.70%. Last month, some reports had suggested that the company is looking to raise Rs 120 crore to Rs Rs 150 crore by the end of December 2009 through a share sale to fund expansion and reduce debt.