Bears on the prowl as Sensex extends slide for sixth day

Key benchmark indices extended losses for sixth straight session of trade as sell-off gripped in index pivotals in late trade. The barometer index BSE Sensex dropped to its lowest level in more than two months. Index heavyweight Reliance Industries (RIL) slumped over 6% on reports the Comptroller and Auditor General (CAG) has set up a team to examine the expenses Reliance Industries (RIL) incurred on its D6 natural gas field in the Krishna-Godavari (KG) basin in the Bay of Bengal.

Stocks fell across the globe as investors continued to fret over the early removal of government stimulus, particularly in the financial sector. The BSE 30-share Sensex lost 491.34 points or 3.09%, off 552.12 points from the day's high and up 74.38 points from the day's low. High volatility was the hallmark of the day's trading session. The market breadth was quite weak. Selling pressure was intense with all the BSE sectoral indices ending with losses.

Realty, cement and metal shares declined sharply on selling pressure. IT stocks slipped on profit booking. Telecom shares saw divergent trend with Bharti Airtel rebounding from a 52-week low on bargain hunting after a steep recent slide. Reliance Communications dropped on poor earnings.

Intra-day volatility on the bourses was high. After an initial slide triggered by weak global stocks, the market recouped almost the entire losses shortly. However, the intraday rebound was short-lived. The market weakened again later. The market once again staged a strong intraday rebound with the Sensex entering the positive zone. However, weak global stocks pulled the market into the red again later.

Bargain hunting in index pivotals helped the market once again regain positive zone in early afternoon trade. The Sensex surged to the day's high in early afternoon trade. But the market faltered again later. Weak European markets triggered a sell-off in mid-afternoon trade. The market extended losses in late trade.

Asian stocks had dropped on Monday, 2 November 2009 when the Indian markets were closed on account of a public holiday. US stocks had declined sharply on Friday, 30 October 2009.

The HSBC Markit Purchasing Managers' Index (PMI), based on a survey of 500 Indian companies, fell to 54.5 in October 2009 from 55 in September 2009. A reading above 50 means activity expanded during the month. Growth in domestic new orders may be beginning to suffer from the impact of a drought, but stronger foreign demand was helping to cushion the blow, HSBC senior Asian economist Robert Prior-Wandesforde said.

Oil product sales rose 0.8% in September 2009, its lowest level since May 2009, as demand for diesel and naphtha softened, data showed on Tuesday.

A news agency today, 3 November 2009, quoted G. Bhujabal, economic advisor in the Ministry of Commerce and Industry as saying that he expects declining trend of exports reversing by December 2009 or January 2010. Exports declined 13.8% in September 2009 to $13.6 billion. Exports fell 28.5% in the April-September 2009 period to $77.9 billion.

Crude oil imports in September 2009 rose 10.5% to 2.77 million barrels per day (bpd) as Indian refiners processed 3.4% more crude. Fuel exports were down by 27% in September 2009 versus a year ago. The data does not include imports and exports by Reliance Industries' new 580,000 barrels per day export-focused refinery at Jamnagar in Gujarat.

European markets were trading weak today, 3 November 2009 as poor results from UBS and a shake-up of Lloyds and Royal Bank of Scotland rattled investors. Key benchmark indices in UK, Germany and France were down by between 2.06% and 2.49%.

Most Asian stocks fell on Tuesday, 3 November 2009, as concern over the withdrawal of stimulus measures overshadowed Ford Motor Co.'s unexpected profit and a rally in gold prices. Key benchmark indices in Hong Kong, Singapore, Taiwan, and South Korea were down by between 0.17% and 1.76% respectively. However China's Shanghai Composite index rose 1.22%.

Japanese markets were closed today, 3 November 2009, for a national holiday.

Australia's central bank on Tuesday raised its key policy rate for a second month in a row, hiking it by a quarter of a percentage point to 3.50%, as expected. The Reserve Bank of Australia left some analysts speculating that policy could be on hold in December 2009 after it said that interest rate rises in October 2009 and November 2009 would work to temper inflation and ensure a sustainable upswing in the economy.

Asian markets had dropped on Monday, 2 November 2009 as worries about the US financial sector resurfaced after CIT Group Inc, the lender to small and mid-sized US companies, filed for bankruptcy.

But Wall Street edged higher on Monday, 2 November 2009 as manufacturing expanded more than expected last month. The Dow Jones industrial average gained 76.71 points, or 0.8%, to 9,789.44. The S&P 500 index added 6.69 points, or 0.7%, to 1,042.88, and the Nasdaq Composite index rose 4.09 points, or 0.2%, to 2,049.20.

Among the economic data, the ISM reported its gauge of manufacturing activity at 55.7 in October 2009, the third straight month of growth and the highest reading since April 2006. Also pending-home sales rose to their highest level in nearly three years in September 2009, boosted by the first-time homebuyer's tax credit. Also construction spending rose 0.8% in the month of September.

Trading in US index futures indicated Dow could fall 73 points at the opening bell on Tuesday, 3 November 2009.

It is widely expected that the US Federal Reserve at a regular two-day policy meeting on 3-4 November 2009 will hold interest rates at their lowest-ever range of 0% to 0.25%, where they stood since December 2008. However, there's plenty of unease about the contents of the Fed's accompanying policy statement. A section of the market sees the Fed altering its statement to a less dovish tone. There is speculation that the Fed might drop or alter its pledge to keep rates low for an extended period.

Financial markets are also looking for clues from other central banks about when stimulative policy may have to come to an end. The European Central Bank (ECB) meets on Thursday, 5 November 2009. No rate change is expected and few expect it to offer clues on when it might change tack. The Bank of England (BOE) meets the same day and the market is waiting to see if it tops up its quantitative easing programme after the economy unexpectedly contracted between July-September 2009 period.

Governments and central banks around the world have injected trillions of dollars in the past year or so to pull the world out of a most severe recession since the 1930s Great Depression.

Closer home, a report prepared by ministry of finance indicated India's economy is showing a "distinct" sign of pickup, although uncertainty related to the poor summer monsoon and the global economic outlook remain. India's economic growth slowed to 6.7% in the fiscal year through March 2009 after three straight years of at least 9%, and government officials have said growth in the current year is on track for roughly 6.5%.

The Reserve Bank of India (RBI) at its monetary policy review on 27 October 2009 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 IMF said on 29 October 2009 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.

Closer home, there are concerns that a fund raising spree by Indian firms 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 slumped 491.34 points or 3.09% to 15,404.94, its lowest closing since 3 September 2009. The Sensex opened 57.65 points lower at 15,838.63. The Sensex rose 78.78 points at the day's high of 15,957.06 in early afternoon trade. The Sensex lost 565.72 points at the day's low of 15,330.56 in late trade, its lowest level since 21 August 2009.

The S&P CNX Nifty slipped 147.80 points or 3.14% to 4,563.90, its lowest closing since 21 August 2009. Nifty November 2009 futures were at 4,536.25, at a discount of 27.65 points as compared to the spot closing. Turnover in NSE's futures & options (F&O) segment increased to Rs 81,574.39 crore from Rs 78,337.48 crore on Friday, 30 October 2009.

The BSE Sensex had shed 1405.87 points or 8.36% in six trading days to 15,404.94 on 3 November 2009 from 16,810.81 on 23 October 2009.

From a 17-month closing high of 17,326.01 on 17 October 2009, the Sensex has lost 1921.07 points or 11.08% in to the current 15,404.94. Yet, with foreign funds making heavy purchases, the Sensex is up 5757.63 points or 59.68% in calendar year 2009, as on 3 November 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 7244.54 points or 88.77%, as on 3 November 2009. FII inflow in October 2009 totaled Rs 8303.80 crore, till 30 October 2009. Their inflow amounted to Rs 68,441.10 crore in the calendar year 2009.

The market breadth, indicating the overall health of the market was weak. On BSE, 1910 shares declined as compared with 749 that rose. A total of 66 shares remained unchanged.

The BSE Mid-Cap index fell 3.74% at 5,789.49, and the BSE Small-cap index fell 4.50% at 6,741.24. Both these indices underperformed the Sensex

The total turnover on BSE amounted to Rs 6,207.52 crore as compared with Rs 5104 crore on Friday, 30 October 2009

All BSE sectoral indices ended with losses. The BSE Auto index (down 1.13%), the BSE Bankex (down 1.93%), the BSE Consumer Durables index (down 2.48%), the BSE PSU index (down 2.68%), the BSE FMCG index (down 2.57%), and the BSE Healthcare index (down 0.54%), outperformed the Sensex.

The BSE Capital Goods index (down 3.20%), the BSE IT index (down 3.44%), the BSE Realty index (down 9.76%), the BSE Metal index (down 5.95%), the BSE Power index (down 3.49%), and the BSE Oil & Gas index (down 4.10%), underperformed the Sensex.

Among the 30-member Sensex pack, 27 slipped while only 3 of them managed to post gains.

India's largest firm by market capitalisation and oil refiner Reliance Industries (RIL) slumped 6.23% to Rs 1811 on reports the Comptroller and Auditor General of India (CAG) will soon audit RIL books of accounts. The stock had lost 3.62%% on Friday, 30 October 2009, hit by disappointing Q2 results.

The director general of hydrocarbons has been accused by Reliance Natural Resources (RNRL), controlled by Mukesh Ambani's estranged brother Anil Ambani, of approving an increase in RIL's capital expenditure on the D6 exploration block from $2.4 billion (Rs11,280 crore) to $8.8 billion. This block is where RIL made one of the biggest discoveries of natural gas in India.

RIL reported 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 market capitalisation Oil & Natural Gas Corporation (ONGC) fell 1.03%. As per reports, the company is planning to enter the nuclear power space. ONGC, which last year announced plans to enter uranium mining, is now seriously exploring the possibility of setting up nuclear power plants in the country, reports added.

India's largest private sector aluminium maker by sales Hindalco Industries tumbled 10.21% to Rs 109.50 after net profit declined 52.2% to Rs 344.05 crore on a 13.2% decline in sales to Rs 4892.56 crore in Q2 September 2009 over Q2 September 2008. The result was announced on Saturday, 31 October 2009. It was the top loser from the Sensex pack.

Other metal stocks also drifted lower. Sterlite Industries India (down 6.42%), National Aluminium Company (down 0.15%), Tata Steel (down 6.30%), and Sesa Goa (down 6.58%), were the other losers from the metal pack.

Jindal Steel & Power fell 4.57% after net profit slumped 32.2% to Rs 305.01 crore on 28% fall in net sales to Rs 1596.53 crore in Q2 September 2009 over Q2 September 2008. The company announced the results on Saturday, 31 October 2009.

Mukand surged 5.63% on reports the company plans to sell a portion of its land bank to reduce its debt of around Rs 1500 crore over the next one year.

Rate sensitive realty shares declined, extending a recent sharp fall, after the RBI in its monetary policy review meet on 27 October 2009 raised the provisioning requirements for loans to commercial real estate from 0.4% to 1%. DLF (down 7.97%), Unitech (down 9.06%), HDIL (down 6.51%), Indiabulls Real Estate (down 14.73%), and Parsvnath Developers (down 6.13%), declined.

India's largest cement maker by sales ACC shed 5.54% after shipments in October 2009 fell marginally to 1.69 million tonnes from 1.70 million a year ago. The company said production fell to 1.71 million tonnes from 1.74 million tonnes a year ago.

India's largest private sector power generation firm by sales Reliance Infrastructure slipped 6.66%. The company on Saturday, 31 October 2009, reported 6.2% rise in net profit to Rs 306.90 crore in Q2 September 2009 over Q2 September 2008. Total income rose to Rs 2,812.82 crore from Rs 2,674.86 crore in the same period last year.

Ambuja Cements declined 4.61% after October 2009 shipments rose 3% to 1.464 million tonnes from a year earlier. The company's production rose to 1.498 million tonnes from 1.451 million tonnes.

Grasim fell 1.03% and UltraTech Cement slipped 3.48%. Aditya Birla Group's cement shipments in October rose 11.1% from a year earlier to 2.819 million tonnes. Production rose an annual 12.5% to 2.934 million tonnes. The group's cement business includes flagship Grasim Industries and unit UltraTech Cement, with a combined production capacity of 42 million tonnes a year.

India's largest engineering & construction firm by sales Larsen & Toubro rose shed 2.75% to Rs 1524.10. The stock had surged to day's high of Rs 1600 after the company said it won an order worth Rs 6897 crore from Maharashtra State Power Generation Company. The announcement was made before market hours today, 3 November 2009.

Indiabulls Power plunged 16.56%, with the scrip moving further away from the initial public offer price of Rs 45, after a disappointing debut on the bourses on Friday, 30 October 2009.

India's largest dam builder by sales Jaiprakash Associates (JAL) tanked 7.14%. As per reports its subsidiary Jaypee Infratech (JIL) is preparing to raise Rs 2,500-3,000 crore through an initial share sale. JAL is eyeing a valuation of Rs 20,000-25,000 crore and expects to divest 10-15% in JIL through the public offer.

Shanthi Gears fell 8.10% after net profit tumbled 78% to Rs 2.68 crore on 55.2% fall in net sales to Rs 29.40 crore in Q2 September 2009 over Q2 September 2008. The company announced the results on Saturday, 31 October 2009.

IRB Infrastructure Developers rose 1.56% after consolidated net profit soared 71.9% to Rs 70.82 crore on a 76.5% spurt in consolidated sales to Rs 355.90 crore in Q2 September 2009 over Q2 September 2008. The result was announced after market hours on Friday, 30 October 2009.

Suzlon Energy tumbled 13.75% after reporting a net loss of Rs 184.91 crore in Q2 September 2009 compared with a net profit of Rs 16.98 crore in Q2 September 2008. The result was announced on Saturday, 31 October 2009.

IT pivotals declined on profit booking. Infosys (down 3.09%), Wipro (down 5.21%), and TCS (down 3.66%), edged lower.

Aptech fell 8.18% on reports the company's plan to list its China-based unit on the New York Stock Exchange has been put on hold since there were some discrepancies in the unit's accounts disclosures for the first six months.

Telecom pivotals witnessed divergent trend. India's second largest telecom company by sales Reliance Communications slumped 6.17%. The company reported 51.66% decline in its consolidated profit at Rs 740 crore in Q2 September 2009 over Q2 September 2008. Consolidated revenue increased to Rs 5,703 crore in the quarter under review from Rs 5,645 crore in the year-ago period. The result was declared on 31 October 2009.

However India's largest cellular services provider by sales Bharti Airtel surged 2.14% to Rs 298.40, on bargain hunting after a sharp recent slide. The stock rebounded from an initial slide which had taken the stock to a 52-week low of Rs 280.05. It was the top gainer from the Sensex pack

Bharti Airtel on Friday introduced a 'pay per second' plan across the country. In this plan, called Freedom Plan, Airtel customers will be charged one paise per second for all local and STD calls to Airtel numbers and 1.20 paise per second for local and STD calls to other networks.

Meanwhile, Singapore Telecommunications has bought additional 1.52% stake in Bharti Airtel and will pay up to Rs 3008.4 crore in three installments ranging over 18 months. In a notice to Singapore Stock Exchange, SingTel said it has entered into a conditional share purchase agreement with Bharti Group entity to buy an additional 7,30,000 issued shares in Bharti Telecom, a promoter company of Bharti Airtel.

India's largest private sector bank by net profit ICICI Bank was down 0.70% to Rs 784 in highly volatile trading session, swinging between Rs 773.10 - 823 . The bank's net profit rose 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 on 30 October 2009.

India's largest bank by net profit State Bank of India fell 4.47%. The bank's consolidated net profit rose 28.29% to Rs 3,133.16 crore on 22% rise in consolidated income to Rs 33,101.65 crore in Q2 September 2009 over Q2 September 2008.

Auto stocks succumbed to selling pressure in late trade after logging decent gains in early trade on the back of strong growth in sales in the month just gone by. Low interest rates and attractive benefits offered by companies pushed the aggregate sales of the industry in October 2009.

India's largest tractor maker by sales Mahindra & Mahindra lost 3.47%. Its overall sales climbed 32% in October this year to 18,410 units against 13,935 units in the same month last year.

India's largest truck marker by sales Tata Motors slipped 2.65%. Its total sales grew 18% to 20,011 units last month against 17,014 units in the same period last year.

However India's largest small car marker by sales Maruti Suzuki India rose 0.61% after total sales grew 32.4% to 85415 units in October 2009, compared with 64490 units posted in the same month a year ago.

Ashok Leyland gained 1.76% after net profit surged 31.8% to Rs 88.61 crore on 15.7% fall in net sales to Rs 1577.68 crore Q2 September 2009 over Q2 September 2008. The company announced the results after market hours on Friday, 30 October 2009.

India's second largest bike marker by sales Bajaj Auto rose 1.09% after it reported 51.06% rise in total two-wheeler sales to 2,49,974 units in October 2009 as compared with 1,65,477 units in the same period a year ago.

However India's largest bike marker by sales Hero Honda Motors fell 4.07% after it reported a marginal increase in October sales at 354,156 units as against 352,449 units in the same month last year.

India's largest FMCG company by sales Hindustan Unilever dropped 4.58% after net profit fell 22% to Rs 429 crore on 5% rise in net sales to Rs 4,228 crore in the quarter ended September 2009 over the quarter ended September 2008.

Shares from healthcare sector gained on defensive buying. Dr Reddy's Laboratories (up 3.95%), Nicholas Piramal (up 0.56%), Sun Pharmaceuticals (up 1.33%), Lupin (up 1.12%), and Cipla (up 0.61%), gained.

Aurobindo Pharma rose 0.17% after the company posted net profit of Rs 128.29 crore in Q2 September 2009 as against a net loss of Rs 38.50 crore in Q2 September 2008. The company announced the results after market hours on Friday, 30 October 2009.

Advanta India fell 9.37% after the company posted net loss of Rs 12.86 crore in Q3 September 2009, higher than net loss of Rs 7.01 crore in Q3 September 2008. Total income plunged 43.6% to Rs 7.84 crore in Q3 September 2009 over Q3 September 2008. The company declared its results after market hours on Friday, 30 October 2009.

Sugar maker Balrampur Chini Mills shed 9.58% after it today, 3 November 2009 said it has not entered into any stake sale agreement with rival Bajaj Hindusthan. The company held some talks with Bajaj Hindusthan to discuss future business strategies, it said in a letter to the stock exchange. Bajaj Hindusthan rose 0.46%.

Print media reports on Saturday indicated that Bajaj Hindusthan was in talks with Balrampur Chini to buy stake from its founders for Rs 2400 crore.

Reliance Industries was the top traded counter on BSE with turnover of Rs 206.91 crore followed by State Bank of India (Rs 183.90 crore), ICICI Bank (Rs 169.01 crore), Bharti Airtel (Rs 148.18 crore), and Reliance Natural Resources (Rs 145.51 crore).

Cals Refineries clocked highest volume of 3.20 crore shares on BSE. Suzlon Energy (2.21 crore shares), Reliance Natural Resources (2.14 crore shares), Indiabulls Power (1.60 crore shares) and Unitech (1.15 crore shares), were the other volume toppers in that order.