Market extends losses for the sixth straight day

Key benchmark indices suffered a severe setback extending losses for the sixth straight day on weak global cues after markets resumed trade today after a holiday on Tuesday on account of Republic Day. The BSE 30-share Sensex plunged 490.64 points or 2.92%, off close to 420 points from the day's high and up close to 60 points from the day's low. The market breadth was extremely weak as small and mid-cap shares succumbed to selling pressure.

Shares from interest rate sensitive sectors - banking, realty and auto pack dominated the slide. Today's sell-off was wide-based with stocks across sectors being hammered brutally. IT and metal stocks were not spared either. Index heavyweight Reliance Industries slipped in highly volatile trade.

Sentiment remained edgy with latest quarterly earnings from select pivotals falling short of street estimates and following the recent selling drive by the foreign institutional investors. The S&P CNX Nifty dipped below the psychological 5,000 level.

Meawhile, the Finance Ministry has made a case for a uniform threshold for goods and services for Central GST (CGST) and State GST (SGST). The Revenue Department has suggested that this annual turnover threshold for registration could be Rs 10 lakh or more. Also, the Centre may come up with a composition scheme up to gross turnover limit of Rs 50 lakh if the threshold for registration is kept at Rs 10 lakh.

These suggestions formed part of the Revenue Department's comments to the first discussion paper on GST released by the States in November last year. India is looking to introduce dual GST.

The International Monetary Fund sharply raised its global economic growth forecast, casting developing countries in a leading role while rich nations struggle with high unemployment and government debt. In an update of its World Economic Outlook, the IMF said on Tuesday the world economy will expand by 3.9% in 2010, much higher than the 3.1% it projected in October, and the pace will pick up to 4.3% next year.

While an economic recovery appears to be gaining traction, the IMF warned the financial system remains fragile in the richer countries and banks will need a lot more capital. As a group, advanced economies are expected to expand 2.1% this year and 2.4% in 2011, the IMF said. The IMF revised up its growth forecast for emerging and developing countries by almost 1%age point to 6% in 2010 and higher to 6.3% in 2011. It said it was "pretty bullish" about India, where it sees the economy growing about 7.7% this year and 7.8% in 2011.

Global cues were negative with Asian and European markets sliding as investors turned cautious ahead of the conclusion of a two-day policy meeting by the U.S. Federal Reserve later in the day. This is the final meeting of Ben Bernanke's term as chairman of the Federal Reserve.

As the economy remains fragile, the statement from the Federal Open Market Committee (FOMC) is expected to be bland. The FOMC is not expected to make any change in the near-zero target Fed Funds rate which has been in effect since December 2008 or in its other programs which were designed to increase the flow of credit.

Global stock markets fell again on Wednesday, hitting their lowest in two months as investors fretted about a monetary squeeze from central banks around the world and also the impact of tightening U.S. banking regulation. In Europe, Key benchmark indices in UK, Germany and France were down by between 0.29% and 0.63%

Asian stocks fell for the eighth straight day on Wednesday on fears that China's heightened efforts to rein in soaring credit growth could hamper the global economic recovery. Key benchmark indices in Japan, Hong Kong, Singapore, South Korea, Taiwan and China were down by between 0.51% and 1.24%.

Asian stocks had suffered steep losses ranging from 2% to 3.5% on Tuesday, 26 January 2010, on the back of implementation of a clampdown on lending by China and cut in rating outlook on Japan by Standard & Poor's.

US markets were little changed on Tuesday, 26 January 2010, as news that the senate has scheduled a hearing on President Obama's bank proposal for next week rattled the market.

The Dow Jones industrial average was down 2.57, or less than 0.1%, to 10,194.29. The S&P 500 index was down 4.61 points, or 0.4%, to 1,092.17. The Nasdaq Composite Index was down 7.07 points, or 0.3%, to 2,203.73.

In economic data watch, consumer confidence hit its highest level since September 2008. Its measure of confidence ticked up to 55.9 from an upwardly revised 53.6 in December.

In other news, the national retail federation reported that retail sales are likely to rise 2.5% this year, after a 2.5% drop in 2009.

The US index futures were volatile. Trading in US index futures showed the Dow could gain 10 points at the opening bell on Wednesday, 27 January 2010.

Back home, the undertone remains cautious ahead of derivatives expiry, RBI's monetary policy and earnings from frontline companies.

Aggregate results of 757 Indian companies showed 48.10% advance in net profit on 18.5% rise in sales in quarter ended December 2009 over the quarter ended December 2008.

Equities are likely to remain volatile in a truncated week as traders roll positions in the derivative segment from January 2010 series to February 2010 series ahead of the expiry of the near-month January 2010 contracts on Thursday, 28 January 2010. Rollover so far is substantially lower at 36% from 49% on comparable day last month.

The Reserve Bank of India (RBI) will hold its quarterly monetary policy review on 29 January 2010 and is widely expected to increase the cash reserve ratio (CRR) requirements for banks, but economists are divided on when it will raise interest rates. CRR is the level of cash that banks must keep in deposit with the central bank.

A CRR increase would have little impact on market, as investors have mostly factored in at least a 25 basis points increase in banks' reserve requirement and steady interest rates. Increases in both the CRR and interest rates could however weigh on shares of banks as well as sectors such as auto and property on concerns loan demand may slow.

Core sector, which comprises six key infrastructure industries, grew 6% in December 2009, compared with 5.3% growth in November 2009. The growth, signifying a recovery in industrial manufacturing, was primarily led by an increase in the production of finished steel, cement and electricity last month. The core sector growth stood at 0.7% in December 2008, due to the economic slowdown.

The sector, which accounts for 26.7% of the index of industrial production (IIP), grew 4.8% in April-December 2009 period, against 3.2% in the corresponding period of 2008-09, the commerce and industry ministry data showed on 23 January 2010.

As per reports, the government is considering an across-the-board increase in excise duty in Budget 2010-11, as it faces pressure to withdraw fiscal stimulus measures in the wake of a 16-year high fiscal deficit of 6.8% in the current financial year. One option being considered is an increase in Cenvat rate by 2% while leaving the service tax rate unchanged at 10%, reports citing an unnamed finance ministry official indicated. Cenvat refers to the median excise duty, tax on manufacture of goods, levied on nearly 90% of the goods made in the country.

Also more services could be brought under the tax net to allow the government to keep service tax rates unchanged. An alternative proposal is also under consideration which seeks an increase in excise rates in sectors that are doing well such as automobiles, instead of an across-the-board hike.

As per provisional figures on NSE, the foreign funds sold shares worth Rs 1002.60 crore and domestic funds bought shares worth Rs 716.22 crore on Monday, 25 January 2010.

The BSE 30-share Sensex plunged 490.64 points or 2.92% to 16,289.82. The Sensex opened 71.86 points lower at 16,708.60, also its day's high so far. It lost 549.61 points at day's low of 16,230.85 in late trade.

The S&P CNX Nifty fell 154.80 points or 3.09% to 4853.10 as per provisional closing. The Nifty crashed below the psychological 5,000 mark to hit a low of 4833.05 in late trade

Weak global cues and a sustained selling spree by foreign investors have weighed on the market which extended its fall to the fifth trading session. From the recent high of 17,641.08 on 18 January 2010, the Sensex fell 1351.26 points or 7.65% to 16,289.82 on Wednesday, 27 January 2010.

The market breadth, indicating the overall health of the market, was weak. On BSE, 2580 shares declined as compared with 335 that rose. A total of 26 shares remained unchanged.

The markets today reported its highest ever turnover of Rs 1,82,984.16 crore including biggest ever NSE F&O turnover of Rs 1,58,503.98 crore. The NSE cash turnover was at Rs 18,715.98 crore and BSE cash at Rs 5,764.20 crore.The total turnover on BSE amounted to Rs 5759 crore higher than Rs 4843.58 crore on Monday, 25 January 2010.

The BSE Mid-Cap index fell 3.98% and the BSE Small-Cap index fell 5.06%. Both the indices underperformed the Sensex.

ITC was the lone gainer from the 30-member Sensex pack. Shares of India's largest cigarette maker by sales rose 0.39%, extending recent gains after posting 26.67% rise in net profit to Rs 1144.17 crore in Q3 December 2009 over Q3 December 2008. The company announced Q3 result during market hours on 22 January 2010.

But, India's largest FMCG major by sales Hindustan Unilever fell 1.72%. The company's net profit rose 5.4% to Rs 649 crore in Q3 December 2009 over Q3 December 2008.

Index heavyweight Reliance Industries (RIL) fell 1.52%. The company's net profit rose 15.77% to Rs 4008 crore on 89.77% surge in total income to Rs 57364 crore in Q3 December 2009 over Q3 December 2008. RIL said the results had been reworked and restated to include figures from Reliance Petroleum, which it absorbed last year. The company announced the Q3 result during market hours on 22 January 2010.

Metal stocks declined after LMEX, a gauge of six metals traded on the London Metal Exchange, fell 0.81% on Monday, 25 January 2010.

India's largest private sector steel maker by sales Tata Steel slumped 8.48% ahead of its Q3 December 2009 results on Thursday, 28 January 2010. It was the top loser from the Sensex pack.

Jindal Saw, Sail, Sesa Goa and National Aluminum Company fell by between 2.78% to 7.73%.

India's largest private sector aluminium maker by sales Hindalco Industries declined 5.66% after net profit fell 21.60% to Rs 427.10 crore on a 29.56% increase in sales to Rs 5286.10 crore in Q3 December 2009 over Q3 December 2008.

India's largest non-ferrous metal firm by capacity Sterlite Industries India shed 4.04% after net profit slumped 77.16% to Rs 46.59 crore on a 39.83% increase in sales to Rs 3611.99 crore in Q3 December 2009 over Q3 December 2008.

Stocks from interest rate sensitive sectors were the worst hit in today's market meltdown. Auto stocks underwent profit booking after auto major Mahindra & Mahindra's earnings fell short of street expectations.

India's largest tractor maker by sales Mahindra and Mahindra (M&M) slumped 5.64%, extending Monday's over 5% slide after it reported lower-than-expected earnings for the latest quarter ended December 2009 during market hours on 25 January 2010.

M&M's net profit surged 849% to Rs 413.70 crore on a 56.32% rise in sales to Rs 4478.70 crore in Q3 December 2009 over Q3 December 2008. The result was announced during trading hours on Monday, 25 January 2010. Meanwhile, the company on Monday also approved a 2-for-1 stock split.

India's largest motorbike maker by sales Hero Honda Motors plunged 4.24%. After market hours on 25 January 2010, the company reported a 78.34% rise in net profit to Rs 535.77 crore on a 32.72% rise in sales to Rs 3814.42 crore in Q3 December 2009 over Q3 December 2008.

India's top truck marker by sales Tata Motors lost 6.8% ahead of its Q3 December 2009 earnings on 29 January 2010.

India's top small car maker by sales Maruti Suzuki India fell 5.28%.

Banking shares declined as investors turned cautious on rate sensitive stocks ahead of the Reserve Bank of India's (RBI) monetary policy review meet on 29 January 2010.

India's largest bank by net profit and branch network State Bank of India slumped 5.07% after the bank's net profit remained flat in the third quarter ended December 2009 to Rs 2,479 crore against Rs 2,478 crore in the year-ago period. Net interest income increased by 9.69% in the quarter under review compared with the same period in the previous fiscal. However, net interest margin declined to 2.82% from 3.10%.

India's second largest private sector bank by net profit HDFC Bank fell 3.66%. India's largest private sector bank by net profit ICICI Bank lost 4.98%.

Rate sensitive realty shares also declined ahead of the RBI's quarterly monetary policy review meet on 29 January 2010. DLF, Unitech, HDIL and Indiabulls Real Estate fell by between 5.18% to 10.61%.

High beta considered shares related to infrastructure sector extended recent fall. High beta stocks are highly volatile stocks which generally outperform benchmark index in a firm market and underperform it in a weak market.

Reliance Infrastructure, Larsen & Toubro, and Jaiprakash Associates fell by between 1.52% to 3.27%.

India's largest power equipment maker by sales Bharat Heavy Electricals fell 1.52%. Bharat Heavy Electricals said on Wednesday it would sign an agreement with the Madhya Pradesh state utility to jointly set up a 1,600 megawatts thermal power plant in the central Indian state.

IT stocks declined on fears the Obama administration's bank plan will crimp outsourcing demand. India's largest IT exporter by sales Tata Consultancy Services fell 1.62%. India's second largest IT exporter by sales Infosys fell 1.55%. India's third largest software services exporter Wipro lost 5.79%. Wipro said on Wednesday it signed a multi-year outsourcing deal with British American Tobacco Plc, the world's second-biggest cigarette maker.

Healthcare stocks fell on profit taking. Cipla, Dr Reddy's Laboratories, Sun Pharmaceutical Industries, Ranbaxy Laboratories fell by between 1.5% to 5.23%.

Cals Refineries clocked the highest volume of 2.72 crore shares on BSE. Unitech (1.33 crore shares), Suzlon Energy (1.12 crore shares), Rashtriya Chemicals & Fertilisers (0.88 crore shares) and National Fertilizer (0.83 crore shares) were the other volume toppers in that order.

State Bank of India clocked the highest turnover of Rs 193.88 crore on BSE. Tata Steel (Rs 187.01 crore), Jai Corp (Rs 151.38 crore), DLF (Rs 120.63 crore) and Reliance Industries (Rs 113.74 crore) were the other turnover toppers in that order.