Sensex falls 4.87% in last five days

The key benchmark indices extended losses for the fifth straight session with weak global cues playing the spoilsport. High volatility was the hallmark of the day's trading session. However, firm US index futures cushioned steep losses. The BSE 30-share Sensex fell 79.22 points or 0.47%, up 75 points from the day's low and off 100 points from the day's high. From the recent high of 17,641.08 on 18 January 2010, Sensex fell 860.62 points or 4.87% to 16,780.46 on Monday, 25 January 2010. The market remains closed on Tuesday, 26 January 2010 on account of republic day holiday.

The undertone was cautious ahead of derivatives expiry, RBI's monetary policy and earnings from frontline companies. Weak global cues had played the spoilsport in early trade. US stocks tumbled in their worst three-day slide in 10 months on Friday, pulling Asian stocks lower today, 25 January 2010. European markets, were lower. The S&P CNX Nifty, which crashed below the psychological 5,000 mark in opening trade, regained that level in late trade. The market breadth was negative after a positive start.

Aggregate results of 670 Indian companies showed 50% advance in net profit on 20% rise in sales in quarter ended December 2009 over the quarter ended December 2008.

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.

Meanwhile India will get a $770 million loan from the World Bank for three projects in the southern state of Andhra Pradesh, the finance ministry said in a statement on Friday, 22 January 2010. With these new loan agreements, the multilateral agency's total ongoing commitment to India has increased to $19.38 billion, the statement added. In the current fiscal year to end-March 2010, the World Bank has committed fund assistance worth $5.5 billion to India.

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.

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. The market remains closed on Tuesday, 26 January 2010, on account of Republic Day.

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.

The food price index rose 16.81% in the 12 months to 9 January 2010, while the fuel index was up 6.34%, the government said on Thursday. The rise in food price index was lower than an annual rise of 17.28% in the previous week.

The annual wholesale inflation rose to 7.31% in December 2009, compared with 4.78% in November and 6.15% a year ago. Finance minister Pranab Mukherjee said on Wednesday the government was taking steps to contain inflation. The situation is constantly under review, he said. He also promised more measures to check the rise in the prices of essential commodities.

European shares were trading lower today, 25 January 2010 weighed by banking stocks. Key benchmark indices in UK, Germany were down by between 0.15% 0.34%. But France's CAC 40 rose 0.22%.

Asian stocks fell for the sixth straight day as concern mounted that a US government plan to limit risk-taking at financial companies will reduce profits and derail a global economic recovery. Key benchmark indices in China, Taiwan, Hong Kong, South Korea, Japan, Singapore were down by between 0.28% and 1.09%.

US stocks tumbled in their worst three-day slide in 10 months on Friday, 22 January 2010, on fears the White House's plan to curb bank risk-taking would cut profits and a drop in tech shares after Google Inc's disappointing results.

The Dow Jones industrial average dropped 216.90 points, or 2.09%, to 10,172.98. The Standard & Poor's 500 Index slid 24.72 points, or 2.21%, to 1,091.76. The Nasdaq Composite Index fell 60.41 points, or 2.67%, to 2,205.29.

In the three day selloff, the Dow lost 5.1%, the S&P lost 5.1% and the Nasdaq lost 5%.

Uncertainty about the Senate's confirmation of Ben Bernanke for another term as the Federal Reserve's chairman also rattled investors in a week when political squabbles helped erase stocks' gains for 2010.

Aside from worrying about how the Obama administration's proposals might hurt bank profits, investors also fretted about the likely impact of China's efforts to prevent the world's third-largest economy from overheating. Since China has led the nascent global economic recovery, any curbs it puts on lending threatens to slow demand that other economies, including the United States, had relied upon to spur their own growth.

Fears that China will get more aggressive in reducing the risk of asset bubbles sent investors bailing from China-focused stock funds for an 18th consecutive week, research firm EPFR Global said on Friday. Investors pulled $348 million from China equity funds in the week ended 20 January 2010, the biggest outflow in 18 weeks.

Though global emerging market equity funds attracted $748 million in fresh money in the week of Jan. 20, Asia ex-Japan equity funds took in only $29 million because of the China-related outflows. Net inflows to emerging market bond funds hit the highest in eight weeks and US bond funds extended a streak of inflows to 55 weeks.

Trading in US index futures showed the Dow could rise 92 points at the opening bell on Monday, 25 January 2010.

Back home, the BSE 30-share Sensex fell 79.22 points or 0.47% to 16,780.46. The Sensex opened 11.98 points lower at 16,847.70. At the day's low of 16,705.56 the Sensex declined 154.12 points in mid-morning trade. Sensex rose 18.09 points at the day's high of 16,877.77 in mid-afternoon trade.

The S&P CNX Nifty fell 28.10 points or 0.56% to 5007.90. The Nifty crashed below the psychological 5,000 mark to hit a low of 4983.05 in opening trade.

The market breadth, indicating the overall health of the market, was weak. On BSE, 1748 shares declined as compared with 1107 that rose. A total of 60 shares remained unchanged. Breadth was positive in morning session.

BSE clocked a turnover of Rs 4812 crore lower than Rs 6560.62 crore on Friday, 22 January 2010.

Among the 30-member Sensex pack, 17 declined while the rest gained.

The BSE Mid-Cap index fell 1.3% and the BSE Small-Cap index fell 0.9%. Both the indices underperformed Sensex.

India's largest motorbike maker by sales Hero Honda Motors fell 1.48%. The company's net profit surged 78.34% to Rs 535.77 crore in Q3 December 2009 over Q3 December 2008. The company announced the result after market hours today.

India's largest tractor maker by sales Mahindra and Mahindra (M&M) plunged 5.24% after it reported lower-than-expected earnings for the latest quarter ended December 2009. It was the top loser from the Sensex pack.

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 approved a 2-for-1 stock split.

India's top small car maker by sales Maruti Suzuki India rose 0.39%. The company reported higher than expected earnings in the third quarter. Its net profit surged 221.92% to Rs 687.53 crore on a 62.50% rise in sales to Rs 7372.65 crore in Q3 December 2009 over Q3 December 2008. The result was announced on Saturday, 23 January 2010.

Shares related to the infrastructure sector declined as investors continued to dump them on concerns of high valuation and poor financials. Jaiprakash Associates, IVRCL Infrastructure & Projects, Era Infra Engineering fell by between 0.44% to 5.01%.

However India's largest engineering & construction firm by sales Larsen & Toubro (L&T) rose 1.24%. The stock halted a two-day slide triggered after the company cut its revenue growth target to 10% from 15% at the time of announcing Q3 results on Thursday. L&T said profit after tax from ordinary activities rose 15% to Rs 696 crore in Q3 December 2009 over Q3 December 2008. Gross sales revenue declined 6% to Rs 8139 crore.

Rate sensitive realty shares declined ahead of the RBI's quarterly monetary policy review meet on 29 January 2010. DLF (down 2.54%), Unitech, HDIL, Indiabulls Real Estate and Parsvnath Developers fell by between 2.77% to 5.02%.

Power generation stocks declined as investors shuffled their portfolios ahead of the upcoming mega follow-on-public (FPO) offer of NPTC. Tata Power Company, Torrent Power, CESC, Reliance Power fell by between 0.5% to 1.19%.

However, India's largest power generation firm by total capacity NTPC rose 0.52%. The company FPO remains open between 3 and 5 February 2010. The pricing has not yet been announced by the company. Speaking in an interview to a news agency, the company's chairman last week said he expects an upcoming sale of its shares by the government to raise up to Rs 12,000 crore.

Metal stocks declined, extending Friday's fall on profit booking. The fall came despite LMEX, a gauge of six metals traded on the London Metal Exchange, rising 0.25% on Friday, 22 January 2010.

Tata Steel, Jindal Stainless, Sail, Sesa Goa and National Aluminum Company fell by between 0.54% to 2.24%.

Sterlite Industries fell1.19% . The company's consolidated net profit rose 42% to Rs 731 crore in Q3 December 2009 over Q3 DEcember 2008. The company announced the result after market hours today.

Hindalco Industries (down 1.46%), declined ahead of its Q3 earnings today, 25 January 2010.

Private sector banking shares declined as investors turned cautious on rate sensitive stocks ahead of the Reserve Bank of India's monetary policy review meet on 29 January 2010.

India's second largest private sector bank by net profit HDFC Bank fell 1.3% following a 3.49% slide in its ADR on Friday. India's largest private sector bank by net profit ICICI Bank lost 1.08%.

However, India's largest bank by net profit and branch network State Bank of India rose 0.15%. The bank's net profit remained unchanged at Rs 2479 crore in Q3 December 2009 over Q3 December 2008. The bank announced the result after market hours today.

Telecom shares were mixed after the government has amended overseas borrowing rules allowing winners in an upcoming 3G wireless spectrum auction to pay the fee in rupees, which could be later refinanced by overseas borrowing within 12 months.The move will help telecom companies to raise funds from the domestic market for the payment upfront, and give them flexibility to refinance the fee through cheaper overseas borrowings later. The government is expected to complete the 3G auction by March 2010.India's largest cellular services provider by sales Bharti Airtel gained 2.86% and was the top gainer from the Sensex pack. On consolidated basis, the company's net profit rose 13.2% to Rs 2236.90 crore on a 6.6% increase in total income to Rs 10327.57 crore in Q3 December 2009 over Q3 December 2008. The result was announced during trading hours on 22 January 2010.

However India's second largest cellular services provider by sales Reliance Communications lost 1.57%. The company will declare its Q3 December 2009 earnings on 30 January 2010.

Select FMCG shares gained on defensive buying as investors shuffled portfolio to low beta stocks with the market fall extending to fifth-day today.

India's largest FMCG firm by sales Hindustan Unilever gained 2.35%. The company announces its Q3 December 2009 earnings on 26 January 2010.

India's largest cigarette maker by sales ITC rose 2.21% as net profit rose 26.67% 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.

Diversified major Grasim Industries rose 0.42% after the company posted 80.81% spurt in net profit to Rs 595.88 crore on a 14.79% rise in sales to Rs 3051.89 crore in Q3 December 2009 over Q3 December 2008. The result was announced after market hours on Friday, 22 January 2010.

Index heavyweight Reliance Industries (RIL) fell 1.09%. 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.

IT stocks declined following Google Inc's disappointing results and on fears the Obama administration's bank plan will crimp outsourcing demand.

India's second largest IT exporter by sales Infosys fell 1.37%. India's third largest software services exporter Wipro lost 0.74%. India's largest IT exporter by sales Tata Consultancy Services was flat at Rs 755.75.

HCL Technologies lost 5.68% after net profit declined 15.07% to Rs 255.44 crore on 2.78% fall in total income 1259.22 crore in Q2 December 2009 over Q1 September 2009. The company declared results before trading hours today, 25 January 2010.

Cals Refineries clocked the highest volume of 1.71 crore shares on BSE. Rashtriya Chemicals & Fertilisers (1.06 crore shares), K Sera Sera (0.89 crore shares), Ispat Industries (0.86 crore shares), National Fertilizer (0.79 crore shares) were the other volume toppers in that order.

Jai Corp clocked the highest turnover of Rs 212.03 crore on BSE. Hindustan Copper (Rs 155.46 crore), Rashtriya Chemicals & Fertilisers (Rs 115.54 crore), National Fertilizer (Rs 101.92 crore) and Havells India (Rs 99.84 crore) were the other turnover toppers in that order.