RIL drops nearly 4%

Sustained selling pressure kept key benchmark indices suppressed throughout the day. World stocks fell as Europe's sovereign debt, indications of weak US jobs data and a crash in commodity and energy prices raised fresh concerns over global economic recovery. US index futures reversed initial gains. The BSE 30-share Sensex was provisionally down 450.77 points or 2.78%, off 448.38 points from the day's high and up 48.75 points from the day's low. The barometer index slipped below the psychological 16,000 mark

The market breadth was extremely weak. Today's sell-off was wide-based with all sectoral indices on BSE edging lower. Auto shares declined after a government-appointed panel recommended additional duty on diesel-powered vehicles. Infrastructure stocks suffered a severe setback on fears of lower government spending on infrastructure after a lower-than-expected response to NTPC's follow-on public offer. Telecom stocks declined on reports the 3G auctions will be delayed.

Realty shares dropped on fears of hike in interest rates. Metal stocks declined as metal prices fell on the London Metal Exchange on Thursday, 4 February 2010. IT stocks fell for the second day in a row after an industry body cut the sector's export forecast for 2010/11. Index heavyweight Reliance Industries (RIL) fell below the Rs 1000 mark in volatile trade.

The market staged a recovery from lower level after an initial sharp setback as US index futures rose. However, the intraday recovery proved short-lived. The market weakened again in morning trade. Market stayed in a narrow range in early afternoon trade as stocks continued to remain under pressure. The market once again recovered from lower level in mid-morning trade. However, it weakened again later. Fresh selling at every small rise from level level pulled market near day's low in early afternoon trade. A weak start from European markets triggered a sell-off on the bourses in mid-afternoon trade. Sustained selling pressure in pivotals kept the market depressed in late trade.

Chairman of the prime minister's economic advisory council C. Rangarajan on Friday said the government is no hurry to roll back economic stimulus measures in one go. He also said that efforts will be made in the budget later this month to lower the fiscal deficit. It has been pointed out repeatedly that the process of exit must be gradual, coordinated and must not be sudden, should not disrupt the economy and efforts will be made to bring down the fiscal deficit in the coming budget, Rangarajan said.

India can gradually start raising interest rates as Asia's third-largest economy is among the first to recover after the global financial crisis, the International Monetary Fund (IMF) said in a report published on 4 February 2010 on its website. India's economy is one of the first in the world to recover and the central bank should take a gradual approach to ensure the recovery reaches its full potential, the IMF report said.

The International Monetary Fund sees the Indian economy coming back to potential by 2010-11 to log 8% growth from the current year's 6.75 per cent. Still, the IMF's assessment of GDP growth for the current fiscal is in contrast to the government's projection of more than 7% and the RBI's latest forecast of 7.5%

European shares fell for the third straight day on Friday, with banks extending losses made on the back of worries about the debt positions of Greece, Spain and Portugal. Key benchmark indices in UK, Germany and France were down by between 0.87% and 1.77%.

Asian shares plunged following an unexpected increase in US jobless claims and slide in commodities. The key benchmark indices in China, Hong Kong, Japan, South Korea, Singapore and Taiwan were down by between 1.87% to 4.30%.

China's GDP growth is expected to reach 11.5% in the first quarter while the pace of the consumer price index's rise could accelerate to about 2.5% compared with a year earlier, a Chinese government think tank said in a report carried by state media on Friday. The State Information Centre cited the continued impact of government stimulus policies and restocking of inventories of manufactured goods among the factors contributing to an acceleration of the economic recovery, the China Securities Journal reported.

China posted full-year GDP growth of 8.7% for 2009 while the quarterly rate accelerated to 10.7% in the fourth quarter from 9.1% in the third and 7.9% in the second.

In US market action on Thursday, the Dow briefly fell below the crucial 10,000 mark, as stocks suffered their worst losses in more than nine months. Escalating sovereign debt problems in Europe and an unexpected rise in jobless claims put investors on the defensive just ahead of Friday's crucial payrolls report.

The Dow Jones Industrial Average fell 268.37 points, or 2.61%, to 10,002.18. The Standard & Poor's 500 Index dropped 34.17 points, or 3.11%, to 1,063.11. The Nasdaq Composite index lost 65.48 points, or 2.99%, to 2,125.43.

US economic data on Thursday showed initial jobless claims rose by 8,000 last week to a seasonally adjusted 480,000. This is against economists' expectation of a drop of 10,000.

Meanwhile, the European Central Bank (ECB) and Bank of England (BOE) kept interest rates at record lows on Thursday as financial markets looked for guidance on growing eurozone debt problems.

The ECB maintained its main lending rate at 1% while the BoE rate stayed at 0.50%. Markets had widely anticipated the decisions and were far more concerned by debt-ridden Greece and other countries with soaring public deficits that have pushed the eurozone into its worst-ever crisis.

Emerging market equity funds lost $1.6 billion in weekly withdrawals, the biggest outflows in 24 weeks, as earnings and Greece's debt woes raised concerns that the global recovery may falter, the EPFR Global data indicated. Investors withdrew $516 million from Asian equities outside of Japan in the week ended 3 February 2010. Within Asia, China equity funds reported net outflows for the fifth time in six weeks while Indian funds lost $180 million, the most in 68 weeks

Trading in US index indicated the Dow could fall 10 points at the opening bell on Friday, 5 February 2010.

Closer home, the two top stock exchanges, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) have decided to hold a special trading session on Saturday, 6 February 2010, as NSE is testing an upgraded trading system. Trading will begin at 11:00 IST and end at 12:30 IST.

Following rising prices of potato and pulses, food inflation rose to 17.56% in the week ended 23 January 2010 from 17.40% in the previous week, government data released on Thursday showed. The inflation for primary articles, which include food and non-food items, marginally eased to 14.56% in the reporting week from 14.66% in the previous week. The fuel price index rose 5.88%

Pronab Sen, the country's chief statistician, said on Wednesday the government should wait till May to roll back stimulus, as the strength of the demand recovery visible in available data may not be for real, pulling the finance minister, Pranab Mukherjee, away from a policy direction which the Reserve Bank of India (RBI) desires.

The advance estimates on economic growth for the current fiscal ending March 2010 will be released on Monday. It will be based on the provisional data for the first half of the year and partial data for third quarter and no data on the fourth quarter, which contributes the highest to the annual Gross Domestic Product.

As regards government's divestment plan, Rural Electrification Corporation (REC) will be the next Government- owned entity to come out with a follow-on public offer (FPO). Its 17.1-crore share FPO will open on 19 February 2010 and will close on 23 February 2010. This will be followed by NMDC's FPO.

As per reports, in the next fiscal, the Government is likely to divest its stake in state-run firms such as Engineers India, Coal India through initial public offers (IPOs) and Power Grid and Sail through FPOs.

As per provisional closing, the BSE 30-share Sensex was down 450.77 points or 2.78% to 15,774.18. The index fell 499.52 points at the day's low of 15,725.43 in mid-afternoon trade. The Sensex declined 2.39 points at the day's high of 16,222.56 in early trade.

The S&P CNX Nifty was down 130.60 points or 2.70% to 4714.75, as per provisional closing.

The market breadth, indicating the overall health of the market, was extremely weak. On BSE, 2372 shares declined as compared with 510 that rose. A total of 53 shares remained unchanged.

The total turnover on BSE amounted to Rs 4488 crore as compared with Rs 4,463.32 crore on Thursday, 4 February 2010

Tata Power was the lone gainer from the 30-member Sensex pack. India's second largest private sector power generation firm by capacity gained 1.50% to Rs 1294.95, recovering from day's low on 1255.25 on bargain hunting.

ONGC (down 4.93%), ITC (down 2.31%), and Grasim (down 2.10%), edged lower from the Sensex pack

Metal stocks declined for the second straight session after LMEX, a gauge of six metals traded on the London Metal Exchange, lost 2.82% on Thursday, 4 February 2010.

India's largest private sector aluminium maker by sales Hindalco Industries slumped 5.54% to Rs 138.05 and was the top loser from the Sensex pack.

Tata Steel (down 4.74%), Sterlite Industries (down 2.16%), National Aluminium Company (down 4.38%), Sesa Goa (down 3.50%), and Hindustan Zinc (down 4.33%), edged lower

Index heavyweight Reliance Industries (RIL) fell 3.89% to Rs 979.70. The stock slipped to day's low of Rs 977.10 after falling below the Rs 1,000 mark in opening trade. As per reports RIL has submitted a $2 billion expression of interest for Value Creation Inc, a Canada-based private firm which holds oil sands assets.

India's largest power utility firm by sales NTPC fell 1.47% to Rs 204.50. NTPC's follow-on pubic offering (FPO) was fully bid by 15:00 IST on the last day of the issue today, 5 February 2010. Bids for 21.01 crore shares were place at Rs 209. The next highest number of bids were put at Rs 202, just above the floor price of Rs 201. Investors put in bids for 11.3 crore shares at Rs 202. The FPO which opened for bidding on 3 February 2010 closes on 5 February 2010.

NTPC's FPO is the first public issue which is adopting the French Auction route to raise funds. Under the French Auction model, institutional buyers are free to bid above a certain floor price. The highest bidder gets preference during the allotment of shares

The government currently holds an 89.5% stake in NTPC and it plans to dilute 5% through the FPO. At the floor price, the government would mop up Rs 8286 crore

India's largest private sector bank by net profit ICICI Bank lost 4.02%. The bank's American depository receipt (ADR) slumped 6.03% to $34.77 on the New York Stock Exchange on Thursday, 4 February 2010.

Auto stocks declined after the panel headed by Kirit Parikh, a former member of the nation's Planning Commission, suggested Rs 80,000 more should be charged as duty on vehicles fitted with diesel engines.

India's top truck maker by sales Tata Motors lost 2.64% after its American depository receipt (ADR) dived 8.45% to $14.41 on the New York Stock Exchange on Thursday, 4 February 2010.

India's largest tractor maker by sales Mahindra and Mahindra (M&M) fell 4.27%. India's top small car maker by sales Maruti Suzuki India shed 0.95%

IT pivotals declined for the second day on disappointing US economic data. US is a key market for Indian IT firms. India's second largest IT exporter by sales Infosys slipped 2.86%

India's third largest software services exporter Wipro declined 2.31%. As per recent reports, Wipro Consumer Care and Lighting, the FMCG arm of Wipro, is in advanced talks to buy Nigeria-based skincare company, Tura International.

India's largest IT exporter by sales Tata Consultancy Services fell 2.58%. Reportedly TCS' Passport Seva Project, which aims to issue passports in flat three days, is all set to be launched in a week or two.

The National Association of Software and Service Companies (Nasscom) has projected export revenue to grow 13% to 15% to $56-$57 billion in the year to March 2011, below the previous outlook for $60-$62 billion.

Infrastructure stocks fell on fears of lower government spending on infrastructure after a lower-than-expected response to NTPC's follow-on public offer. Jaiprakash Associates (down 4.58%), Larsen & Toubro (down 1.39%), Bharat Heavy Electricals (down 3.47%), Gammon India (down 3.08%), GMR Infrastructure (down 5.62%), and Punj Lloyd (down 3.42%), declined.

Telecom stocks declined for the second running day weighed by reports the auction for the much awaited third-generation mobile-phone services may not be held by 31 March 2010

India's largest mobile services provider by sales Bharti Airtel fell 1.75%. India's second largest mobile services provider by sales Reliance Communications declined 0.55%.

The government had set 14 January 2010 as the tentative deadline to start taking bids for the airwaves as per its schedule announced in October last year. On 19 January 2010, Communications Minister Raja had told reporters in New Delhi the auction would be completed before the next fiscal year begins on 1 April 2010.

India's largest pharma company by market capitalisation Sun Pharmaceuticals Industries fell 2.54%. As per reports, the Supreme Court of Israel debarred the company from acquiring further stake in Israeli drug firm Taro.

Sun has been engaged in the legal tussle to take control of Taro after their $454-million merger deal in 2007 was unilaterally called off by the Israeli firm in 2008.

Ranbaxy Laboratories slumped 5.41% on reports the US drug regulator has asked the company to immediately assess whether its plants making drugs for the US market meet the required standards.