RIL off more than 4% as debt woes in Europe rattle world stocks

The key benchmark extended losses for the second straight day as world stocks reeled from rating downgrades on Greece and Portugal. The BSE 30-share Sensex was provisionally down 285.27 points or 1.61%, off close to 240 points from the day's high and up close to 60 points from the day's low. Metal and realty stocks led the decline. All the sectoral indices on BSE were in the red. The market breadth was weak.

Index heavyweight Reliance Industries (RIL) slumped more than 4%, extending recent losses triggered by disappointment from Q4 result. India's largest mobile services provider by sales Bharti Airtel dropped in volatile trade as Q4 net profit fell.

Stocks were volatile as traders rolled over positions in the derivatives segment from the April 2010 series to the May 2010 series ahead of the expiry of the near-month April 2010 contracts on Thursday, 29 April 2010. The market slumped in early trade as global stocks reeled from rating downgrades on Greece and Portugal. The market cut losses in morning trade. The market moved in a range in mid-morning trade. A sell-off gripped the market in mid-afternoon trade as European stocks extended losses. The market trimmed losses in late trade.

The Q4 March 2010 corporate earnings announced so far have been good. The combined net profit of a total of 372 companies rose 27.6% to Rs 28545 crore on 37.5% rise in sales to Rs 241872 crore in the quarter ended March 2010 over the quarter ended March 2009.

European equities extended losses on Wednesday, with financial shares sliding further following downgrades of Greek and Portuguese debt on Tuesday, when global stock markets fell sharply. The key benchmark indices in France, Germany and UK fell by between 0.64% to 1.86%.

Stocks in Portugal and Spain fell sharply and Greek shares fell again on Wednesday, with the ASE Composite index down another 0.4% to 1,688.84, after dropping 6% in the previous session as lenders such as Alpha Bank tumbled. Greece's securities regulator banned short selling for two months.

Asian stocks fell as renewed worries about Greece's debt problems led to sharp decline in US stocks on Tuesday. The key benchmark indices in Hong Kong, China, Japan, South Korea, Singapore, Taiwan and Indonesia were down by between 0.26% to 2.57%.

Concerns about Europe intensified when global rating agency Standard & Poor's on Tuesday downgraded Greece's debt to junk status and hit Portugal with a two-notch rating cut. Greece has already admitted it can't pay debts due shortly and has asked for a bailout from European neighbors and the International Monetary Fund.

US index futures reversed early gains. Trading in US index futures indicated that the Dow could fall 34 points at the opening bell on Wednesday 28 April 2010.

US stocks tumbled on Tuesday as downgrades of Greece and Portugal fueled fear about euro-zone economic stability, and a grilling of Goldman Sachs on Capitol Hill heightened the possibility of financial reforms. The Dow Jones Industrial Average dropped 213.04 points, or 1.90% to 10,991.99. The Standard & Poor's 500 Index slid 28.34 points, or 2.34% to 1,183.71. The Nasdaq Composite Index lost 51.48 points, or 2.04% to 2,471.47.

The US Federal Reserve is likely to keep interest rates near zero and it is also likely to repeat its vow of an extended period of very low rates at the conclusion of a two-day policy meeting on Wednesday, 28 April 2010. The Fed has kept the Fed funds rate in a range of zero to 0.25% since December 2008.

Back home, the Congress-led United Progressive Alliance government sailed through a trial of strength in parliament on Tuesday by winning the cut motion demanded by opposition parties against an unpopular hike in fuel and fertiliser prices with smaller parties giving it a leg up to achieve a surprisingly strong victory. Prime Minister Manmohan Singh's government was backed by 289 MPs in the 545-strong Lok Sabha, while the opposition managed 201 votes. Two parties walked out on the vote, adding to abstentions. However, major reforms may take a backseat for the some time to come as there is a stiff resistance by the opposition on fears it may hurt the poor.

On the macro front, the latest data showed infrastructure sector output jumped 7.2% in March 2010 from a year earlier, higher than an upwardly revised rise of 4.7% in February 2010.

The Indian Meteorological department (IMD) expects normal rainfall in the June-September monsoon season this year. Rainfall is likely to be 98% of the long-term average, the IMD said on 23 April 2010. Good monsoon rains would help raise farm output, boost rural incomes and lower food inflation. The south west monsoon is important for India as about 60% of the country's farmlands are rain-fed and more than half of the workforce is employed in the agriculture sector. The quantum of rainfall in the crucial sowing month of July and distribution of rainfall during the monsoon season holds key.

The latest data showed the annual food and fuel inflation ticked higher, raising worries central bank may raise interest rates before the next scheduled policy review in July 2010. The food price index rose 17.65% in the year to 10 April 2010. The fuel price index rose 12.45% and the primary articles index rose 14.14% in the year to 10 April 2010, the latest government data showed.

The Reserve Bank of India expects India's economy to expand 8% in the year ending March 2011 (FY 2011) with an upward bias, assuming a normal monsoon this year and sustenance of good performance of the industrial and services sectors on the back of rising domestic and external demand.

In its half-yearly World Economic Outlook, the International Monetary Fund (IMF) has pegged India's GDP growth at 8.75% in calendar 2010 and 8.5% in calendar 2011. According to the IMF, domestic demand in India will strengthen as the labour market improves, and investment is expected to be boosted by strong corporate profitability, rising business confidence and favourable financing conditions.

Indian stocks had surged recently after the Reserve Bank of India (RBI) raised interest rates on 20 April 2010 by less than some economists had expected and forecast inflation will slow. From a recent low of 17400.68 on 19 April 2010, the BSE Sensex jumped 345.60 points or 1.98% to 17745.28 on Monday, 26 April 2010. Optimism about the fourth quarter corporate earnings and hopes of a normal monsoon this year aided the rally

The RBI said it will continue to monitor macroeconomic conditions, particularly the price situation closely and take further action as warranted. A 25 basis points hike in the cash reserve ratio (CRR) with effective from 24 April 2010 will suck out excess liquidity of Rs 12500 crore from the banking system.

As per provisional figures, the BSE 30-share Sensex was down 285.27 points or 1.61% to 17405.35. The Sensex fell 47.03 points at the day's high of 17,643.59 in early trade. The index declined 346.04 points at the day's low of 17,344.58 in late trade.

The S&P CNX Nifty was down 88.80 points or 1.67% at 5,219.55 as per provisional figures.

The BSE Mid-Cap index fell 1.52% and the BSE Small-Cap index fell 1.94%.

The market breadth, indicating the overall health of the market, was extremely weak. On BSE, 2212 shares declined as compared with 681 that rose. A total of 72 shares were unchanged.

From the 30 share Sensex pack, 26 stocks fell while the rest gained.

BSE clocked turnover of Rs 4767 crore, higher than Rs 4512.53 crore on Tuesday, 27 April 2010.

Index heavyweight Reliance Industries (RIL) fell 4.14%, with the scrip declining for the third straight day as net profit rose a lower-than-expected 29.9% to Rs 4710 crore in Q4 March 2010 over Q4 March 2009. The Q4 result was announced after trading hours on 23 April 2010.

The company today said it had discovered oil in one of its exploration blocks in the Cambay basin on India's western coast, the block in which it holds 100% controlling interest. This is its fourth oil discovery in the region.

India's largest mobile services provider by sales Bharti Airtel slipped 1.11% to Rs 294.95 in choppy trade as consolidated net profit as per US accounting standards declined 8% to Rs 2055 crore on 2% growth in total revenue to Rs 10056 crore in Q4 March 2010 over Q4 March 2009. The result was announced at the onset of the trade today. The company said a strong free cash flow of Rs 5448 crore resulted in net debt turning into a positive net cash position of Rs 1281 crore as at 31 March 2010

Bharti Airtel Chairman & Managing Director Sunil Bharti Mittal said at the time of announcing Q4 March 2010 results that Bharti Airtel continues to be strongly positioned in India despite a hyper competitive market.

Bharti's total customer base stood at 137.60 million as on March 2010, a rise of 41% over March 2009. The average monthly churn for the quarter ended 31 March 2010 was 1.5% (1% voluntary churn and 0.5% company initiated churn) for its post-paid segment and 5.9% for the prepaid segment.

Diversified Jaiprakash Associates fell 4.28% and was the top loser from the Sensex pack.

Unitech fell 3.93%, with the scrip falling for the third straight day. The board of directors at a meeting held on 20 April 2010 approved demerger of non-core operations comprising of telecommunications, hotels, special economic zones, logistics, transmission towers and others into a separate entity called Unitech Infra. For every one share of Unitech, the shareholders will get one share of Unitech Infra, which will be listed at a later date.

India's largest realty player by sales DLF fell 3.2% with the scrip declining for the third straight day after the company said on Saturday 24 April 2010 that its subsidiary, Caraf Builders & Constructions, acquired 24.52 crore compulsorily convertible preference shares (CCPS) in group company DLF Assets from PE firm SC Asia for Rs 3,084.68 crore. With this, Caraf's stake in DLF Assets has risen to 91.90%. DSIPL (a company owned by SC Asia) would continue to hold 2.72 crore CCPS, representing an economic interest of 4.59% in DAL, it said.

Among other realty stocks, Sobha Developers, HDIL, Phoenix Mills, Orbit Corporation and Indiabulls Real Estate fell by between 3.07% to 6.67%.

Metal stocks declined after LMEX, a gauge of six metals traded on the London Metal Exchange, slumped 4.64% on Tuesday, 27 April 2010. Ispat Industries, Hindalco Industries, Sesa Goa, National Aluminum Company, Hindustan Zinc, Steel Authority of India fell by between 0.86% to 4.68%.

India's largest private sector steel maker by sales Tata Steel fell 3.52%, with the scrip declining for the second straight day. The company said recently its sales in the year ended on 31 March 2010 rose 18% from a year ago to 6.17 million tonnes.

Copper maker Sterlite Industries fell 1.95%, with the scrip declining for the second straight day. The stock had jumped 5.95% on Monday after the company's board recommended issue of bonus shares in the ratio of 1:1 and a 2-for-1 stock split at the time of announcing Q4 results during trading hours on Monday, 26 April 2010. Consolidated net profit surged 130.82% to Rs 1380.90 crore in Q4 March 2010 over Q4 March 2009.

IT stocks also fell on profit taking. India's third largest IT exporter by sales, Wipro fell 1.17% with the stock declining for the second straight day. The board announced a 2:3 bonus late last week. Consolidated net profit under International Financial Reporting Standards jumped 21% Rs 1209 crore on 8% rise in total revenue to Rs 6983 crore in Q4 March 2010 over Q4 March 2009. The results were announced on Friday, 23 April 2010.

Wipro has projected revenue from the IT services business to be in the range of $1.19 billion to $1.215 billion in Q1 June 2010. The company said it won several large deals in Q4 March 2010. Commenting on the fourth quarter results, Wipro Chairman Azim Premji said there was a broad-based, volume led growth during the fourth quarter. There was a good recovery in technology and telecom verticals. The business environment is returning to normal, he added.

India's largest information technology services provider by sales, TCS, fell 1.93%, on profit taking. The company posted 9.7% growth in consolidated net profit as per Indian accounting standards to Rs 2,001 crore on 1.17% rise in revenues to Rs 7738 crore in Q4 March 2010 over Q3 December 2009. The result was announced on 19 April 2010.

At the time of announcing the results, TCS chief executive officer and managing director N Chandrasekaran said the company's sales and execution machine is primed and the company has laid a solid platform for growth. There is a significant traction for TCS' strategy of full services which together with TCS' global engagement model positions the company well for accelerated growth, Chandrasekaran said.

India's second largest software exporter by sales, Infosys Technologies, fell 1.5%.

HCL Technologies fell 0.71%, with the stock declining for the second straight day after recent strong gains triggered by robust Q3 March 2010 results. Consolidated net profit as per US accounting standards rose 15.9% to Rs 344 crore on 1.4% growth in revenue to Rs 3075.70 crore in Q3 March 2010 over Q2 December 2009. The company announced the result on 21 April 2010.

India's largest engineering and construction firm by sales Larsen & Toubro (L&T) fell 2.04% on profit taking after registering gains for three days in a row. The company recently received an order worth Rs 1,060 crore from Gujarat State Petroleum Corporation (GSPC) to build an offshore oil platform.

India's largest power equipment maker by sales Bharat Heavy Electricals fell 0.49%, with the scrip falling for the second straight day.

Bank of Baroda rose 1.55%, reversing early losses, on decent Q4 results. Net profit rose 20.4% to Rs 906.28 crore in Q4 March 2010 over Q4 March 2009. The stock hit a all time high of Rs 689 today. The result was announced during trading hours today.

Dabur India rose 1.18% as net profit rose 29.72% to Rs 135.28 crore in Q4 March 2010 over Q4 March 2009. The result was announced during trading hours today.