Market extends losses for the third straight day

The key benchmark indices extended losses for the third straight day on continued worries over fiscal health of euro zone nations. Nevertheless, the market staged a strong intraday rebound after an initial sharp slide. The barometer index BSE Sensex regained the psychological 17,000 level after sliding below that mark in early trade. The BSE 30-share Sensex lost 49.18 points or 0.29%, up close to 230 points from the day's low and off close to 35 points from the day's high.

The Sensex has lost 470.75 points or 2.68% in three trading sessions from a recent high of 17558.71 on 30 April 2010.

The market breadth was weak. Metal stocks fell as metal prices slumped on the London Metal Exchange on Tuesday, 4 May 2010. Interest rate sensitive banking stocks declined on fears the Reserve Bank of India may resort to further monetary tightening to counter soaring inflation. High beta infrastructure stocks dropped. Telecom stocks saw divergent trend. IT pivotals recovered from early lows after the rupee weakened to its lowest level in over a month against the dollar. Select auto shares rose on strong monthly sales figures for April 2010.

Stocks were choppy. A setback in world stocks triggered by deepening worries about sovereign debt issues in Europe pulled the barometer index BSE Sensex below the psychological 17,000 level at the onset of the trading session. The market came off the lower level shortly. But the market soon slumped to a fresh intraday low. The market once again came off the lower level in morning trade. The market weakened again in mid-morning trade.

The Sensex regained the 17,000 level in early afternoon trade as recovery in Chinese stocks and higher US index futures triggered a rebound on the domestic bourses. The market once again weakened in afternoon trade as European stocks gave away initial small gains. The Sensex was again below the 17,000 level. The market cut losses in mid-afternoon trade on gains in select pivotals. Recovery gathered steam in late trade as European stocks moved into positive zone in volatile trade.

NSE's volatility index India VIX, a measure of traders' perception of near-term risks in the market based on options prices, rose 1.67% to 23.69. The index had risen 5.24% on Tuesday, 4 May 2010, after jumping 8.8% on Monday, 3 May 2010. India VIX is calculated based on the S&P CNX Nifty options prices. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days.

European stocks dipped in volatile trade on Wednesday after a sell-off in the previous session, as lingering sovereign debt fears eclipsed positive results by bellwethers like InBev and Societe Generale. The key benchmark indices in France, Germany and UK were down down between 0.12% to 0.39%.

A massive Greek bailout package announced on Sunday, 2 May 2010, failed to halt rising jitters about sovereign-debt problems along the euro zone's boundary. Euro-zone governments and the International Monetary Fund hoped that the $145.14 billion rescue package for Greece would soothe investors' nerves over high sovereign-debt levels in Spain, Italy, Portugal and Ireland.

Instead, it had the opposite effect, with fears that Greece's debt woes could spread to other countries. Investors are also concerned that the three-year financial package will not fix Greece's longer-term funding problems.

The European Central Bank (ECB) holds a regular policy meeting on interest rates on Thursday, 6 May 2010. Interest rates in the 16-member eurozone have now been on hold at an historic low of 1% for a year and many economists expect the ECB to leave borrowing costs unchanged till next year. The press conference of ECB chief Jean-Claude Trichet in which he is likely to update on Europe's role in Greece's bailout will be closely watched.

Asian stocks fell on fears Europe's attempt to contain Greece's debt crisis would fail. The key benchmark indices in Hong Kong, Indonesia, Taiwan, and Singapore were down by between 1.41% to 3.81%. But, China's Shanghai Composite index moved to positive zone from negative zone led by aviation stocks. The Shanghai Composite index rose 0.77%. Markets in South Korea and Japan were closed for holidays.

US markets declined sharply on Tuesday, 4 May 2010, on fears Europe's attempt to contain Greece's debt crisis would fail. The Dow Jones industrial average slumped 225.06, or 2.02%, to 10,926.77. The Standard & Poor's 500 index shed 28.66, or 2.38%, to 1,173.60 and the Nasdaq Composite index was down 74.49, or 2.98%, to 2,424.25.

US index futures edged lower in volatile trade. Trading in US index futures indicated that the Dow could fall 20 points at the opening bell on Wednesday, 5 May 2010.

Back home, the fourth quarter corporate results announced so far have been fairly encouraging. The combined net profit of a total of 1109 companies rose 28.7% to Rs 38455 crore on 30.3% rise in sales to Rs 358408 crore in the quarter ended March 2010 over the quarter ended March 2009.

The Parliament on Tuesday passed the Union Budget 2010-11 with the Rajya Sabha approving the Finance Bill. Earlier, the bill was passed in Lok Sabha. The Finance Bill now requires Presidential assent before the provisions are notified. Finance Minister Pranab Mukherjee in a debate on the Finance Bill remained firm on not rolling back increase in fuel prices.

A recent industry body report showed that business confidence in India improved on the back of economic recovery. The bi-annual Business Outlook Survey of the Confederation of Indian Industry (CII) showed that the Business Confidence Index (BCI) of the Indian industry increased by 1.5 points for the April-September 2010 period, compared to the past six months.

However, on the flip side, as per another survey a drop in new orders and output has resulted in the country's manufacturing expanding at a slower pace for the second month in a row. The HSBC Markit Purchasing Managers' Index, based on a survey of 500 companies, fell to 57.2 in April 2010 from 57.8 in March 2010. A figure of 50 separates contraction from expansion.

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 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.

The RBI at its annual policy review on 20 April 2010 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.

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.

The BSE 30-share Sensex fell 49.18 points or 0.29% to 17,087.96. The index fell 15.48 points at the day's high of 17,121.66 in late trade. The Sensex lost 278.91 points at the day's low of 16,858.23 in early trade.

The S&P CNX Nifty declined 23.60 points or 0.46% to 5,124.90.

The BSE Mid-Cap index rose 0.3% and outperformed the Sensex. The BSE Small-Cap index fell 0.24%. It also outperformed the Sensex.

Sectoral indices on BSE were mixed. The BSE Metal Index (down 1.07%), Realty index (down 1.03%), Capital Goods index (down 0.78%), Oil & Gas index (down 0.39%), Bankex (down 0.35%), and Power index (down 0.26%) underperformed the Sensex.

The BSE Teck index (up 0.95%), IT index (up 0.92%), BSE Healthcare index (up 0.62%), FMCG index (up 0.33%), Auto index (up 0.05%), PSU index (down 0.2%), and Consumer Durables index (down 0.22%), outperformed the Sensex.

The market breadth, indicating the overall health of the market, was weak. On BSE, 1722 shares declined as compared with 1137 that rose. A total of 85 shares remained unchanged. The breadth was extremely weak earlier in the day.

The total turnover on BSE amounted to Rs 4742 crore, slightly higher than Rs 4733.49 crore on Wednesday, 4 May 2010.

Among the 30-share Sensex pack, 15 declined while the rest gained.

High beta infrastructure stocks dropped. Reliance Infrastructure (down 2.59%), Larsen & Toubro (down 1.24%), Bharat Heavy Electricals (down 0.44%), and Punj Lloyd (down 1.13%) edged lower.

India's largest dam builder by sales Jaiprakash Associates lost 4.67% to Rs 133.60 and was the top loser from the Sensex pack. The stock slumped as the initial public offer of its unit Jaypee Infratech got lukewarm response from investors and was subscribed 1.24 times. The bidding for the issue got over on Tuesday.

Index heavyweight Reliance Industries (RIL) was flat at Rs 1020.75. The stock hit a high of Rs 1023 and low of Rs 1000 in volatile trade. RIL said 28 April 2010 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.

Meanwhile, the Supreme Court may pronounce a judgement on the gas dispute between Reliance Industries (RIL) and Reliance Natural Resources (RNRL) shortly as the Chief Justice of India KG Balakrishnan retires on 11 May 2010. The RIL-RNRL gas dispute has been heard by a three-member Supreme Court bench led by the Chief Justice of India. The tussle relates to supply of gas to Reliance Natural Resources (RNRL) from the D6 block in the Krishna-Godavari eastern offshore fields of Mukesh Ambani-led Reliance Industries (RIL).

The dispute landed in the Supreme Court after seeing many twists and turns in lower courts. The two sides - RIL and RNRL had approached Supreme Court challenging a decision by the Bombay High Court. The Bombay High Court, in its order dated 15 June 2009 had directed that RNRL will get assured supply of 28 mmscmd of gas from RIL's Krishna-Godavari basin for 17 years at $2.34 per million British thermal units (mBtu). The gas price was 44.28% lower than the price fixed by the government for gas sale from the RIL block in the KG basin at $4.2 mBtu.

Shares of oil exploration firms slipped after crude-oil futures fell 4% on Tuesday as fresh worries over Greece's ability to meet provisions of a fiscal-aid package boosted the dollar and slashed equities. Cairn India (down 2.75%), Oil India (down 0.11%), and ONGC (down 1.05%), declined. Fall in crude oil prices would result in lower realizations from crude sales for oil exploration firms.

The sharp slide in crude oil prices, however, lifted PSU OMCs. HPCL (up 0.72%), BPCL (up 2.25%) rose. But, Indian Oil Corporation fell 0.96%. Fall in crude oil prices will reduce under-recoveries of state-run oil firms on domestic sale of petrol, diesel, LPG and kerosene at controlled prices.

Light, sweet crude-oil futures for June 2010 delivery settled down $3.45 at $82.74 a barrel on Tuesday, snapping a four-day rally. The settlement price was the lowest since only 27 April 2010, but the single-day drop was the biggest since 4 February 2010.

Telecom stocks saw divergent trend. India's largest cellular services provider by sales Bharti Airtel gained 2.66% to Rs 297.50 and was the top gainer from the Sensex pack. India's second largest listed cellular services provider by sales Reliance Communications lost 1.05%.

Meanwhile, the provisional winning price for the pan-India licence in the ongoing 3G auction in the subcontinent has crossed Rs 10700 crore mark, higher than the core reserve price of Rs 3500 crore fixed by the Government of India.

Most metal and mining stocks were off the day's lows, with Hindalco Industries (up 1.44%), Sesa Goa (up 3.33%), Steel Authority of India (up 0.45%) staging a strong intraday rebound. Jindal Saw (down 0.87%), Tata Steel (down 0.92%), National Aluminium Company (down 0.42%), Sterlite Industries (down 3.28%), Hindustan Zinc (down 2.14%), though in the red were off the day's lows.

Interest rate sensitive banking shares declined on fears the Reserve Bank of India may resort to further monetary tightening to counter soaring inflation. India's second largest private sector bank by net profit HDFC Bank fell 1.29% to Rs 1915.35 after its ADR lost 4.66% on Tuesday. Nevertheless, the stock came off the day's low of Rs 1883.

India's largest private sector bank by net profit ICICI Bank slipped 1.27% to Rs 903.70 after its ADR lost 7.06% on Tuesday. But, the stock came off the day's low of Rs 885.

India's biggest commercial bank in terms of branch network State Bank of India rose 0.18% to Rs 2,285.30, off the day's low of Rs 2,245. The bank has reportedly extended a special home loan scheme by two months till 30 June 2010. SBI's teaser rates scheme was to originally expire on 31 March 2010, but was later extended by a month to 30 April 2010.

Teaser rate scheme provides concessional home loans to borrowers in the initial years, after which the interest rate increases to align with prevailing market rates.

India's largest mortgage lender by total income Housing Development Finance Corporation slipped 0.63%. The company's board on 3 May 2010 approved a 5-for-1 stock-split.

Select auto shares rose on strong monthly sales figures for April 2010. India's largest tractor maker by sales Mahindra & Mahindra rose 0.85%. The company's total vehicle sales rose 13% to 26,043 units in April 2010 over April 2009. The company announced the monthly sales data during trading hours on Monday, 3 May 2010.

India's largest small car maker by sales Maruti Suzuki India rose 1.39%. Total sales rose almost 30% to 93,058 units in April 2010 over April 2009. Domestic sales rose 23.4% to 80,034 units. The data was unveiled on 1 May 2010.

India's top truck maker by sales Tata Motors lost 0.78% to Rs 835.65, off the day's low of Rs Rs 816.55. The stock had hit a 52-week high of Rs 882.20 on 3 May 2010. Total sales including exports of commercial and passenger vehicles jumped 52% to 57,202 vehicles in April 2010 over April 2009. Domestic sales rose 49% to 54,065 units. Exports rose 148.8% to 3,137 units.

IT pivotals recovered from early lows after the rupee weakened to its lowest level in over a month against the dollar. A weak rupee boosts revenues of IT firms in rupee terms as the sector derives a lion's share of revenue from exports. The partially convertible rupee was at 44.93/94 per dollar, weaker than its close of 44.61/62 on Tuesday. The rupee struck a low of 44.9850 in intraday trade, its lowest since 31 March 2010.

India's third largest software services exporter Wipro rose 1.7% to Rs 671.60, recovering sharply from day's low of Rs 642.10. India's largest software services exporter TCS rose 0.64% at Rs 765.90, rebounding from day's low of Rs 748. India's second largest software services exporter Infosys gained 0.78% to Rs 2687.80, off day's low of Rs 2609.25.

Realty stocks fell on fears the Reserve Bank of India may resort to further monetary tightening to counter soaring inflation. inflation. Omaxe, HDIL, Indiabulls Real Estate and Unitech fell by between 0.21% to 2.81%.

Pharma shares rose on defensive buying. Glaxosmithkline Pharmacauticals, Cipla, Ranbaxy Laboratories, Dr Reddy's Laboratories, Piramal Healthcare and Lupin rose by between 0.25% to 4.24%.

India's largest cement producer by sales ACC rose 0.75%. The company's cement production declined to 1.79 million tonne in April 2010 from 1.84 million tonne in April 2009. Cement dispatches declined to 1.79 million tonne in April 2010 from 1.80 million tonne in April 2009.

Sugar stocks declined on weak global sugar prices. New York front-month raw sugar futures touched a one-year low of 14.58 cents per lbs on Tuesday, down 2.6%, on investor selling pressured by a stronger dollar and a lack of cash buying. Bajaj Hindusthan, Shree Renuka Sugars, Balrampur Chini Mills fell by between 0.17% to 1.31%.

Cals Refineries clocked the highest volume of 6.24 crore shares on BSE. Filmcity Media (1.41 crore shares), Reliance Natural Resources (1.38 crore shares), Birla Power Solutions (1.27 crore shares) and S Kumars Nationwide (73.72 lakh shares) were the other volume toppers in that order.

ARSS Infra clocked the highest turnover of Rs 184.63 crore on BSE. Tata Steel (Rs 177.84 crore), Sesa Goa (Rs 157.30 crore), Sterlite Industries (Rs 104.13 crore) and JSW Steel (Rs 96.31 crore) were the other turnover toppers in that order.