Metal shares lead 4.5% Sensex slide

The market tumbled below 17,000 level as the Greece debt crisis made investors edgy about its impact on global economic recovery. Notwithstanding the assurance of funds from International Monetary Fund (IMF) to Greece, debt crisis haunted global markets and impacted other emerging markets including India in the form of high volatility.

FII outflow in May 2010 totaled Rs 981.90 crore, while inflow in the calendar year 2010 totaled Rs 29,023.90 crore (till 5 May 2010).

Fears of a fresh credit crunch in Europe threw global markets into disarray last week. European Central Bank President Jean-Claude Trichet on Thursday, 6 May 2010, rejected calls for more aggressive action to avert fiscal contagion in Southern Europe, shaking investors as he suggested the euro zone's monetary-policy makers have done all they can for now. Trichet offered only rhetorical support for Greece and Portugal, the two countries most at risk from high indebtedness and stagnant economic growth.

Back home, inflation based on food prices rose 16.04% in the year through 24 April 2010, slower than previous week's annual rise of 16.61%, the latest government data showed. Fuel prices inflation remained at elevated level. The fuel price index rose 12.69% in the year through 24 April 2010, same as a week ago. The primary articles index rose 13.93% in the year through 24 April 2010.

The fourth quarter corporate results announced so far have been fairly encouraging. The combined net profit of a total of 1290 companies rose 29.40% to Rs 42,157 crore on 29.10% rise in sales to Rs 3,91,885 crore in the quarter ended March 2010 over the quarter ended March 2009.

Meanwhile, business at Indian service companies rebounded to a 21-month-high in April 2010 on new business and high input prices. The HSBC Markit Business Activity Index, based on a survey of 400 firms, rose to 62.1 in April, its highest since July 2008, and compared with 58.1 in March 2010.

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.

The BSE Sensex tumbled 789.60 points or 4.49% to 16769.11 in the week ended Friday, 7 May 2010. The S&P CNX Nifty slumped 259.95 points or 4.92% to 5,018.05 in the week.

The BSE Mid-Cap index fell 4.87% and the BSE Small-Cap index fell 5.40% in the week. Both these indices underperformed the Sensex.

The key benchmark indices ended a choppy trading session lower on Monday, 3 May 2010, as weak global stocks weighed on investors' sentiment. The BSE 30-share Sensex fell 172.63 points or 0.98% to 17,386.08. The S&P CNX Nifty declined 55.25 points or 1.05% to 5,222.75.

The key benchmark indices slumped on Tuesday, 4 May 2010, extending losses for the second straight day, as world stocks fell. The BSE 30-share Sensex fell 248.94 points or 1.43% to 17,137.14. The S&P CNX Nifty fell 74.25 points or 1.42% to 5,148.50.

The key benchmark indices extended losses for the third straight day on Wednesday, 5 May 2010, on continued worries over fiscal health of euro zone nations. Nevertheless, the market staged a strong intraday rebound after an initial sharp slide. The BSE 30-share Sensex fell 49.18 points or 0.29% to 17,087.96. The S&P CNX Nifty declined 23.60 points or 0.46% to 5,124.90.

The key benchmark indices ended a choppy trading session lower on Thursday, 6 May 2010, as debt worries in the euro zone weighed on investors' sentiment. The barometer index BSE Sensex fell below the psychological 17,000 level after flirting with that level throughout the day. The BSE 30-share Sensex fell 100.43 points or 0.59% to 16,987.53. The S&P CNX Nifty declined 34.05 points or 0.66% to 5,090.85.

The key benchmark indices extended losses on the last trading day of the week on Friday, 7 May 2010 as euro zone debt worries rattled global stocks. Except the Oil & Gas index, all the other sectoral indices on the BSE closed in the red. The BSE 30-share Sensex fell 218.42 points or 1.29% to 16,769.11. The S&P CNX Nifty declined 72.80 points or 1.43% to 5018.05.

All the Sensex stocks, barring Reliance Industries, ended the week in negative zone. Index heavyweight Reliance Industries (RIL) inched up 0.13%. A three member Supreme Court bench on Friday, 7 May 2010, ruled 2-1 in favour of the company on gas dispute with Reliance Natural Resources (RNRL). The court ordered the two feuding firms to renegotiate a gas contract which was first drawn up in 2005 as a part of a family settlement.

Supreme Court judge P Sathasivam declared that the brothers' MoU was not binding and that RIL and RNRL must renegotiate the gas contract in six weeks. The judge said that the government owned all the gas assets till they reached the users. He added that Production Sharing Contract (PSC) will override all the prior agreements and the MoU between the Ambani brothers is not binding. He also said that it was not feasible to restrain the government's power on gas and it is a natural asset which belongs to the people.

Justice B.Sudarshan Reddy then delivered dissent to Justice Sathasivam's verdict. At the end of both verdicts, the Chief Justice of India KG Balakrishnan supported Justice Sathasivam.

Earlier, 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 Anil Dhirubhai Ambani-controlled Reliance Natural Resources slumped 24.69%.

Metal shares bore the major brunt of last week's sell-off with the barometer for metal shares, the BSE Metal index slumping 9.64% to 17,664.76. Sterlite Industries (down 13.77%), Tata Steel (down 9.72%), Hindalco Industries (down 8.43%), were the major metal shares that tumbled.

Reliance Infrastructure (down 13.77%), Jaiprakash Associates (down 11.80%), DLF (down 8.42%), ICICI Bank (down 7.79%) and HDFC Bank (down 7.24%), were some of the major Sensex losers.

India's largest dedicated mortgage lender by market capitalisation Housing Development Finance Corporation (HDFC) fell 3.21%. Net profit rose 26.30% to Rs 926.38 crore on 8.10% decline in total income to Rs 2,899.32 crore in Q4 March 2010 over Q4 March 2009. HDFC's board approved a 5-for-1 stock split.

India's largest truck maker by sales Tata Motors fell 12.64%. Its total sales including exports of commercial and passenger vehicles jumped 52% to 57,202 vehicles in April 2010 over April 2009.

Tata Motors' domestic sales rose 49% to 54,065 units. Exports rose 148.8% to 3,137 units. Commercial vehicle sales in the domestic market rose 36% to 30,963 units. Passenger vehicle sales jumped 70% to 24,902 units. Passenger vehicle sales include distribution of Fiat cars by Tata Motors. Sales of the ultra-cheap car Tata Nano totaled 3,525 units in April 2010.