Sensex slips as auto stocks crash

Today's major news

Fortis Healthcare exits race for Parkway; the stock ends 2.93% up

Dabur India's Q1 net profit up 11% yoy; the stock closes 3.73% lower

Sterlite Industries Q1 net profit soars 272% yoy; the stock ends 0.20% higher



Global signals

European shares edged lower on Monday as pharmaceuticals fell in the early trades. FTSE 100 was trading on a flat note.

All the major Asian markets ended in the positive territory expect Jakarta Composite and Straits Times. SGX Nifty closed 27 points lower.

The US stock index futures point out a slightly lower opening at the Wall Street on Monday. As the investors are eagerly waiting for the earnings of firms like Legg Mason, Masco, and Range Resources. The investors will also keep an eye on data for the month of June - the Chicago Fed National Activity Index and new home sales.

Indian indices

Despite of the firm Asian markets and solid US corporate earnings coupled with positive outcome from European banks' stress test results, the domestic indices edged lower on Monday. The Indian bourses broke a three-day winning run owing to disappointing earnings by Maruti Suzuki along with the interest rate sensitive sectors like auto, realty and banking that took severe beating ahead of the Reserve Bank of India (RBI)’s policy review slated tomorrow (July 27, 2010).

The markets are anxiously awaiting RBI's response tomorrow. It is expected that the RBI may raise repo and reverse repo rates by 25 basis points (bps), while a 25-50 bps hike in the cash reserve ratio (CRR) is also expected.

The Sensex opened 75 points lower at 18056. The index soon turned positive for brief period to touch the day's high of 18194. However, the Sensex pared gains and started drifting lower. In the afternoon session, the index expanded its losses as the European stocks erased its initial gains and turned negative. The Sensex touched the day's low of 17994 in its late trade as selling intensified in the rate sensitive sectors like auto, banking and realty. Maruti Suzuki, Hero Honda and State Bank of India dragged the Sensex down.

At the finishing line, the Sensex managed to hold the 18000 levels to shut at 18020, 111 points lower. The Nifty closed 31 points lower at 5419.

Market Outlook: For tomorrow, on the earnings front, we have heavyweights like Reliance Industries, Larsen & Toubro, and Hindustan Unilever declaring their quarterly numbers. Events to watch out in the US tonight will be the new home sales data.

Market sentiment

The market breadth was negative as declining stocks outdid the advancing ones. Of the 3,008 shares traded on the BSE, 1,824 shares declined whereas 1,090 shares advanced. Ninety-four shares remained unchanged

Sectoral & stock screening

Out of 13 sectoral indices, only four sectors managed to close higher. BSE TECk gained the most by 0.61% and BSE information technology (IT) surged by 0.59%. The sectors that fell the most were BSE Auto, BSE Realty and BSE Bankex by 3.25%, 2.13% and 0.79% respectively.

Among 'A' group stocks' front, IFCI was the topper, up by 3.79%, followed by Lupin that advanced by 3.59% and Mahindra & Mahindra Financial that rose by 3.16%. Among losers, Maruti Suzuki slid the most by 12.31% on disappointing Q1 results, followed by Indian Bank that fell by 11.79% on poor Q1 results and Hero Honda that shed 7.46%.

Viewing volumes

Industrial finance company - IFCI was the most actively traded share with over 1.18 crore shares changing hands on the BSE, followed by India's largest hospital chain - Fortis Healthcare (0.36 crore shares), India’s second largest developer - Unitech (0.34 crore shares), engineering & construction major - Jaiprakash Associates (0.33 crore shares) and India's largest non-ferrous metals and mining company - Sterlite Industries (0.26 crore shares).