Fake housing loan scam hit markets in late trade

The domestic indices slid after news emerged that CBI conducted several raids in context of the multi crore fake housing loan scandal involving LIC Housing Finance. There was a heavy sell-off in banking and realty stocks.

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Indian indices

The domestic market witnessed a sharp fall today with huge selling coming in the last half an hour of trade as the Central Bureau of Investigation (CBI) conducted raids in metro cities like Mumbai, Delhi, Kolkata and Chennai in context of the multi crore fake housing loans scandal. Fears of a likely financial scam triggered a huge sell-off in banking as well as realty companies' shares, leading the representative sectoral indices on the BSE to crash by around 3% each. There were reports that the CBI (economic offences wing) raided LIC Housing Finance - promoted by LIC (LIC has 36% stake in the company) - on November 23. The CBI is investigating a case of unjustified issuance of loan to one of the builders and misappropriation of funds at LIC Housing.

Capital goods, technology and cement companies' shares along with State Bank of India, Oil & Natural Gas Corporation (ONGC), Housing Development Finance Corporation (HDFC), HDFC Bank, SAIL and Reliance Communications underwent selling pressure. In the mid-cap space, TVS Motors, Gujarat Flourochem, Akzo Nobel, Apollo Tyres and Great Offshore gained in the range of 4-8% while Money Matters plunged 19% (on talks of a raid by CBI officials).

The Sensex began the session in the morning 43 points higher at 19735. The index held on to its gains through out the morning session. It hit the day's high of 19836 in the morning session. The 30 share bellwether Sensex continued to trade in the green in the afternoon session holding on its morning gains. But in the last hour of trade it slipped drastically to hit the day's low of 19376 as banking and realty stocks fell sharply on news of the fake housing loan scam.

At the finishing, the Sensex shut at 19460, lower by 232 points. The Nifty ended at 5866, down by 68 points.

Bond & Rupee Update: The Indian rupee opened at 45.64 per dollar versus 45.56. The bond market is expected to be higher on global political uncertainty, Irish debt concerns and absence of any government auction this week.

Market sentiment

The market breadth was weak as declining stocks outnumbered the advancing ones. Of the 3,085 stocks on the BSE, 1,676 declined to 1,253 rising while 156 stocks remained unchanged.

Sector and stock screening

Almost all of the 13 sectoral indices ended the session in the negative except BSE Fast Moving Consumer Goods and BSE Auto indices that were flat or up marginally up by 0.24% and 0.05% respectively. The BSE Bankex and the BSE Realty index were hit the most; they slid 2.94% and 2.88% respectively after the CBI exposed the multi crore fake housing loan scam. The BSE PSU, BSE Capital Goods (CG) and BSE Information Technology (IT) indices slid over 1% each.

Among 'A' group stocks - TVS Motors was the biggest gainer as it surged by 8.25%, followed by Apollo Tyres that rose 4.58% and Videocon Industries (up 3.25%). Among the losers were LIC Housing Finance (down 18.32%), DB Realty (down 16.23%) and Central Bank of India (down 8.02%).

Viewing volumes

The government's power utility - Power Grid Corporation was traded the most, with over 0.70 crore shares changing hands on the BSE, followed by industrial finance company - IFCI (0.51 crore shares), leading two-wheeler manufacturer - TVS Motors (0.41 crore shares), PSU chemicals & fertilizers firm - Rashtriya Chemicals (0.40 crore shares) and India's second largest real estate developer - Unitech (0.36 crore shares).

Global signals

European shares rose in early trade today, recovering from a six week closing low hit in the previous session, with mining stocks taking the lead tracking a recovery in metal prices.

Asian indices closed mixed. The Hang Seng, Shanghai Composite and Straits Times ended in the green, while the Nikkei, Jakarta Composite and the Kospi closed in the negative territory.

The US stock index futures point to a lower opening on the Wall Street. The investors will keep an eye on durable goods orders, personal income and outlays, jobless claims, and consumer sentiment data.

Market Outlook: The market will track the durable goods order, personal income and outlays, jobless claims, and consumer sentiment data to be announced in the US tonight.