Market hits two-month low as CBI arrests bank officials on bribery charges

The key benchmark indices tumbled in late trade, with financial and realty stocks witnessing a sharp sell-off on television reports of a multi-crore housing loan scandal. But, news reports after trading hours suggested it was a case of bribery of bank officials for arranging corporate loans. The barometer index BSE Sensex and the 50-unit S&P CNX Nifty settled at their lowest closing levels in more than two months. The Central Bureau of India (CBI) has arrested top officials from some leading PSU banks and public/private financial institutions. The CBI said that the officers of Bank of India, Central bank of India, Punjab National bank and LIC HF were receiving illegal gratification for facilitating loans. Executives at Money Matters Financial Services were also arrested for broking bribery deals.



Five separate cases have been registered and investigations are on, the leading investigation agency said in a press conference. It hasn't put up a figure to the size of the scam. The biggest arrests included the CEO of LIC Housing Finance.

The market breadth turned negative after the reports of loan scam, in contrast with a strong breadth earlier in the day. The BSE 30-share Sensex lost 231.99 points or 1.18%, off close to 375 points from the day's high and up close to 85 points from the day's low. Volatility was high as traders rolled over positions in the derivatives segment from the near-month November 2010 series to December 2010 ahead of the expiry of the November 2010 futures & options (F&O) contracts on Thursday, 25 November 2010.

The key benchmark indices edged higher at the onset of the trading session tracking recovery in Asian stocks as concern over Korean tensions and Chinese policy tightening eased a little. The market slipped into the red for a brief period later. The market regained positive zone in morning trade.

The key benchmark indices surged to fresh intraday highs in mid-morning trade. The market pared gains in early afternoon trade. The Sensex once again slipped into the red later. The market regained positive zone in afternoon trade. The market once again slipped into the red in mid-afternoon trade. The market slumped in late trade amid reports of a multi-crore loan scandal.

NSE's volatility index, India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, rose 6.10% to 24.68. The index had jumped 16.71% to 23.26 on Tuesday, 23 November 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.

Year-end profit taking may continue to weight on the the domestic bourses in the near term. A number of stocks have clocked decent to strong gains this year. Funds based in US and Europe follow calendar year as their accounting year. The market has lost ground soon after hitting a record closing high early this month.

Congress President Sonia Gandhi, today, 24 November 2010, called opposition parties' attacks on the prime minister over an alleged corruption scam "shameful", the strongest backing yet for Manmohan Singh. Sonia Gandhi's comments are seen putting to rest any speculation of Singh having to resign. The Congress President said the party always cracked down on corruption when it was discovered.

The Prime Minister has been called to defend himself with the Supreme Court over his alleged failure to swiftly act on a complaint against his now-sacked telecoms minister. Parliament has also remained shut for the past two weeks over calls by the opposition for a joint parliamentary investigation into the telecom scandal.

Meanwhile, the Supreme Court has deferred giving its view in a case over the prime minister's role in investigating allegations of corruption in the sale of telecoms licences. A representative of Singh has defended the prime minister in court, arguing he did nothing wrong. Singh is not on trial and cannot be charged with any crime, rather the court wants to understand the prime minister's role in handling the request.

European markets turned modestly higher Wednesday after an unexpectedly strong reading for the Ifo Institute's German business-climate index. The index posted an unexpected rise to 109.3 in November from 107.6 in October, while economists had expected it to remain flat. The key benchmark indices in UK, Germany and France were up by between 0.49% to 0.92%. But, markets in peripheral Europe remained lower, with Ireland's ISEQ droping 0.7% to 2,644.67.

Credit rating agency Standard & Poor's on Tuesday, 23 November 2010, said it cut its long-term sovereign credit rating on Ireland to A from AA-. It also cut its short-term rating on Ireland. The new ratings reflect the agency's view that the Irish government appears likely to borrow "over and above" the agency's previous projections to fund further bank capital injections. The Irish government will reportedly take a majority stake in lender Bank of Ireland, as it struggles to try to restore credibility to the country's battered banking sector and economy.

South Korean stocks fell on Wednesday morning, reacting to the exchange of shell fire with the North, but they soon moved off their lows on a view that an all-out war between the two nations is unlikely. South Korea's Kospi index plunged 1.9% in opening trades but later recovered some ground to close just 0.15% down by the end of the day.

Hong Kong recovered from Tuesday's 2.7% drop in the Hang Seng Index as concern over Korean tensions and Chinese policy tightening eased a little and as mainland Chinese shares moved higher. The Hang Seng index ended 0.56% higher. In China, the Shanghai Composite index ended 1.12% higher. Banks led gains in China on bargain-buying, while Industrial & Commercial Bank of China's successful cash call lifted sentiment

In other Asian markets, the key benchmark index in Singapore and Malaysia were up by between 0.32% to 0.34%. The key benchmark indices in Japan, Indonesia and Taiwan were down by between 0.38% to 0.84%.

US index futures moved between gains and losses. Trading in US index futures indicated that the Dow could gain 37 points at the opening bell on Wednesday, 24 November 2010. The US financial markets are closed for the Thanksgiving Day holiday on Thursday, 25 November 2010, while they are only open for a half day on Friday, 26 November 2010.

The BSE 30-share Sensex was down 231.99 points or 1.18% at 19,459.85, its lowest closing level since 16 September 2010. The Sensex fell 315.92 points at the day's low of 19,375.92 in late trade. The Sensex jumped 143.73 points at the day's high of 19,835.57 in mid-morning trade.

The S&P CNX Nifty was down 69 points or 1.16% at 5,865.75, its lowest closing since 16 September 2010.

The BSE Mid-Cap index fell 1.11% and the BSE Small-Cap index fell 0.56%. Both these indices outperformed the Sensex.

Most of the sectoral indices on BSE fell. The BSE FMCG index (up 0.24%), Auto index (up 0.05%), Consumer Durables index (down 0.24%), Healthcare index (down 0.27%), Oil & Gas index (down 0.57%), Power index (down 0.86%), Metal index (down 0.95%) and IT index (down 1.06%) outperformed the Sensex.

The BSE Bankex (down 2.94%), Realty index (down 2.88%), PSU index (down 1.84%) and Capital Goods index (down 1.21%) underperformed the Sensex.

The market breadth, indicating the health of the market, turned negative in late trade. On BSE, 1696 shares fell while 1288 shares rose. A total of 101 shares remained unchanged. The breadth was strong earlier in the day.

BSE clocked a turnover of Rs 4,389 crore, lower than Rs 4,775.57 crore on Tuesday, 23 November 2010.

Among 30 Sensex shares, 25 fell and rest rose.

India's largest tractor maker by sales Mahindra & Mahindra jumped 3.23% to Rs 784.25. Mahindra & Mahindra on Tuesday, 23 November 2010, signed a deal to buy a 70% stake in South Korea's Ssangyong Motor $463 million. The total cost of acquisition of $463 million comprises $378 million in investment in equity of Ssangyong and $85 million in corporate bonds. Ssangyong Motor makes premium sports utility vehicles and recreational vehicles.

Among other auto stocks, Hindustan Motors, TVS Motor Company, Ashok Leyland, and Tata Motors, rose by between 0.07% to 8.25%. But, Maruti Suzuki India, Bajaj Auto and Hero Honda Motors fell by between 1.02% to 1.42%.

India's largest listed telecom operator by sales Bharti Airtel rose 0.76% to Rs 331.65 after a well known foreign brokerage upgraded the stock to 'buy' from 'neutral' and raised its target price on the stock to Rs 430.

India's largest private steel maker by sales Tata Steel rose 0.54% to Rs 615.35 after a prominent foreign brokerage lifted the steelmaker to 'outperform' from 'underperform', saying Asian steel prices and the company's India margins can sustain at current levels through fiscal year 2012.

Index heavyweight Reliance Industries (RIL) fell 0.08% to Rs 994.10, coming off day's high of Rs 1015.90 in a falling market. The stock hid risen earlier after a foreign brokerage upgraded the stock to 'neutral' from 'underweight' with a target price of Rs 1,084 a share. RIL has 11.53% weightage in the Sensex.

Shares of LIC Housing Finance (down 18.32%) and Central Bank of India (down 8.02%) plunged in late trade after media reports suggested that the Central Bureau of Investigation (CBI) had questioned the top officials of the two entities in connection with an alleged multi-crore fake home loans scandal.

Shares of many other housing finance firms tumbled amid reports of a multi-crore housing loan scandal. GIC Housing Finance (down 5.11%), Dewan Housing Finance (down 4.88%) and HDFC (down 2.52%), tumbled.

Among banking shares, Canara Bank, Bank of India, Bank of Baroda, Federal Bank, State Bank of India, Punjab National Bank, Union Bank of India, ICICI Bank, Axis Bank, HDFC Bank and Kotak Mahindra Bank fell by 0.46% to 7.23%.

Realty shares also tumbled on reports of a multi-crore housing loan scandal. Orbit Corporation, HDIL, Parsvnath Developers, Indiabulls Real Estate, DLF, Ansal Properties, Ackruti City, Anant Raj Industries, Peninsula Land, Sobha Developers, Phoenix Mills and Mahindra Lifespace Developers were down by 0.57% to 5.28%.

Most capital goods shares witnessed selling pressure. ABB, Siemens, BEML, BHEL and Larsen & Toubro fell by 0.32% to 2.72%.

IT stocks fell on lingering worries over euro-zone sovereign debt. Europe is the second biggest market for Indian IT firms. Infosys, Wipro and TCS fell by between 0.41% to 2.12%.

Airline stocks rose. Low-cost air carrier SpiceJet jumped 3.79%. India's largest private sector air carrier by market capitalisation Jet Airways (India) rose 1.79%. Private air carrier Jet Airways India's international passenger traffic in October grew 18%, while its domestic passenger traffic rose 11%. Jet Airways, which currently operates a fleet of 91 aircraft, has a market share of 26.2% in India.

But, another private sector air carrier, Kingfisher Airlines fell 1.85% reversing initial gains. The company's chairman Vijay Mallya said it will raise $250-300 million through global depository receipts (GDR) by January next year.

Karuturi Global clocked the highest volume of 2.03 crore shares on BSE. Cals Refineries (1.73 crore shares), Power Grid Corporation of India (70.94 lakh shares), Alok Industries (59.81 lakh shares) and IFCI (51.57 lakh shares) were the other volume toppers in that order.

LIC Housing Finance clocked the highest turnover of Rs 308.74 crore on BSE. State Bank of India (Rs 261.25 crore), Coal India (Rs 113.69 crore), Orchid Chemicals (Rs 96.19 crore) and Tata Steel (Rs 88.69 crore) were the other turnover toppers in that order.