Market slumps on across-the-board sell-off

The market plummeted last week as traders locked gains, while weak global markets kept the sentiment subdued. Selling pressure intensified in last two trading sessions of the week after key indices in China and South Korea plunged. Sentiment also remained weak as euro zone debt woes resurfaced.



The BSE Sensex slumped 848.07 points or 4.04% to 20,156.89 in the week ended Friday, 12 November 2010. The S&P CNX Nifty tumbled 240.8 points or 3.81% to 6,071.65. The BSE Mid-Cap index fell 2.84% and the BSE Small-Cap index fell 1.14%. Both these indices outperformed the Sensex.

China's Shanghai Composite slumped over 5% on Friday, 12 November 2010 on fears Chinese authorities will again attempt to slow the growth of the economy, fueling speculation that the global economy will likely experience slower-than-expected growth ahead. This followed a report in the state-run newspaper that China has limited investment by foreign companies in the domestic real-estate market to commercial property that must be designated for their own use.

South Korean bourses corrected sharply on Thursday, 11 November 2010 due to a large-scale foreign fund selling, which was being attributed to failure of US President Barack Obama and his Korean counterpart to reach a free-trade accord.

Worries over sovereign debt levels in Europe also prompted investors to scale down exposure in riskier assets like equities. According to reports, European Union member states are checking to see if Ireland needs financial aid from Europe's 750 billion-euro rescue fund. Investors continue to flee Irish government bonds on fears about the country's solvency, driving yields sky-high. Ireland's bond yields or the amount of interest that would be given to bond holders hit a high of 8.915%, from 6.81% two weeks ago. The yield was an astounding 650 basis points above German bonds, suggesting Ireland is seen as increasingly risky.

Back home, poor industrial production data also dragged the bourses lower. India's industrial output in September 2010 rose at a much slower-than-expected 4.4% from 8.2% a year ago, government data released on Friday, 12 November 2010 showed. The September IIP data is the lowest in 15 months. Meanwhile, the index of industrial production for August was revised upwards from 5.6% to 6.9%.

Foreign institutional investors (FIIs) inflow in November 2010 totaled Rs 17,158 crore (till 10 November 2010). FIIs had bought equities worth Rs 28,562.90 crore in October 2010. FII inflow in the calendar year 2010 totaled Rs 1,30,081.10 crore (till 10 November 2010).

The key benchmark indices started the week, Monday 8 November 2010 on a subdued note as investors locked in profits after market scaled record closing high on special one hour trading session to mark the beginning of Samvat year 2067 on Friday, 5 November 2010. The BSE 30-share Sensex fell 152.58 points or 0.73% to 20,852.38. The S&P CNX Nifty fell 39.25 points or 0.62% to 6,273.20. The Nifty hit a high of 6,335.90.

The key benchmark indices eked out decent gains in a choppy trading session on Tuesday, 9 November 2010, tracking firm European stocks and as US index rose. Consumer durables, realty, FMCG and IT stocks rose. But, index heavyweight Reliance Industries edged lower in volatile trade. The market breadth was strong. The BSE 30-share Sensex rose 80.10 points or 0.38%, to 20,932.48. The S&P CNX Nifty rose 28.35 points or 0.45% to 6,301.55.

The key benchmark indices edged lower in a choppy trading session on Wednesday, 10 November 2010, tracking weak European stocks as sovereign debt problems in Europe resurfaced and after China's further monetary tightening. The BSE 30-share Sensex fell 56.77 points or 0.27%, to 20,875.71. The S&P CNX Nifty fell 25.85 points or 0.41% to 6,275.70.

A broad-based sell-off was witnessed in key benchmark indices on Thursday, 11 November 2010, as investors remained cautious ahead of the outcome of meetings of G-20 world leaders in South Korea on Thursday and Friday. US index futures edged lower. The BSE 30-share Sensex fell 286.62 points or 1.37%, to 20,589.09. The S&P CNX Nifty fell 81.45 points or 1.3% to 6,194.25.

The key benchmark indices tumbled on Friday, 12 November 2010, as a sell-off in Chinese stocks dragged world markets lower that day. Investors fretted Beijing will take new steps to cool the world's No. 2 economy and global leaders meeting in South Korea papered over currency tensions. In domestic news, industrial output rising lower than forecast in the month of September also dampened sentiment. The BSE 30-share Sensex fell 432.20 points or 2.10%, to 20,156.89. The S&P CNX Nifty declined 122.60 points or 1.98% to 6,071.65.

Among the 30-share Sensex, 28 shares fell.

India's largest commercial lender by branch network State Bank of India (SBI) tumbled 13.16% to Rs 3030.4 on reporting a lower-than-expected Q2 result. It was the biggest Sensex loser in the week ended Friday, 12 November 2010. On a consolidated basis, SBI's net profit fell 22.52% to Rs 2363.95 crore on 14.57% increase in total income to Rs 37925.44 crore in Q2 September 2010 over Q2 September 2009. As State Bank of Indore was merged with SBI with effect from 26 August 2010, the Q2 September 2010 are not comparable with the corresponding period of the previous year. The bank announced Q2 result after market hours on Monday, 8 November 2010.

Realty developer DLF was the second biggest Sensex loser. The stock slumped 8.09% to Rs 327.55. A well-known foreign brokerage downgraded the stock to 'underperform' from 'neutral', citing continued weak operating performance in the September quarter. On a consolidated basis, DLF's net profit fell 4.9% to Rs 418.38 crore on 35.3% increase in net sales to Rs 2369.02 crore in Q2 September 2010 over Q2 September 2009.

DLF's consolidated net profit fell as the company faced rising interest rates and increases in land and construction costs. A rapidly-growing economy helped DLF's commercial office and retail segments and it expects housing projects to yield good returns. The firm is concerned though with the recent sharp increase in commodity prices that could bump up construction costs.

India's largest listed telecom operator by sales Bharti Airtel corrected 7.10% to Rs 306.05. It was the third biggest Sensex loser. Bharti Airtel's consolidated net profit fell 26.59% to Rs 1661.20 crore on 46.50% increase in consolidated total income to Rs 15231.90 crore in Q2 September 2010 over Q2 September 2009. Bharti Airtel said average revenue per user (ARPU) in India fell 20% to Rs 202 in Q2 September 2010 over Q2 September 2009.

Drug maker Cipla tumbled 6.58% to Rs 329.9. It was the fourth biggest Sensex loser. Cipla's net profit declined 4.62% to Rs 263.01 crore on 15.22% rise in net sales to Rs 1579.88 crore in Q2 September 2010 over Q2 September 2009. The result was announced after market hours on Thursday, 11 November 2010. Cipla said operating margins and profits were squeezed on account of appreciation of the Indian rupee by 4-5% year-on-year and increased overheads at its Indore special economic zone (SEZ).

India's second largest listed telecom operator by sales Reliance Communications was the fifth biggest Sensex loser. It fell 6.44% to Rs 169.95.

Bharat Heavy Electricals (down 5.96%), ONGC (down 5.25%), Larsen & Toubro (down 4.18%), Hindalco Industries (down 4.07%), Jindal Steel & Power (down 4.03%) and Maruti Suzuki India (down 3.86%), were the other major Sensex losers.

India's largest private sector bank by market capitalisation ICICI Bank slipped 5.29% to Rs 1202.5. On a consolidated basis, India's largest private sector lender by market capitalisation's net profit rose 21.87% to Rs 1394.94 crore on 0.90% decline in total income to Rs 14464.55 crore in Q2 September 2010 over Q2 September 2009. During the quarter, ICICI Bank received approval of Reserve Bank of India (RBI) for merger of Bank of Rajasthan. The merger was effective from the close of business of 12 August 2010. The financials for Q2 September 2010 include the financials for erstwhile Bank of Rajasthan (BoR) for the period 13 August 2010 to 30 September 2010 (49 days).

Index heavyweight and India's largest private sector company by market capitalisation Reliance Industries fell 4.07% to Rs 1061.85. The company's net profit rose 27.80% to Rs 4923 crore on 22.69% rise in net sales to Rs 57,479.00 crore in Q2 September 2010 over Q2 September 2009. The company's net profit was boosted by higher output from its gas field, which was ramped up last year, and increased run rate of its refineries in Jamnagar, but earnings growth in future would be led by margin improvement, chief financial officer Alok Agarwal was quoted by the media as saying on 31 October 2010.

India's largest truck maker by sales Tata Motors was unchanged at Rs 1245.55. The company's consolidated net profit surged 10106.6% to Rs 2,222.99 crore on 36.8% rise in consolidated net sales to Rs 28,572.71 crore in Q2 September 2010 over Q2 September 2009. Second quarter consolidated profit got a boost as a global economic recovery spurred demand for luxury sedans and sport-utility vehicles.

India's largest copper maker by sales Sterlite Industries bucked the trend last week. The stock rose 0.19% to Rs 181.75. According to reports, Sterlite Industries' parent firm Vedanta Resources PLC plans to list Sterlite Energy on the bourses. Sterlite Industries owns 100% in Sterlite Energy.