Sensex corrects 4.03% from record closing high

The key benchmark indices tumbled in late trade, extending two-day losses, as a plunge in Chinese stocks dragged world markets lower with investors fretting Beijing will initiate fresh steps to cool the world's second largest economy. Domestic economic data of industrial output rising lower than forecast in the month of September also dampened sentiment. Metal, banking realty and consumer durables stocks fell. The market breadth was weak. The BSE 30-share Sensex was down 432.20 points or 2.1%, off close to 440 points from the day's high and up close to 50 points from the day's low.



Today's decline was wide-based taking stocks across sectors in its stride. All the sectoral indices on BSE were in the red. Index heavyweight Reliance Industries slipped.

From the record closing high of 21004.96 on 5 November 2010, the Sensex fell 848.07 points or 4.03%.

The market edged lower in early trade. It slipped into the red once again after recovering sharply from the day's low to trade in green for a brief period in morning trade after index heavyweight Reliance Industries reversed initial losses. It weakened in mid-morning trade. It extended losses to hit fresh intraday lows in early afternoon trade. Fresh selling dragged the market to day's low in afternoon trade. It remained weak in mid-afternoon trade. It further extended losses in late trade.

Industrial output in September 2010 rose at a much slower-than-expected 4.4% from 8.2% a year ago, government data released today 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%.

Manufacturing growth, which constitutes 80% of the industrial output, slumped to 4.5% in September 2010 from 8.3% in September 2009. The mining sector grew at 5.2% against 7.4%, electricity rose at 1.7% against 7.5% while consumer durables increased 10.9% against 21.9%, in September 2010 over September 2009.

India's economy is expected to grow 8.5% in the current year and 9% in 2010/11, Prime Minister Manmohan Singh said on Friday. However, high unemployment in industrialised countries threatens a revival of protectionist sentiment, especially since the use of conventional monetary and fiscal tools to revive the economy has been exhausted, he said in a speech at the plenary session of the G20 summit in Seoul.

European stocks dropped on Friday, losing ground for the third straight session, hurt by escalating fears over Ireland's debt problems. The key benchmark indices in France, Germany and UK fell by between 0.2% to 1.01%.

France's official statistics agency said the French economy grew 0.4% in the third quarter -- a slower rate than in the previous quarter.

German economic growth slowed in the third quarter from a historical surge in the previous three months, but still reflected a broad-based recovery, according to data released by the Federal Statistical Office on Friday. German gross domestic product expanded 0.7% in the third quarter versus the second quarter.

Economic growth in the 16 countries that use the euro fell by more than half in the third quarter of the year, official figures showed Friday, as the pace of recovery in Germany, Europe's biggest economy, slowed and the Netherlands saw output unexpectedly drop. Eurostat, the EU's statistics office, said that economic growth in the eurozone moderated to 0.4% in the July to September quarter from the 1 percent growth recorded in the previous three month period.

Greece's jobless rate rose to a record 12.2% in August, while the nation's progress in reducing its deficit appeared to slow, government data showed Thursday.

Ireland warned on Thursday that a surge in its borrowing costs to record highs had become "very serious" and the EU said it was ready to act should the humbled former "Celtic Tiger" require a rescue from its euro partners.

In the U.S., the University of Michigan confidence survey is due later in the global day.

Asian stock markets edged lower on Friday, with banking stocks hurting the Tokyo and Sydney bourses. Sentiment was hurt by Wall Street's drop Thursday, dragged by a plunge in Cisco System's shares and concerns over European sovereign debt. The key benchmark indices in South Korea, Hong Kong, Indonesia, Japan, Singapore and Taiwan fell by between 0.08% to 2.1%.

China's Shanghai Composite slumped 5.16% 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 follows 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.

Hong Kong's economy expanded for a sixth consecutive quarter, boosted by strong exports to China and elsewhere in Asia, the government said Friday, while warning of the longer term risks of a sluggish recovery in advanced industrial countries. The Chinese territory, which maintains separate political and economic systems from the mainland, said gross domestic product expanded 0.7% in the third quarter from the previous quarter. GDP grew 1.4% in the second quarter.

The Bank of Thailand has set limits on bank lending for residential property as a preventive measure against a possible bubble emerging in the sector, a deputy central bank governor said on Friday. The loan-to-value ratio (LTV), the percentage of a property's value that can be given as a loan, for condominium units is set at 90%, effective January 2011.

Meanwhile, the G20 will reportedly agree to setting vague "indicative guidelines" for measuring global imbalances and hammer out the details next year, effectively calling a timeout to let tempers cool after heated debate over currencies. Negotiators laboured until the wee hours of the morning to try to thrash out an agreement that their leaders can all endorse, despite deep divisions that were on public display in the run-up to the Group of 20 summit concluding on Friday.

Trading in US index futures indicated that the Dow could fall 59 points at the opening bell Friday, 12 November 2010.

Back home, food price index rose 12.30%, while the fuel price index climbed 10.67% in the year to 30 October 2010, government data on Thursday showed. In the prior week, annual food and fuel inflation stood at 12.85% and 10.67%, respectively. The primary articles price index was up 14.87% in the latest week compared with an annual rise of 15.43% a week earlier.

The wholesale price index for the month of October will be announced on Monday, 15 November 2010.

The $1.7 billion follow-on public offer of state-run Power Grid Corporation was subscribed 14.37 times by 16:00 IST on the last day of bidding today data on NSE showed. Follow-on offer price band is fixed between Rs 85 to Rs 90 per Share, and 5% discount will be available to Retail investors and eligible employees at the issue price on allotment.

While global liquidity remains ample, a section of the market is worried that a strong equity issuance pipeline over the next six months will soak liquidity from the secondary equity markets. Indian companies are estimated to raise about Rs 80000 crore from equity and debt issue over the next three to six months. After Power Grid Corp, Steel Authority of India and Indian Oil Corp are some of the other companies that are planning large share sales in coming months.

Meanwhile, share sales by the Indian government in state run firms Manganese Ore India (MOIL) and Shipping Corporation of India are likely to hit the market by end-November, while an offer by Hindustan Copper is likely in December, Disinvestment Secretary Sumit Bose said

On the corporate front, the Q2 September 2010 corporate results have been encouraging. The combined net profit of a total of 2563 firms surged 35.2% to Rs 93632 crore on 19.5% growth in sales to Rs 752403 crore in Q2 September 2010 over Q2 September 2009.

India's services sector expanded last month at a faster rate than in September 2010, bringing an end to a 3-month decline in the key business activity index, a survey showed on Wednesday, 3 November 2010. The manufacturing sector expanded in October 2010 at a much faster pace than in September 2010, supported by strong output and a sharp rise in new business, a purchasing managers' index (PMI) showed on Monday, 1 November 2010.

The Reserve Bank of India (RBI) at its second quarterly monetary policy review on Tuesday, 2 November 2010, hiked its lending and borrowing rates by a quarter point each, as expected, to tackle inflationary pressures. The central bank signaled a pause in its policy tightening drive that began in October 2009. Based purely on current growth and inflation trends, the Reserve Bank of India (RBI) believes that the likelihood of further rate actions in the immediate future is relatively low, RBI governor D Subbarao said in a monetary policy statement. "However, in an uncertain world, we need to be prepared to respond appropriately to shocks that may emanate from either the global or domestic environment," he added.

The RBI said it will continue to closely monitor both global and domestic macroeconomic conditions. "We will take action as warranted with a view to mitigating any potentially disruptive effects of lumpy and volatile capital flows and sharp movements in domestic liquidity conditions, consistent with the broad objectives of price and output stability", the policy statement said.

The Reserve Bank of India (RBI) next reviews monetary policy on 16 December 2010. There are expectations of RBI raising rates by a total of 25 basis points by the end of the current fiscal year.

Foreign funds have made heavy purchases of $28.5 billion till date into Indian markets.

The BSE 30-share Sensex was down 432.20 points or 2.1%, to 20,156.89. At the day's high of 20,593.91 hit in morning trade, index rose 4.82 points. The Sensex lost 480.69 points at the day's low of 20,108.40 in late trade.

The S&P CNX Nifty was down 122.60 points or 1.98% to 6,071.65.

BSE clocked turnover of Rs 5250 crore lower than Rs 6113.90 crore on Thursday, 11 November 2010.

The market breadth, indicating the health of the market was weak. On BSE, 2298 shares declined while 748 shares rose. A total of 71 shares remained unchanged. The breadth was positive upto early afternoon trade.

From 30 share Sensex pack, 28 fell and only two rose.

Index heavyweight Reliance Industries (RIL) lost 1.87 % to Rs 1061.85, off day's high of Rs 1087.60. The stock extended three-day slide on reports it may lose authorisation for the proposed 1,100-km pipeline from Kakinada in Andhra to Haldia in West Bengal as it has failed to make progress.

India's largest realty player by sales DLF fell 5.46%, extending Thursday's 4.41% losses after company announced before market hours on Thursday that its net profit fell 4.85% to Rs 418.38 crore in Q2 September 2010 over Q2 September 2009.

Among other realty stocks, Omaxe, Indiabulls Real Estate, Phoenix Mills, HDIL and Unitech fell by between 2,1% to 5.89%

India's largest steel maker by sales Tata Steel fell 3.96%, ahead of its Q2 result today.

JSW Steel, Hindalco Industries, National Aluminum Company, Hindustan Zinc, Steel Authority of India, JSW Steel and Jindal Steel & Power fell by between 2.1% to 4.72%

Consumer durables stocks fell on profit taking. Blue Star, Videocon Industries, Lloyd Electric and Titan Industries fell by between by between 0.59% to 4.29%.

India's largest bank by branch network and net profit State Bank of India (SBI) fell 4.55%. The stock extended three-day decline on reporting lower than expected Q2 result. 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.

India's largest private sector bank by net profit ICICI Bank slumped 2.99%, with the stock falling for the third straight day. The stock had on 5 November 2010 scaled a 52-week high of Rs 1,277.

India's second largest private sector bank by net profit HDFC Bank declined 1.65%.

India's largest listed cellular services provider by sales Bharti Airtel dropped 3.59%, with the stock falling for the third straight day. The company during trading hours on 10 November 2010 said consolidated net profit declined 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.

India's second largest listed cellular services provider by sales Reliance Communications lost 3.52%.

Capital goods stocks fell on profit taking. BEML, SKF India, BHEL, Praj Industries and Larsen & Toubro fell by between 0.55% to 2.53%.

Software stock fell as sovereign debt problems resurfaced in euro zone. Europe is the second biggest export market for Indian IT firms. India's largest software services exporter by sales TCS fell 0.71%, with the stock falling for the second straight day. India's second largest software services exporter by sales Infosys fell 1.83%, with the stock falling for the second straight day. Infosys is eyeing acquisitions in Japan as India's second-largest outsourcer looks for growth outside its main markets in the United States and Europe its chief executive S Gopalkrishnan said. India's third largest software services exporter by sales Wipro fell 1.13%, with the stock falling for the second straight day.

Tata Motors, India's largest auto maker by sales fell 2.42%. The company posted a 100-fold jump in consolidated net profit due to a buoyant local market and a surge in sales at UK subsidiary Jaguar Land Rover (JLR). The stock hit record high of Rs 1350 on Wednesday. Net profit rose to Rs 2,222.99 crore for the Q2 September 2010 compared with Rs 21.78 crore in the corresponding quarter a year ago. On a standalone basis, company's net profit declined 40.66% to Rs 432.70 crore on 44.51% rise in net sales to Rs 11449.61 crore in the quarter ended September 2010 over the quarter ended September 2009. The result was announced after market hours on Tuesday.

India's largest bike maker by sales Hero Honda Motors rose 0.29%. The company reported its highest ever monthly sales at 5,05,553 units in October 2010, registering a jump of 42.75% over the same month last year.

India's top small car maker by sales Maruti Suzuki India fell 1.06%, reversing initial gains. The company's total sales rose 39.2% to 1.18 lakh vehicles in October 2010 over October 2009.

Bajaj Auto rose 0.77%. The company reported 32% surge in total sales to a 3.7 lakh units in October 2010 over October 2009. The company clocked record motorcycle and commercial vehicle sales in the recently concluded month.

India's largest tractor maker by sales Mahindra & Mahindra fell 4.75%. The stock hit record high of Rs 826.40 on Thursday. The company's auto sales rose 34% to 34,495 units in October 2010 as against 25,670 units during October 2009.

Car sales in India rose an annual 37.9% in October, an industry body said on Wednesday. Firms sold 1,82,992 cars in the month, data from the Society of Indian Automobile Manufacturers (SIAM) showed. Sales of trucks and buses, a barometer of economic activity, rose 18.17% to 50,835 units in October, SIAM said.

HPCL clocked highest volume of 3.27 crore shares on BSE. Alok Industries (1.99 crore shares), Resurgence Mines (1.7 crore shares), Cals Refineries (1.49 crore shares) and Delta Corp (1.05 crore shares) were the other volume toppers in that order.

State Bank of India clocked highest turnover of Rs 239.62 crore on BSE. Coal India (Rs 178.64 crore), Delta Corp (Rs 142.25 crore), Tata Steel (Rs 120.05 crore) and Reliance Industries (Rs 85.99 crore) were the other turnover toppers in that order.