Nifty hits 14-1/2-month low on global growth fears

Frenzied selling in index pivotals pulled the market sharply lower in late trade. The 50-unit S&P CNX Nifty hit 14-1/2-month low below the psychological 5,000 mark. Data showing sustained selling by foreign funds this month also weighed on sentiment. Weakness in global stocks also hit sentiment adversely. Fears over global growth prospects and Europe's ongoing sovereign debt woes weighed on equity markets across the world. The BSE Sensex was provisionally down 393.66 points or 2.34%, off 469.67 points from the day's high and up 13.83 points from the day's low. Many Sensex and Nifty components hit 52-week lows.



Foreign institutional investors (FIIs) sold shares worth a net Rs 407.68 crore on Wednesday, 17 August 2011, as per provisional data from the stock exchanges. FIIs have sold shares worth a massive Rs 7565.21 crore this month, till 17 August 2011, as per data from the stock exchanges. There was a huge outflow of Rs 5279.30 crore in just three trading sessions between 5 August 2011 and 9 August 2011.

Investors investing in India are worried that higher interest rates will crimp corporate profit growth. Commercial banks have raised lending rates over the past few days after the Reserve Bank of India (RBI) late last month raised its key lending rate by a steeper-than-expected 50 basis points at a policy review. Three top commercial banks, State Bank of India, ICICI Bank and HDFC Bank, last week, raised lending rates by half a percentage point.

Today's decline on the domestic bourses was broad-based, with all the 13 sectoral indices on BSE logging declines. The market breadth was quite weak. Index heavyweight Reliance Industries, ICICI Bank, State Bank of India, Hindalco Industries, Sterlite Industries (India), Jindal Steel and Power, Tata Steel, Tata Motors, Tata Power, Reliance Infrastructure and Wipro hit 52-week lows. Bank stocks declined on concerns higher interest rates may crimp loan growth. Software pivotals were under pressure on concerns that a likely economic slowdown in the US and Europe will hit technology spending by overseas clients.

The market edged lower in early trade on weak Asian shares. A bout of volatility was witnessed in mid-morning trade as the Sensex cut losses soon after a sudden slide. The market extended losses to hit fresh intraday low in early afternoon trade. A bout of volatility was witnessed as the market weakened once again after trimming losses in afternoon trade. The market extended losses in mid-afternoon trade. The market slumped in late trade.

As per provisional closing, the BSE Sensex was down 393.66 points or 2.34% to 16,447.14. The Sensex lost 407.49 points at the day's low of 16,433.31 in late trade, its lowest level since 9 August 2011. The index rose 76.01 points at the day's high of 16,916.81 in early trade.

The S&P CNX Nifty was down 120 points or 2.37% to 4,936.60. The Nifty hit a low of 4,932.15 in intraday trade, its lowest level since 27 May 2010. The Nifty high of 5,078.60 in intraday trade.

The market breadth, indicating the overall health of the market, was quite weak. On BSE, 2,189 shares fell and 720 shares rose. A total of 101 shares remained unchanged.

The BSE Mid-Cap index declined 2.02%, outperforming the Sensex. The BSE Small-Cap index fell 2.64%, underperforming the Sensex.

The total turnover on BSE amounted to Rs 2229 crore compared with Rs 1577 crore by 14:25 IST

Among the 30-share Sensex pack, 26 declined while the rest gained. Jindal Steel & Power (down 4.85%), HDFC (down 3.02%), and Larsen & Toubro (down 1.3%), edged lower from the Sensex pack. Hindustan Unilever (up 0.6%) and Jaiprakash Associates (up 0.52%), edged higher from the Sensex pack.

Index heavyweight Reliance Industries (RIL) lost 2.55% to Rs 735.55, a 52-week for the counter. RIL, last week, said it has received the government's formal approval to sell a 30% stake in 21 oil and gas production sharing contracts to BP PLC. "Following the approval, Reliance and BP will work together to conclude the deal expeditiously," RIL said in a statement.

The initial proposal was for RIL to sell the stake in 23 blocks to BP for $7.2 billion plus another $1.8 billion linked to exploration success. However, the government cleared only 21 blocks and RIL had said it would continue to seek approval for the remaining two blocks.

Software pivotals were under pressure on concerns that a likely economic slowdown in the US and Europe will hit technology spending by overseas clients. The US and Europe are the two biggest markets for Indian IT firms. India's third largest software services exporter Wipro plunged 5.59% to Rs 325 and was the top loser from the Sensex pack. The stock had hit 52 week low of Rs 324.70 in intraday trade today, 18 August 2011. India's largest software services exporter TCS fell 3.94%.

India's second largest software services exporter Infosys declined 3.21% to Rs 2,370.50. The stock had hit 52-week low of Rs 2,343.70 in intraday trade on Friday, 12 August 2011. Infosys Chief Operating officer S.D. Shibulal today, 18 August 2011, said the company is facing a challenging environment as the main outsourcing markets, the US and Europe, remain weighed by debt crisis and slowing economic growth. Shibulal will take over as the new chief executive officer of Infosys on 21 August 2011.

Shibulal said that, despite the weak economic environment, Infosys will continue to make investments in the short term for sustainable growth in the long term.

HCL Technologies plunged 7.25%. The company said after trading hours on Wednesday, 17 August 2011, that Canada's largest credit union has selected HCL Technologies to automate enterprise-wide loan origination & processing.

Bank stocks fell on concerns higher interest rates may crimp loan growth. India's largest private sector bank by net profit ICICI Bank lost 5.16% to Rs 863.60, after sliding to a 52-week low of Rs 862.20 today. The bank, last week, raised its base rate upwards by 50 basis points to 10%. The bank had also announced an increase of 0.5% in its benchmark prime lending rate and in its Floating Reference Rate (FRR) for consumer loans (including home loans).

ICICI Bank today, 18 August 2011, said it will launch two new home loan products with interest rates fixed for one and two years--a reminder of the teaser loan schemes which became a banking sector trend in 2009-2010.

India's largest bank by net profit and branch network State Bank of India fell 4.82% to Rs 2070, after falling to 52-week low of Rs 2068.30 today, 18 August 2011. The bank's consolidated net profit fell 25.34% to Rs 2512.47 crore on 20.3% rise in total income to Rs 39454.89 crore in Q1 June 2011 over Q1 June 2010. The bank announced Q1 results on Saturday, 13 August 2011.

India's second largest private sector bank by net profit HDFC Bank shed 1.24%. The bank has hiked its lending rates by half a percentage point, in line with the rate hikes by other top lenders after the central bank raised its policy rate by the same margin in late July 2011. The bank has also raised interest rates on some deposits by between 25 basis points and 75 basis points.

India's largest steel maker by sales Tata Steel declined 2.61% to Rs 460. The stock hit a 52-week low of Rs 459.30 in intraday trade today, 18 August 2011. The company's consolidated net profit surged 192.91% to Rs 5346.55 crore on 35.33% rise in total income to Rs 36882.43 crore in Q1 June 2011 over Q1 June 2010. Tata Steel announced the first quarter results late last week.

Tata Steel's net profit zoomed due to 6445.71% jump in other income to Rs 3882.26 crore in Q1 June 2011 over Q1 June 2010. The other income includes profit of Rs 2879.29 crore on disposal of Tata Steel Global Mineral Holding's investment in Riversdale Mining. The other income also includes profit of Rs 511.01 crore on sale of part of investment in Tata Refractories. The other income also includes Rs 597.71 crore relating to arbitration with the Teeside Cast Products Consortium.

India's largest non-ferrous metals producer Sterlite Industries (India) declined 4.54% to Rs 128.25 after hitting a 52-week low of Rs 127.50 today.

India's largest real estate developer by sales DLF surged 2.67% to Rs 182.35 and was the top gainer from the Sensex pack. The stock rose on bargain hunting after a steep recent slide triggered by a hefty Rs 630-crore fine imposed on the realty major by the competition regulator for abusing dominant market position. The stock had hit a 52-week low of Rs 173.40 in intraday trade on Wednesday, 17 August 2011.

India's largest bike maker by sales Hero MotoCorp rose 0.63%. The company recently unveiled a new brand. The company said during market hours today that its board of directors by way of passing a resolution by circulation on 17 August 2011, appointed Sunil Kant Munjal as the joint managing director of the company for a term of five years from 17 August 2011.

India's largest commercial vehicle maker by sales Tata Motors dropped 3.63% to Rs 751.05 after global sales fell 6% to 85,392 units in July 2011 over July 2010. The stock hit 52-week low of Rs 750.10 today. While sales of luxury sedans of Jaguar brand were down 23% to 4,372 units, Land Rover sales were up by 8% at 14,747 units in July 2011 over July 2010. Total passenger vehicles sales fell 24% to 38,154 units in July 2011 over July 2010. Commercial vehicles sales were up by 16% to 47,238 units.

The company at the fag end of the trading session on Tuesday, 16 August 2011, had informed the stock exchanges that a committee of directors vide its Circular Resolution dated 12 August 2011 approved 13 September 2011 as the record date for the purpose of sub-division of the Ordinary Shares and 'A' Ordinary Shares (collectively the shares) both having face value of Rs 10 into 5 shares having face value of Rs 2 each.

Indian firms relying on European and US markets are worried about a likely economic slowdown in the US and Europe. Indo-Europe trade stands at $67 billion, making it India's largest trading partner globally. Bilateral trade between India and the US stood at $36.5 billion in 2010.

The food price index rose 9.03% and the fuel price index climbed 13.13% in the year to 6 August 2011, government data on Thursday, 18 August 2011, showed. In the previous week, annual food and fuel inflation stood at 9.90% and 12.19% respectively. The primary articles index was up 11.64%, compared with an annual rise of 12.22%.

Reserve Bank of India (RBI) Governor D Subbarao last week said it is important to bring down inflation to sustain growth and that it is too early to signal a change in monetary stance. The Reserve Bank of India (RBI) is scheduled to undertake a mid-quarter policy review on 16 September 2011.

The wholesale price index (WPI) for the month of July 2011 came in at 9.22%, lower than 9.44% rise in June 2011. The government also raised May's inflation reading to 9.56% from a provisional 9.06%. Chief Economic Adviser Kaushik Basu on Tuesday, 16 August 2011, said he expects inflation to remain between 9% and 10% until December. Finance Minister Pranab Mukherjee on Tuesday said the government will take steps to cool inflation, although he didn't elaborate what these measures might include.

Industrial production grew 8.8% in June 2011 from a year earlier, helped by strong growth in manufacturing output, data released by the government on Friday, 12 August 2011, showed. The reading was sharply higher than the upwardly revised 5.95% industrial output growth in May 2011. The June reading also beat market expectations by a wide margin.

Food Minister K.V. Thomas on Wednesday, 17 August 2011, said that the government plans to introduce a food security bill, which promises to give cheap food grains to 70% of the country's population, in the winter session of parliament. Thomas told reporters that the bill won't be introduced in the ongoing session of parliament, as earlier planned, because the "consultation process with state governments and different ministries is still on. "A ministerial panel had cleared the draft law last month.

Indian Meteorological Department (IMD) said today, 18 August 2011, that monsoon rains were 26% above normal in week to 17 August 2011, strengthening from a 14 percent above normal reading in the previous week. The June to September Southwest monsoon rains are crucial to crop production in 60% of the country that does not have adequate irrigation.

European stocks tumbled amid worries over stalling global growth. The key benchmark indices in France, Germany and UK fell by between 2.11% to 3.73%.

Asian stocks fell on Thursday, 18 August 2011, with Japanese exporters hit by a stronger yen. The key benchmark indices in China, South Korea, Hong Kong, Singapore, Japan, and Taiwan fell by between 0.13% to 1.7%. Indonesia's Jakarta Composite rose 1.71%.

Trading in US index futures indicated that the Dow could fall 179 points at the opening bell on Thursday, 18 August 2011.