Sensex tumbles 14.4% in 18 trading sessions

A fresh setback in world equities weighed on Indian shares for yet another day as the key benchmark indices reached 14-1/2-month closing lows. Nevertheless, the barometer index the BSE Sensex regained the psychological 16,000 mark after a sharp fall pulled the index below that level in mid-afternoon trade. The Sensex tumbled 328.12 points or 1.99%, up 153.90 points from the day's low and off 146.05 points from the day's high. The market breadth was weak. Twelve out of 13 sectoral indices on BSE declined. Stocks fell across the world on fears over global economic growth and the health of Europe's banking system.



The Sensex has plunged 2,729.62 points or 14.46% in 18 trading session from a recent high of 18,871.29 on 25 July 2011 as foreign funds pressed sales.

NSE's volatility index, India VIX, surged to 29.19% from Thursday's (18 August 2011) close of 27.45%. Reliance Industries, Infosys, Wipro, ICICI Bank, State Bank of India (SBI), Hindalco, Sterlite Industries (India), Tata Steel, Jindal Steel & Power, Cipla, Tata Power and Tata Motors recovered after striking 52-week lows. Reliance Communications hit a record low.

Bargain hunting helped most auto stocks reverse initial slide caused on concerns higher interest rates could crimp sales of automobiles. Software stocks saw an across the board slide on concerns that a likely economic slowdown in the US and Europe will hit technology spending by overseas clients. Bank stocks extended recent steep losses triggered by fears that elevated interest rates would hurt borrowers' ability to repay loans and increase delinquencies. Airline stocks gained as a fall in crude oil prices eased concerns about the impact of high jet fuel prices on operating costs. Shares of state-run oil marketing companies rose as crude oil prices sank after a fresh plunge in global stock markets.

Foreign institutional investors (FIIs) sold shares worth Rs 488.67 crore on Thursday, 18 August 2011, as per provisional data from the stock exchanges. FIIs have sold shares worth Rs 8053.88 crore this month, till 18 August 2011, as per data from the stock exchanges. There was a massive outflow of Rs 5279.30 crore in just three trading sessions between 5 August 2011 and 9 August 2011.

FIIs have sold shares worth a net Rs 13093.13 in calendar year 2011 so far, as per data from the stock exchanges. Domestic institutional investors have bought shares worth a net Rs 20608.77 this year so far.

Investors investing in India are worried that higher interest rates will restrict 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.

The BSE Sensex tumbled 328.12 points or 1.99% to settle at 16,141.67, its lowest closing level since 25 May 2010. The Sensex lost 482.02 points at the day's low of 15,987.77 in mid-afternoon trade. The index fell 182.07 points at the day's high of 16,287.72 in morning trade.

The S&P CNX Nifty fell 98.50 points or 1.99% to settle at 4,845.65, its lowest closing level since 25 May 2010. The Nifty hit a low of 4,796.10 in intraday trade.

The market breadth, indicating the overall health of the market, was weak. On BSE, 2,083 shares fell and 773 shares rose. A total of 105 shares remained unchanged.

The BSE Mid-Cap index declined 1.36%, outperforming the Sensex. The BSE Small-Cap index fell 2.01%, underperforming the Sensex.

The total turnover on BSE amounted to Rs 2753 crore, higher than Rs 2241.65 crore clocked on Thursday.

Twelve out of 13 sectoral indices on BSE declined. The BSE IT index (down 4.41%), the BSE Capital Goods index (down 4.17%), and BSE TecK index (down 3.7%), outperformed the Sensex. The BSE Realty index (up 0.77%), the BSE Metal index (down 0.39%), and the BSE Realty index (down 0.7%), underperformed the Sensex.

Among the 30-share Sensex pack, 21 declined while the rest gained.

Index heavyweight Reliance Industries (RIL) lost 1.39% to Rs 729.65. The stock hit 52-week low of Rs 721.60 today. 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.

State-run Coal India gained 0.97%. The company's consolidated net profit rose 64.05% to Rs 4143.92 crore on 28.29% rise in total income to Rs 16057.97 crore in Q1 June 2011 over Q1 June 2010. The company announced Q1 results after market hours on Friday, 12 August 2011.

Coal India recently overtook Reliance Industries (RIL) as India's largest company in terms of market capitalization. Coal India produces and markets coal and coal products as well as provides related consulting services. .

Shares of state-run oil marketing companies rose as crude oil prices sank after a fresh plunge in global stock markets. BPCL (up 0.07%), HPCL (up 1.57%) and Indian Oil Corporation (up 1.03%), edged higher. Lower crude oil prices could reduce under-recoveries of state-run oil marketing companies (PSU OMCs) on domestic sale of diesel, LPG and kerosene at controlled prices. The government has already freed pricing of petrol.

Airline stocks gained as a fall in crude oil prices eased concerns about the impact of high jet fuel prices on operating costs. SpiceJet (up 8.96%), Kingfisher Airlines (up 5.28%) and Jet Airways (India) (up 0.89%) gained. Aviation turbine fuel, or jet fuel constitutes more than 50% of operating cost for airliners. Prices of jet fuel are directly linked to crude oil prices. State-run oil marketing companies--Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation revise jet fuel prices on the 1st and 16th of every month based on the average international crude price in the preceding fortnight.

Bargain hunting helped most auto stocks reverse initial slide caused on concerns higher interest rates could crimp sales of automobiles. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.

India's largest tractor and utility vehicles maker by sales Mahindra & Mahindra (M&M) rose 0.3%, halting a three-day 3.12% fall. The company's consolidated net profit rose 6.7% to Rs 662.30 crore on 66.2% rise in gross revenue and other income to Rs 14256 crore in Q1 June 2011 over Q1 June 2010. The result was announced during trading hours on Wednesday, 17 August 2011.

Commenting on the results, Mahindra Group Executive Director and Chief Financial Officer Bharat Doshi said, "We are delighted to announce the consolidated financials of the Mahindra Group which in addition to the auto and farm businesses are a reflection of the robust growth of the various group companies in the IT, finance, real estate, hospitality and Systech sectors. Mahindra Satyam's significant growth in margins and profit and SsangYong Motor Company's improved sales volume is heartening to note; it is with great satisfaction that we see the integration of both these companies in the group."

India's largest small car maker by sales Maruti Suzuki India rose 0.41%, reversing initial declines. Recent reports indicated the company has cut production of most of its models, including the best selling Alto, by 5% due to slump in demand in the domestic market. Maruti on Wednesday, 17 August 2011, unveiled its much awaited sportier and stylish car, new Swift. The new Swift is priced in the range 4.22 lakh to 5.53 lakh for petrol variant and 5.17 lakh to 6.38 lakh in diesel variant.

Speaking at the launch of the new Swift, Shinzo Nakanishi, Managing Director and CEO, Maruti Suzuki on Wednesday said, "We have launched the new Swift at a time when there was significant demand for the ongoing model. In keeping with the Swift's iconic status, we had to ensure that the brand continues to offer the latest and the best in terms of features, design, performance and aspiration. I am confident that the new Swift will create new benchmarks with its improved fuel efficiency, stylish and sportier looks and high performance."

Maruti Chairman R.C. Bhargava today, 19 August 2011, said that the company's management is in discussions with the local unit of Fiat SpA to source diesel engines for its cars.

India's largest commercial vehicle maker by sales Tata Motors dropped 5.53% to Rs 711.50 and was the top loser from the Sensex pack. The stock hit 52-week low of Rs 713.05 today. The company's global sales declined 6% to 85,392 units in July 2011 over July 2010. 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.

India's largest bike maker by sales Hero MotoCorp rose 2.52% to Rs 2,000, extending recent gains triggered by a brand revamp exercise from the two-wheeler major. Hero MotoCorp recently unveiled a new brand after the two-wheeler major ended its long standing partnership with Japan's Honda Motor. Hero MotoCorp aims to increase annual revenue to $10 billion and two-wheeler sales to 10 million units a year in the next five to six years, as it expands in overseas markets and hopefully benefits from strong local demand. The company expects exports to contribute a tenth of its vehicle sales and revenue over the same period.

Hero MotoCorp said during market hours on Thursday, 18 August 2011, 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 second largest bike maker by sales Bajaj Auto slipped 0.31%.

Scooters India jumped 10% after Finance Minister Pranab Mukherjee said the government plans to revive the state-owned company by bringing in a strategic partner.

Software pivotals extended recent steep losses 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 largest software services exporter TCS fell 2.29%.

India's second largest software services exporter Infosys plunged 5.51% to Rs 2,231.90. The stock hit 52-week low of Rs 2,172.65 in intraday trade today. Infosys Chief Operating officer S.D. Shibulal on Thursday, 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 said that, despite the weak economic environment, Infosys will continue to make investments in the short term for sustainable growth in the long term. Shibulal takes over as the new chief executive officer of Infosys on 21 August 2011.

India's third largest software services exporter Wipro declined 2.2% to Rs 320.80. The stock recovered sharply after sliding to a 52-week low of Rs 310.20 in intraday trade today.

HCL Technologies was down 0.96% to Rs 393. The stock hit a 52-week low of Rs 365.75 today. 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.

Second line software stocks were also under selling pressure. iGate Patni (down 3.83%), Oracle Financial Services Software (down 3.89%), Mahindra Satyam (down 1.83%), and Tech Mahindra (down 4.86%), declined.

Educomp Solutions slumped 6.12%, extending Thursday's 8.9% slump triggered by reports that the income tax department conducted search operations at the company's premises on that day.

GTL fell 7.14% after consolidated net profit plunged 63.13% to Rs 12.94 crore on 35.13% growth in net sales to Rs 833.74 crore in the quarter ended June 2011 over the quarter ended June 2010. The company declared its results after market hours on Thursday, 18 August 2011.

India's largest power generation firm by capacity NTPC was down 0.26%. The company's Chairman Arup Roy Choudhury said that the company plans to place orders for 13.14 gigawatts (GW) of power generation equipment through bulk tenders to accelerate its capacity addition program. The bulk tenders--for units of 660 megawatt (MW) and 800 MW--will be issued in the near future.

NTPC, along with its joint ventures, has a generation capacity of 34.85 GW, or 19% of India's total installed capacity. It is building projects with a capacity of 14.09 GW and aims to have a total of 75 GW capacity by March 2017. Placing orders via bulk tenders will not only help NTPC expedite its expansion plan but may also give an earnings boost to equipment makers such as Bharat Heavy Electricals and Larsen & Toubro.

Bank stocks extended recent steep losses triggered by fears that elevated interest rates would hurt borrowers' ability to repay loans and increase delinquencies. India's largest private sector bank by net profit ICICI Bank lost 3.21% to Rs 837, after sliding to a 52-week low of Rs 825 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 on Thursday, 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 second largest private sector bank by net profit HDFC Bank shed 0.18%. The bank recently 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. HDFC Bank also raised interest rates on some deposits by between 25 basis points and 75 basis points.

India's largest bank by net profit and branch network State Bank of India lost 2.05% to Rs 2,035, in volatile trade after sliding to a 52-week low of Rs 2,026.10 hit in intraday trade today. 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.

Nalco fell 1.56% and Bhel declined 4.7% after the finance minister said today that proposals to sell some of government stakes in these two state-run firms are at various stages of consideration before the government approves them. There are proposals to divest a 5% stake in Bhel and to sell a 10% government stake in Nalco, Finance Minister Pranab Mukherjee told parliament in a written reply.

Mukherjee also said the government has approved selling the entire stakes in loss-making state-run firms Central Water Transport Corp, Scooters India and Tyre Corp of India to a strategic partner.

Metal stocks extended recent slide on worries the global economic slowdown may crimp demand. India's largest sponge iron maker by sales Jindal Steel & Power fell 1.6% to Rs 486.95, after falling to a 52-week low of Rs 464 today.

India's largest steel maker by sales Tata Steel declined 0.81% to Rs 458.80. The stock hit a 52-week low of Rs 450.25 in intraday trade today. 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 1.98% to Rs 126.05 after hitting a 52-week low of Rs 121.35 today.

JSW Steel jumped 4.96% to Rs 665.40. The stock recovered from the day's low of Rs 623.80, which is also a 52-week low for the counter.

India's largest aluminium maker by sales Hindalco Industries rose 1.63% to Rs 140. The stock rebounded after striking a 52-week low of Rs 128.55 today.

India's second largest listed cellular services provider Reliance Communications lost 2.04% to Rs 74.25 after falling to a record low of Rs 72.60 today.

Small and mid-cap stocks suffered severe setback. Inventure Growth & Securities (down 20%), Kanchan International (down 19.96%), Shalibhadra Finance (down 19.96%), Falcon Tyres (down 19.92%), Dunlop India (down 19.83%), Simbhaoli Sugars (down 18.28%), KLG Systel (down 12.23%), Talbros Automotive (down 13.86%), and Arss Infrastructure Projects (down 12.44%), tumbled.

Indiabulls Real Estate rose 4.86%, extending Thursday's 0.86% rise after Macquarie Bank bought 72.23 lakh shares, or 1.79% stake in the company through bulk deals in the preceding two trading sessions on BSE and NSE.

IRB Infrastructure Developers spurted 7.62%. The stock recovered from the day's low of Rs 132, which is also a 52-week low for the counter.

J. B. Chemicals & Pharmaceuticals was down 3.92% to Rs 139.55, off the session's low of Rs 116.60, after the company's board declared special interim dividend of Rs 40 per share. At the day's low of Rs 116.60, the stock had lost 19.72% before the company announced the special dividend during trading hours.

Titan Industries declined 2.64% on concerns high and rising gold prices may impact sales of gold jewellery.

SBI clocked highest turnover of Rs 157.92 crore on BSE. Infosys (Rs 93.99 crore), Inventure Growth Securities (Rs 72.84 crore), ICICI Bank (Rs 70.85 crore) and Larsen & Toubro (Rs 69.72 crore) were the other turnover toppers in that order.

SpiceJet clocked highest volume of 1.31 crore shares on BSE. Cals Refineries (98.17 lakh shares), Suzlon Energy (97.11 lakh shares), K S Oils (86.28 lakh shares), and Sanraa Media (77.17 lakh shares) were the other volume toppers in that order.

Indian firms relying on European and US markets are worried about a likely economic slowdown in the US and Europe. Bilateral trade between India and the US stood at $36.5 billion in 2010.

Commerce Minister Anand Sharma today, 19 August 2011, said India's discussions with the European Union (EU) and Canada to form free-trade agreements are in advance stages. India aims to boost bilateral trade with Canada to C$15 billion (US$15.3 billion) a year by 2015 from about C$4.2 billion in 2010.

With the 27-member EU, India had initiated discussions on the free-trade pact in 2007. The two sides originally hoped to conclude a wide-ranging deal by 2010 to boost trade to $237 billion annually by 2015. Their bilateral trade is currently worth about $92 billion.

The recent slide in global crude oil prices will help ease concerns of higher oil subsidy burden for the government, provided the fall in oil price sustains. US crude-oil futures continued to slide during Asian hours on Friday, 19 August 2011, as a deteriorating global economic outlook pushed investors away from risk assets, deepening concerns about demand for commodities. New York Mercantile Exchange crude-oil futures for September delivery shed $1.76, or 2.14%, to $80.62 a barrel in electronic trading. The drop came on top of the $5.20, or 5.9%, plunge in a regular Nymex session on Thursday, 18 August 2011, when the front-month contract suffered its biggest percentage and dollar price decline since 8 August 2011.

Planning Commission deputy chairman Montek Singh Ahluwalia today, 19 August 2011, said the Planning Commission is aiming for annual average economic growth of 9% over the next five years starting April 2012, higher than the 8.0%-8.3% expected in the current fiscal year through March. The Indian government sets five-year macroeconomic targets and the Planning Commission's view is part of an approach paper for the next five-year period. The commission, chaired by Prime Minister Manmohan Singh, is scheduled to consider the approach paper tomorrow, 20 August 2011.

Reserve Bank of India (RBI) deputy governor Subir Gokarn on Thursday, 18 August 2011, said that the primary objective of monetary policy must be to keep inflation low and stable. The Reserve Bank of India (RBI) is scheduled to undertake a mid-quarter policy review on 16 September 2011.

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 on Thursday, 18 August 2011, that monsoon rains were 26% above normal in week to 17 August 2011, strengthening from a 14% 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.

Total rainfall since the beginning of the season was 1% below normal until 17 August 2011, down from a deficit of 4% until last week. Good rains will help India achieve its target of increasing its food grains output to a record 245 million metric tonnes this crop year that started 1 July 2011. Good rains could help boost rural income and may help bring down food inflation. The rainfall has been normal in 65% of the country, while it has exceeded the normal in 23% and deficient in 12% until 17 August 2011.

The rainfall was excess to normal in oilseeds-growing western region, in the rice-growing eastern region as well as parts of the grain-bowl northern region and the north-western Rajasthan state. Plantings of key summer crops have been on the rise until 5 August, aided by favourable weather, including the main summer-sown rice crop. Rice acreage rose to 26.03 million hectares as against 24.47 million hectares during the same period last year. A news agency quoted IMD spokesman B.P. Yadav as saying on Thursday, 18 August 2011, that there could probably be a weakening of the monsoon rains again next week, especially in the northern region but showers may increase in central India and southern peninsula.

Anti-corruption activist Anna Hazare today, 19 August 2011, began his fortnight long hunger strike at the Ramlila Ground in Delhi. 73-year-old Hazare said people are fed up of corruption and the government should not take long to bring a strong Lokpal Bill.

European stocks extended fall on Friday, 19 August 2011, as global growth concerns continued to spook investors, with banking shares remaining under heavy selling pressure. The key benchmark indices in France, Germany and UK fell by between 2.77% to 3.89%. Financial shares were among the biggest decliners, extending losses from the previous session, when worries escalated over the health of European banks amid exposure to the euro zone's long-running debt crisis and what's viewed as a lack of resolve among European leaders to tackle the problems.

Asian stocks fell on Friday, 19 August 2011, as a deteriorating global economic outlook pushed investors away from risk assets, with exporters among the worst performers. The key benchmark indices in China, South Korea, Indonesia, Hong Kong, Singapore, Japan and Taiwan fell by between 0.98% to 6.22%.

South Korea's stock exchange briefly halted program trading early afternoon in an effort to arrest the selling plunge as the main stock index and futures indexes plunged more than 5%.

Asia's losses mirrored a sharp sell-off in the US on Thursday, 18 August 2011, where fears about the health of the economy were heightened after factory activity in the Philadelphia region weakened to the lowest level in more than two years.

Trading in US index futures indicated that the Dow could fall 191 points at the opening bell on Friday, 19 August 2011.