Market slumps on weak global cues

The market slumped last week, snapping a 3-week rally, as fears of weak Q2 September 2011 corporate earnings, a further slowdown in China's manufacturing sector and Federal Reserve's assessment that the US economy faces significant downside risks rattled investors. Key benchmark indices fell in four out of five trading sessions during the week.

The BSE Sensex slumped 771.77 points or 4.56% to 16,162.06 in the week ended Friday, 23 September 2011. The S&P CNX Nifty tumbled 216.50 points or 4.25% to 4,867.75.



The BSE Mid-Cap index fell 2.62% and the BSE Small-Cap index declined 2.38%. Both these indices outperformed the Sensex.

The market sentiment was weak following reports that nearly a quarter of top 100 companies have paid lower advance tax in Q2 September 2011, reflecting the slowdown in growth and pressure on margins because of rising input costs and higher interest rates.

Inflows from foreign institutional investors (FIIs) in September 2011 totaled Rs 2932.30 crore (till 21 September 2011). FIIs had sold shares worth a net Rs 10833.60 crore in August 2011. FII inflow in calendar 2011 totaled Rs 2799 crore (till 21 September 2011).

Trading for the week began on a weak note. Key benchmark indices snapped three-day winning streak on Monday, 19 September 2011, as world stocks fell after a meeting of European finance ministers over the weekend made no progress toward resolving the euro zone debt crisis. The BSE Sensex was down 188.48 points or 1.11% to settle at 16,745.35. The S&P CNX Nifty was down 52.30 points or 1.03% to 5,031.95.

Key benchmark indices spurted to 1-1/2 week closing highs on Tuesday, 20 September 2011, as European stocks rose and as US index futures jumped, buoyed by expectations that Greece will receive the next aid tranche from international creditors as well as hopes that the Federal Reserve may announce fresh measures to stimulate the economy. The BSE Sensex jumped 353.93 points or 2.11% to settle at 17,099.28. The S&P CNX Nifty was up 108.25 points or 2.15% to settle at 5,140.20.

Key benchmark indices edged lower on Wednesday, 21 September 2011, amid intraday volatility as euro-zone debt worries resurfaced. The BSE Sensex lost 34.13 points or 0.2% to settle at 17,065.15. The S&P CNX Nifty was down 6.95 points or 0.14% to settle at 5,133.25.

Fears of weak Q2 September 2011 corporate earnings and a rout in global stocks rattled Indian shares on Thursday, 22 September 2011. The BSE Sensex tanked 704 points or 4.13% to settle at 16,361.15. The S&P CNX Nifty was down 209.60 points or 4.08% to settle at 4,923.65.

Key benchmark indices registered losses for the third straight day on Friday, 23 September 2011. The BSE Sensex fell 199.09 points or 1.22% to 16,162.06 in the week ended Friday, 23 September 2011. The S&P CNX Nifty slipped 55.90 points or 1.14% to 4,867.75.

Among the 30-Sensex shares, 27 declined and just three rose during the week.

India's largest engineering and construction company by revenue Larsen & Toubro (L&T) was the biggest Sensex loser last week. The stock fell 9.78% to Rs 1452.25. The company announced during market hours on Thursday, 22 September 2011, that it has bagged a Rs 700-crore order in Oman.

India's largest truck maker by sales Tata Motors slipped 8.84% to Rs 147.40. Tata Motors has reportedly cut production of most of its car models, including the Nano minicar, this month due to sluggish demand. The company will likely make about 12,000 cars this month. The September 2011 production figure will be 33% lower than the 17,821 cars it produced a year earlier, reports suggest.

India's largest copper maker by sales Sterlite Industries tumbled 8.81% to Rs 122.70. Chinese manufacturing data and European macroeconomic concerns, coupled with a gloomy economic outlook from the US Federal Reserve rattled investors and sparking a broad sell-off in commodities. London copper futures have officially entered a bear market, with prices for the industrial metal now off more than 20% from the record $10,190 hit on 15 February 2011. More than the 20% drop is regarded by some investors as signalling a bear market.

Hindalco Industries (down 7.55%), Hero Motocorp (down 7.44%), ONGC (down 6.15%), Tata Steel (down 5.97%) and DLF (down 5.47%), edged lower from the Sensex Pack.

Index heavyweight Reliance Industries (RIL) fell 6.85% to Rs 770.75. The Comptroller and Auditor General of India has reportedly begun examining the books of Reliance Industries (RIL) to see whether there was any loss to the exchequer at the company's D6 block in the Krishna-Godavari basin in 2008-09 and 2009-10. RIL had recently denied inflating costs on its D6 gas field in the Krishna-Godavari (KG) basin. RIL made the clarification after CAG said in its final report submitted to the parliament on Thursday, 8 September 2011, that RIL initially estimated capital expenditure of D-1 and D-3 gas discovery at $2.4 billion, which it later revised to $8.8 billion.

RIL's advance tax payment rose 37.6% to Rs 1800 crore in Q2 September 2011 over Q2 September 2010, hinting at good Q2 results from the diversified firm.

RIL, owner of the world's biggest refining complex, early this week said it is planning to take Maintenance and Inspection (M&I) shutdown of Light Cycle Oil hydrocracker (LCOHC) and Vacuum Gas Oil hydtrotreating unit (VGOHT) of SEZ refinery at Jamnagar refinery complex from 19 to 23 September 2011 respectively. These maintenance shutdowns will be for a period of approximately 4 weeks, RIL said. The routine shutdown of these units is being planned for the first time since commissioning. Both the refineries at Jamnagar complex are planned to operate at maximum crude processing capacity i.e. 1.3 million barrels per day during this period. All other major processing units at the complex are also planned to operate at normal capacity, RIL said.

Interest rate sensitive banking stocks fell in volatile trade on fears that elevated interest rates would hurt borrowers' ability to repay loans and increase delinquencies. India's second largest private sector bank by net profit HDFC Bank fell 5.38% to Rs 457.65.

India's largest private sector bank by net profit ICICI Bank fell 4.12% to Rs 844.65. ICICI Bank and US based Oppenheimer Holdings Inc. have agreed to form a non-financial partnership to tap business opportunities in the two countries, the companies said Wednesday. ICICI Securities and Oppenheimer & Co. Inc. have formed a strategic alliance covering a wide range of securities activities including equity and debt capital markets services, advisory services, private equity transactions, and wealth management, the companies said in a press statement.

ICICI Securities had recently announced a similar pact with the UK-based financial advisory group Collins Stewart Hawkpoint PLC to promote joint access to each others' core markets.

India's largest bank by branch network and net profit State Bank of India (SBI) rose 0.51% to Rs 1955.50. The bank is seen posting weak Q2 results as its advance tax payment declined 14.2% to Rs 1650 crore in Q2 September 2011 over Q2 September 2010. SBI on Thursday, 22 September 2011, said it has increased the size of its Medium Term Note (MTN) Programme from $5 billion to $10 billion. The offering circular (OC) under the said MTN Programme has been updated on 19 September 2011 with the audited financial data of the bank as on 31 March 2011 and filed with Singapore Exchange.

Software shares declined 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 main outsourcing markets for Indian firms. However, the rupee's weakness against the dollar helped limit losses in IT shares. The rupee hit 50 against the dollar for first time in more than 28 months on Friday, 23 September 2011. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports. TCS (down 3.67%), Infosys (down 2.23%) and Wipro (down 0.53%), declined.

India's largest car maker by sales Maruti Suzuki India fell 1.82% to Rs 1086.55. The company may report weak Q2 results as Maruti's advance tax payment fell 55.8% to Rs 120 crore in Q2 September 2011 over Q2 September 2010.

Maruti Suzuki India on Thursday, 22 September 2011, added 200 workers at its Manesar, Haryana factory, increasing the total workforce to more than 1,300 at the unit. The fresh hiring comes as labor unrest continues at the facility. The unrest forced the auto maker to also start producing the Swift hatchback at its Gurgaon plant, also in Haryana, earlier this month to raise output and cut the waiting period for the car. Maruti, which introduced an upgraded version of the Swift in August, has orders for about 90,000 units of the car with a waiting period that has extended to more than four months due to the labor issues at Manesar.

Maruti intends to further increase staff at Manesar in the coming days. Maruti halted operations at the plant on 29 August 2011 after it asked 950 workers to sign a "good conduct bond" before they could enter the factory. The move came after Maruti said it discovered "serious and deliberate" quality problems in cars made at the plant. It also suspended or dismissed 21 employees. Several workers have yet to sign the bond, leading the auto maker to hire new workers.

Pharmaceutical company Cipla rose 0.34% to Rs 283.85. Power generation company Tata Power Company rose 0.54% to Rs 989.80.