Sensex, Nifty settle at 6-1/2-week lows on euro-zone, US debt woes

Key benchmark indices skidded for the eighth straight day to hit 6-1/2-week lows as European and US debt problems pulled world stocks lower. Data showing substantial selling by foreign funds recently hurt sentiment adversely. The barometer index, BSE Sensex, fell below the psychological 16,000 level. The BSE Sensex was down 425.41 points or 2.6%, off close to 350 points from the day's high and up close to 45 points from the day's low. The market breadth was weak. All the 13 sectoral indices on BSE were in the red.

The Sensex has lost 1,623.43 points or 9.24% in the past eight trading sessions from a high of 17,569.53 on 8 November 2011. The Sensex has lost 1,758.91 points or 9.93% this month so far. The Sensex has slumped 4,562.99 points or 22.24% in calendar 2011. From a 52-week high of 20,664.80 on 3 January 2011, the Sensex has lost 4,718.70 points or 22.83%. From a 52-week low of 15,745.43 on 4 October 2011, the Sensex has risen 200.67 points or 1.27%.



Coming back to today's trade, index heavyweight Reliance Industries (RIL) lost more than 2.5%. SBI, Bhel, NTPC, ICICI Bank, Tata Steel and Sterlite Industries hit 52-week lows. Metal stocks extended recent losses triggered by poor Q2 results from leading metal firms. IT stocks extended recent losses on European and US debt problems. Bank stocks extended recent losses triggered by fears of rising defaults in a slowing economy. Bharti Airtel fell after the Central Bureau of Investigation (CBI) conducted searches at the company's offices on Saturday, 19 November 2011, seeking details on spectrum allocation by the government to operators between 2001-02.

The market trimmed losses soon after a weak opening triggered by weak Asian shares. The initial recovery proved short-lived. The market weakened again in morning trade. The market hit 6-1/2-week low in mid-morning trade. Bargain hunting in some beaten-down pivotals helped the key benchmark indices cut loses after they hit fresh 6-1/2 weeks in mid-morning trade. The Sensex came off highs in afternoon trade. The market extended losses in mid-afternoon trade as European shares tumbled in early trade. The market tumbled in late trade.

The market may remain volatile this week as traders roll over positions in futures & options (F&O) segment from the near-month November 2011 series to December 2011 series. The near-month November 2011 F&O contracts expire on Thursday, 24 November 2011.

Data showing substantial selling by foreign funds recently weighed on sentiment. Foreign institutional investors (FIIs) sold shares worth Rs 871.62 crore on Friday, 18 November 2011, as per the provisional data from the stock exchanges. Their outflow totaled Rs 1965.48 crore in four trading session from 15 to 18 November 2011.

The BSE Sensex tumbled 425.41 points or 2.6% to settle at 15,946.10, its lowest closing level since 5 October 2011. The index lost 471.21 points at the day's low of 15,900.30 in late trade. The index fell 74.48 points at the day's high of 16,297.03 in early trade.

The S&P CNX Nifty tanked 127.45 points or 2.6% to settle at 4,778.35, its lowest closing level since 5 October 2011. The Nifty hit a low of 4,764.80 and a high of 4,873.80 in intraday trade.

The BSE Mid-Cap index fell 1.88% and the BSE Small-Cap index declined 1.68%. Both these indices outperformed the Sensex.

The market breadth, indicating the overall health of the market, was weak. On BSE, 1,981 shares fell and 792 rose. A total of 126 shares were unchanged.

The total turnover on BSE amounted to Rs 2068 crore, lower than Rs 2,348.04 crore on Friday, 18 November 2011.

From the 30-share Sensex pack, 28 declined while only two of them managed gains.

Index heavyweight Reliance Industries (RIL) dropped 2.62% to Rs 786.85, off day's the day's high of Rs 800.90. The stock fell for the straight sixth day. RIL said after market hours on Friday, 18 November 2011, that it has formed an equal joint venture with BP by the name India Gas Solutions, which will focus on global sourcing and marketing of natural gas in India. The joint venture will also develop infrastructure to accelerate transportation and marketing of natural gas within the country. India Gas Solutions will be funded with equal equity from BP and RIL.

Three oil exploration stocks fell after crude oil futures fell for the third day in a row today, 21 November 2011. Cairn India (down 4.94%), Oil India (down 1.87%) and ONGC (down 2.7%) edged lower. Oil fell for the third day in a row as investors speculated that fuel demand may falter amid signs of slowing global economic growth in Asia and debt crises in the US and Europe. Lower crude oil prices will result in lower realization from crude sales for oil exploration firms. Crude for January 2012 delivery was down $1.82 a barrel or 1.93% at 95.82 a barrel. Front-month prices dropped 1.6% last week.

Indian Oil Corporation (IOCL), HPCL and BPCL fell 0.76% to 3.05% on concerns a weakening rupee would increase their cost of crude import. The rupee skidded for a fifth consecutive session on Monday to below 52 a dollar, as oil importers bought dollars and subdued shares heightened fears of foreign fund outflows.

Pharma major Sun Pharmaceutical Industries rose 0.14%, with the stock gaining for the third straight day. Consolidated net profit rose 19% to Rs 597.74 crore on 42% growth in net sales/income form operations to Rs 1894.60 crore in Q2 September 2011 over Q2 September 2010. The company announced the results on 13 November 2011.

India's largest power equipment maker by sales Bhel lost 5.04% to Rs 262.05, with the stock extending seven-day 17.58% slump. The stock hit a 52-week low of Rs 260.10 in intraday trade today, 21 November 2011.

India's largest power generation firm by capacity NTPC declined 3.93% to Rs 156.40 after falling to a 52-week low of Rs 155.70 in intraday trade today, 21 November 2011.

India's largest engineering and construction firm by order book L&T fell 1.34% Rs 1226.30. The stock was volatile. The scrip hit high of Rs 1263.85 and low of Rs 1220. A panel of top minister's on Friday reportedly approved three projects worth Rs 25000 crore, including L&T's Rs 16000 crore metro project in Hyderabad. These projects were delayed due to pending regulatory clearances, including environment and land issues.

Bank stocks extended recent losses triggered by concerns that rising defaults in a slowing economy. India's largest bank by net profit and branch network State Bank of India (SBI) fell 3.04% to Rs 1,673.05. The stock hit a 52-week low of Rs 1,657.15 in intraday trade today, 21 November 2011.

India's largest private sector bank by net profit ICICI Bank slumped 4.9% to Rs 732.45 after falling to a 52-week low of Rs 726.05 in intraday trade today, 21 November 2011.

India's second largest private sector bank by net profit HDFC Bank shed 2.8%.

Metal stocks extended recent losses triggered by poor Q2 results from leading metal firms. Hindalco Industries, JSW Steel, National Aluminum Company, Steel Authority of India (Sail), Sesa Goa and Jindal Steel & Power 1.29% to 7.05%.

India's largest steel maker by sales Tata Steel fell 3.03% to Rs 380.60, after sliding to a 52-week low of Rs 378.20 in intraday trade today, 21 November 2011. The stock extended recent losses triggered by weak Q2 numbers. Consolidated net profit fell 89.26% to Rs 212.43 crore on 11.73% rise in total income to Rs 32918.33 crore in Q2 September 2011 over Q2 September 2010.

Tata Steel said its performance was adversely impacted by higher global raw materials costs and lower average selling prices at Tata Steel Europe. Tata Steel's net debt at the end of September 2011 stood at Rs 45056 crore, compared to Rs 46627 crore at the end of March 2011.

India's largest non-ferrous metals maker by sales Sterlite Industries India lost 4.85% to Rs 102.95. The stock hit a 52-week low of Rs 102.30 in intraday trade today, 21 November 2011.

IT stocks extended recent losses triggered by euro-zone debt worries. Europe is the second biggest outsourcing market for Indian IT firms after the US. Debt worries in the US also weighed on IT shares. India's second largest software services exporter Infosys dived 2.86%, with the stock declining for the fifth straight day. A US federal judge has refused to allow Infosys an out-of-court settlement in a case filed by one of the firm's employees, a setback to the company, which is facing allegations of visa rule violations.

Jack Palmer, a principal consultant at Infosys, filed a lawsuit against Infosys in the Alabama state court earlier this year, alleging the company sought his help to circumvent US visa laws. The lawsuit was later moved to the federal court. Mr. Palmer accused Infosys of using short-term business visit visas to circumvent the fewer and expensive work visas meant for high-skilled labor. His suit led to a probe by US authorities, including an inquiry by a US Senate subcommittee. Infosys has previously denied any wrongdoing.

India's third largest software services exporter Wipro shed 1.03%. The company early this month said Premier Foods has selected Wipro Technologies, the global IT, consulting and outsourcing business of Wipro, as a strategic technology partner. As part of the five year strategic relationship, Wipro will be supporting both systems and processes to enhance efficiency of Premier Foods' supply chain. This relationship will enable Premier Foods to realise quantifiable benefits for a known budgetary expenditure with minimal exposure to variable costs.

India's largest software services exporter TCS declined 2.12%, with the stock declining for the sixth straight day. TCS said it continues to see stable pricing environment and isn't seeing cancellation of any projects by clients, its chief financial officer said on Friday, 18 November 2011. The clients are closely monitoring the unfolding of the global economic situation but so far haven't cut their technology budgets or delayed planned projects, S. Mahalingam told reporters. He also said that the company, which gets most of its revenue from the US and Europe, remains concerned over recent currency volatility.

Auto stocks extended recent losses triggered by concerns that 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 maker by sales Mahindra & Mahindra (M&M) shed 2.72%. India's largest motorcycle maker by sales Hero MotoCorp declined 0.62%. India's second largest motorcycle maker by sales Bajaj Auto slipped 4.21%.

India's largest truck maker by sales Tata Motors slumped 5.2%. The company today, 21 November 2011, introduced a new version of the Nano minicar, which it said is more powerful and fuel efficient than the previous model. India's largest commercial vehicle maker by sales said it will continue to sell the Nano at the same price. The Nano, sold in three variants, is priced between Rs 1.4 lakh and Rs 1.96 lakh at showrooms in New Delhi. Tata Motors said the new version of the Nano will have a fuel efficiency of 25.4 kilometers per liter, compared with 23.6 kilometers per liter of the previous variant. The new Nano is powered by a 624 cubic centimeter gasoline engine that will deliver 38 horsepower, compared with 35 horsepower in the previous variant.

India's largest small car maker by sales Maruti Suzuki India rose 0.2% to Rs 942.60, halting nine-day 16.68% slide on bargain hunting. It was the top gainer from the Sensex pack.

India's largest listed cellular services provider by market capitalization Bharti Airtel lost 2.3% to Rs 388.50, off day's low of Rs 380. The Central Bureau of Investigation (CBI) on Saturday, 19 November 2011, conducted searches at offices of Bharti Airtel and Vodafone's Indian unit seeking details on spectrum allocation by the government to operators between 2001-02. The CBI conducted raids at Bharti Airtel's office in Gurgaon, near New Delhi.

"We would like to categorically state that all the spectrum allotted to us from time to time has been strictly as per the stated government policy," Bharti Airtel's spokesman said in a statement. "We are providing all details and correspondence to the authorities and shall provide complete support as needed in the matter," Bharti Airtel's spokesperson said.

Meanwhile, Bharti Airtel on Friday, 18 November 2011, said it will start selling Apple Inc.'s latest iPhone 4S on 25 November 2011. The smartphone from the Cupertino, California-based company is priced at $867 for the 16GB version. India, with 865.71 million wireless users at the end of August, is the world's second-largest telecoms market after China.

Jaiprakash Associates fell 2.25%, with the stock extending 20.46% losses in preceding eight trading sessions triggered by weak Q2 operating performance. Net profit rose 11% to Rs 128.65 crore on 2% growth in net sales to Rs 3132.41 crore in Q2 September 2011 over Q2 September 2010. A sharp surge in other income and decline in tax rate to 42% from 60% boosted bottom line. The core operating profit margin declined 80 basis points to 23.9%, mainly due to increase in employee costs.

Realty stocks extended recent slide triggered by weak Q2 results from top realty firms. DLF, HDIL, Indiabulls Real Estate, and Unitech fell by between 2.19% to 4.32%.

Cals Refineries clocked highest volume of 1.33 crore shares on BSE. Suzlon Energy (1.03 crore shares), Pipavav Defence (71.04 lakh shares), Shree Renuka Sugars (55.01 lakh shares) and IFCI (44.03 lakh shares) were the other volume toppers in that order.

SBI clocked highest turnover of Rs 122.87 crore on BSE. RIL (Rs 89.83 crore), Tata Steel (Rs 56.91 crore), ICICI Bank (Rs 56.29 crore) and L&T (Rs 55.14 crore) were the other turnover toppers in that order.

Corporate earnings have been weak. The combined net profit of a total of 3,766 companies declined 35.9% to Rs 67501 crore on 20.6% growth in sales to Rs 1136200 crore in Q2 September 2011 over Q2 September 2010.

The government recently raised the limit for foreign investments in government and corporate bonds by $5 billion each. The move is aimed at boosting overseas capital inflows, which have remained muted so far this year, and it is likely to support the Indian currency that has shed nearly 13% against the dollar this fiscal year that started 1 April 2011. Thomas Mathew, joint secretary of capital markets, told reporters on 17 November 2011, that the incremental limit of $5 billion can be invested in securities without any residual maturity criterion.

The government has put off introduction or consideration and passing of key bills such as the Land Acquisition Bill, Direct Taxes Code Bill, the Banking and Insurance Bills during the winter session of Parliament. The winter session starts tomorrow, 22 November 2011. The Banking Bill was referred to the standing committee in March, while the Insurance Bill was sent to the committee in 2009. Giving details about the business of the proposed session, Parliamentary Affairs Minister, Pavan Kumar Bansal on 16 November 2011, said that the Standing Committee on Rural Development needs more time on the land acquisition bill.

Bansal announced a list of 31 bills for consideration and passage during the winter session. It government also aims to introduce 23 new bills during the 21 sittings of the session. The Finance Ministry will also seek the approval of Parliament for additional expenditure.

The Union Cabinet on 16 November 2011, cleared the pension bill but decided not to limit foreign direct investment in the sector, retaining the flexibility to prescribe or change limit through an executive decision. The government will place the Pension Fund Regulatory and Development Authority Bill 2011 in the winter session of Parliament.

The Reserve Bank of India (RBI) has announced its first government bond buyback under its open-market-operations program this year, in a move aimed at easing liquidity in the cash-strapped banking system. The plan to buy up to Rs 10000 crore of government bonds on Thursday, 24 November 2011 comes as banks have been borrowing between Rs 80000 crore and Rs 1.3 lakh crore daily for the past week, underscoring the cash crunch in the local banking system. The RBI said it will buy the bonds through a multi-security auction using the multiple price method. It will announce the details of the bonds that it will buy back at the auction shortly, it added.

RBI announced a 25 basis points hike in its key policy rate viz. the repo rate to 8.5% after half-yearly review of the monetary policy on 25 October 2011. The central bank cut its GDP growth forecast for the current fiscal year through March 2012 to 7.6% from 8% earlier. But it retained its March-end inflation projection of 7%. RBI said the projected inflation trajectory indicates that the inflation rate will begin falling in December 2011 (January 2012 release) and then continue down a steady path to 7% by March 2012. It is expected to moderate further in the first half of 2012-13. This reflects a combination of commodity price movements and the cumulative impact of monetary tightening. Further, moderating inflation rates are likely to impact expectations favourably.

Emerging markets such as India must take measures to boost long-term foreign direct investment to blunt volatility in exchange rates, and any capital control measures must be selective and temporary, a senior executive of the Asian Development Bank said on 14 November 2011. While capital flows and exchange rates are likely to be volatile in the short-term amid ongoing euro-zone debt concerns, India must focus on improving its investment climate by providing better infrastructure, putting in place a coherent manufacturing policy and developing financial markets, Managing Director General Rajat M. Nag said on the sidelines of the India Economic Summit.

European stocks slumped on Monday, 21 November 2011, pressured by euro-zone debt worries and concerns over a possible collapse in talks to cut the US deficit ahead of Wednesday's deadline. The key benchmark indices in UK, Germany and France were down by between 1.82% to 2.35%.

Rising French government borrowing costs and an uncertain economic outlook continue to pose a threat to the outlook for France's AAA credit rating, Moody's Investors Service said on Monday, 21 November 2011. "Elevated borrowing costs persisting for an extended period would amplify the fiscal challenge the French government faces amid a deteriorating growth outlook, with negative credit implications," wrote Alexander Kockerbeck, senior credit officer, in the ratings firm's Weekly Credit Outlook

Spanish elections over the weekend saw Mariano Rajoy's Popular Party take a commanding lead over the socialists, in what is likely to be the latest change of government in the euro zone. But questions lingered over how the new government could pass austerity measures to save debt-laden Spain from a potential bailout.

Asian shares lost ground on Monday, 21 November 2011, with European and US debt problems firmly in focus for the region's investors. Key benchmark indices in China, Hong Kong, Japan, Indonesia, South Korea, Taiwan and Singapore fell by between 0.06% to 2.64%.

Further hitting sentiment Monday, Chinese Vice Premier Wang Qishan -- who is widely expected to be named as premier next year -- said that he was concerned about the outlook for the global economy, according to the state-run Xinhua News Agency.

Data released early Monday showed that Japan swung back to a trade deficit in October 2011, with the Ministry of Finance reporting a trade gap of 273.8 billion yen ($3.56 billion). In part, the data reflected production problems for Japanese multinationals from disastrous flooding in Thailand.

Singapore's economy will grow 1% to 3% in 2012, the trade ministry said in a statement. Non-oil domestic exports will probably rise 2% to 3% in 2011, lower than a previous forecast for shipments to grow 6% to 7%, the trade promotion agency said in a separate statement today.

Stocks had posted steep losses in the Asia-Pacific region on Friday, 18 November 2011, hit by fresh concerns that Europe's debt woes will hamper global economic growth.

Trading in US index futures indicated that the Dow could fall 146 points at the opening bell on Monday, 21 November 2011. There are fears that a super committee of US politicians convened to find $1.2 trillion in savings will be unable to reach a deal by its November 23 deadline. If it cannot reduce the deficit automatic budget cuts will begin in 2013, half of which will be in defence.

US stocks closed higher on Friday while some broader indexes fell slightly, as investors considered a potential proposal for future European bailouts while they continued to worry over Washington's debt talks. The Dow Jones Industrial Average gained 25.43 points, or 0.22%, to 11796.16. The Standard & Poor's 500-stock index dropped 0.48 point, or 0.04%, to 1215.65 and the Nasdaq Composite fell 15.49 points, or 0.60%, to 2572.50.