Market skids to 4-1/2-week low on weak global stocks

Key benchmark edged lower to reach their lowest closing level in 4-1/2 weeks as weakness in global stocks hit sentiment adversely. Investors remained cautious ahead of the outcome tomorrow, 6 March 2012, of assembly elections held in five states. The barometer index, BSE Sensex, lost 274.12 points or 1.55%, off about 235 points from the day's high and up close to 50 points from the day's low. The market breadth was weak. World stocks fell as China cut its economic growth forecast to its lowest level in eight years. China is the world's second largest economy after the US.

The barometer index has lost 389.81 points or 2.19% in March 2012 so far (till 5 March 2012). The Sensex had jumped 559.13 points or 3.25% in February 2012. The index has surged 1,907.95 points or 12.34% in calendar 2012 so far (till 5 March 2012) on the back of heavy inflow from foreign funds. From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 2,227.01 points or 14.71%. From a 52-week high of 19,811.14 on 6 April 2011, the Sensex has lost 2,448.27 points or 12.35%.



Coming back to today's trade, shares of state-run gas transmission and distribution firm GAIL (India) hit 52-week low. Index heavyweight Reliance Industries (RIL) shed nearly 2%. Realty stocks extended recent losses. Interest rate sensitive banking stocks edged lower on fears banks' bad loans could increase in a slowing economy. Metal stocks declined after China's Premier Wen Jiabao today, 5 March 2012, cut the country's growth target to 7.5% for 2012, from an 8% goal in place since 2005. Except BSE FMCG index, all the other 12 sectoral indices on BSE were in the red.

The market edged lower in early trade on weak Asian shares. The market trimmed losses after hitting fresh intraday low in morning trade. The market was range bound in mid-morning trade. The market extended losses to hit fresh one-week low in early afternoon trade. The market fell further, with the Sensex hitting 4-1/2 week low in afternoon trade. The market trimmed losses in mid-afternoon trade. The market once again trimmed losses after hitting fresh intraday low in late trade.

The BSE Sensex shed 274.12 points or 1.55% to settle at 17,362.87, its lowest level since 1 February 2012. The index fell 324.69 points at the day's low of 17,312.30 in late trade. The index fell 38.57 points at the day's high of 17,598.42 in early trade.

The S&P CNX Nifty lost 79.05 points or 1.47% to settle at 5,280.35, its lowest closing level since 2 February 2012. The index hit low of 5,265.70 and a high of 5,344.50 in intraday trade.

BSE clocked turnover of Rs 2446 crore.

The market breadth, indicating the overall health of the market, was weak. On BSE, 1,844 shares fell and 986 shares rose. A total of 111 shares were unchanged.

From the 30-share Sensex pack, 25 declined and the rest rose.

Index heavyweight Reliance Industries (RIL) fell 1.88%. RIL along with BP PLC will reportedly submit a joint plan to the government to develop the D6 natural gas block and its satellite fields as an integrated unit. The proposal, which will be submitted in the next few weeks, will seek to maximise the use of existing infrastructure to develop all the fields which haven't been worked on yet, BP India chief Sashi Mukundan said last week. The proposal is significant in that it will seek approval to develop an entire block as one unit, rather than follow the current practise of getting clearance for one oil or natural gas field at a time.

In 2011, BP purchased a 30% stake in 21 RIL's oil and gas blocks across India, including D6, which is India's biggest gas discovery so far. RIL is facing declining output at D6 due to reservoir complexity, a natural decline in reserves and delays in developing satellite fields. Output at the D1, D3 and MA fields in the D6 block has plunged to about 38 million metric standard cubic meters a day (MMSCMD) from 60 MMSCMD in June 2010. It is estimated that output will fall further to 27.60 MMSCMD in the next financial year starting April, and to 22.60 MMSCMD in the year after that.

RIL recently said its wholly-owned subsidiary Reliance Holding USA, Inc. priced a $500 million reopening of its existing 5.4% Guaranteed Senior Notes due 2022. The additional notes will be consolidated and will form a single series with the $1,000 million 5.4% Guaranteed Senior Notes due 2022 and will be fully and unconditionally guaranteed by RIL. Reliance Holding USA, Inc. will apply the net proceeds to fund its ongoing capital expenditure, to make business investments, to refinance its existing debt and for general corporate purposes.

ONGC rose 0.89%, with the stock reversing initial losses. The government last week raised Rs 12770 crore ($2.57 billion) from the auction of 42.03 crore shares of state-run oil exploration firm. The number of shares sold fell short of the government's target of 42.77 crore shares, but the money raised exceeded the initial aim of Rs 12405 crore. Bids were registered at a weighted average price of Rs 303.67 a share, or 4.7% above the fixed floor price of Rs 290, the government said late on Friday, 2 March 2012. The government offered to sell its 5% stake in India's largest hydrocarbons explorer for at least Rs 290 each.

GAIL (India) declined 4.88% to Rs 353.45. The stock hit a 52-week low of Rs 352.15.

L&T fell 2.42%. The company said during market hours on Friday, 2 March 2012, that its construction division bagged orders worth Rs 1306 crore across various business segments in February 2012.

Bharat Heavy Electricals (Bhel) declined 3.56%. Bhel has set a new record in its Solar Photovoltaic (PV) business in a single year, by commissioning 13 megawatts (MW) of solar power plants in various parts of the country during the current financial year, the company said in a statement today, 5 March 2012. Solar power projects commissioned by the company during the year include a 3 MW Grid Connected Solar Power Plant at Raichur in Karnataka, a 5 MW Plant in Rajasthan, 2 plants of 2 MW each in Maharashtra and over 1 MW in the Lakshadweep Islands. Significantly, all these projects have been commissioned on Engineering, Procurement and Construction (EPC) basis, Bhel said.

Among other capital goods stocks, Crompton Greaves, Punj Lloyd and ABB shed by between 2.25% to 4.59%.

A panel of ministers on economic affairs has deferred a decision on duties for imported power equipment, heavy industries minister Praful Patel told reporters on Thursday, 1 March 2012. In February 2010, a high-ranking government body had recommended imposition of a 10% import duty and 4% special additional duty on all imported power gears, mainly targeted at curbing imports from China. At present, there is no duty on imported power gears for projects above 1 giga watts (GW), while a 5% duty is applicable on imported power gears for projects below 1 GW.

Hospitality shares fell across the board on profit taking. EIH, Hotel Leela Venture, Indian Hotels, Taj GVK Hotels, EIH Associates Hotels, and Royal Orchid Hotels fell by between 3.44% to 7.93%.

These stocks had surged on Saturday, 3 March 2012, on reports Reliance Industries (RIL) acquired an additional 3.73% stake in EIH from Analjit Singh, the promoter of Max India for Rs 192 crore through an open market transaction. RIL now holds 18.53% in EIH, racing past rival ITC, which has 14.98% in EIH.

Textile stocks were mixed after the government banned cotton exports until further notice. Jindal Cotex, Ruby Mills, Jindal Worldwide and Vardhman Textiles rose by between 1.36% to 6.69%. Alok Industries, Arvind, and Patspin India fell by between 0.44% to 2.56%. The ban on cotton exports encompasses all exports of the fiber crop, including volumes that traders have registered with the government but which they haven't actually shipped yet.

Realty stocks extended recent losses. DLF, Unitech, HDIL and D B Realty shed by between 1.55% to 5.44%. Property consultants and real estate developers have reportedly demanded industry status to the realty sector in the forthcoming Budget. They have also sought incentives to promote affordable housing segment and an increase in the tax exemption on home loans. To boost supply, they have also asked for a single-window clearance for real estate development projects and foreign direct investment (FDI) in multi-brand retail to create demand for retail space in shopping malls.

Interest rate sensitive banking stocks edged lower on fears banks' bad loans could increase in a slowing economy. India's biggest private sector bank in terms of branch network, ICICI Bank fell 3.88%.

State Bank of India declined 3.4%. The bank late last month cut interest rates on education loans by 25 to 100 basis points.

India's second largest bank by net profit HDFC Bank dropped 1.46%. Among other banking stocks, IDBI Bank, Bank of Baroda, Bank of India, Canara Bank, Axis Bank and Punjab National Bank shed by between 0.55% to 3.99%.

Metal stocks declined after China's Premier Wen Jiabao today, 5 March 2012, cut the country's growth target to 7.5% for 2012, from an 8% goal in place since 2005. China is the world's largest consumer of copper and aluminum. Sterlite Industries, Bhushan Steel, Tata Steel, Sail, Hindalco Industries, Nalco, and Hindustan Zinc shed by between 0.39% to 5.35%.

JSW Steel fell 3.75%. The company said during market hours today that its crude steel production was severely impacted in February 2012 due to usage of inferior grades of iron ore. The company's crude steel production rose 13% to 6.10 lakh tons in February 2012 over February 2011.

Tata Power Company fell 2.03%. The company through its subsidiary Khopoli Investments and South Africa's Exxaro Resources have formed an equal joint venture to create a new energy company called Cennergi in South Africa. Cennergi will focus on investigation of feasibility, development, ownership, operation, maintenance, acquisition and management of electricity generation projects in South Africa, Botswana and Namibia. Tata Power made the announcement during trading hours today, 5 March 2012.

Raymond rose 2.78%. With regard to media reports that LVMH was negotiating to invest about $150 million in the company's arm Raymond Apparel, Raymond has clarified that there is no such proposal before the company's board.

Reliance Anil Dhirubhai Ambani (ADA) Group shares rose across the board as exit polls predicted Samajwadi Party in a clear leadership position in the Uttar Pradesh assembly, much ahead of its rival political parties. Reliance Communications, Reliance Infrastructure, Reliance Broadcast Network, Reliance Capital, Reliance MediaWorks and Reliance Power gained by between 0.16% to 5.52%. According to media reports, the Reliance Anil Dhirubhai Ambani (ADA) Group could benefit from a Samajwadi Party victory in Uttar Pradesh. Anil Ambani is known to be close to SP President Mulayam Singh Yadav.

Cigarette maker ITC rose 0.95% on defensive buying.

Adani Enterprises was flat. The company today said it has signed five agreements for supply of imported coal with NTPC, the country's largest power generation company. Adani Enterprises will supply 4 million tonnes of coal imported from global sources between March 2012 to June 2012 to NTPC's fourteen power stations across India. The imported coal is required to meet the coal blending requirements of the NTPC power stations.

Shares of NTPC fell 1.29% in a weak market.

IT stocks were mixed. India's third largest software services exporter by revenues Wipro rose 1.06%, with the stock reversing initial losses.

India's largest software services exporter by revenue, TCS shed 0.68%. The company last week said that its universal financial services platform, TCS BaNCS, has been selected by South Africa's Nedgroup Insurance Company, (NedIC) -- a short-term insurer specializing in homeowner's cover, personal accident and vehicle-related, value-added insurance products. TCS BaNCS Insurance, a part of the TCS BaNCS universal financial services platform, will serve as the new policy administration system for NedIC's short-term insurance services. TCS BaNCS serves the top banks in Africa through its banking and capital markets suite of solutions; this will be TCS BaNCS' first insurance customer in Africa.

India's second largest software services exporter by revenue Infosys dropped 1.75%. Infosys announced during market hours on 27 February 2012 that Bharti Airtel has chosen the company as its partner for 'airtel money' -- the country's first of its kind mobile wallet service by a mobile operator. Under this partnership, Infosys WalletEdge -- the mobile commerce platform will enable the ubiquitous mobile wallet service to support cashless payments and settlements needs of diverse customer segments.

The rupee slipped on Monday to near six-week low as dollar demand from importers remained strong while subdued shares clouded the outlook for portfolio inflows. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.

Most auto stocks edged lower. Bajaj Auto fell 2.03%, with the stock declining for the fourth straight day on muted sales growth in February 2012. The company said during market hours on Friday its total sales rose 5% to 3.43 lakh units in February 2012 over February 2011.

Hero MotoCorp declined 2.91%. The company reportedly plans to set up assembly plants in several countries and boost its technological capabilities through acquisitions or partnerships, as the company seeks to expand its presence worldwide. The strategies follow the exit early last year of Honda Motor Co. from an joint venture that prevented Hero MotoCorp, formerly known as Hero Honda Motors, from aggressively tapping overseas markets. Made-in-India two-wheelers are gaining popularity, especially in Africa and Latin America, as they are relatively cheap and fuel efficient. Establishing overseas assembly plants will also help Hero MotoCorp offer its products at a much more affordable price, especially in countries which levy lower taxes on locally built products, report said.

Hero MotoCorp reported a 10.89% growth in total sales at 5.23 lakh units in February 2012 over February 2011. The company announced the monthly sales data after trading hours on 1 March 2012.

India's largest commercial vehicles maker by sales Tata Motors rose 2.09% on reports the company's Jaguar Land Rover unit and China's Chery Automobile Co are seeking regulatory approval for a 17.5 billion yuan car venture in eastern China. The venture, to be located close to Shanghai in Changshu city, will make Land Rover SUVs initially followed by Jaguars in the second phase, reports added.

Tata Motors' total sales rose 19% to 92,119 units in February 2012 over February 2011. The company announced the monthly sales data during trading hours on 1 March 2012.

India's largest utility vehicles maker Mahindra & Mahindra (M&M) fell 0.19%, with the stock declining for the fourth straight day. The company's total sales rose 29% to 43,087 units in February 2012 over February 2011. The company announced the monthly sales data during trading hours on 1 March 2012.

India's largest car maker by sales Maruti Suzuki India dropped 0.56%. The company said during market hours on 1 March 2012 that total sales rose 6.5% to 1.18 lakh units in February 2012 over February 2011.

Sun Pharmaceutical Industries fell 1.83% to Rs 557.80. The stock hit a record high of in intraday trade Rs 572 today.

Cals Refineries clocked highest volume of 93.50 lakh shares on BSE. Reliance Power (83.18 lakh shares), Suzlon Energy (79.78 lakh shares), Reliance Communications (77.47 lakh shares) and Dazzel Confindiv (70.24 lakh shares) were the other volume toppers in that order.

Reliance Infrastructure clocked highest turnover of Rs 123.97 crore on BSE. SBI (Rs 112.70 crore), Reliance Power (Rs 112.59 crore), Reliance Capital (Rs 83.32 crore) and Reliance Communications (Rs 74.87 crore) were the other turnover toppers in that order.

India's services sector lost momentum in February and firms shed workers for the first time in three months despite growing more confident about the year ahead, a business survey showed on Monday. HSBC's Business Activity Index, compiled by Markit and based on a survey of around 400 firms, fell to 56.5 in February from 58.0 in January. The employment sub-index slipped below the 50-mark separating growth from contraction for the first time since November, reflecting similar trends in the factory sector during the month. The confidence index regarding future business inched up to a new eight-month high of 71.7 in February from 71.2 in January.

Foreign institutional investors (FIIs) sold shares worth a net Rs 0.50 crore Saturday, 3 March 2012, as per provisional data from the stock exchanges. FIIs bought shares worth Rs 442.64 crore in the first three trading sessions of March 2012. FIIs had bought shares worth a net Rs 25212.10 crore in February 2012, as per data from Securities & Exchange Board of India (Sebi). FIIs had bought shares worth a net Rs 10357.70 crore in January 2012.

Exit polls have predicted a hung assembly in Uttar Pradesh with the Samajwadi Party (SP) emerging as the single largest party and Mayawati's BSP on its way out. In Uttarakhand and Punjab, most of the polls by news channels hinted at the Congress having an edge over the BJP. In Manipur, the exit polls have predicted that while the Congress will be comfortably ahead of the Manipur People's Party-led opposition combine, it might just fall short of a majority. In Goa, exit polls have indicated that the BJP-led combine has an edge over the Congress-NCP alliance.

Polling for assembly elections in five states concluded on Saturday, 3 March 2012. The counting of the votes takes place tomorrow, 6 March 2012, with the results due on the same day.

The government is working with state governments for early implementation of a goods and services tax (GST), Finance Minister Pranab Mukherjee said on 22 February 2012.

Finance Minister Pranab Mukherjee will present the annual budget for 2012/13 on 16 March 2012, while the railways budget will be presented on 14 March 2012. The budget session of parliament will start on 12 March 2012. The government will present on March 15 the Economic Survey for 2011/12, a document on the state of economy prepared by the economic division in the ministry of finance. The annual budget is usually presented on the last working day of February. However, the budget has been delayed this time due to the assembly polls.

Reports indicate that the finance ministry is considering a proposal to increase excise duty from 10% to 12%, although still lower than the level before the 2008 financial crisis. The move is aimed at helping the government improve its fiscal situation but it is expected to push up the cost of almost all manufactured goods from food products to consumer durables and automobiles.

Mining shares led decline in European stock markets on Monday after China cut its economic growth forecast to its lowest level in eight years. Key benchmark indices in France, Germany and UK shed by between 0.45% to 1.08%. China is a large consumer of natural resources and any indications about future growth in that country tend to influence mining stocks.

Moody's Investors Service on Friday, 2 March 2012, cut Greece's sovereign debt rating to the lowest possible level after a debt-restructuring deal that imposes hefty economic losses for private creditors. Moody's lowered Greece's local and foreign-currency bond ratings a notch to C from Ca, becoming the third credit rating agency to downgrade the country following the announcement of the swap deal to lighten its debt burden.

European Union leaders have cleared the release of long-awaited second bailout package for debt-ridden Greece. This is to enable Greece avoid a default on paying back euro 14.5-billion debts due on 20 March 2012. Finance ministers of the euro group, during a two-day meeting in Brussels Friday, kicked off the preparations to release the first tranche of the euro 130-billion rescue package.

Meanwhile, all but two European Union countries signed a fiscal pact to tighten budget discipline on Friday, marking a coup for Germany that pushed for the accord to prevent a repeat of the loose spending that led to economic crisis. Only Britain and the Czech Republic did not sign the agreement, under which all other countries in the 27-nation bloc are to write a golden rule on balanced budgets into national constitutions or equivalent laws and automatic correction mechanisms if the rule is breached.

Asia markets edged lower on Monday, led by losses in technology and energy stocks. Key benchmark indices in China, Hong Kong, Indonesia, Japan, Singapore, South Korea and Taiwan shed by between 0.06% to 1.38%.

China's services sector output grew at its fastest pace in four months in February as new business growth reached an eight-month high, a private-sector survey of purchasing managers showed today. The reading contrasted with an official report on Saturday that signaled that the sector was shrinking. The private-sector HSBC China Services PMI climbed to a seasonally adjusted 53.9 in February from 52.5 in January, well above the 50 mark that demarcates expansion and contraction. The official PMI for non-manufacturing sectors fell to 48.4 in February from 52.9 in January, the National Bureau of Statistics said on Saturday.

China's Premier Wen Jiabao cut the country's growth target to 7.5% for 2012 in a bid to find leeway for promised economic and welfare reforms while delivering stability ahead of a leadership transition later this year.

Trading in US index futures indicated that the Dow could fall 49 points at the opening bell on Monday, 5 March 2012.