Market slides on first day of March 2012

Trading for the new month began on a weak note as key benchmark indices declined close to 1%. The barometer index, BSE Sensex, fell 168.71 points or 0.95%, off close to 134 points from the day's high and up about 121 points from the day's low. The market breadth was negative. Bhel and L&T declined after these two companies were outbid by BGR Energy Systems in a tender for a large order from NTPC. Interest rate sensitive banking stocks extended Wednesday's losses on fears banks' bad loans could increase in a slowing economy.

The barometer index has surged 2,129.05 points or 13.78% in calendar 2012 so far (till 1 March 2012) on the back of heavy inflow from foreign funds. The Sensex jumped 559.13 points or 3.25% in February 2012. From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 2,448.11 points or 16.17%. From a 52-week high of 19,811.14 on 6 April 2011, the Sensex has lost 2,227.17 points or 11.24%.



Coming back to today's trade, index heavyweight Reliance Industries (RIL) trimmed losses in volatile trade. ONGC declined as an auction of 5% government stake-sale in the firm through the stock exchanges mechanism was held today, 1 March 2012. Maruti Suzuki India jumped nearly 5% after reporting higher February 2012 sales. Realty stocks edged lower.

The market edged lower in early trade amid mixed Asian shares. The market extended initial losses to hit fresh intraday low in morning trade. The market trimmed intraday losses in mid-morning trade. Intraday recovery witnessed in mid-morning trade proved short lived, with key benchmark indices weakening once again in early afternoon trade on weak Asian stocks. The market skidded to hit fresh intraday low in mid-afternoon trade as European stocks opened lower. The market was volatile in late trade.

The BSE Sensex fell 168.71 points or 0.95% to settle at 17,583.97, its lowest closing level since 27 February 2012. The index fell 35.15 points at the day's high of 17,717.53 in early trade. The index declined 289.41 points at the day's low of 17,463.27 in mid-afternoon trade.

The S&P CNX Nifty fell 45.45 points or 0.84% to settle at 5,339.75, its lowest closing level since 27 February 2012. The index hit a high of 5,372.45 in intraday trade. The index hit a low of 5,297.50 in intraday trade.

The BSE Mid-Cap index fell 0.53% and the BSE Small-Cap index fell 0.38%. Both these indices outperformed the Sensex.

The market breadth, indicating the overall health of the market, was negative. On BSE, 1,580 shares fell and 1,264 shares rose. A total of 111 shares were unchanged.

BSE clocked turnover of Rs 2831 crore, lower than Rs 3514.52 crore on Wednesday, 29 February 2012.

From the 30-share Sensex pack, 24 declined and the rest rose.

Index heavyweight Reliance Industries (RIL) fell 1.01% to Rs 810.35, off the day's low of Rs 801.20. 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 told reporters on Monday, 27 February 2012. 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 last week 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 fell 1.87% to Rs 287.85 as an auction of 5% government stake-sale in the firm through the stock exchanges mechanism was held today, 1 March 2012. According to reports, investors bid for 29.2 crore shares of ONGC, about 68% of a total of 42.77 crore shares on offer. The Government of India held 74.14% stake in ONGC as on 31 December 2011. Media reports after trading hours said that BSE was in the process of reconciling bids for ONGC auction with funds received and the exchange will publish final numbers later today, 1 March 2012.

Most auto shares declined. India's largest commercial vehicles maker by sales Tata Motors fell 1.16% to Rs 267.65. The company's total sales rose 19% to 92,119 units in February 2012 over February 2011.

India's largest utility vehicles maker Mahindra & Mahindra (M&M) fell 3.67% to Rs 681.65. The company's total sales rose 29% to 43,087 units in February 2012 over February 2011. Speaking on the month's performance, Pravin Shah, Chief Executive, Automotive Division, Mahindra & Mahindra Ltd. said, "We are happy to maintain a healthy growth of 29% in February 2012, with all our brands doing well. While the XUV500 continues to create excitement in the market, the recently launched New Xylo has also evoked a very positive response from customers".

M&M's consolidated net profit, adjusted for extra-ordinary items, rose 13.2% to Rs 831.80 crore on 27.6% growth in gross revenue and other income to Rs 16488.40 crore in Q3 December 2011 over Q3 December 2010. Mahindra Satyam, Mahindra Finance and Mahindra Forgings led the improved performance of the Mahindra Group in Q3 December 2011. M&M announced the consolidated results during trading hours on 21 February 2012.

India's largest car maker by sales Maruti Suzuki India rose 4.64% after company said during market hours today that total sales rose 6.5% to 1.18 lakh units in February 2012 over February 2011. The stock was the top gainer from the Sensex pack.

Ambuja Cements rose 2.56% to Rs 164.15 as the company's shipments grew 12.7% to 20 lakh tonne in February 2012 over February 2011. Production rose 11.27% to 19.93 lakh tonne in February 2012 over February 2011.

Tata Communications (TCL) rose 1.22% to Rs 235.60 in choppy trade after the company confirmed during market hours today that as part of its ongoing review of potential acquisition opportunities, TCL is evaluating a possible cash offer for Cable & Wireless Worldwide plc (CWW). TCL emphasized that considerations are at a very preliminary stage.

Interest rate sensitive banking stocks extended Wednesday's losses triggered by fears banks' bad loans could increase in a slowing economy. India's biggest private sector bank in terms of branch network, ICICI Bank fell 2.44% to Rs 884.35.

India's second largest bank by net profit HDFC Bank fell 0.70% to Rs 514.15. The stock had hit a record high of Rs 540 in intraday trade on Wednesday, 29 February 2012.

State Bank of India declined 1.05% to Rs 2,219.75. The bank on Monday, 27 February 2012, cut interest rates on education loans. Loans of up to Rs 4 lakh will now be charged an interest rate of 13.50%, down from 13.75% earlier, while those between Rs 4 lakh and Rs 7.5 lakh will be charged 13.25%, instead of 14.25% earlier. Loans above Rs 7.5 lakh will be given at an interest rate of 12.00%, a quarter percentage point less than earlier.

Among other bank shares, Axis Bank (down 2.31%), Canara Bank (down 1.99%), Union Bank of India (down 1.91%), Yes Bank (down 1.63%), Federal Bank (down 1.46%), Bank of India (down 1%), Punjab National Bank (down 0.81%) and IndusInd Bank (down 0.77%), edged lower.

Metal stocks fell as LMEX, a gauge of six metals traded on the London Metal Exchange, declined 1.18% on Wednesday, 29 February 2012. JSW Steel (down 3.51%), Bhushan Steel (down 3.36%), Hindustan Zinc (down 2.24%), Tata Steel (down 2.03%), Jindal Steel & Power (down 1.49%), Sail (down 1.16%), Sesa Goa (down 0.84%) and Sterlite Industries (down 0.4%), edged lower.

Reliance Communications rose 0.95% to Rs 95.30 after the company said during market hours today that that in accordance with the terms of issue of $1 billion Zero Coupon Foreign Currency Convertible Bonds (FCCBs) issued by the company in February 2007, the company has paid $1.182 billion (Rs 5,825 crore at the US dollar exchange rate of Rs 49.30) and redeemed all the outstanding FCCBs of $925.3 million together with premium of 27.69%.

Realty stocks edged lower. DLF (down 5.17%), D B Realty (down 4.18%), HDIL (down 4.07%), Sobha Developers (down 3.33%), Oberoi Realty (down 3.28%), Prestige Estates (down 3.22%), Anant Raj Industries (down 2.89%), Peninsula Land (down 2.23%), Indiabulls Real Estate (down 2.22%), Unitech (down 1.55%), Sunteck Realty (down 0.88%) and Parsvnath Developers (down 0.59%), edged lower.

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.

India's largest engineering and construction firm by sales L&T fell 2.30% with the stock extending Wednesday's 2.91% losses triggered by reports that the company has lost in a bidding race for a large NTPC contract for super-critical boilers. L&T was reportedly the third lower bidder for the NTPC contract.

BGR Energy Systems said after market hours on Wednesday, 29 February 2011, that it has emerged as the lowest bidder in all five projects for NTPC's 11 x 660 megawatts (MW) super-critical boiler tender. As per tender conditions of NTPC, BGR Energy would be awarded contracts worth Rs 6500 crore for 7 boilers. Shares of BGR Energy fell 4.89% on profit taking. The stock had jumped 9.47% on Wednesday ahead of the announcement.

State-run power equipment major, Bhel, was the second lowest bidder for the contract and it will get orders for the remaining 4 boilers, reports suggest. Shares of Bhel declined 2.97%.

Meanwhile, a panel of ministers on economic affairs have deferred a decision on duties for imported power equipment, heavy industries minister Praful Patel told reporters on Thursday. 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.

State Bank of India clocked highest turnover of Rs 127.80 crore on BSE. DLF (Rs 127.20 crore), Reliance Capital (Rs 93.95 crore), L&T (Rs 73.37 crore) and HDIL (Rs 72.89 crore), were the other turnover toppers on BSE in that order.

Suzlon Energy reported highest volume of 2.10 crore shares on BSE. IFCI (1.30 crore shares), Lanco Infratech (1.01 crore shares), Dazzel Confindive (89.86 lakh shares) and HDIL (66.05 lakh), were the other volume toppers on BSE in that order.

Foreign institutional investors (FIIs) bought shares worth a net Rs 579.63 crore on Wednesday, 29 February 2012, as per provisional data from the stock exchanges. FIIs bought shares worth a net Rs 25075.21 crore in February 2012, as per provisional data from the stock exchanges. FIIs had bought shares worth a net Rs 10357.70 crore in January 2012, as per data from Securities & Exchange Board of India (Sebi).

India's merchandise exports in January 2012 rose by 10.10% to $25.35 billion while imports during the same month climbed by 20.25% to $40.10 billion, data released by the Government showed on Thursday. As a result, the trade deficit for January stood at $14.76 billion compared with $10.33 billion in the corresponding month a year earlier.

India's manufacturing sector expansion slowed slightly in February from a month ago, although the pace of growth remained healthy as new orders touched a 10-month high, a business survey showed on Thursday. The HSBC manufacturing Purchasing Managers' Index (PMI), compiled by Markit, eased to 56.6 in February from 57.5 in January, which was an eight-month high. The index has held above the 50 mark that separates growth from contraction for almost three years.

The Indian economy expanded 6.1% in the October-December quarter from a year earlier, the weakest pace in more than two years, hurt by slower growth in manufacturing output and a contraction in mining production, according to data released by the government on Wednesday, 29 February 2012. Growth in gross domestic product was slower than the 6.9% expansion posted in the July-September quarter. It was also below expectations for a 6.4% expansion, according to the median estimate of a poll of economists carried out by Capital Market. The government expects the economy to grow 6.9% in the current fiscal year that ends March 31, the weakest pace in three years.

India's fiscal deficit during April to January was Rs 4.35 lakh crore or 105.4% of the full-year target, government data showed on Wednesday.

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 ongoing assembly polls. Polling for assembly elections in five states concludes in early March 2012. The counting of the votes takes place on 6 March 2012, with the results due on the same day.

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.

European stock markets reversed initial losses on Thursday. Key benchmark indices in France, Germany and UK rose by between 0.28% to 0.56%.

Activity across the British manufacturing sector continued to grow in February, but at a slower pace, according to a survey of purchasing managers released Thursday. The Markit/CIPS purchasing managers index for the sector fell to 51.2 February, down slightly from January's eight-month high of 52.0. A reading above 50 indicates expansion.

Asian stocks edged lower on Thursday after US stocks faltered on Wednesday as Federal Reserve Chairman Ben Bernanke dashed hopes of additional quantitative easing and expressed a cautious view on the domestic recovery. Key benchmark indices in China, Taiwan, Japan, Singapore, Hong Kong and Indonesia fell by between 0.04% to 1.35%. South Korean stock markets were closed for a holiday.

Meanwhile, a pair of key Chinese manufacturing surveys -- one from a government-backed group and another from HSBC -- offered a split decision on the sector. The official China manufacturing Purchasing Managers' Index rose to 51, indicating mild expansion. However, HSBC's subsequent PMI release printed at 49.6, just below the 50 mark that separates overall growth from contraction.

Trading in US index futures indicated that the Dow could gain 17 points at the opening bell on Thursday, 1 March 2012. US stocks dropped on Wednesday as Federal Reserve Chairman Ben Bernanke dashed hopes of additional quantitative easing and expressed a cautious view on the domestic recovery. The Fed chairman remained cautious on his view of the recovery, warning that the US rebound remains "uneven and modest." In economic headlines, the Commerce Department revised its estimate of fourth-quarter US economic growth to 3% from an initial estimate of 2.8%.