Market slides on negative global cues; breadth weak

Key benchmark indices edged lower as weak global stocks weighed on sentiment. The 50-unit S&P CNX Nifty trimmed losses after hitting 8-week low in late trade. The market breadth was weak. The barometer index, BSE Sensex, lost 135.74 points or 0.79%, up about 80 points from the day's low and off close to 120 points from the day's high. Index heavyweight Reliance Industries (RIL) edged lower in volatile trade. Cigarette maker ITC hit record high. The barometer index, BSE Sensex, has fallen 631.06 points or 3.55% in March 2012 so far (till 28 March 2012). The index has surged 1,666.70 points or 10.78% in calendar 2012 so far. From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 1,985.76 points or 13.11%. From a 52-week high of 19,811.14 on 6 April 2011, the Sensex has lost 2,689.52 points or 13.57%. Coming back to today's trade, Tata Steel rose after the company reportedly raised the borrowing limit to Rs 50000 crore. Software pivotals were mixed. Power generation major NTPC extended Tuesday's fall. Engineering & construction major Larsen & Toubro (L&T) reversed Tuesday's gains. Interest rate sensitive banking stocks declined on fears banks' bad loans could increase in a slowing economy. State Bank of India dropped after the bank raised fixed deposit rates on select maturities by up to 1% amid tight liquidity situation. The market erased almost the entire intraday losses in morning trade after an initial slide triggered by weak Asian shares. Volatility was witnessed on the bourses later. Key benchmark indices cut losses in mid-afternoon after sliding to fresh intraday lows in afternoon trade. Volatility continued in late trade as the market once again trimmed losses after hitting fresh intraday low. The market may remain volatile tomorrow, 29 March 2012, as traders roll over positions from the near-month March 2012 series to April 2012 series. The March 2012 derivatives contracts expire tomorrow, 29 March 2012. The BSE Sensex shed 135.74 points or 0.79% to settle at 17,121.62, its lowest closing level since 26 March 2012. The index lost 217.24 points at the day's low of 17,040.12 in late trade. The index fell 11.54 points at the day's high of 17,245.82 in mid-morning trade. The S&P CNX Nifty shed 48.40 points or 0.92% to settle at 5,194.75, its lowest closing level since 26 March 2012. The index hit a low of 5,169.60 in intraday trade, its lowest level since 1 February 2012. The Nifty hit a high of 5,236.55 in intraday trade. The BSE Mid-Cap index fell 0.87% and the BSE Small-Cap index declined 1.08%. Both these indices underperformed the Sensex. The total turnover on BSE amounted to Rs 3669 crore, higher than Rs 2906.29 crore on Tuesday, 27 March 2012. The market breadth, indicating the overall health of the market, was weak. On BSE, 2,030 shares declined and 889 shares gained. A total of 96 shares were unchanged. From the 30-share Sensex pack, 21 stocks declined while the rest of them advanced. Some FMCG stocks rose on defensive buying. Nestle India, Marico and Godrej Consumer Products rose by between 0.64% to 1.96%. But, FMCG major Hindustan Unilever fell 0.9%. Cigarette maker ITC rose 0.53% to Rs 226.70. The stock hit a record high of Rs 227.75 in intraday trade today, 28 March 2012. The Union Budget 2012-13 imposed an additional ad-valorem excise on cigarettes, while keeping the fixed rate structure constant. The additional levy is at the rate of 10% on 50% of retail selling price (MRP), which effectively works out to 5% of MRP. This additional levy is on cigarettes above 65 mm of length, which covers almost the entire cigarette portfolio of ITC. Analysts reckon that ITC may go for medication of length of some of its lower-end brands (reduce the length to sub-65mm) to avoid the additional levy on some part of its portfolio. Index heavyweight Reliance Industries (RIL) fell 0.65% to Rs 725.95. The stock gyrated in a range of Rs 721.10 and Rs 735.70 during the day. The upstream oil regulator Directorate General of Hydrocarbons (DGH) has reportedly rejected RIL's plea that geological complexities are hindering drilling new wells on KG-D6 gas fields, and has asked RIL to drill new wells to boost output. Cairn India tumbled 4.06% after the company's chief executive officer told the media that a proposed 80% increase in cess on crude petroleum oil produced in India could discourage the firm's expansion plan. Union Budget 2012-13 has hiked the cess on crude petroleum oil produced in India from Rs 2500 per tonne to Rs 4500 per tonne. GAIL (India) gained 0.12% to Rs 365.15, with the stock recovering from day's low of Rs 363.35. The state-run firm after market hours on Tuesday, 27 March 2012, said it has set gas transmission target of 121.55 MMSCMD and gas marketing target of 85.75 MMSCMD from domestic sources and through LNG route for the year ending March 2013 (FY 2013) under the annual memorandum of understanding (MoU) signed with the Ministry of Petroleum and Natural Gas. The MoU provides for production target of 430 TMT of polymers (HDPE & LLDPE) and 1,370 TMT of liquid hydrocarbons, GAIL (India) said. The financial targets are set at Rs 43430 crore of gross sales and gross margin of Rs 6287 crore, the company said. India's largest power generation firm by capacity NTPC fell 1.61%, with the stock extending Tuesday's 0.54% fall. NTPC has signed a Commercial Interest Reference Rate (CIRR) based fixed interest rate term loan facility backed by Euler Hermes of euro 72.5 million with KfW, Germany. The loan will be utilized to fund the capital expenditure on Barh, Stage-II project located in the state of Bihar, NTPC said. The loan has a door to door maturity of 14 years. The announcement was made after trading hours on Monday, 26 March 2012. India's largest pharma company by market capitalisation Sun Pharmaceutical Industries declined 1.29%. The company said during market hours today that United States Food & Drug Administration (USFDA) has granted its subsidiary an approval for its Abbreviated New Drug Application (ANDA) for generic version of Seroquel, Quetiapine Fumarate tablets, in multiple strengths. Dr. Reddy's Laboratories rose 1.11%. During market hours today, 28 March 2012, the company said it has launched Quetiapine fumarate tablets (25 mg, 50 mg, 100 mg, 200 mg, 300 mg and 400 mg), a bioequivalent generic version of Seroquel tablets, in US market on 27 March 2012. The Seroquel brand had US sales of approximately $4.6 billion for twelve months ended December 2011 according to IMS Health. Private sector steel maker Tata Steel advanced 2.02% to Rs 455.50. Reportedly the company plans to borrow up to Rs 50000 crore in loans as the company is now more comfortable to raise funds for capacity expansion and purchase of mines to consolidate its position as the world's seventh-largest steelmaker. Among other metal stocks, JSW Steel, Sail, Bhushan Steel, Jindal Steel & Power, Hindalco Industries and Sterlite Industries fell by between 0.3% to 3.79%. Meanwhile, the US Commerce Department on Tuesday set a preliminary import duty of nearly 286% on a certain type of steel pipe from India to offset government subsidies. Engineering & construction major Larsen & Toubro (L&T) rose 0.36% in volatile trade. The stock had gained 1.87% on Tuesday after the company said during market hours on that day its construction division has won a contract worth Rs 1700 crore from Tata Steel for the latter's new 6 million tonnes per annum steel plant being set up at Kalinganagar in Odisha. As part of the greenfield steel plant, L&T is executing a slew of projects like blast furnace, sinter plant, coke oven, balance of plant for steel melt shop, hot strip mill, utilities and construction works for other areas, L&T said. Software pivotals were mixed. India's second largest software services exporter by revenue Infosys fell 1.18%. India's largest software services exporter by revenue TCS slipped 0.8%. India's third largest software services exporter by revenues Wipro rose 0.69%, reversing intraday fall. The US government has decided to hike H-1B visa fee from next fiscal. The hike in visa fee is likely to hit software companies adversely as US is the biggest outsourcing market for Indian IT firms and the sector employs a large number of professionals. Interest rate sensitive banking stocks declined on fears banks' bad loans could increase in a slowing economy. India's biggest private sector bank in terms of net profit, ICICI Bank lost 1.93%. India's second largest bank by net profit HDFC Bank fell 0.92%. India's largest bank by branch network State Bank of India (SBI) dropped 2.28%. The state-run bank has raised fixed deposit rates on select maturities by up to 1% with effect from Wednesday, 28 March 2012, amid tight liquidity situation. Fixed deposits with maturity period of 7-90 days will earn 8% interest against existing 7%. Interest rates on 91-179 day and 181-240 day period fixed deposits have been raised by 0.75% and 1%, respectively. The rate of interest will be 8% now. Interest rate on 241-day to one-year deposits has been raised by 0.25% to 8%. The announcement was made after market hours on Tuesday, 27 March 2012. Among other banking stocks, Bank of India, Kotak Mahindra Bank, IndusInd Bank, Punjab National Bank, Bank of Baroda, IDBI Bank and Axis Bank dropped by between 0.94% to 4%. Reliance Anil Dhirubhai Ambani (ADA) Group shares declined across the board. Reliance Communications, Reliance Infrastructure, Reliance Broadcast network, Reliance Capital, Reliance MediaWorks and Reliance Power fell by between 2.51% to 3.51%. Shares of Vijay Mallya promoted UB Group companies rose on market buzz Vijay Mallya and Heineken are in final stages of the negotiations and due diligence for United Breweries (UBL) stake sale. United Spirits, United Breweries (UBL), and United Breweries (Holdings) rose by between 1.96% to 4.89%. Shares of Kingfisher Airlines were flat. Heineken which currently holds 37.5% stake in UBL may look to acquire controlling stake in UBL, reports added. Currently, the UB group has been passing through a rough patch with the group's airlines business, Kingfisher Airlines, deep in the red and struggling to survive. Auto stocks were mixed. India's largest commercial vehicle maker by sales Tata Motors fell 0.5%. India's largest utility vehicles and tractors maker by sales Mahindra & Mahindra declined 0.71%. India's largest small car maker by sales Maruti Suzuki India gained 0.98%. India's second largest bike maker by sales Bajaj Auto declined 1.42%. India's largest bike maker by sales Hero MotoCorp slipped 0.83%. Gold financing companies gained on bargain hunting after steep recent slide triggered after the Reserve Bank of India (RBI) last week putting a restriction on financing against gold jewellery. Manappuram Finance gained 2.5% while Muthoot Finance rose 2.97%. The Reserve Bank of India (RBI) has directed all NBFCs not to sanction loan beyond 60% of the value of gold jewellery. The RBI further said that the NBFCs whose financial assets consist of loans against gold jewellery to the tune of 50% or more, will have to maintain 12% tier-I capital by 1 April 2014. RBI said NBFCs should not grant any advance against bullion/primary gold and gold coins and they have to disclose the percentage of gold loans to their total assets in balance sheet. Schneider Electric Infrastructure clocked highest volume of 17.56 crore shares on BSE. Cals Refineries (3.07 crore shares), Surya Chakra Power Corporation (1.06 crore shares), Manappuram Finance (88.38 lakh shares) and HDIL (77.01 lakh shares) were the other volume toppers in that order. Schneider Electric Infrastructure clocked highest turnover of Rs 1140.22 crore on BSE. SBI (Rs 127.06 crore), ICICI Bank (Rs 77.13 crore), HDIL (Rs 63.45 crore) and Tata Steel (Rs 63.22 crore) were the other turnover toppers in that order. Finance Minister Pranab Mukherjee on Tuesday said the new tax avoidance rules are meant to check tax avoidance through complicated deals, and not directed against any particular mode of investment like participatory notes (PNs). His comments come at a time when there are concerns in the market that investments through participatory notes and those coming to India through tax havens like Mauritius could be subject to General Anti-Avoidance Rules which comes into effect from 1 April 2012, which in turn could impact FII inflows. Participatory Notes or P-Notes are instruments issued by registered foreign institutional investors to overseas investors, who wish to invest in the Indian stock markets without registering themselves with the market regulator, the Securities and Exchange Board of India (Sebi). Foreign institutional investors (FIIs) bought shares worth a net Rs 42.99 crore on Tuesday, 27 March 2012, as per provisional data from the stock exchanges. They had sold shares worth a net Rs 135.29 crore on Monday, 26 March 2012. Earlier FIIs had made substantial purchases of Indian stocks with their inflow totaling Rs 7305.48 crore in 11 trading sessions from 9 to 23 March 2012, as per provisional data from the stock exchanges. The next major trigger for the market is Q4 March 2012 earnings. Investors will focus on the guidance provided by the management for the year ending March 2013 (FY 2013) to gauge the earnings outlook. The Q4 earnings season will begin in mid April 2012. Advance tax payout of top Indian firms for the last installment of 15 March 2012 was largely flat. A muted advance tax payment indicates that the revenues and profits of companies are under stress. Companies have to pay advance tax on their projected earnings a fortnight before the end of every quarter. The government plans to raise Rs 3.7 lakh crore from the market by issuing bonds during the first half of 2012-13. This works out to around 65% of the total market borrowings estimated at Rs 5.7 lakh crore in the next financial year. Typically, the government completes two-thirds of its borrowings in the first half, the so-called lean season for private sector fund raising. On an average, the government will borrow around Rs 15,000 crore every week. The announcement, which came after market hours on Tuesday, 27 March 2012, is likely to send bond yields higher on concerns of large supplies. European stock markets declined in choppy trade on Wednesday, tracking losses in Asia and on Wall Street the prior day in a step back from recent gains. Key benchmark indices in Germany and UK were down by between 0.11% to 0.19%. France's CAC 40 rose 0.05%. In the UK, gross domestic product fell 0.3% in the fourth quarter of 2011, revised down from a fall of 0.2% previously. Earlier, data showed the French economy expanded 0.2% quarter-on-quarter at the end of 2011, slowing from 0.3% growth in the third quarter Asian markets edged lower on Wednesday as investors waited for more clues on the state of the US economy. Key benchmark indices in China, Japan, Hong Kong, Singapore and South Korea were down by between 0.1% to 2.65%. Taiwan's Taiwan Weighted index was up 0.11%. Indonesia's Jakarta Composite gained 0.27%. Trading in US index futures indicated that the Dow could gain 29 points at the opening bell on Wednesday, 28 March 2012. US stocks retreated from near four-year peaks on Tuesday, 27 March 2012, as investors took a breather following a strong market rally. The Dow Jones industrial average shed 43.90 points, or 0.33%, to 13,197.73. The Standard & Poor's 500 index dropped 3.99 points, or 0.28%, to 1,412.52 and the Nasdaq Composite index dipped 2.22 points, or 0.07%, to 3,120.35. A report quoted the US Federal Reserve Chairman Ben Bernanke as saying on Tuesday that it was too soon to declare victory in the US economic recovery, warning against complacency in policymaking as the outlook brightens.