Sensex, Nifty hit 5-week lows; metal stocks lead decline

Key benchmark indices extended losses for the second straight day to reach their lowest level in five weeks after a setback to the Congress party in assembly elections clouded the UPA government's ability to push economic reforms. The Congress party heads the United Progressive Alliance (UPA) coalition government at the centre. The market breadth was weak. Volatility was high as results of assembly elections held in five states filtered in since early morning. The barometer index, BSE Sensex, lost 189.58 points or 1.09%, off close to 520 points from the day's high and up about 45 points from the day's low. Weakness in global stocks also hurt sentiment adversely.

The barometer index has lost 575.40 points or 3.24% in March 2012 so far (till 6 March 2012). The Sensex had jumped 559.13 points or 3.25% in February 2012. The index has surged 1,718.37 points or 11.11% in calendar 2012 so far (till 6 March 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 2,037.43 points or 13.46%. From a 52-week high of 19,811.14 on 6 April 2011, the Sensex has lost 2,637.85 points or 13.31%.



Coming back to today's trade, index heavyweight Reliance Industries (RIL) declined nearly 3%. Metal stocks dropped for the second straight day after China's Premier Wen Jiabao on Monday, 5 March 2012, cut the country's growth target to 7.5% for 2012, from an 8% goal in place since 2005. Capital goods, realty and banking stocks reversed intraday gains.

The market trimmed losses after hitting its lowest level in almost five weeks in early trade. High volatility was witnessed in morning trade as key benchmark indices regained strength after paring gains after a strong rebound. The market hit a fresh intraday high in mid-morning trade. The market trimmed gains in early afternoon trade. The market was further off the day's high in afternoon trade. The market slipped into the negative terrain in mid-afternoon trade. The market hit a fresh intraday low in late trade.

The Samajwadi Party (SP) has crossed the half-way mark in the 2012 Uttar Pradesh Assembly Elections and looks all set to form the next government in the state. While the party has already won 144 seats, it is leading in 79 other seats, taking the total number to 223 as per the tally at around 16:41 IST. The Congress and RLD alliance was trailing in fourth place.

In Punjab, the ruling Shiromani Akali Dal (SAD)-Bharatiya Janata Party (BJP) coalition created history by retaining power. Punjab has not seen the incumbent government returning to power in the last 46 years. Meanwhile, a close contest was on between the Congress and the ruling BJP in Uttarakhand. The ruling Congress led coalition is set to retain power in Manipur. The BJP led coalition is set to form the next government in Goa.

The BSE Sensex lost 189.58 points or 1.09% to settle at 17,173.29, its lowest closing level since 30 January 2012. The index fell 234.59 points at the day's low of 17,128.28 in late trade. The index rose 329.09 points at the day's high of 17,691.96 in mid-morning trade, its highest level since 2 March 2012.

The S&P CNX Nifty shed 57.95 points or 1.1% to settle at 5,222.40, its lowest closing level since 31 January 2012. The index hit a high of 5,382.05 in intraday trade, its highest level since 2 March 2012. The index hit low of 5,206.40 in intraday trade.

The BSE Mid-Cap index fell 1.11% and the BSE Small-Cap index declined 1.29%. Both these indices underperformed the Sensex.

BSE clocked turnover of Rs 3027 crore, higher than Rs 2456.13 crore on Monday, 5 March 2012.

The market breadth, indicating the overall health of the market, was weak. On BSE, 1,773 shares fell and 1,048 shares rose. A total of 113 shares were unchanged.

From the 30-share Sensex pack, 21 fell and the rest rose.

Index heavyweight Reliance Industries (RIL) fell 2.68% to Rs 776.50. The stock was volatile. The stock hit a high of Rs 809 and a low of Rs 773.30. 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.

Most realty stocks reversed initial gains. Anant Raj Industries, Unitech, HDIL and D B Realty fell by between 1.57% to 6.09%. But, realty major DLF rose 2.73%. 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.

Bank stocks reversed initial gains. India's biggest private sector bank in terms of branch network, ICICI Bank fell 1.98%. India's second largest bank by net profit HDFC Bank declined 0.72%.

State Bank of India declined 1.06%. The bank late last month cut interest rates on education loans by 25 to 100 basis points.

Among other banking stocks, IDBI Bank, Bank of Baroda, Bank of India, Canara Bank, Axis Bank and Punjab National Bank dropped by between 0.11% to 2.95%.

L&T dropped 2.44%, with the stock reversing initial gains. The company said on Friday, 2 March 2012, its construction division bagged orders worth Rs 1306 crore across various business segments in February 2012.

Bharat Heavy Electricals (Bhel) fell 3.23%, with the stock reversing initial gains. 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 on Monday, 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.

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.

Metal stocks declined for the second straight day after China's Premier Wen Jiabao on Monday, 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, JSW Steel, Tata Steel, Sail, Nalco, and Hindustan Zinc shed by between 0.49% to 6.14%. LMEX, a gauge of six metals traded on the London Metal Exchange dropped 1.37% on Monday, 5 March 2012.

Hindalco Industries fell 5.75% after the company's US-based unit Novelis said it is selling three aluminium foil manufacturing plants in Europe to American Industrial Acquisition Corporation for an undisclosed sum. The transaction includes foil rolling operations in Rugles, France; Dudelange, Luxembourg; and Berlin, Germany, Novelis.

Sugar stocks reversed initial gains in a weak market on profit taking. Bajaj Hindusthan, Balrampur Chini Mills and Shree Renuka Sugars shed by between 4.45% to 7.86%.

Telecom stocks fell even as an Empowered Group of Ministers (EGoM) decided to allocate 700-megahertz (MHz) spectrum band for offering fourth-generation or 4G telecom services. MTNL, Tata Teleservices (Maharashtra), Reliance Communications, Bharti Airtel and Idea Celluar dropped by between 0.47% to 6.33%. This particular band (700 MHz) is considered to be very efficient and could fetch the government revenues more than it got through auctioning of 3G spectrum last year.

Ranbaxy Laboratories declined 1.19%. The company announced during market hours today that it has launched the generic versions of Atorvastatin tablets, 10 milligrams (mg), 20 mg, 40 mg and 80 mg in Italy and Sweden and l0 mg, 20 mg and 40 mg in the Netherlands, after receiving approval from the respective local Regulatory Authorities. In accordance with its settlement agreement with Pfizer, Ranbaxy has introduced the product ahead of the applicable patent expiries, the company said. Pfizer's patent expires in Italy on 8 May 2012 and in the Netherlands and Sweden on 6 May 2012, Ranbaxy said in a statement.

IT stocks rose on a weak rupee. The rupee fell below 50 mark against the dollar on Tuesday on negative local equities and as some companies stepped up dollar purchases due to maturing foreign loans. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports. India's third largest software services exporter by revenues Wipro rose 0.05%.

India's second largest software services exporter by revenue Infosys gained 1.41%. 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.

India's largest software services exporter by revenue, TCS fell 0.62%. 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.

Auto stocks were mixed. Bajaj Auto rose 0.57%. The company said during market hours on 2 March 2012 its total sales rose 5% to 3.43 lakh units in February 2012 over February 2011.

Hero MotoCorp declined 1.07%. 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 fell 2.27%. Tata Motors Chairman Ratan Tata today, 6 March 2012, denied a news report that the Indian car maker has made a bid for the assets of failed Swedish auto firm Saab AB.

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) rose 0.64%. 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 gained 1.01%. 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.

Dazzel Confindiv clocked highest volume of 1.1 crore shares on BSE. Lanco Infratech (1.08 crore shares), Reliance Power (93.51 lakh shares), HDIL (75.06 lakh shares) and IFCI (72.33 lakh shares) were the other volume toppers in that order.

SBI clocked highest turnover of Rs 252.32 crore on BSE. Reliance Infrastructure (RS 133.33 crore), Reliance Power (Rs 117.59 crore), ICICI Bank (Rs 99.51 crore) and Reliance Capital (Rs 78.64 crore) were the other turnover toppers in that order.

Foreign institutional investors (FIIs) bought shares worth a net Rs 125.50 crore Monday, 5 March 2012, as per provisional data from the stock exchanges.

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.

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, 5 March 2012. 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.

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.

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.

European stock markets dropped Tuesday, as banks and miners moved lower on concerns about global growth. Key benchmark indices in UK, France and Germany fell by between 1% to 1.47%.

China on Monday lowered its growth target for 2012 to the lowest level in eight years which fuelled concerns about global growth. Another report on that day showed that US factory orders declined in January for the first time in three months

Asian shares edged lower Tuesday, with steel makers among the top decliners on concerns about global growth. Key benchmark indices in China, Hong Kong, Indonesia, Japan, Singapore, South Korea and Taiwan shed by between 0.45% to 2.16%.

Trading in US index futures indicated that the Dow could fall 99 points at the opening bell on Tuesday, 6 March 2012. US stocks closed slightly lower Monday, hamstrung by a lowered economic growth target in China, contracting euro-zone business activity and some weak elements in a gauge of the US services sector.