Sensex hits over one-week closing low below 16,000

Key benchmark indices fell for the third straight day to hit their lowest closing level in over a week as global stocks faltered as investors dumped risky assets after data showing downbeat manufacturing activity from China to Europe raised doubts about global economic recovery. Reports indicating that monsoon rains over India's mainland will be delayed by about four days also weighed on sentiment. The barometer index, BSE Sensex fell below the psychological 16,000 mark. The Sensex was down 253.37 points or 1.56%, off close to 260 points from the day's high and up about 30 points from the day's low. The market breadth was weak. From a recent high of 16,438.58 on 29 May 2012, the Sensex has declined 473.42 points or 2.87% in three trading sessions. The Sensex shed 1,100.28 points or 6.35% in May 2012 on euro-zone debt worries. The barometer index has gained 510.24 points or 3.3% in calendar 2012 so far (till 1 June 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 829.30 points or 5.47%. From a 52-week high of 19,131.70 on 8 July 2011, the Sensex has lost 3,166.54 points or 16.55%. Index heavyweight Reliance Industries (RIL) was down over 3%. Jindal Steel & Power hit 52-week low. Automobile and hotel stocks were down across the board after the government announced a series of austerity measures in the context of the current fiscal situation where there is a tremendous pressure on government's resources. Gas utility stocks soared after television media reported that the Delhi High Court has ruled in favour of city gas utility Indraprastha Gas (IGL) which was contesting a directive from a government regulator to cut gas tariffs in New Delhi. Oil exploration firms mostly declined as crude futures fell to its lowest level in seven months today, 1 June 2012. The market edged lower in early trade. It extended losses to hit fresh intraday low in morning trade. It trimmed losses from intraday lows in mid-morning trade. It weakened to hit lowest level in over one week in early afternoon trade. Key benchmark indices hit their intraday day lows in afternoon trade. It plunged to hit fresh intraday low in mid-afternoon trade. It extended losses to hit fresh intraday low in late trade. The BSE Sensex was down 253.37 points or 1.56% to 15,965.16, its lowest closing level since 23 May 2012. The index fell 285.05 points at the day's low of 15,933.48 in late trade. The index rose 7.66 points at the day's high of 16,226.19 in early trade. The S&P CNX Nifty was down 82.65 points or 1.68% to 4,841.60, its lowest closing level since 23 May 2012. The index hit a high of 4925 and a low of 4,831.75. The BSE Mid-Cap index dropped 1.46% and the BSE Small-Cap index fell 1.22%. Both these indices outperformed the Sensex. BSE clocked turnover of Rs 1865 crore higher than Rs 1782.54 crore on Thursday, 31 May 2012. The market breadth, indicating the overall health of the market, was weak. On BSE, 1830 shares declined and 850 shares rose. A total of 118 shares were unchanged. Among the 30-share Sensex pack, 27 fell while the rest rose. Cigarette maker and index heavyweight ITC rose 1.54% on defensive buying. Index heavyweight Reliance Industries (RIL) declined 3.16%. RIL bought back 8.2 lakh shares at average price of Rs 700.226 per share on Monday, 28 May 2012. The company cumulatively bought back a total of 2.09 crore till 28 May 2012 under the share buyback programme. RIL early last week said it has selected Phillips 66's E-Gas technology for its planned gasification plants at Jamnagar in Gujarat. The planned gasification plants at Jamnagar will be among the largest in the world and will process petroleum coke and coal into synthesis gas utilizing the E-Gas technology, RIL said in a statement. The synthesis gas will be used as a feedstock for a new chemical complex and will fuel the Jamnagar refinery's existing gas turbine power generation units, RIL said in a statement. Gas utility stocks soared after television media reported that the Delhi High Court has ruled in favour of city gas utility Indraprastha Gas (IGL) which was contesting a directive from a government regulator to cut gas tariffs in New Delhi. Indraprastha Gas (up 28.7%), Petronet LNG (up 8.99%), Gujarat Gas Company (up 14.62%), Gujarat State Petronet (up 11.2%) and GAIL (India) (up 2.65%) gained. IGL, the sole distributor of CNG (compressed natural gas) and PNG (piped natural gas) in Delhi and adjoining areas, in its petition had challenged the regulator's order terming it to be invalid. It had contended that the regulator had no right to fix the network tariff and compression charge for CNG supplied by it to consumers. In April, the regulator (PNGRB) had ordered IGL to cut network tariff by around 60% retrospectively from April 2008. Oil exploration firms mostly declined as crude futures fell to its lowest level in seven months today, 1 June 2012, after China's manufacturing index missed estimates, adding to speculation global demand will falter. Cairn India fell 4.81% and ONGC declined 2.92%. Oil India rose 1.28%. Lower crude oil prices will result in lower realization from crude sales for oil exploration firms. Realty stocks declined. HDIL, Unitech and D B Realty dropped by between 0.7% to 5.56%. Realty major DLF fell 1.3%. The company said after market hours on Wednesday that consolidated net profit fell 38.55% to Rs 211.70 crore on 4% fall revenue to Rs 2747 crore in Q4 March 2012 over Q4 March 2011. Higher base effect was partly responsible for the decline in bottom line. DLF said consolidated net profit of Rs 345 crore in Q4 March 2011 included one-time gain of Rs 72 crore. Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 9% to Rs 928 crore in Q4 March 2012 over Q4 March 2011. Consolidated net profit declined 27% from Rs 1639 crore on 1% growth in revenue to Rs 10224 crore in the year ended March 2012 (FY 2012) over the year ended March 2011 (FY 2011). Automobile and hotel stocks down after the government announced a series of austerity measures in the context of the current fiscal situation where there is a tremendous pressure on government's resources. The finance ministry has banned purchase of new vehicles until further orders, including against condemned vehicles. The finance ministry also announced a ban on holding meeting and conferences at five-star hotels. India's largest utility vehicles maker Mahindra & Mahindra (M&M) fell 1.05%. The company announced during trading hours today, 1 June 2012, that its total sales rose 28.2% to 43,988 units in May 2012 over May 2011. Domestic sales rose 24.2% to 39,938 units. Passenger vehicles 26.7% to 21,154 units. Exports rose 87.2% to 4,050 units in May 2012 over May 2011. M&M's Farm Equipment Sector (FES) maintained its leadership position in the tractor industry in May 2012.Domestic sales in May 2012 stood at 18019 units, as against 17952 units during May 2011. Total tractor sales (domestic + exports) in May 2012 stood at 19016 units, as against 18892 units for the same period last year. Exports for the month of May 2012 stood at 997 units. Small-car major Maruti Suzuki India shed 2.94% after company said during market hours today than total sales declined 5% to 98,884 units in May 2012 over May 2011. India's largest commercial vehicle maker by sales Tata Motors shed 3.73%, with the stock extending recent sharp losses. Tata Motors' total sales (including exports) of Tata commercial and passenger vehicles rose 4% to 64,347 vehicles in May 2012 over May 2011. The company's domestic sales of Tata commercial and passenger vehicles for May 2012 rose 6% to 60,128 units in May 2012 over May 2011. Tata Motors' consolidated net profit jumped 136.35% to Rs 6234 crore on 44.3% growth in revenue (net of excise) to Rs 50908 crore in Q4 March 2012 over Q4 March 2011. The company announced the results after trading hours on Tuesday, 29 May 2011. Shares of two-wheeler makers edged lower on worries recent steep hike in petrol could hit demand for petrol driven two wheelers. India's second largest motorcycle maker by sales Bajaj Auto fell 0.89%. India's largest motorcycle maker by sales Hero MotoCorp was down 0.82%. Among hotel stocks, Hotel Leela Ventures, EIH, EIH Associated Hotels, Indian Hotels, and Royal Orchid Hotel shed by between 0.01% to 2.61%. Construction stocks declined across the board. Hindustan Construction Company, NCC, L&T, Bhel, Jaiprakash Associates, Patel Engineering and IRB Infrastructure & Developers declined by between 0.59% to 3.98%. Prime Minister Manmohan Singh has approved the setting up of a mechanism that will track the progress of all major infrastructure projects to avoid delays in their completion. The government today, 1 June 2012, said it will periodically review the progress of projects under the Investment Tracking System to ensure that issues are quickly identified and resolved. All public-sector projects with an investment of 10 billion rupees ($178 million) or more will be monitored by the National Manufacturing Competitive Council, a statement said. The Department of Financial Services will monitor similar-sized projects of private companies, and the two bodies will report the progress of projects to the prime minister every quarter. Cement stocks mostly declined ahead of the announcement of May 2012 shipment figures by cement companies starting today, 1 June 2012. Jaiprakash Associates, India Cements, ACC and Ambuja Cements fell by between 0.81% to 1.85%. UltraTech Cements rose 2.88%. Metal stocks fell on worries a weakening domestic and global economy will hit demand for metals. Tata Steel, Hindustan Zinc, Hindalco Industries, Bhushan Steel, Sterlite Industries, JSW Steel, and Sail shed by between 0.26% to 4.51%. Jindal Steel & Power was down 2.81% to Rs 429.05. It hit a 52-week low of Rs 425 in intraday today, 1 June 2012. NMDC declined 0.69%. The company said that the Government of India, Ministry of Steel has informed that the additional charge for the post of CMD, NMDC has been assigned to Shri C.S. Verma, Chairman, SAIL for a period of three months with immediate effect or until further order, whichever is earlier in addition to his regular assignment subject to approval of the competent authority vide letter dated May 25, 2012. IT stocks declined on weak economic data in the US. US is the biggest outsourcing market for Indian IT firms. India's largest software services exporter by revenues Tata Consultancy Services (TCS) declined 1.69%. N. Ganapathy Subramaniam, head of TCS's financial services business, said in a recent media interview that TCS is confident that growth in its financial services segment this fiscal year will be around last year's 21%. Mr. Subramaniam added that the pipeline of deals is as strong as what it was a year ago, when global businesses accelerated investments on the expectation of an economic recovery. India's second largest software services exporter by revenues Infosys shed 2.13%. India's third largest software services exporter by revenue, Wipro declined 1.79%. Banks stocks fell across the board. India's largest private sector bank by net profit ICICI Bank gained 0.33%. India's second largest private sector bank by net profit HDFC Bank fell 2.87%. India's largest commercial bank in terms of branch network State Bank of India (SBI) declined 1.48% on profit taking after recent strong gains triggered by healthy Q4 results. The state-run bank reported 19297.84% spurt in net profit to Rs 4050.27 crore on 27.97% growth in total income to Rs 33959.54 crore in the Q4 March 2012 over Q4 March 2011. The result was announced on 18 May 2012. The massive rise in SBI's net profit in the fourth quarter was due to base effect. It may be recalled that SBI had made massive one-time provisions in Q4 March 2011 on account of counter cyclical provisioning buffer, provisions for the teaser home loans and provision for deferred tax. This has resulted in low base effect for year-on-year comparison in Q4 March 2012. SBI's net profit jumped 41.65% to Rs 11707.29 crore on 24.33% growth in total income to Rs 120872.90 crore in the year March 2012 over year March 2011. SBI said it made an additional provision of Rs 1350 crore against certain non-performing domestic advances in the year ended March 2012. Cals Refineries clocked highest volume of 1.55 crore shares on BSE. Future Ventures (94.18 lakh shares), Suzlon Energy (73.76 lakh shares), Kingfisher Airlines (63.04 lakh shares) and Indraprastha Gas (58.33 lakh shares) were the other volume toppers in that order. Indraprastha Gas clocked highest turnover of Rs 139.85 crore on BSE. SBI (Rs 126.14 crore), Tata Motors (Rs 100.25 crore), MCX (India) (Rs 62.85 crore) and RIL (Rs 49.20 crore) were the other turnover toppers in that order. India's merchandise exports rose by 3.2% to $24.45 billion in April while imports rose by 3.83% to $37.94 billion, Government data showed on Friday. India's trade deficit stood at $13.48bn in April versus $13.91bn in March, the Ministry of Commerce & Industry said. Monsoon rains over India's mainland will be reportedly delayed by about four days and are expected to hit the southern state of Kerala around June 5. The state-run India Meteorological Department had initially forecast the monsoon would arrive by June 1, but the progress of rains has stalled over Sri Lanka. Normally, the monsoon arrives over the country in the first week of June. A timely arrival of monsoon rains is critical for the sowing of summer crops such as rice, oilseeds, sugar cane and cotton. Around 60% of summer crops are rain-fed, and if monsoon rainfall is more or less on schedule and in sufficient amounts, crops that benefit from the rains account for around half of India's total agricultural output. India's manufacturing sector kept up its steady expansion in May, with fast-rising output evened out by slowing growth of domestic order books, a business survey showed on Friday. The HSBC manufacturing Purchasing Managers' Index (PMI), compiled by Markit, slipped marginally to 54.8 in May from 54.9 in April. It has stayed above the 50 mark, that separates growth from contraction, for a little over three years now. The survey's output index rose to 56.4 in May from 56.1 in April, while the employment sub-index rose to its highest level in ten months. Foreign institutional investors (FIIs) sold shares worth a net Rs 665.76 crore on Thursday, 31 May 2012, as per provisional figures from the stock exchange. India's economy grew at a much lower than expected annual rate of 5.3% in Q4 March 2012, largely due to a decline in manufacturing output, the latest data showed. The data showed that the manufacturing sector shrank 0.3% in the quarter compared with a year earlier. The farm sector grew 1.7%. GDP growth for the year ended March 2012 was at 6.5%, lower than the government's projection of a 6.9% expansion. Growth in the eight core industries slowed in April, pointing to more stress for the industrial sector, which is witnessing a prolonged phase of sluggishness. Eight core industries spanning coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity, rose 2.2% in April, lower than the 4.2% posted in the same month last year. The core sector accounts for 37.9% in the index for industrial production The Reserve Bank of India (RBI) is in favour of relaxing the investment limit for foreign institutional investors (FIIs) in sovereign bonds, and also doing away with witholding tax. The RBI's working group released its draft report on Thursday outlining measures to boost liquidity in government securities and interest rate derivatives market. "Withholding tax has been cited as a major roadblock for FII participation in local currency bond markets...elimination of withholding tax will lead to long-term benefits for the financial market by improving market efficiency," it said. At present, foreign investors can buy bonds up to $15 billion in government bonds. The report suggests issuing multiple benchmarks of various maturities and consolidating the bond market. The 45-page report also favours reviewing of trading norms for foreign investors in the derivatives segment. The report also says FIIs eventually should be allowed to directly take trading positions in the interest rate futures segment based on the overnight cash rates. The group also favours targeting the mid-level retail investor segment, by way of issuing inflation-indexed bonds, among other measures. European stock markets turn sharply lower on Friday after downbeat European PMI data threw clouds over the region's manufacturing sector, while investors awaited U.S. nonfarm payrolls due later in the day. Key benchmark indices in France, UK and Germany were down by 0.79% to 2.58%. The May purchasing managers' index for Britain's manufacturing sector released on Friday fell sharply to post a three-year low, indicating a steeper-than-expected contraction in activity. The Markit/CIPS manufacturing PMI fell to 45.9 from a reading of 50.2 in April. Manufacturing sector activity across the debt-stricken eurozone contracted at the fastest pace in three years in May, according to the Markit survey. The Markit purchasing managers' index for the sector fell to 45.1 last month from 45.9 in April and was little changed from a preliminary estimate of 45.0. Greek voters return to the polls on 17 June 2012 after the splintered results of a May 6 parliamentary election left no party able to put together a government. Most Asia markets fell Friday after data indicated that momentum is slowing in the Chinese economy. Key benchmark indices in Hong Kong, Indonesia, Singapore, Taiwan, Japan, and South Korea were down by 0.38% to 2.68%. China's Shanghai Composite rose 0.05%. China's official version of the manufacturing Purchasing Managers' Index declined to 50.4 in May, from 53.3 in April, well below forecasts. Meanwhile, the HSBC survey showed that China's factory activity contracted for a seventh straight month in May. The final reading of the HSBC manufacturing PMI fell to 48.4 in May on a 100-point scale, compared to a April's 49.3, and weaker than an initial "flash" reading of 48.7. Trading in US index futures indicated that the Dow could fall 108 points at the opening bell on Friday, 1 June 2012. US stocks fell modestly on Thursday to close out the worst month since September as investor sentiment sank on Europe's deepening credit problems. The continuing worry over Europe and a batch of disappointing US economic figures weighed on the market. Jobless claims rose for the seventh week in eight, putting investors on edge before today's US monthly payrolls report. The US economy slowed more than initially thought in the first quarter amid smaller gains in consumption and inventories, while corporate profits picked up. Gross domestic product increased at a 1.9% annual rate from January through March, the Commerce Department said Thursday.