Sensex, Nifty hit lowest level in more than a week as FIIs sell

The key benchmark indices dropped for the fourth straight day to reach their lowest closing level in more than a week as data showing sustained selling by foreign funds over the past three trading sessions weighed on the sentiment. Another reason why investors were cautious was because the central bank is seen raising key short-term interest rates by a minimum 25 basis points at a policy review early next week.



Intraday volatility was high as traders rolled over positions in the futures & options (F&O) segment ahead of expiry of the near-month April 2011 contracts today, 28 April 2011. The BSE 30-share Sensex was down 156.67 points or 0.81%, off close to 250 points from the day's high and up close to 25 points from the day's low. The market breadth was weak.

Index heavyweight Reliance Industries (RIL) extended a three-day fall. ICICI Bank rose amid high intraday volatility after the private sector bank reported strong Q4 results during trading hours. Cigarette major retreated from a record high. IT stocks declined after all the three top IT firms - Infosys, TCS and Wipro said at the time of announcing Q4 March 2011 results that margins will be under pressure due to hike in wage costs.

Reliance Communications, Unitech and DB Realty declined on investor worries about the ongoing telecoms licencing graft case. Metal stocks fell on concerns that China might introduce fresh tightening measures aimed at controlling prices. Interest rate sensitive realty stocks fell on worries higher interest rates could dent demand for residential and commercial property.

Volatility was high right from the onset of the trading session. The market slipped into the red soon after a firm start. The market shortly regained positive zone. The market once again slipped into the red later. The market moved in a range in morning trade. The market came off lows in mid-morning trade after hitting a fresh intraday low. Weakness continued in early afternoon trade. The market trimmed losses after hitting a fresh intraday low in afternoon trade. Volatility continued in mid-afternoon trade. The market hit a fresh intraday low in late trade.

Foreign institutional investors (FIIs) sold shares worth a net Rs 477.20 crore in the secondary equity markets on Wednesday, 27 April 2011, higher than outflow of Rs 146.10 crore on Tuesday, 26 April 2011, the latest data showed. FIIs had sold shares worth a net Rs 173.50 in the secondary equity markets on Monday, 25 April 2010.

The BSE 30-share Sensex was down 156.67 points or 0.81% to 19,292.02, its lowest closing level since 19 April 2011. The index fell 182.77 points at the day's low of 19,265.92 in late trade. The Sensex rose 93.36 points at the day's high of 19,542.05 in early trade.

The S&P CNX Nifty was down 48.45 points or 0.83% to 5,785.45, its lowest closing level since 19 April 2011. The Nifty hit low of 5,776.95 in late trade.

The BSE Mid-Cap index fell 0.97% and underperformed the Sensex. The BSE Small-Cap index declined 0.48% and outperformed the Sensex.

The market breadth, indicating the health of the market, was weak. On BSE, 1796 shares declined while 1100 shares advanced. A total of 93 shares remained unchanged. The breadth was positive earlier in the day.

Among the 30-member Sensex pack, 25 declined while the rest advanced.

The total turnover on BSE amounted to Rs 3066 crore, lower than Rs 3247.27 crore on Wednesday, 27 April 2011.

Index heavyweight Reliance Industries (RIL) fell 1.15%, extending Wednesday's losses triggered by reports the government is considering imposing penalty on the firm for falling short of targeted gas production at its D6 block. The company said recently that it is drawing up a plan to raise gas production from its D6 deepwater block in the Krishna Godavari basin in the Bay of Bengal, off India's east coast. RIL said the reservoirs in the block are more complicated than previously expected and continuous and significant efforts are underway for understanding these reservoirs. RIL said it is trying to "identify well locations for incremental production and sustenance."

Gas output from the block touched a peak of 60 million metric standard cubic meters a day (mmscmd) last year. Production has now fallen to 50 mmscmd as against a target of 69.8 mmscmd, S.K. Srivastava, head of India's upstream regulator, said last week. He also said that Reliance hasn't given any "satisfactory response" on the matter.

Integrated development plan for all other discoveries in KG-D6 is being conceptualized to augment production in the most capital efficient manner, RIL said on 25 April 2011. The company said it is studying various options such as "recompletion of wells and compression" to increase gas production.

India's largest oil exploration firm by market capitalization Oil and Natural Gas Corporation (ONGC) gained 1.99% and was the top gainer from the Sensex pack. The stock rose on reports the company's oil and oil equivalent gas production rose 1.8% to 62.03 million tonnes in the year ended March 2011 over the year ended March 2010. Of this, 9.4 million tonnes came from the group's overseas operations. The state-run explorer made 24 discoveries in India in the year ended March 2011, of which nine were offshore discoveries. It also discovered oil and gas at two blocks in Gujarat.

India's largest private sector bank by net profit ICICI Bank rose 0.92% to Rs 1117.55 amid high volatility soon after its Q4 result hit the market in afternoon trade. The stock hit a low of Rs 1085.65 and high of Rs 1127.50. Net profit jumped 44% to Rs 1452 crore on 23% growth in net interest income to Rs 2510 crore and 18% growth in fee income to Rs 1791 crore in Q4 March 2011 over Q4 March 2010. Consolidated net profit rose 16.85% to Rs 1567.93 crore in Q4 March 2011 over Q4 March 2010.

The bank said its savings deposits increased by 26% to Rs 66,869 crore (US$ 15.0 billion) as at 31 March 2011 from Rs 53,218 crore as at 31 March 2010. The CASA (current & savings accounts) deposits ratio increased to 45.1% as at 31 March 2011 from 41.7% as at 31 March 2010. ICICI Bank's net non-performing asset ratio decreased to 0.94% as at 31 March 2011 from 1.87% as at 31 March 2010 and 1.16% as at 31 December 2010.

Most other banking stocks edged lower ahead of the Reserve Bank of India's annual 2011-2012 monetary policy review on 3 May 2011. The BSE Bankex fell 0.83% and underperformed the Sensex. India's second largest private sector bank by net profit HDFC Bank slipped 0.68% while India's largest bank by net profit and branch network State Bank of India slipped 1.76%.

Bank of Baroda lost 5.02% on profit taking after strong Q4 results. During market hours today, the bank reported 42.82% rise in net profit to Rs 1294.35 crore on 39.99% rise in total income to Rs 7168.65 crore in Q4 March 2011 over Q4 March 2010.

LIC Housing Finance fell 1.14% on profit taking after strong Q4 results. Net profit surged 47.42% to Rs 314.77 crore on 40.71% rise in total income to Rs 1354.29 crore in Q4 March 2011 over Q4 March 2010. The company announced the results during trading hours today, 28 April 2011.

India's largest cigarette maker by sales ITC slipped 0.91% to Rs 191.55. Expectations of good Q4 results drove the stock to a record high of Rs 194.75 in intraday trade today.

Software stocks declined after all the three top IT firms - Infosys, TCS and Wipro said at the time of announcing Q4 March 2011 results that margins will be under pressure due to hike in wage costs. The BSE IT index declined 1.12% and underperformed the Sensex. India's third largest IT exporter by sales Wipro fell 0.9%, extending Wednesday's over 2% decline after the company said proposed wage hike would impact operating margins. The company announced before the market hours on Wednesday, 27 April 2011, a 14% rise in net profit as per International Financial Reporting standards (IFRS) to Rs 1375 crore on 18% rise in total revenues to Rs 8302 crore in Q4 March 2011 over Q4 March 2010.

India's largest IT exporter by sales TCS shed 1.80%, extending three-day slide, on concerns about profit margins. At the time of announcing Q4 March 2011 results last week, TCS management said wage hikes and currency volatility are the main threats to profit margins. TCS plans to increase wages by 12% to 14% for India-based staff. The company plans to raise wages by 2% to 4% in major overseas markets and 2% to 14% in emerging markets.

India's second largest software services exporter Infosys slipped 0.75%. The stock had been under selling pressure after company's disappointing earnings growth forecast for the year ending March 2012 (FY 2012).

Telecom pivotals saw divergent trend. India's largest listed cellular services provider by sales Bharti Airtel rose 0.56%. The company unveils its year ended March 2011 results on 5 May 2011.

Reliance Communications, Unitech and DB Realty fell on investor worries about the ongoing telecoms licencing graft case. India's second largest listed cellular services provider by sales Reliance Communications slumped 5.13% and was the top loser from the Sensex pack. Unitech plunged 7.54% and DB Realty tumbled 4.22%.

On Wednesday, the Directorate of Enforcement filed a status report in the Supreme Court stating that properties worth Rs 2000 crore ($451 million) of two of the three companies charged in the case "will be attached within two months". The report did not name the companies. The companies could be Swan Telecom, which is now called Etisalat DB, and Unitech Wireless, which have been charged in the case along with a unit of Reliance Communication. Etisalat DB is a joint venture between Abu Dhabi's Etisalat and the DB Group, parent of DB Realty. Unitech Wireless is a joint venture between Unitech and Norway's Telenor.

Meanwhile, Unitech clarified that Unitech (real estate company) has not been named in the charge-sheet filed by the CBI. It is further clarified that the on-going matter pertains to Unitech Wireless (Tamil Nadu) (Uninor) which is a separate legal entity engaged in the telecom business, it said. The company reiterated that Unitech would continue to focus on its real estate business in normal course.

Interest rate sensitive realty stocks fell on worries higher interest rates could dent demand for residential and commercial property. BSE Realty index shed 3.03% and underperformed the Sensex. HDIL, Anant Raj Industries, Orbit Corporation, Indiabulls Real Estate and DLF shed by between 1.63% to 4.32%. Purchases of both residential and commercial property are largely driven by finance.

Metal stocks fell on concerns that China might introduce fresh tightening measures aimed at controlling prices. China is the world's largest consumer of copper and aluminum. BSE Metal index fell 1.2% and underperformed the Sensex. Sail, Jindal Steel & Power, JSW Steel, Hindustan Zinc, Nalco, Tata Steel and Hindalco Industries fell by between 0.52% to 3.35%.

Interest rate sensitive auto stocks fell across the board on concerns higher interest rates could crimp sales of automobiles. Automobile purchases, including that of cars, two-wheelers, utility vehicles and commercial vehicles are substantially driven by financing. Fears of a hike in domestic fuel prices also weighed on auto stocks as crude prices have surged over the past few months. The BSE Auto index fell 0.58% and outperformed the Sensex.

India's largest tractor and utility vehicles maker by sales Mahindra & Mahindra (M&M) slipped 0.11%. The company on Wednesday announced the launch of its next generation passenger carrier Maxximo Mini Van priced at Rs 3.2 lakh. Maxximo Mini Van will compete with Tata Magic and Maruti Omni in the mini van segments.

India's largest bike maker by sales Hero Honda Motors declined 3.17%. The company announces Q4 result on 4 May 2011.

India's largest car maker by sales Maruti Suzuki India declined 0.94%. Chief Executive Shinzo Nakanishi said at the time of announcing Q4 results early this week that Maruti will make efforts to protect and increase margins going forward. Net profit fell 8.4% to Rs 2288.60 crore on 24.60% increase in total income, net of excise, to Rs 37522.40 crore in the year ended March 2011 (FY 2011) over the year ended March 2010. The company announced the FY 2011 results during trading hours on Monday, 25 April 2011. The company said adverse currency movement (particularly on exports), higher commodity prices and new model launches impacted the company's profits in the year ended March 2011.

India's largest truck maker by sales Tata Motors fell 1.3%. Recent reports indicated the company has cut production in April 2011 of its sports-utility vehicles and cars--besides the Nano--by 15%-20% over March 2011. The production cut is normal balancing in production, reports said.

India's second largest bike maker by sales Bajaj Auto advanced 0.26% The company announces its Q4 March 2011 result on 18 May 2011.

Biocon slipped 4.22% on profit taking after decent Q4 results. During market hours today, the company reported 25% growth in consolidated net profit to Rs 101 crore on 8% increase in total income to Rs 717 crore in Q4 March 2011 over Q4 March 2010.

Biocon's Chairperson and Managing Director, Kiran Majumdar-Shaw said, "The year ended March 2011 delivered strong multi-sectoral growth. Emerging markets have realised significant and sustained growth for our active pharmaceutical ingredients (APIs), whilst our branded formulations have scripted business success in India. Licensing income from Pfizer and others has contributed materially to profit generations this fiscal. Our research services businesses supported by Syngene and Clinigene have signaled a turnaround. We are confident this will drive robust profitability next fiscal. To support our expanding business operations, we expect to increase out employee strength by around 1000 in the year ending March 2012." Biocon said its current headcount stood at 5500 employees.

Birla Power Solutions clocked highest volume of 3.6 crore shares on BSE. Cals Refineries (1.12 crore shares), Unitech (89.98 lakh shares), HFCL (81.67 lakh shares) and SPIC (78.87 lakh shares) were the other volume toppers in that order.

ICICI Bank clocked highest turnover of Rs 198.75 crore on BSE. Coal India (Rs 88.01 crore), State Bank of India (Rs 86.67 crore), Amrutanjan HealthCare (Rs 78.04 crore) and LIC Housing Finance (Rs 76.52 crore) were the other turnover toppers in that order.

The corporate results announced so far have been good. The combined net profit of a total of 311 companies rose 24.2% to Rs 29928 crore on 27.8% rise in sales to Rs 245154 crore in Q4 March 2011 over Q4 March 2010.

Nine of 14 economists polled by Capital Market expect 25 basis points (bps) hike in key short-term interest rates while five expect a 50 bps hike in short-term rates on 3 May 2011 when the Reserve Bank of India (RBI) undertakes its annual 2011-2012 monetary policy review. A cumulative hike of 75-100 bps in short-term rates is expected during the financial year ending March 2012 (FY 2012). 100 bps is one percentage point or 1 %. Economists expect inflation based on the wholesale price index (WPI) to slide to a median 7.8% in FY 2012 from 9.4% in the year ended March 2011 (FY 2011). The poll shows that economists expect inflation to remain high in the first half of the year and slide in the second half of the year.

The food price index rose 8.76% and the fuel price index climbed 13.53% in the year to 16 April 2011, government data on Thursday showed. In the previous week, annual food and fuel inflation stood at 8.74% and 13.05%, respectively. The primary articles price index was up 12.08%, compared with an annual rise of 11.96% a week earlier.

A sharp surge in global crude oil prices over the past few months has raised macroeconomic worries. India imports majority of its crude oil requirements and high oil prices have raised concerns about widening current account deficit. High oil prices have also raised concerns about higher oil subsidy bill for the government and its negative impact on the government's fiscal position. US crude futures were down 16 cents or 0.14% at $112.60 a barrel.

The India Meteorological Department (IMD) has predicted the southwest monsoon 2011 to be 98% (normal) of the long period average (LPA) with a model error of plus/minus 5%. IMD has indicated that there is very low probability for the season rainfall to be deficient (below 90% of LPA) or excess (above 110% of LPA).

Good rains, if they arrive on time and if they are well spread, would help ease food inflation and boost rural income. Rainfall that comes within 96% to 104% of the long-term average is considered a normal monsoon season, but this alone doesn't guarantee a good crop. The timing and spread of the rains are equally important. The quantity and geographical spread of rainfall during the monsoon season is crucial for India's agriculture sector, which lacks irrigation facilities on more than half its farm land. Monsoon rains usually enter India's mainland through the southern state of Kerala in the first week of June, gradually progressing to cover most of central and northern India by July, before retreating in September.

European shares gained on Thursday, tracking Wall Street higher, after US Federal Reserve Chairman Ben Bernanke said he was in no rush to scale back the central bank's support for the economy. The key benchmark indices in France and Germany rose by between 0.37% to 0.39%. UK's FTSE 100 fell 0.12%.

Many Asian markets reversed initial gains triggered by US Federal Reserve's decision on Wednesday to hold interest rates steady and to continue to purchase bonds. The key benchmark indices in Singapore, Indonesia, Japan and South Korea rose 0.07% to 1.63%. The key benchmark indices in China, Hong Kong and Taiwan slipped by between 0.09% to 1.29%.

Chinese shares extended their recent losses on concerns that Beijing might introduce fresh tightening measures aimed at controlling prices, especially in the property sector.

Meanwhile, the Bank of Japan on Thursday kept its overnight call rate range at zero to 0.1% by unanimous vote, broadened the range of assets it accepts as collateral and also detailed the emergency 1 trillion yen ($12 billion) loan program to help regions hit by the 11 March 2011 earthquake and tsunami.

US stocks indexes their rally to fresh multi-year highs on Wednesday after the US Federal Reserve Chairman Ben Bernanke said the central bank would continue to reinvest proceeds from maturing securities and added that there was no specific time frame to begin tightening interest rates. The Dow Jones Industrial Average gained 95.59 points, or 0.76%, to 12690.96, while the Standard & Poor's 500 index gained 0.62% to 1355.66. The Nasdaq Composite added 0.78% to 2869.88.

Bernanke at the end of the two-day policy meeting on Wednesday signaled the Fed will maintain its record monetary stimulus after ending large-scale bond purchases in June, while the need to contain inflation means further easing is unlikely. The Fed left its benchmark interest rate in a range of zero to 0.25%, where it's been since December 2008.

Bernanke reinforced the view of the Federal Open Market Committee, which released its policy statement yesterday, that borrowing costs are likely to stay low for an extended period. The panel agreed to finish $600 billion of Treasury purchases in June and said surging commodity prices will probably have a transitory effect on inflation.

Trading in US index futures indicates a flat opening of US stocks on Thursday, 28 April 2011.