Sensex, Nifty hit 28-month lows; RIL hits 52-week low

A late sell-off pushed the key benchmark indices to their lowest level in almost 28 months. The BSE Sensex was provisionally down 197.29 points or 1.28%, off 266.08 points from the day's high and up 46.19 points from the day's low. The market breadth was weak. Barring the BSE FMCG index, all the other 12 sectoral indices on BSE were in the red. Index heavyweight Reliance Industries (RIL) slumped to 52-week low in volatile trade. Capital goods stocks dropped on worries that new order flows will be hit adversely in a slowing economy, with L&T, Bhel, and Jaiprakash Associates hitting 52-week lows. Tata Power also hit 52-week low

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Interest rate sensitive banking and auto stocks declined in volatile trade, extending their recent losses after the Reserve Bank of India (RBI) kept its short-term lending rate unchanged at its mid-quarter monetary policy review meet on Friday, 16 December 2011. State Bank of India (SBI) hit 52-week low. Metal stocks edged lower, with steel maker Tata Steel hitting a 52-week low. IT pivotals edged lower on ongoing sovereign debt crisis in Europe. ITC gained on defensive buying.

Data showing sustained selling by foreign funds over the past few days weighed on sentiment. Foreign institutional investors (FIIs) sold shares worth Rs 450.37 crore on Monday, 19 December 2011, as per the provisional data from the stock exchanges. FII outflow totaled Rs 2371.70 crore in seven trading sessions from 9 to 19 December 2011, as per provisional data from the stock exchanges. The outflow followed sustained inflow early this month.

The market pared gains soon after a positive start. The market regained strength later. The Sensex once again trimmed gains in early trade. The market slipped into the red in morning trade. The market cut losses after hitting fresh intraday low in mid-morning trade. Key benchmark indices weakened again after trimming intraday losses in early afternoon trade. The market hit fresh intraday low in afternoon trade. The market cut losses in mid-afternoon trade as pivotals recovered from the day's lows. Volatility ruled the roost as the market tumbled in late trade after moving into positive zone for a short while in mid-afternoon trade.

As per provisional closing, the BSE Sensex was down 197.29 points or 1.28% to 15,182.05. The index gained 68.79 points at the day's high of 15,448.13 in early trade, its highest level since 16 December 2011. The index fell 243.48 points at the day's low of 15,135.86 in late trade, its lowest level since 21 August 2009.

The S&P CNX Nifty was down 64.40 points or 1.40% to 4,548.70. The Nifty hit a high of 4,637.25 in intraday trade, its highest level since 16 December 2011. The Nifty hit a low of 4,531.15 in intraday trade, its lowest level since 21 August 2009.

The market breadth, indicating the overall health of the market, was weak. On BSE, 1,886 shares declined and 906 shares advanced. A total of 118 shares were unchanged.

The total turnover on BSE amounted to Rs 1900 crore, higher than Monday's turnover of Rs 1844 crore.

From the 30-member Sensex pack, 25 declined while only five of them managed gains.

Index heavyweight Reliance Industries (RIL) lost 3.25% to Rs 711.95 after diving to a 52-week low of Rs 709.15 in intraday trade today, 20 December 2011. The company's advance tax payment reportedly fell 15.79% to Rs 1002 crore in Q3 December 2011 over Q3 December 2010. Oil minister Jaipal Reddy said in a written reply in the lower house of parliament on Thursday, 15 December 2011, that the decline in gas output from RIL's east coast block is due to the company drilling fewer number of wells than promised and stoppage of production at six wells.

RIL late last month said that it has initiated arbitration proceedings against the government to seek an independent view of a tribunal on the issue of the company's entitlement of recovery of entire costs on KG-D6 gas blocks from the revenue generated from the blocks. RIL said it has initiated arbitration proceedings against the Government of India (GoI) in a bid to finally resolve the cost recovery issue so as not to hinder future investments in this block.

RIL said its investment in KG-D6 production facilities has been only partly recovered and the return on the investment so far is less than the cost of the capital. The production sharing contract (PSC) with the Government of India (GoI) contains no provision which entitles the GoI to restrict the costs recovered by the company by reference to factors such as the level of production or the extent to which field facilities are utilised, RIL said.

India's largest oil exploration firm by market capitalization ONGC gained 2.91%.to Rs 254.50 and was the top gainer from the Sensex pack. Crude oil futures rose for the second day in a row on forecasts that US crude stockpiles declined for a second week and on speculation that further sanctions against Iran will curb supply. Higher crude oil prices will result in higher realizations from crude sales for oil exploration firms.

Capital goods stocks dropped on worries that new order flows will be hit adversely in a slowing economy. India's largest dam builder by sales Jaiprakash Associates slumped 8.04% to Rs 53.20 and was the top loser from the Sensex pack. The stock hit a 52-week low of Rs 53.10 in intraday trade today, 20 December 2011.

Engineering and construction major L&T declined 5.70% to Rs 973.25 after sliding to a 52-week low of Rs 972.05 in intraday trade today, 20 December 2011. During market hours today, 20 December 2011, the company said it has bagged new orders valued at Rs 1000 crore across various business segments in Q3 December 2011.

India's largest power equipment maker by sales Bhel rose 1.04% to Rs 233.95. The stock recovered after hitting a 52-week low of Rs 225 in intraday trade today, 20 December 2011.

Private sector power generation major Tata Power Company slumped 5.11% to Rs 81.70, extending two-day fall. The stock hit a 52-week low of Rs 80.65 today, 20 December 2011.

Interest rate sensitive banking stocks declined in highly volatile trade, extending recent losses after the Reserve Bank of India (RBI) kept its short-term lending rate viz. the repo rate and cash reserve ratio (CRR) unchanged after mid-quarter monetary policy review announced on Friday, 16 December 2011. A section of investors expected a cut in interest rates or CRR after recent data showed a moderation in inflation and slower economic growth. They were left disappointed.

India's largest private sector bank by branch network, ICICI Bank, lost 0.40% to Rs 654.50 after the bank's American depository receipt, or ADR fell 3.55% to settle at $24.43 on the New York Stock Exchange on Monday, 19 December 2011. The stock had declined to a 52-week low of Rs 641 on Monday, 19 December 2011. The bank's advance tax reportedly remained flat at Rs 450 crore in Q3 December 2011.

India's second largest private sector bank by branch network, HDFC Bank, advanced 2.20%. The bank's advance tax reportedly rose 20% to Rs 900 crore in Q3 December 2011 over Q3 December 2010.

India's largest bank by net profit and branch network State Bank of India (SBI) shed 2.68% to Rs 1,587.85 after sliding to a 52-week low of Rs 1,576 today. The bank's advance tax reportedly fell 6.48% to Rs 1730 crore in Q3 December 2011 over Q3 December 2010.

Metal stocks edged lower after LMEX, a gauge of six metals traded on the London Metal Exchange, fell 1.38% to $3,189.80 on Monday, 19 December 2011. Sterlite Industries (India) (down 1.72%), JSW Steel (down 4.16%), Sesa Goa (down 5.17%), Hindalco Industries (down 4.37%), declined.

India's largest private sector steel maker Tata Steel lost 5.46% to Rs 343.50 after falling to a 52-week low of Rs 342.20 today.

Interest rate sensitive auto stocks reversed intraday gains as the Reserve Bank of India (RBI) kept short term lending rate steady. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing. India's largest tractor maker by sales Mahindra & Mahindra (M&M) shed 0.42%. The company's advance tax reportedly fell 4.34% to Rs 220 crore in Q3 December 2011 over Q3 December 2010. The company on Thursday, 15 December 2011, said it will raise prices of its vehicles by up to 3% in January 2012 to offset the effects of rising raw-material costs. The company's total auto sales jumped 52.7% to 40,722 units in November 2011 over November 2010.

India's largest small car maker by sales Maruti Suzuki India slipped 0.17%. The company's total sales fell 18.5% to 91,772 units in November 2011 over November 2010.

India's largest motorcycle maker by sales Hero MotoCorp dropped 5.74%. The company's advance tax reportedly rose 50% to Rs 180 crore in Q3 December 2011 over Q3 December 2010. The company's sales rose 27.4% to 536,772 units in November 2011 over November 2010.

India's second largest motorcycle maker by sales Bajaj Auto fell 2.69%. The company's advance tax reportedly rose 21.62% to Rs 450 crore in Q3 December 2011 over Q3 December 2010. Bajaj Auto's total vehicle sales jumped 25% at 374,477 units in November 2011 over November 2010.

India's largest passenger vehicle maker by sales Tata Motors fell 2.61% to Rs 175.20. The stock declined on profit booking after surging 4.44% on Monday, 19 December 2011. The company's global vehicle sales rose an annual 35% to 1,08,028 units in November 2011 over November 2010, the company said in a statement on Thursday, with its luxury Jaguar Land Rover unit reporting a 27% rise in sales to 29,183 units. Sales of Jaguar cars fell 5% to 5,315 units while those of Land Rover sport-utility vehicles gained 38% to 23,868 units. The company said it sold 49,724 trucks and buses globally in November, up 24% from a year earlier.

Software pivotals edged lower amid ongoing sovereign debt crisis in Europe, which is the second biggest outsourcing market for IT services exporters after the US. India's largest software services exporter by revenues Tata Consultancy Services (TCS) fell 0.65%. Before market hours on Monday, 19 December 2011, TCS announced that it will expand its operations in the state of Maharashtra by building a new software development campus in Nagpur with an investment of Rs 600 crore in the first phase.

India's second largest software services exporter by revenues Infosys slipped 0.34%. During market hours today, 20 December 2011, the company said its business process outsourcing subsidiary -- Infosys BPO has signed a definitive agreement to acquire all of the outstanding share capital in Australia-based Portland Group Pty, a leading provider of strategic sourcing and category management services. The purchase consideration for the deal is Australian dollar (AUD) 37 million. Portland Group reported revenue of about AUD 31.3 million for the year ended 30 June 2011.

India's third largest software services exporter by revenues Wipro fell 1.76%.

India's largest cigarette maker by sales, ITC gained 1.34% on defensive buying.

At its mid-quarterly monetary policy review meet on Friday, 16 December 2011, the Reserve Bank of India (RBI) left its main lending rate unchanged in order to support faltering economic growth as inflation shows signs of cooling. While inflation remains on its projected trajectory, downside risks to growth have clearly increased, RBI said in a statement. From this point on, monetary policy actions are likely to reverse the cycle, responding to the risks to growth, RBI said.

However, it must be emphasized that inflation risks remain high and inflation could quickly recur as a result of both supply and demand forces, the central bank said in statement. Also, the rupee remains under stress, RBI said. The timing and magnitude of further actions will depend on a continuing assessment of how these factors shape up in the months ahead, RBI said. The RBI has raised rates 13 times since March 2010.

As per reports, advance taxes for the third quarter from corporates headquartered in Mumbai have risen 10%. Cements and pharma companies have reported surge in advance tax payment for the third quarter. Advance taxes are collected in four installments -- 15% by 15 June; 40% by 15 September; 75% by 15 December and 100% by 15 March.

Credit rating agency Moody's Investors Service on 14 December 2011 said that the sharp decline in the value of the Indian rupee against the dollar is generally exerting only a moderate impact on rated Indian companies. Risks for companies holding large amounts of dollar denominated debt are also manageable in the near term, given that debt maturities are limited for this time frame, Moody's said in a new report. This means Indian companies rated by Moody's do not have a significant dollar outflow at a time when the Indian rupee is losing ground.

Continuing further in its fight to lift the rupee, the Reserve Bank of India (RBI) late on Friday deregulated non-resident external (NRE) rupee deposits and ordinary non-resident (NRO) accounts, opening the gates to a flood of dollars. While NRE deposits can be repatriated in dollars, NRO monies can't, and are held in rupees in India. The RBI said banks are free to determine the interest rates they offer on both savings deposits and term deposits.

The Reserve Bank of India (RBI) took steps on 15 December 2011 to arrest the free-fall of the rupee after the local currency hit a new record low against the dollar for the fourth consecutive day. The new currency rules include reducing the net amount of US dollar-versus-rupee trade that authorized foreign-exchange dealers can hold on their books. Another measure of the bank's new rules would limit the amount of currency hedging by importers, who typically buy dollars.

The Union Cabinet on Sunday approved the draft of the path-breaking National Food Security Bill which seeks to provide subsidised foodgrains to over half of India's 1.2 billion population. The bill was a part of the Congress manifesto for the 2009 general elections and seeks to combat widespread hunger in the country. The bill is likely to cost Rs 2 lakh crore annually for the government.

A government statement in parliament last month dashed hopes of a relief in securities transaction tax (STT). Junior finance minister S.S. Palanimanickam has said that the government has no proposal to lower the securities transaction tax (STT). There has been a speculation that the government will reduce STT in Union Budget 2012-2013 in a bid to revive sagging volumes on the bourses. Palanimanickam said in a written reply to Rajya Sabha that the securities transaction tax receipts had declined by around 18% to Rs 2960 crore during the first six months in the current fiscal year from a year ago period.

The government has reportedly decided to extend the winter session of Parliament to discuss and pass the Lokpal Bill. The Prime Minister has cleared the Lokpal Bill draft which will now be taken at a Union Cabinet meet this evening, reports suggest.

European stocks moved off initial lows on Tuesday after Sweden's central bank, the Riksbank, on Tuesday announced it will cut the repo rate by 0.25 percentage points to 1.75% and said the rate will remain low next year. Key benchmark indices in Germany and France were up 0.62% and 0.44%. In UK, the FTSE 100 was down 0.11%

Asia markets were mixed on Tuesday. Key benchmark indices in China, Indonesia and Singapore were down by between 0.10% to 0.65%. Key benchmark indices in Hong Kong, Japan, Taiwan and South Korea were up by between 0.06% to 0.91%.

Asian shares had declined sharply in the previous session, after the death of North Korean leader Kim Jong-Il and fears about debt-stricken Europe kept investors cautious.

Trading in US index futures indicated that the Dow could advance 76 points at the opening bell on Tuesday, 20 December 2011. A speech by European Central Bank President Mario Draghi on Monday, which dampened hopes of additional bond purchases and more aggressive aid to struggling European nations, contributed to a weaker finish for US stocks on that day. The Dow Jones Industrial Average dropped 100.13 points, or 0.84%, to 11,766.26. The S&P 500 slipped 14.31 points, or 1.1%, to 1,205.35 and the Nasdaq Composite index declined 32.19 points, or 1.2%, to 2,523.14.