Sensex, Nifty settle at over two-week lows

Key benchmark indices declined for the third straight day to settle at their lowest level in more than 2 weeks as data showing decline in industrial production in October 2011 for the first time in more than two years and weak European stocks dampened sentiment. The barometer index, BSE Sensex, fell below the psychological 16,000 mark. The BSE Sensex shed 343.11 points or 2.12%, off about 490 points from the day's high and up close to 30 points from the day's low. The market breadth was weak.

From a recent high of 16,877.06 on 7 December 2011, the Sensex has tumbled 1,006.71 points or 5.96% in three trading sessions. The Sensex has fallen 253.11 points or 1.56% so far this month. The Sensex has slumped 4,638.74 points or 22.61% in calendar 2011. From a 52-week high of 20,664.80 on 3 January 2011, the Sensex has lost 4,794.45 points or 23.2%. From a 52-week low of 15,478.69 on 23 November 2011, the Sensex has risen 391.66 points or 2.53%.



Coming back to today's trade, index heavyweight Reliance Industries (RIL) fell nearly 4%. Except the BSE IT index, all the other 12 sectoral indices on BSE were in the red. Interest rate sensitive auto stocks fell on worries higher interest rates and slowing economy could crimp demand. Metal & mining stocks declined on worries global economic slowdown could hurt demand, with Sterlite Industries, Steel Authority of India, NMDC and Hindustan Copper hitting 52-week lows.

Capital goods stocks extended losses after the latest data showed that capital goods output tumbled 25.5% in October 2011 over October 2010. Interest rate sensitive banking stocks reversed initial gains on worries over rising defaults in a slowing economy, with ICICI Bank hitting 52-week low. IT stocks rose on strong economic data in the US. Shares of power generation major Tata Power hit 52-week low.

The market trimmed gains after a firm start triggered by higher Asian stocks. The market slipped into the red to hit fresh intraday low in morning trade. Intraday volatility continued as key benchmark indices trimmed losses soon after hitting 1-1/2-week low in morning trade. The market extended losses to hit fresh 1-1/2-week low in early afternoon trade. The market further extended losses in afternoon trade. Intraday volatility continued as key benchmark indices weakened once again after trimming losses in mid-afternoon trade. The market extended losses to hit fresh intraday low in late trade.

The third advance tax installment is due on Thursday, 15 December 2011, which may provide cues on Q3 December 2011 corporate earnings. Advance taxes are collected in four installments -- 15% by 15 June; 40% by 15 September; 75% by 15 December and 100% by 15 March.

The BSE Sensex lost 343.11 points or 2.12% to settle at 15,870.35, its lowest closing level since 25 November 2011. The index declined 373.50 points at the day's low of 15,839.96 in late trade. The index rose 146.86 points at the day's high of 16,360.32 in early trade.

The S&P CNX Nifty lost 102.10 points or 2.1% to settle at 4,764.60, its lowest closing level since 25 November 2011. The index hit a low of 4,755.55 and a high of 4,910.25 in intraday trade.

The BSE Mid-Cap index fell 1.9% and the BSE Small-Cap index declined 1.54%. Both these indices outperformed the Sensex.

BSE clocked turnover 1815 crore, lower than Rs 1897.66 crore on Friday, 9 December 2011.

The market breadth, indicating the overall health of the market, was weak. On BSE, 1,957 shares fell and 797 shares fell. A total of 115 shares were unchanged. The breadth was positive earlier in the day.

From the 30-member Sensex pack, 27 stocks fell and the rest of them rose.

Index heavyweight Reliance Industries (RIL) fell 3.65%, with the stock falling for the third straight day. Reliance Industries is reportedly scouting for oil investments in the US as it looks to increase the stake of crude production. The reports stated that company is also looking to invest more in the United States shale gas sector. Reliance has outlined plans to spend $4 billion to $4.5 billion by 2014 on three US shale gas joint ventures it entered into last year.

As per a separate report, RIL will enter the fast-food business with its own brand next year, opening yet another front to do business directly with India's growing young population after retail and 4G wireless services. According to reports, RIL's chief Mukesh Ambani has roped in Rishi Negi, chief operations officer of multiplex operator Fame India, which is partly owned by his younger brother Anil Ambani, to develop a quick service restaurant (QSR) concept within 3-4 months. RIL is exploring a scaleable model like McDonald's and Domino's, complete with a standardised menu and express delivery. It plans both independent outlets and presence in food courts.

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.

Another index heavyweight L&T fell 2.62%, with the stock falling for the third straight day after the latest data showed that capital goods output tumbled 25.5% in October 2011 over October 2010. Among other capital goods stocks, Usha Martin, Punj Lloyd, BGR Energy Systems, Crompton Greaves, BEML, Suzlon Energy, Usha Martin, Lakshmi Machine Works, SKF India, Bhel, ABB, Areva T&D India, Praj Industries, Siemens, Bharat Electronics, Alstom Projects and Havells India fell by 0.06% to 6.72%.

Tata Power Company tumbled 6.46% and was the top loser from the Sensex pack. The stock hit a 52-week low of Rs 86.25 in intraday trade today, 12 December 2011.

Among other power stocks, Reliance Power, NTPC, Power Grid Corporation of India and Reliance Infrastructure fell by between 0.71% to 3.19%.

Metal stocks declined on worries global economic slowdown could hurt demand. Jindal Saw, Hindustan Zinc, Tata Steel, JSW Steel, Hindalco Industries, and Bhushan Steel dropped by between 0.16% to 6.37%.

Sterlite Industries fell 3.16% to Rs 98.20. The stock hit a 52-week low of Rs 98 today.

Sail shed 5.65% to Rs 78.50. The stock hit a 52-week low of Rs 77.70 today.

Hindustan Copper declined 3.66% to Rs 177.65. The stock hit a 52-week low of Rs 177.55 today.

GMDC, Sesa Goa and Coal India fell by between 1.94% to 3.85% after the government today, 12 December 2011, introduced in parliament a bill that seeks to make mining companies pay higher compensation to people displaced by mining activities. NMDC dropped 4.54% to Rs 169.15. The stock hit a 52-week low of Rs 168 today.

Under the proposed law, miners would have to pay an amount equal to the royalty they need to pay to the government to help create a fund for the welfare of people displaced. In the case of coal miners, the amount will be 26% of profits from the projects. The Indian industry had opposed the proposal on higher royalty, saying that it would drive up costs and few would venture to invest in the mining sector.

Interest rate sensitive banking stocks reversed initial gains on worries over rising defaults in a slowing economy. India's largest private sector bank by net profit, ICICI Bank fell 3.27% to Rs 707.60, off the day's high of Rs 744. The stock hit a 52-week low of Rs 705.10 today. India's second largest private sector bank by net profit, HDFC Bank dropped 2.9% to Rs 431.90, off the day's high of Rs 450.95. India's largest bank by net profit and branch network State Bank of India (SBI) declined 4.87% to Rs 1773.10, off the day's high of Rs 1,895.80.

Interest rate sensitive auto stocks fell on worries higher interest rates and slowing economy could crimp demand. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing. India's largest truck maker by sales Tata Motors declined 2.84%. The company's total sales rose 41% to 76,823 units in November 2011 over November 2010.

India's largest tractor maker by sales Mahindra & Mahindra (M&M) fell 2.8%, extending Friday's 3.62% losses. The company's total auto sales jumped 52.7% to 40,722 units in November 2011 over November 2010.

Ashok Leyland declined 0.79%. The company reported 53.36% jump in commercial vehicle sales at 7,878 units in November 2011 over November 2010.

India's largest car maker by sales Maruti Suzuki India fell 2.78%. The company's total sales fell 18.5% to 91,772 units in November 2011 over November 2010.

India's second largest motorcycle maker by sales Bajaj Auto dropped 2.45%, extending Friday's 3.2% decline. Bajaj Auto's total vehicle sales jumped 25% at 374,477 units in November 2011 over November 2010.

India's largest motorcycle maker by sales Hero MotoCorp shed 2.87%. The company's sales rose 27.4% to 536,772 units in November 2011 over November 2010. TVS Motor Company declined 5.56%. The company's total sales rose 12% to 175,535 units in November 2011 over November 2010.

Car sales in India rose in November, the first monthly rise in five, an industry body said on Thursday, 8 December 2011 as the industry rebounded strongly from the biggest fall in over a decade the month before. Domestic passenger car sales increased by 7% to 1,71,131 units in November 2011, from 1,59,939 units in the same month last year. According to figures released by the Society of Indian Automobile Manufacturers (SIAM) on Thursday, motorcycle sales in the country grew by 22.67% to 8,69,070 units during the month from 7,08,476 units in the corresponding month last year. Total two-wheeler sales grew by 25.27% to 11,63,294 units last month from 9,28,660 units in November 2010, as per the data. Sales of commercial vehicles grew by 34.99% to 66,264 units in the month under review from 49,087 units in the year-ago period, SIAM said.

IT stocks rose on strong economic data in the US, the biggest outsourcing market for Indian IT firms. India's third largest software services exporter by revenue Wipro rose 2.56%. Wipro Technologies, the global information technology, consulting and outsourcing business of Wipro, recently announced its plans to create a focused global unit called Business Operation Unit, which will enable Wipro to deliver differentiated value for clients with seamless, predictable execution. It will consolidate its business application services, global delivery, quality and IS teams under the newly formed Business Operation Unit.

India's second largest software services exporter by revenue Infosys gained 0.93%.

India's largest software services exporter TCS rose 0.7%, reversing initial decline. Tata group holding firm, Tata Sons, recently named Cyrus Pallonji Mistry as the successor to Tata Group Chairman Ratan Tata.

A weak rupee also supported IT stocks. The rupee eased on Monday weighed by dollar demand from oil refiners. The partially convertible rupee was at 52.67/68 per dollar, weaker than Friday's close of 52.03/04 per dollar. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.

Shares state-run oil marketing companies fell after crude oil price rose more than 1% to settle at $99.41 a barrel on the New York Mercantile Exchange on Friday, 9 December 2011. HPCL (down 2.77%), BPCL (down 2.33%) and Indian Oil Corporation (down 0.39%) edged lower. Higher crude oil prices will increase under-recoveries of public sector oil marketing companies (PSU OMCs) on domestic sale of diesel, LPG and kerosene at controlled prices. Meanwhile, a weak rupee further impacts PSU OMCs as the crude oil that refineries process is either imported or priced on import-parity. Crude oil futures for January 2012 delivery rose $1.07 a barrel or 1.09% to settle at $99.41 a barrel on the New York Mercantile Exchange on Friday, 9 December 2011.

IDFC fell 4.66% after the lender said during market hours today that 25% of total issued and paid up equity shares of IDFC Asset Management Company and of IDFC AMC Trustee Company plus one equity share of each of these companies have been transferred to Natixis Global Asset Management Asia.

GAIL (India) fell 1.25%. The company said it has signed a sales and purchase agreement (SPA) for supply of liquified natural gas (LNG) over 20 years with Sabine Pass Liquefaction, LLC, a subsidiary of Cheniere Energy Partners, L.P., USA for supply of 3.5 million tonnes per annum (MTPA) of LNG. Commenting on the development, Mr. B. C. Tripathi, Chairman & Managing Director, GAIL (India) said, "The SPA with Cheniere will help GAIL to ensure long-term gas supply for the growing demand in the Indian market. This will be in addition to other initiatives being undertaken by GAIL, which includes building captive LNG facilities in India and augmenting its transmission capacity from 175 MMSCMD to over 300 MMSCMD over the next two years. GAIL has already established an office in Houston and acquired shale gas assets in Carrizo's Eagle Ford Shale acreage and is further looking for shale gas assets in the US".

Interest rate sensitive realty stocks declined on worries higher interest rates and slowing economy could crimp demand. Purchases of both residential and commercial property are largely driven by finance. HDIL, Unitech, DLF and Indiabulls Real Estate shed by between 0.19% to 4.27%.

Cals Refineries clocked highest volume of 2.56 crore shares on BSE. Suzlon Energy (42.61 lakh shares), IFCI (35.71 lakh shares), Jaiprakash Associates (35.33 lakh shares), and Sanraa Media (33.71 lakh shares) were the other volume toppers in that order.

SBI clocked highest turnover of Rs 185.39 crore on BSE. RIL (Rs 95.25 crore), L&T (Rs 72.2 crore), ICICI Bank (Rs 58.60 crore), and Infosys (Rs 47.36 crore) were the other turnover toppers in that order.

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.

Industrial production shrank 5.1% in October versus 11.3% growth in the same period a year earlier, data released by the Commerce Ministry showed today, 12 December 2011. It was the first decline in industrial production in more than two years. Industrial output last fell in June 2009, when it shrank 1.8%. Manufacturing output, which has a 75.5% weight in the index of industrial production, fell 6% from a year earlier in October, compared with a 2.4% rise the previous month. Mining output shrank 7.2%, after falling 5.6% in September. September's industrial production growth was revised upwards marginally to 2%, from 1.9% earlier.

The government on Friday, 9 December 2011, cut its economic growth forecast to 7.25%-7.75% from the previous 8% for the current year through March 2012 (FY 2012), and it also warned of possible fiscal slippage caused by global uncertainties. In a mid-year economic review presented in parliament on Friday, 9 December 2011, the finance ministry said that commitments on account of additional requirement on various subsidies will make it difficult to adhere to the total expenditure target for the current year. However the government promised to keep the slippage to a minimum as it broadly adheres to its long-term fiscal rigor, the report added. The government had pegged fiscal deficit at 4.6% of gross domestic product when it presented the Union Budget 2011-2012 in February 2011.

The reduction in GDP growth forecast for FY 2012 comes after the economy grew an annual 6.9% in the quarter ending September 2011, its slowest pace in more than two years. The government said headline inflation would decline from December 2011, expecting it to ease to 7% by March 2012.

The government also said that the Rs 40000-crore stakes sale target in state-run companies would be hard to achieve this fiscal year, while tax receipts would suffer from the impact of the global slowdown. The government is considering options other than share sales to meet its divestment target in state-run companies for the fiscal year ending March, the junior finance minister said on Friday.

Food inflation in India slid further in the fourth week of November, falling under the 7% mark, data released by the Government showed on Thursday. Fuel inflation remained steady. Food inflation declined to 6.6% in the week ended November 26 from 8% in the preceding week, the Commerce & Industry Ministry said on Thursday. Food inflation stood at 8.93% in the corresponding week last year. Inflation in the Primary Articles group fell to 6.92% in the week under review, from 7.74% in the week ended November 19, according to the Commerce Ministry statement. It was at 14.01% in the year-ago period. Inflation in the Fuel & Power group stood at 15.53% in the week ended November 26, unchanged compared to the previous week, the latest data showed. It was at 10.07% in the comparable week of the previous year.

Easing food inflation could nudge the central bank to reverse its tight monetary policy stance as economic growth is stuttering. Food inflation has been a key driver of headline inflation in India over the past few years.

Data due on Wednesday 14 December 2011 on headline inflation for November 2011 will provide cues on the central bank's likely policy stance at its mid-quarter monetary policy review on 16 December 2011. Inflation based on the wholesale price index (WPI) is projected to ease to 9% in November 2011, as per the median estimate of the poll carried out by Capital Market. Inflation, as measured by the wholesale price index (WPI), stood at 9.73% in October 2011 and 9.72% in September 2011.

India's manufacturing sector expansion slowed in November as factory output grew at its slowest pace in nearly three years although export demand should provide some cheer for factories, a survey showed on 1 December 2011. The HSBC Markit India Manufacturing PMI fell to 51 in November from 52 in October, but has stayed above the 50 mark that divides growth from contraction for 32 months. The PMI was 50.4 in September.

On the flip side, India's services sector expanded in November for the first time in two months as new business accelerated despite persistent inflationary pressures, a survey showed on Monday. The seasonally adjusted HSBC Markit Business Activity Index -- based on a survey of around 400 firms -- stood at 53.2 in November, above the 50-mark that separates growth from contraction. It had fallen to 49.1 in October after contracting for the first time in more than two years in September to 49.8. Despite tight monetary conditions, the sub-index for new business accelerated to 52.3 in November from 51 in October, driving the turnaround in the service sector.

India's November exports are seen at $22.3 billion while imports for the month are seen at $35.9 billion, leaving a trade deficit f $13.6 billion, Trade Secretary Rahul Khullar told media reporters on Friday. Exports between April and November are seen up 33.2 percent from a year earlier to $192.7 billion, Khullar said, citing provisional data.

The Reserve Bank of India (RBI) announced a 25 basis points hike in its key policy rate viz. the repo rate to 8.5% after half-yearly review of the monetary policy on 25 October 2011. The central bank cut its GDP growth forecast for the current fiscal year through March 2012 to 7.6% from 8% earlier. But it retained its March-end inflation projection of 7%. RBI said the projected inflation trajectory indicates that the inflation rate will begin falling in December 2011 (January 2012 release) and then continue down a steady path to 7% by March 2012. It is expected to moderate further in the first half of 2012-13. This reflects a combination of commodity price movements and the cumulative impact of monetary tightening. Further, moderating inflation rates are likely to impact expectations favourably. RBI unveils mid-quarter monetary policy review on 16 December 2011.

European stocks declined for the fourth time in five days on Monday, 12 December 2011, after Moody's Investors Service said measures announced at last week's European Union summit won't be enough to take pressure off euro-area sovereigns. Key benchmark indices in France, Germany and UK fell by between 0.59% to 1.66%.

Under the deal reached Friday, all 17 countries that use the euro agreed to allow a central European authority to oversee their future budgets. Nine other EU nations are considering it. Britain is the lone holdout. They also agreed to automatic penalties if they spend too much. In addition to tighter controls on spending, Europe's new "fiscal compact'' calls for the launch of a permanent bailout fund for euro nations in 2012, a year ahead of schedule. The deal also will send 200 billion euros ($267 billion) to the International Monetary Fund, which controls another emergency fund for countries in crisis.

However, Moody's said on Monday, 12 December 2011, that extra measures announced by policymakers offered little that was new. Moody's said it will still review the ratings of all European Union countries during the first quarter of next year. "The announced measures therefore do not change Moody's previously expressed view that the crisis is in a critical and volatile stage, with sovereign and bank debt markets prone to acute dislocation which policymakers will find increasingly hard to contain," Moody's said in a statement.

Italian bond yields crept higher ahead of a government debt auction, while the French government is also due to issue debt.

Asian stock markets rose Monday, 12 December 2011, as investors cheered a new European fiscal pact aimed at fixing the region's debt crisis and preventing a collapse of the euro currency. Key benchmark indices in Indonesia, Japan, Singapore, South Korea and Taiwan rose by between 0.26% to 1.37%. Key benchmark indices in China and Hong Kong were down 1.02% and 0.06% respectively.

Trading in US index futures indicated that the Dow could fall 82 points at the opening bell on Monday, 12 December 2011. A deal to forge stronger ties between most of Europe's economies sent US stocks sharply higher Friday as hopes grew that the region is close to resolving its debt crisis.

In US economic data, the trade deficit narrowed in October for the fourth month in a row, as oil exports helped to offset record imports from China. The October deficit was smaller than Wall Street expectations. Separately, an early reading on consumer sentiment in December topped expectations.

The Federal Open Market Committee (FOMC) will meet Tuesday, 13 December 2011. No change in the current policy for the fed funds rate target range of 0%-0.25% through mid-2013 is expected, nor is it expected that the Fed with expand its balance sheet through more asset purchases. This is the final scheduled meeting in 2011. The next is on 24-25 January 2012, at which the rotation of FOMC voters will take place.