Sensex provisionally down 0.92%; breadth weak

Key benchmark indices edged lower for the fourth day in a row as data showing sustained selling by foreign funds over the past few days, ongoing worries about euro-zone sovereign debt crisis and geopolitical worries arising from death of North Korean leader Kim Jong-il hurt sentiment adversely. Intraday volatility was high. The barometer index, BSE Sensex, was provisionally down 142.70 points or 0.92%, up 157.91 points from the day's low and off 91.45 points from the day's high. The market breadth was weak.

L&T, Bhel, Sterlite Industries (India), Tata Steel, ICICI Bank, State Bank of India (SBI) and Maruti Suzuki India hit 52-week lows today. Index heavyweight Reliance Industries (RIL) edged higher in volatile trade. FMCG stocks rose on defensive buying in a weak market. Interest rate sensitive auto and banking stocks extended Friday's (16 December 2011) decline as the Reserve Bank of India's decision to keep repo rate unchanged after a policy review on that day disappointed some. Bharti Airtel recouped almost entire losses after a steep initial sell-off.



Sustained selling by foreign funds over the past few days weighed on sentiment. Foreign institutional investors (FIIs) sold shares worth Rs 220.25 crore on Friday, 16 December 2011, as per the provisional data from the stock exchanges. FII outflow totaled Rs 1921.34 crore in six trading sessions from 9 to 16 December 2011, as per provisional data from the stock exchanges. The outflow followed sustained inflow early this month.

The market opened on a weak note as Asian stocks fell. The Sensex and the 50-unit S&P CNX Nifty hit 2-year lows. The market came off lows in early trade. The intraday recovery proved short-lived. The market hit fresh 2-year low in morning trade. The market once again came off lows later. The market weakened again in mid-morning trade. The market once again trimmed intraday losses in early afternoon trade. The market moved in a tight range in the negative terrain in afternoon trade. Volatility ruled the roost as market recovered after hitting fresh intraday low in mid-afternoon trade.

As per provisional closing, the BSE Sensex was down 142.70 points or 0.92% to 15,348.65. The index lost 300.61 points at the day's low of 15,190.74 in mid-afternoon trade, its lowest level since 21 August 2009. The index fell 51.25 points at the day's high of 15,440.10 in early trade.

The S&P CNX Nifty was down 46.55 points or 1% to 4,605.05. The Nifty hit a low of 4,555.90 in intraday trade, its lowest level since 3 November 2009. The Nifty hit a high of 4,623.15 in intraday trade.

The market breadth, indicating the overall health of the market, was weak. On BSE, 2,078 shares declined and 769 shares rose. A total of 101 shares were unchanged.

The total turnover on BSE amounted to Rs 1838 crore, lower than Friday's Rs 2187.93 crore.

From the 30-member Sensex pack, 23 declined while the rest of them gained. DLF (down 3.26%), Jindal Steel & Power (down 3.49%), and Tata Power (down 2.83%), edged lower from the Sensex pack.

FMCG pivotals rose on defensive buying in a weak market. ITC (up 1.13%) and Hindustan Unilever (up 1.26%), edged higher. Also pharma major Cipla rose 0.05% on defensive buying.

Index heavyweight Reliance Industries (RIL) rose 1.75% to Rs 735.65. The stock was volatile. The stock hit a high of Rs 739.80 and a low of Rs 715.40. 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 power generation firm by capacity NTPC declined 0.22%, extending Friday's 3.21% fall triggered by lower advance tax payment for Q3 December 2011. The company's advance tax payment reportedly fell 17% to Rs 830 crore in Q3 December 2011 over Q3 December 2010.

India's largest listed cellular services provider by sales Bharti Airtel declined 0.06% to Rs 336.10, off sharply from day's low of Rs 321.45.

Capital goods stocks tumbled on worries new order flows will be hit adversely in a slowing economy. India's largest engineering and construction firm by order book position L&T dropped 4.34% to Rs 1,029.10 after sliding to a 52-week low of Rs 1,026.05 today. L&T's advance tax payout rose marginally to Rs 350 crore from Rs 340 crore.

India's largest power equipment maker by sales Bhel lost 2.45% to Rs 234.55 after falling to a 52-week low of Rs 228 today.

Interest rate sensitive banking stocks extended Friday's (16 December 2011) decline 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 during trading hours that day. 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 2.89% to Rs 656.50, after declining to a 52-week low of Rs 641 today. 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, declined 3.15% after the bank's American depository receipt, or ADR fell 4.62% to settle at $25.21 on the New York Stock Exchange on Friday, 16 December 2011. 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 3.24% to Rs 1,626 after sliding to a 52-week low of Rs 1,604 today. The bank's advance tax reportedly fell 6.48% to Rs 1730 crore in Q3 December 2011 over Q3 December 2010.

The RBI on Friday said that year-on-year non-food credit growth at 17.5% on 2 December 2011 was below its indicative projection of 18%.

Reserve Bank of India (RBI) has reportedly pointed on the shortcomings in the quality of bank audits as financial statements certified by accountants show lower non-performing assets (NPAs) than is actually the case. According to RBI, there is a difference between the levels of non-performing assets (NPAs) found during the course of supervisions (by RBI) and those in audited books of banks.

Interest rate sensitive auto stocks extended Friday's (16 December 2011) fall 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 during trading hours that day. 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) declined 1.37%. 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 1.59% to Rs 915 after falling to a 52-week low of Rs 905.55 today. 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 fell 1.15%. 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 dropped 0.90%. 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.

However, India's largest passenger vehicle maker by sales Tata Motors advanced 4.41% to Rs 179.85 and was the top gainer from the Sensex pack. 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.

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.

Metal pivotals were mixed. India's largest non-ferrous metals maker by sales Sterlite Industries (India) rose 0.95% to Rs 90.25 after falling to a 52-week low of Rs 86.10 today.

India's largest private sector steel maker by sales Tata Steel shed 0.53% to Rs 363. The stock recovered after hitting a 52-week low of Rs 354.65 today.

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. The central bank also refrained from cutting the cash reserve ratio (CRR) despite tight liquidity in the system. The repo rate was left steady at 8.5% after increasing it 13 times since March 2010. The bank rate also remains static at 6%. The central bank kept its end-March 2012 inflation forecast unchanged at 7%.

While inflation remains on its projected trajectory, downside risks to growth have clearly increased, RBI said in a statement. The guidance given in the second quarter review of the monetary policy was that, based on the projected inflation trajectory, further rate hikes might not be warranted. In view of the moderating growth momentum and higher downside risks to growth, this guidance is being reiterated, RBI said. 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.

European stock markets turned higher in late morning trade on Monday, with drug and food-and-beverage sectors leading the gains. Key benchmark indices in France, UK and Germany were up by between 0.23% to 0.48%. French stocks shrugged off news of an outlook downgrade to negative by Fitch Ratings late Friday.

After Europe markets closed Friday Fitch Ratings affirmed its triple-A rating on France but cut its outlook to negative from stable. Fitch also put ratings of Italy, Belgium, Spain, Slovenia and Cyprus on negative credit watch on Friday, saying there was "heightened probability" of a downgrade in the near term.

Asia markets edged lower on Monday as losses accelerated after reports North Korean leader Kim Jong-il died, with sentiment already weak on concerns about the European debt crisis. Key benchmark indices in China, Hong Kong, Japan, Taiwan, Singapore and South Korea were down by between 0.30% to 3.43%. Indonesia's Jakarta Composite rose 0.05%.

The death of the North Korean leader and the consequences for geopolitical stability struck investor appetite across equity markets, which were already dampened by concerns about Europe's debt crisis. Reports citing North Korean state television said midday Monday that the communist nation's leader Kim Jong-il died on Saturday. Following the announcement, Japanese Prime Minister Yoshihiko Noda set up a crisis management team on North Korea to confirm the news and handle the implications, according to reports. The South Korean military, meanwhile, went on high alert, according to local media reports. South Korea's authorities will closely monitor financial-market volatility, reports citing the nation's Deputy Finance Minister Choi Jong-Ku, said.

Dow futures reversed intraday losses in volatile trade. Trading of US index futures indicated that the Dow could rise 25 points at the opening bell on Monday, 19 December 2011. US stocks settled on a mixed note on Friday, 16 December 2011, with intraday rally fizzling as continued jitters surrounding Europe's debt crisis weighed on investor sentiment. The Dow Jones Industrial Average dropped 2.42 points, or 0.02%, to 11866.39. The Standard & Poor's 500-stock index rose 3.89 points, or 0.32%, to 1219.65 and the Nasdaq Composite index rose 14.32 points, or 0.56%, to 2555.33.