Market Update

Global meltdown leads to market crash

The market witnessed a big carnage today, as widespread selling caused the index slip below the 15,100 mark shortly after the opening bell. A sharp slump across the international markets saw the Sensex resume 172 points lower at 15,250 and shed 370 points to touch the day's low of 15,052. The market soon moved above the 15,100 level, but traded below 15,200 through the session as intense selling continued in realty, banking and capital goods and other counters. The Sensex finally ended the session with a loss of 334 points at 15,088. The Nifty too came under selling pressure and lost 78 points to close at 4,504.

The market breadth was extremely weak, with the losers outnumbering the gainers by 2.14:1 on the BSE. Of the 2,576 stocks traded on the BSE 1,804 stocks declined, 840 stocks advanced and 71 stocks ended unchanged. All the BSE sectoral indices continued to trade weak and dropped around 0.50-4% each. The BSE Realty Index was the major loser and lost 4.27%, while the BSE Bankex Index shed 4.01%.

Majority of the 30 stocks of the Sensex ended in the red. Among the major losers Ranbaxy Laboratories shed 7.68% at Rs548.10, Reliance Infrastructure plunged 5.68% at Rs1,008, BHEL crumbled 5.04% at Rs1,416, Larsen & Toubro crashed 4.84% at Rs2,609.20, ICICI Bank slipped by 4.08% at Rs747.60, HDFC Bank tumbled 3.93% at Rs1,111.50, SBI lost 3.69% at Rs1,290, HDFC dropped nearly 3.29% at Rs2,198 and ONGC slumped 3.06% at Rs837.10. Select front-line counters ended in the green. M&M rose 1.11% at Rs576.45, while Wipro and Cipla closed with moderate gains.

Reality stocks witnessed a steep fall. Anant Raj plummeted 7.67% at Rs154.10, while Unitech crashed 5.82% at Rs188.60. Phoenix Mill at Rs241, Indiabulls Realty at Rs373.60, Puravankara at Rs190, Ansal infrastructure at Rs99.10, Mahindra Life at Rs541.50 and DLF at Rs478.20 tumbled over 2-5% each. Among the Bankex stocks Indian Overseas Bank plunged 7.54% at Rs109.80, Kotak Bank fell by 5.49% at Rs614.55, Bank of India lost 4.99% at Rs267.60, Punjab National Bank shed 4.99% at Rs435.25 and Axis Bank declined 4.67% at Rs718.10.

Over 1.77 crore Niraj Cement shares changed hands on the BSE followed by Chambal Fertilisers (1.03 crore shares), Anu’s Laboratories (0.85 crore shares), IFCI (0.71 crore shares) and Reliance Petroleum (0.67 crore shares).Global meltdown leads to market crash

Political worries pull market down

The northward journey of the market finally got derailed on the third day of the trading week, after a sharp bout of selling in afternoon ensured that the market remains in negative territory till the close. The last two trading sessions had seen the market register gains of over 500 points on the back of firm international markets. The overnight fall in the US markets and mixed Asian indices saw brisk activity in early trades, with the Sensex witnessing a swing of over 400 points. After resuming 47 points higher at 15,744, the index eased on profit taking and remained range-bound with a negative bias in the first half of the trading session. A wave of selling in heavyweights and select sectoral stocks triggered a major fall, with the index slipping nearly below the 15,400 mark and touching the day's low of 15,390. The Sensex however managed to erase some losses on selective buying and closed the session with losses of 275 points at 15,422, while Nifty declined by 71 points at 4,582.

The broader market was in red. Of the 2,730 stocks traded on the BSE, 1,405 stocks declined, 1,254 stocks advanced and 71 stocks ended unchanged. Among the sectoral indices only two ended in green. BSE Realty was the biggest laggard and moved down 3.50% at 5,885.75 followed by BSE Bankex index (down 3.45% at 7,306.44) and BSE IT index (down 2.39% at 4333.94). However, BSE FMCG index gained 0.37% at 2,310.11 followed by BSE Auto index (up 0.11% at 4,179.54).

Among the laggards, ICICI Bank was down 4.25% at Rs771, HDFC Bank declined by 3.40% at Rs1,161.20, Tata Steel shed 3.18% at Rs818, Larsen & Toubro dropped 3.12% at Rs2,725, Jaiprakash Associates lost 2.93% at Rs180.50 and Reliance Infrastructure fell 2.83% at Rs1,065.20. However, select heavyweights attracted decent buying support. Ambuja Cement surged 4.80% at Rs90.65, Ranbaxy Laboratories rose 2.88% at Rs598.20, Grasim Industries jumped 2.38% at Rs2,177.25, Maruti Suzuki India added 1.24% at Rs765 and Hindalco gained 0.96% at Rs174.30..

Select realty stocks witnessed considerable selling pressure. Anant Raj Industries dropped 7.46% at Rs166.90, indiabulls Real Estate lost 6.07% at Rs397.90, Puravankara Projects declined by 4.44% at Rs200.35, Sobha Developers slipped by 3.36% at Rs395.45, Unitech lost 3.31% at Rs200.25 and Phoenix Mills was down 3.04% at Rs255.30..

Over 1.49 crore Anu’s Laboratories shares changed hands on the BSE followed by Ispat Industries (1.39 crore shares), Chambal Fertilisers (1.30 crore shares), RNRL (1.27 crore shares), IFCI (1.14 crore shares) and Nagarjuna Fertilisers (1.05 crore shares).

Corporate News

Corporate News

Reliance Industries sends letter to MTN; says it has the first right of refusal to buy the controlling interest in Reliance Communications.(FE)
JSW Steel plans to invest Rs800bn to add 20mn tonne capacity.(BL)
Idea Cellular to buy Spice Comm. in a three stage deal in which minority shareholders of latter can swap their shares for Idea’s shares or sell them in an open offer.(BS)
Goldman Sachs to pay Rs7bn for a minority stake in M&M.(TOI)
Hindalco Industries considering various options including rights issue to repay a US$3bn bridge loan it took to finance the acquisition of Novelis Inc.(BL)
Telekom Malaysia is understood to have picked up ~15% stake in Idea Cellular at a price of Rs158 a share.(DNA)
Videocon to roll out its GSM services from Chennai on August 15th of current year.(ET)
Vedanta Resources bid for US copper firm Asarco faces a roadblock.(Mint)
Hinduja Group to finalise a strategic investor to offload 15% stake in the 1,040MW coal fired project at Vizag in Andhra Pradesh.(FE)
Wipro Technologies pulls out of its JV with Motorola.(ET)
SBI decides against raising interest rates for the time being.(BS)
ONGC Videsh, Indian Oil and Oil India together expect to spend US$3bn if they get the right to develop the Farsi block in Iran.(BS)
The New York Times Company in discussion to acquire a 5% equity stake in Sieger Solutions, a 100% subsidiary of Deccan Chronicle Holdings.(BL)
Reliance Power emerges as the lowest bidder to build two power projects in the Allahabad district of Uttar Pradesh.(BS)
3i Infotech completes the acquisition of US based Regulus Group for US$100mn.(DNA)
TPG Newbridge may invest US$150mn for a 49% stake in a company that will hold 100% equity capital of Shriram City Union Finance.(BL)
Pipe manufacturer PSL secures Rs 1.2bn order from BPCL.(BL)
Spice Comm. promoter B K Modi in negotiations to acquire 39% stake in Sony Entertainment Television.(BS)
Reliance Retail will soon enter into a 51:49 JV with US-based Avery Dennison Corp.(ET)
Philips Electronics India decides to buy back shares for Rs1.8bn at Rs260 per share.(DNA)
Maharashtra government decides to allot 25 acres of land in Nagpur to Mahindra Lifespace Developers.(ET)
Ultra mega power project in Tilaiya, Jharkhand to be awarded in November; eleven companies short listed for the project.(BS)
MAN Infraprojects, subsidiary of MAN Industries, to invest Rs10bn in real estate (DNA).
Indo Asian Fusegear forms JV with a Spanish firm to manufacture wiring devices for home automation.(Mint)
Lehman Brothers to invest Rs7.5bn in Unitech’s 97 acre project in North Mumbai.(ET)
JK Tyres to set up a greenfield site for passenger car tyres.(ET)
Sarswat Cooperative Bank has made a fresh application to the RBI to acquire the ailing South Indian Cooperative Bank.(ET)

Economic News

Inflation rises to 8.75%, a seven year high on dearer primary goods for week ended May 31st.(BL)
State governments are planning to cap sales tax on jet fuel at 12.5%.(ET)
Government raises export duty on iron ore and long steel products; imposes fresh excise duty on large cars and SUVs.(BS)
Cement output in May 2008 fell marginally to 14.89mt against 15.02mt in April according to Cement Manufacturers’ Association.(BL)
Drug price regulator has introduced pro rata pricing for injectibles in addition to oral liquids, tablets and ointments.(ET)
Due to slowdown in passenger traffic and high ATF costs, airline companies are canceling or cutting deliveries due this year or sub-leasing them to other carriers globally.(BS)
Government withdraws 5-15% export cess imposed on variety of steel products including hot and cold rolled coils, steel pipes and tubes and galvanized sheets.(ET)
DoT may impose eligibility conditions for 3G spectrum auction.(BL)
Cable operators may be allowed to build an optical fibre infrastructure.(ET)
Government approves 13 FDI proposals worth Rs 15bn including one by steel major ArcelorMittal for its operations in India.(FE)
Mining ministry to buy a Rs4.5bn deep-sea research vessel for seaboard mapping.(ET)
Government is contemplating ban on maize exports to reduce price in the domestic markets.(ET)
Empowered group of state finance ministers likely to discuss today Center’s proposal to reduce sales tax on petrol, diesel, cooking gas and jet fuel.(ET)

Market gains SENSEX-206 points

The market was back on track after slipping on Friday. Though it came off its highs, but still ended firm above the 15,350 mark. The bounce from the recent sell-off was in line with the recovery witnessed in the major Asian indices, which were up around 1% each. The Sensex resumed 143 points higher at 15,333 and advanced further on substantial buying support. Buying in realty and banking stocks propelled the index to an intra-day high of 15,553 in afternoon trades. After an initial upmove, the Sensex witnessed profit taking in the second half of the session and erased most of its gains to touch an intra-day low of 15,333. The index finally wrapped up the session with gains of 206 points at 15,396, while the Nifty closed with gains of 55 points at 4,573.

Of the 2,724 stocks traded on the BSE 1,770 stocks advanced, 878 stocks declined and 76 stocks ended unchanged. Among the sectoral indices, the BSE Realty index was the major gainer and was up 3.54% at 5,870.87 followed by the BSE Bankex index that was up 2.83% at 7,255.63. The BSE IT index, the BSE Power index, the BSE Teck index, the BSE FMCG index, the BSE Metal index and the BSE PSU index ended the day in positive territory. On the other hand, the BSE CD index and the BSE Auto index ended the day in red.

Among the index heavyweights, ICICI Bank gained 4.43% while Reliance Infrastructure notched up gains of 3.97%, Bharti Airtel moved up 3.15% at Rs839.60 and NTPC scaled up 3.07% at Rs166.05. Cipla, HDFC Bank, DLF, Infosys, Hindustan Unilever and ITC were up 2% each. Wipro, HDFC, Satyam Computer Services and Larsen & Toubro gained 1% each. Tata Steel, Reliance Industries, Jaiprakash Associates, ONGC, Tata Consultancy Services and ACC also ended the day in positive territory. However, Hindalco Industries was the major loser and shed 2.31% at Rs170.65. BHEL was down 2.15% at Rs1,511.15 and Reliance Communications shed 1.52% at Rs531. SBI, Maruti Suzuki India and Mahindra & Mahindra ended in negative territory.

Over 2.58 crore Chambal Fertlisers shares changed hands on the BSE followed by Nagaarjuna Fertlisers (1.88 crore shares), Anu’s Laboratories (1.10 crore shares), IFCI (94.35 lakh shares) and Reliance Natural Resources (88.87 lakh shares).

Markets make smart recovery on industrial growth data

FIIs were net sellers by Rs 1,211.2 crore; domestic institutional investors were net buyers for Rs 500.44 crore.Oil and gas, capital goods and metal stocks were major gainers

Stocks sagged in the early hours of trade on the RBI’s hike in short-term lending rates, to make sharp recovery only hours later as the Index of Industrial Production figures came in.
The Sensex fell by a hefty 437 point intra-day; it finally closed at 15,250, witnessing a swing of more than 500 points from its day’s low of 14,748.

FIIs sold equities for the fourth consecutive day of the week; they were net sellers by Rs 1,211.2 crore. Domestic institutional investors were net buyers for Rs 500.44 crore, according to BSE and NSE’s provisional data.

Net sales of equities by FIIs in the past three days amount to Rs 2,336 crore; FII net sales in June so far amount to Rs 5,321.50 crore.

“The markets today showed remarkable recovery in spite of weak global cues and RBI’s move to increase the repo rate by 25 basis points to 8 per cent. Good IIP numbers also helped,” said Mr P.K. Agarwal, President, Research, Bonanza Portfolio Ltd.

The Index of Industrial Production (IIP) data released on Thursday for April recorded a 7 per cent growth as compared to 3 per cent in March. However, it was much lower than the 11.3 per cent growth for the same month a year ago.

“This year is going to be tough since we are dependent on FIIs inflows but they don’t seem to be in a hurry to come back; we may see another heavy fall,” said Mr Waqar Naqvi, Chief Executive, Taurus Asset Management Co. Ltd.

“When commodity prices come down, India might become more attractive for the FIIs,” said Mr Naqvi adding that “The economies of Russia, Brazil and Vietnam, where commodity stocks had 65 to 75 per cent share in the local equities markets, were not falling.”
BSE Midcap and Small cap indices outperformed the Sensex by gaining 0.53 per cent and 0.78 per cent.

Some major gainers include Rajesh Exports up over 13%, RNRL up 7%, Reliance Petro up 5%, Aban Offshore up 6%, Jyoti Structures up 13%, Deccan Chronicles up over 14%, Idea Cellular up 11%, Spice Communications up 5.5%, Neyveli Lignite up almost 5%, Bilcare and Lupin rose 5% each, Aptech rose 5.7%.Other mid and smallcap gainers included ABG Shipyard up 6.4%, Adani Enterprise up 5.6%, Amara Raja Batteries up 5.8%, Himatsingka Seide up 9%, Pantaloon up 9%, Plethico up 7%, Renuka Sugars up over 6%, S Kumars up 12%, Balrampur Chini up over 5%, Bajaj Hindustan up 6.6%, Praj Industries up 6%, City Union Bank up almost 6%, Entegra up another 10%, EIH Associated up 5% again, Fortis Financial Services (renamed Religare Renova) up 10% again, Greenply up over 7%, Indus Fila up 6% again, Lloyd Steel up 6.5%, Mangalore Chem up 10%, Nilkamal up 12%, Orient Paper up 8%, Saint-Gobain up over 7%, Shree Ashtavinayak rose almost 6% and touched its 52-week high, Valecha up 12.5%, Zandu Pharma up 10% among many others.Bang Overseas aside from Shree Ashtavinayaka, touched its 52-week high today.

Some major losers included Suzlon Energy down 7%, JSW Steel dropped 7.4%, United Breweries Ltd dropped 7.3% after yesterday's rise, Bajaj Holdings down 5%, Nahar Industrial down 7% and touching its 52-week low, Natco Pharma down 7%.

Among the sectoral indices, BSE Oil & Gas, Capital Goods and Metals were the major gainers.
The industrial sectors that were major losers on Thursday were IT, health care and automobile.

A near term trigger for the market will be corporate advance tax payments for the first installment which falls due on 15 June 2008. The income tax law requires a company to 15% the estimated tax liability for the year as advance tax in the first installment. The advance tax payment by the corporate sector will give a cue on Q1 June 2008 results.