Equities extended losses for a fifth straight day today with the barometer index BSE Sensex falling below the psychologically important 14,000 mark for the first time in 10 months since late August 2007. Heavy selling pressure in index pivotals during the second half of the day`s trading sessions spooked the market. Metal and FMCG shares were the worst hit in today`s trade.
Choppy swings were witnessed in late trade with the market bouncing in the green, lead by solid rally in index heavyweight Reliance Industries (RIL). However, RIL quickly pared gains pulled the market sharply lower in late trade. The market breadth was weak. All sectoral indices in BSE suffered losses. Asian and European markets were trading lower.
Fears of further increase in interest rates to tame inflation continued to weigh on the market sentiment. Reserve Bank of India (RBI) governor signaled on Monday, 23 June 2008, that the central bank will tighten monetary policy further to tackle inflation that surged past 11% in early June 2008 to a 13-year high.
In a crucial global event, the US Federal Reserve is expected to hold key rate for short-term lending at its current 2%, at its two-day policy meeting that begins today, 24 June 2008. Investors will scrutinise the statement accompanying the decision for clues on the future course of monetary policy.
Meanwhile, a crucial UPA-Left meeting on the controversial civilian nuclear deal with the United States is scheduled tomorrow, 25 June 2008. The left allies, whose parliamentary support is crucial to the Congress-led United Progress Alliance (UPA) government at the Centre, have said they would withdrew support if the government went ahead with the deal.
The 30-share BSE Sensex was down 301.06 points or 2.11% at 13,992.26, as per provisional closing. Sensex lost 302.01 points at day`s low of 13,991.31 hit in fag trade. At the day`s high of 14,432.90, the Sensex gained 139.58 points in early trade.
The broader based S&P CNX Nifty slumped 105.55 points or 2.47% at 4,160.85 as per provisional closing.
The market breadth was weak. On BSE, 1930 shares declined as compared to 713 that advanced. 67 remained unchanged.
The BSE Mid-Cap index slipped 1.97% to 5,700.52 and the BSE Small-Cap index fell 1.90% to 7,000.54. Both these indices underperformed the Sensex.
The total turnover on BSE amounted to Rs 5355 crore as against Rs 3597 crore by 14:30 IST
Among the 30-member Sensex pack, 24 declined while the rest gained.
Metal shares declined sharply. India`s largest private sector steel maker Tata Steel plunged 7.08% to Rs 692.80 on 12.52 lakh shares. It was the top loser from Sensex pack.
Sterlite Industries (down 5.39% to Rs 698.10), Hindalco Industries (down 3.65% to Rs 143), National Aluminium Company (down 11.20% to Rs 359.95), Jindal Steel & Power (down 4.95% to Rs 1810.05), and Sesa Goa (down 4.3% to Rs 3230) were the other major losers from the metal sector.
Hindustan Unilever (down 6.38% to Rs 212.10), Dabur India (down 4.40% to Rs 88.10), ITC (down 2.74% to Rs 190.05), Marico (down 5.58% to Rs 58.40), and Nestle India (down 0.70% to Rs 1648), edged lower from FMCG sector.
India`s largest private sector company in terms of market capitalisation and oil refiner Reliance Industries (RIL) saw high volatility in the day. The stock settled 0.80% higher to Rs 2038.30 on 16.45 lakh shares. The stock swung wildly in a range of Rs 2012 and Rs 2133.70 during the day. As per recent reports, RIL plans to open its first North American plant in North Carolina by investing $215 million.
India`s largest power generation company in terms of sales, NTPC lost 4.84% to Rs 154.20. As per reports, NTPC had paid 6.9% lower advance tax at Rs 188 crore in the first installment of this financial year over the corresponding period in the previous year.
India`s largest state-run oil exploration company Oil & Natural Gas Corporation (ONGC) fell 4.75% to Rs 845.15. ONGC has decided to exit projects to set up a refinery and a special economic zone Andhra Pradesh, the company said on Monday, 23 June 2008. ONGC will unveil its Q4 and year ended March 2008 results on Wednesday, 25 June 2008.
Banking stocks slipped on selling pressure. ICICI Bank (down 2.95% to Rs 700.10), HDFC Bank (down 4.62% to Rs 1046) and State Bank of India (down 0.17% to Rs 1203), edged higher.
Software stocks slipped in the red after firm start. Satyam Computer Services (down 2.09% to Rs 450.50, off day`s high of Rs 465.75), Infosys Technologies (down 4.08% to Rs 1772.05, off day`s high of Rs 1859.90), and TCS (down 1.26% to Rs 847, off day`s high of Rs 864.80) declined.
Wipro, the country`s third largest software services exporter was down 2% to Rs 470. Wipro has reportedly raised close to Rs 1,400 crore (35 billion Yen) through external commercial borrowings (ECBs). The company has been pursuing an aggressive acquisition strategy over the last few years and it concluded two major acquisitions in the year ended March 2008 including Unza and Infocrossing for a cumulative value of close to $900 million. As of 31 March 2008, Wipro had cash and bank balance Rs 3,927 crore.
Reliance Communications (RCom), the country`s second largest telecom services provider in terms of market capitalisation slumped 2.85% to Rs 474. RCom`s proposed merger deal with South Africa based global operator, MTN is reportedly expected to close by first week of July 2008 with RCom likely to acquire 40% stake in the merged entity.
India`s leading pharma company in terms of sales, Ranbaxy Laboratories gained 2.44% to Rs 526 on 14.58 lakh shares. It was the top gainer from Sensex pack.
Bharat Heavy Electricals (Bhel), the country`s largest state-run engineering company in terms of order book, gained 2.10% to Rs 1390. As per reports, Bhel has paid 42.8% higher advance tax at Rs 300 crore in the first installment of this financial year over the corresponding period in the previous year.
India`s dedicated housing finance company Housing Development Finance Corporation advanced 2.05% to Rs 2260. The stock moved in a range of Rs 2182 and Rs 2300 in the day.
Reliance Capital was the top traded counter on BSE with turnover of Rs 454.33 crore followed by Reliance Industries (Rs 341.56 crore), Tata Steel (Rs 239.07 crore), Reliance Communication (Rs 184.91 crore)and Anu`s Labs (Rs 177.87 crore), in that order.
Volatility is expected to remain high in the near term as derivatives contracts for June series are set to expire on Thursday, 26 June 2008. As per reports, the marketwide rollover of positions from June 2008 series to July 2008 series stood at 26.50% while that of Nifty was 31%, as on Friday, 20 June 2008.
Meanwhile, as per reports, advance tax collections increased 27% to Rs 21,000 crore in Q1 June 2008 over Q1 June 2007, as of 20 June 2008. Advance taxes are paid in four instalments, in June, September, December and March. Usually, the first instalment is 15% of the total tax estimated to be paid for the whole fiscal.
European markets, which opened after Indian market, slipped into the red after firm opening. Key benchmark indices in United Kingdom, France and Germany were down by between 1.18% and 1.48%.
Asian markets, which opened before Indian market, were trading lower except China`s Shanghai Composite which rose 1.50% at 2,801.72. Japan`s Nikkei (down 0.06% at 13,849.56), Hong Kong`s Hang Seng (down 1.14% at 22,456.02), Taiwan`s Taiwan Weighted (down 1.76% at 7,738.12), Singapore`s Straits Times (down 0.57% at 2,962.20) and South Korea`s Seoul Composite (down 0.28% at 1,710.84) slipped.
US markets lost some ground yesterday, 23 June 2008, sending financial shares to their lowest level in five years, on a deteriorating outlook for bank earnings. The Dow Jones industrial average dropped 0.33 points, or less than 0.01%, to 11,842.36. The Standard & Poor`s 500 index gained 0.07 points, or 0.01%, to 1,318.00, and the Nasdaq composite index lost 20.35 points, or 0.85%, to 2,385.74.
Crude for August delivery was up 20 cents at $136.94 a barrel today, 24 June 2008 amid fears of Nigerian supply disruptions and tensions between Israel and Iran. It had hit a record high of $139.89 on 16 June 2008.
Back home, Indian stocks suffered losses for the fourth straight session yesterday, 23 June 20008, to settle at 10-month low on sustained selling pressure throughout the day due to concerns of further policy tightening by the Reserve Bank of India with inflation reaching 13-year high and political uncertainty. The 30-share BSE Sensex lost 277.97 points or 1.91% at 14,293.32 and the broader based S&P CNX Nifty was down 81.15 points or 1.87% to 4266.40, on that day.
As per provisional data, foreign funds sold shares worth a net Rs 665.56 crore and domestic mutual funds bought shares worth a net Rs 91.75 crore yesterday, 23 June 2008.
Foreign institutional investors (FIIs) were net sellers of Rs 166.24 crore in the futures & options segment yesterday, 21 June 2008. They were net buyers of index futures to the tune of Rs 876.86 crore and sold index options worth Rs 864.33 crore. They were net sellers of stock futures to the tune of Rs 165.96 crore and sold stock options worth Rs 12.81 crore.
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