Relentless selling in realty, oil & gas and metal stocks spooked
sell-off in late trade, erasing early gains. Weak Asian and
European markets also played the spoilsport. The S&P CNX Nifty
settled below the physcological 5,000 mark, after closing above
that level for six consecutive sessions. The market breadth was
weak on BSE.
The 30-share BSE Sensex settled 257.47 points or 1.52% lower at
16,649.64 after registering 147.23 point gain at day's high of
17,054.34 and 281 point loss at day's low of 16,626.11. The day's
high and low were hit during early and late trade respectively.
The broader based S&P CNX Nifty was down 78.9 points or 1.57% at
4,946.55. Nifty May 2008 futures were at 4945.20, a marginal
discount of 1.35 points as compared to spot closing. Nifty May 2008
futures are set for expiry on Thursday, 29 May 2008.
The NSE's futures & options (F&O) segment turnover slipped to Rs
41,317.97 crore, as compared to Rs 45076.17 crore on Thursday, 22
May 2008.
The BSE Mid-Cap index declined 1.59% to 6,937.11 and BSE Small-Cap
index declined 1.69% to 8,517.43. Both these indices underperformed
Sensex.
The BSE clocked a turnover of Rs 5,358 crore today as compared to
Rs 6,106.27 crore on 22 May 2008.
Securities Exchange Board of India (Sebi)'s plan to keep in
abeyance the imposition of upfront margins for institutional trades
in the cash market. Securities & Exchange Board of India (Sebi) had
earlier asked institutional investors to pay upfront margins from
16 June 2008. In the light of difficulties expressed by the market
participants regarding implementation of upfront margining of
institutional trades in the cash market, it has been decided to
keep the same in abeyance, Sebi said in a circular issued to stock
exchanges.
Inflation based on the whole price index rose 7.82% in the year
through 10 May 2008, marginally lower than 7.83% rise in the
previous week, government data released today, 23 May 2008, showed.
Meanwhile, inflation for the year through 15 March 2008 was revised
upwards to 8.02% compared to provisional figure of 6.68%.
The market breadth, which was strong during first half of the day,
settled weak. On BSE, 795 shares advanced as compared to 1,924 that
declined and 71 remained unchanged.
Among the 30-member Sensex pack, 25 declined while the rest
advanced.
Among the sectoral indices, the BSE Realty index (down 2.38% at
7,510.14), BSE FMCG index (down 2.15% at 2,387.47), BSE Oil & Gas
index (down 2.15% to 10,975.26), BSE Metal index (down 2.08% to
16,795.80), BSE IT index (down 1.75% to 4,340.98), BSE Bankex (down
1.72% at 8,232.16), BSE PSU index (down 1.69% to 7,524.44)
underperformed Sensex.
While the BSE Auto index (down 1.39% at 4,619.90), BSE Capital
Goods index (down 1.12% at 13,192.42), BSE Consumer Durables index
(down 1.04% to 4,584.46), BSE TecK index (down 0.98% to 3,454.97),
BSE Power (down 0.93% to 3,202.79), BSE Health Care index (up 0.02%
at 4,229.03) outperformed Sensex.
Interest rate sensitive realty stocks declined, while banking
shares were mixed. Indiabulls Real Estate (down 4.3% to Rs 490.45),
DLF (down 1.76% to Rs 609.75) and Unitech (down 2.04% to Rs 268.25)
edged lower from real estate pack.
Banking stocks fell after inflation data. India's largest private
sector bank by net profit ICICI Bank (down 1.89% to Rs 863.75) and
State Bank of India (down 2.1% to Rs 1,573.25) edged lower. However
HDFC Bank rose 0.25% to Rs 1,383.35.
Oil & Gas stocks declined on profit booking after steady rally in
past few days. Cairn India (down 4.05% to Rs 306.45), ONGC (down
2.41% to Rs 902.05) and Reliance Industries (down 2.39% to Rs
2,554.80) edged lower.
Metal stocks were weak. Sterlite Industries (down 4.96% to Rs
903.20), Hindalco Industries (down 2.38% to Rs 192.95), Tata Steel
(down 1.32% to Rs 896.50) and Steel Authority of India (down 1.57%
to Rs 172.95) , National Aluminium Company (down 0.45% to Rs 528)
edged lower.
FMCG stocks fell. ITC declined 4.48% to Rs 213.05. The company
posted 13.05% rise in net profit to Rs 735.64 crore on 17.95% rise
in total income to Rs 4,098.07 crore in Q4 March 2008 over Q4 March
2007. Tata Tea (down 1.91% to Rs 899.95), Dabur India (down 1.61%
to Rs 94.75) edged lower.
Bharti Airtel (up 2.35% to Rs 836.80), HDFC (up 1.96% to Rs
2,678.30), Cipla (up 0.2% to Rs 203.50), Hindustan Unilever (up
0.32% to Rs 235.75) edged higher from the Sensex pack.
Tata Motors (down 3.57% to Rs 637.85), Jaiprakash Associates (down
3.43% to Rs 237.65), Reliance Infrastructure (down 2.42% to Rs
1,291), Reliance Communicatios (down 2.11% to Rs 572.30), edged
lower from Sensex pack.
India's largest IT exporter by sales Tata Consultancy Services
(TCS) declined 2.4% to Rs 933.70. It has reportedly won a contract,
estimated to be worth more than Rs 1000 crore, for processing
Indian passport applications.
India's largest tractor maker by sales Mahindra & Mahindra was down
0.07% to Rs 651.90. Private equity ICICI Venture is reportedly
partnering Mahindra & Mahindra in its bid to acquire Belgian gear
maker VCST Industrial Products in a deal valued around 250 million
euros.
Ispat Industries clocked the highest volume of 3.57 crore shares on
BSE. IFCI (1.67 crore shares), Aishwarya Telecom (1.11 crore
shares), Idea Cellular (92.15 lakh shares) and Reliance Natural
Resources (81.43 lakh shares) were other volume toppers in that
order.
Reliance Capital clocked the highest turnover of Rs 283.43 crore on
BSE. Cairn India (Rs 175.73 crore), Reliance Industries (Rs 151.06
crore), Reliance Power (Rs 138.29 crore) and Ispat Industries (Rs
126.68 crore) were other turnover toppers in that order.
European markets were weak. Key benchmark indices from France,
Germany and UK were down between 0.48% to 1.05%.
Most of the Asian markets were in red. Key benchmark indices in
Japan, rose by 0.24%. Key benchmark indices in Singapore, Hongkong,
Taiwan China and South Korea were down by between 0.36% to 1.92%.
US stocks rose modestly on Thursday, 22 May 2008, after two days of
steep declines as energy prices pulled back from record highs and a
proposed acquisition in the utilities sector buoyed optimism. The
Dow rose 24.43 points, or 0.19% to close at 12,625.62. The Standard
& Poor's 500 Index climbed 3.64 points, or 0.26%, to 1,394.35,
while the Nasdaq Composite Index was up 16.31 points, or 0.67%, at
2,464.58.
Earnings downgrade amid rising input and interest costs, high
inflation and drying up of global liquidity due to credit crisis
remain major concern for the Indian stock market. In a bid to rein
in inflation, the Reserve Bank of India, on Tuesday, 29 April 2008,
raised cash reserve ratio (CRR) by 25 basis points to 8.25%, to
suck out excess liquidity in the banking system, in its annual
monetary policy review.
With parliamentary elections scheduled next year (May 2009), the
government may leave no stone unturned in its attempt to tame
inflation. This is bad news for commodity scrips such as cement and
steel. Cement maker ACC said earlier this months that its margins
will be hurt by a decision to hold its prices for 2 to 3 months
that was taken after the government asked cement firms to help
contain price pressures. The government recently imposed export tax
on basmati rice and some steel products, and cut import duties on
key inputs like ferro alloys and metallurgical coke. The government
had earlier banned export of cement and non-basmati rice. On 7 May
2008, the government ordered suspension in futures trading in
channa, refined soyoil, potato and rubber for four months.
Meanwhile, as per a recent study by CLSA, large amount of foreign
currency convertible bonds (FCCBs) issued by Indian companies are
coming up for redemption in the next 18-24 months. After recent
stock market volatility many FCCBs are at risk of not converting
i.e. if the stock market remains subdued, it will stop the bond
holders from opting for an equity conversion as it will be easier
for them to buy the stock from the open market instead of paying
the agreed premium.
When the FCCBs come for redemption, some of these companies may
have to take on more debt to redeem the FCCB, thereby raising
interest outgo. In the event FCCBs don't get converted, companies
have the option to lower the conversion price in line with the
market, leading to higher equity dilution. If companies decide to
issue fresh FCCBs to finance redemption of FCCBs, it will be at
lower premium than earlier.
With the rupee tumbling against the dollar in the last few days,
the government may ease restrictions on overseas corporate
borrowing when it, together with the RBI, reviews the external
commercial borrowing (ECB) policy later this month, reports
suggest. Last year, the government had imposed restrictions on ECBs
in a bid to check in surge in rupee against the dollar. There are
many Indian corporates who will eagerly seek cheap overseas funds
if the RBI re-opens the ECB tap, analysts reckon.
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