The market recovered some of the lost ground in late trade after
the barometer index BSE Sensex and the S&P CNX Nifty had tumbled to
its lowest in 2008 in mid-afternoon trade. Weakness in global
markets weighed on the domestic bourses. The market breadth was
weak. Healthcare stocks and shares of public sector oil marketing
firms rose even as IT, realty and banking stocks declined.
The 30-share BSE Sensex lost 176.85 points or 1.17% at 14,889.25,
its lowest close since mid-March 2008. At the day's low of
14,645.31 the Sensex lost 420.79 points in mid-afternoon trade,
falling below its previous year 2008 low of 14,677.24 hit 18 March
2008.
Earlier, after opening on a subdued note on weak global cues, the
market had recovered to trade in green for a brief period. At the
day's high of 15,088.03 Sensex gained 21.93 points in early trade.
The broader based S&P CNX Nifty was down 41.25 points or 1.14% at
4,449.80. Nifty hit new year 2008 low of 4369.80 today. Nifty June
2008 futures were at 4453, at a premium of 3.20 points as compared
to spot closing of 4449.80.
The BSE clocked a turnover of Rs 5,265 crore today as compared to a
turnover of Rs 5,053.75 crore on Monday, 9 June 2008. NSE's futures
& options (F&O) segment turnover was Rs 53,893.30 crore, which was
lower than Rs 58,333.52 crore on Monday, 9 June 2008.
The market breadth was weak on BSE with 964 shares advancing as
compared to 1,667 that declined. 68 remained unchanged. Among the
30 stocks from Sensex pack, 21 were trading in red.
The BSE Mid-Cap index fell 1.08% to 6,103.83 and BSE Small-Cap
index fell 1.02% to 7,341.16.
All the sectoral indices on BSE ended with losses except the BSE
HealthCare index. BSE IT index (down 2.75% to 4,283.96), BSE Bankex
(down 2.43% at 6,862.33), BSE Consumer Durables index (down 2.37%
to 3,840.96), The BSE Realty index (down 2.11% at 5,630.61), BSE
TecK index (down 1.94% to 3,323.17), BSE FMCG index (down 1.58% to
2,276.59), BSE PSU index (down 1.23% to 6,390.28) underperformed
Sensex.
BSE HealthCare index (up 2.16% at 4,411.91), BSE Oil & Gas index
(up 0.15% to 9,691.22), The BSE Auto (down 0.1% at 4,119.58), BSE
Capital Goods (down 0.16% at 11,617.57), BSE Power index (down
0.47% to 2,606.96), BSE Metal index (down 0.8% to 15,265.92), BSE
FMCG index (down 1.58% to 2,276.59), outperformed the Sensex.
Bharat Heavy Electricals (up 0.54% to Rs 1,382.05), Reliance
Industries (RIL) (up 1.68% to Rs 2,199.40), Ambuja Cements (up
0.43% to Rs 82.30) and ACC (up 0.55% to Rs 616.40) edged higher
from the Sensex pack.
ONGC (down 4.74% to Rs 831.25), HDFC (down 4.79% to Rs 2,101),
Jaiprakash Associates (down 3.54% to Rs 177.15), Reliance
Infrastructure (down 2.59% to Rs 1,011.60), Tata Motors (down 0.81%
to Rs 512.90) edged lower from the Sensex pack.
Consumer durables stocks declined. Rajesh Exports (down 6.53% to Rs
70.85), Titan Industries (down 3.73% to Rs 1,088), Blue Star (down
3.26% to Rs 390) and Gitanjali Gems (down 1.13% to Rs 266) edged
lower.
Banking stocks fell extending their recent sharp losses on concerns
of further policy tightening of the monetary policy by the Reserve
Bank of India to rein in inflation which is at its highest level in
nearly four years. HDFC Bank (4.96% to Rs 1,130.95), State Bank of
India (down 1.06% to Rs 1,279.10) and ICICI Bank (down 2.47% to Rs
731.60) edged lower.
Realty stocks extended yesterday's huge losses. Indiabulls Real
Estate (down 1.82% to Rs 391.15), Unitech (down 3.03% to Rs 179.20)
and DLF (down 0.35% to Rs 479.85) edged lower.
Software services companies, which get more than half their revenue
from the United States, fell on signs the US economy was heading
for stagflation. BSE IT index was the top loser from the sectoral
indices on BSE. It was down 2.75% to 4,283.96. Infosys (down 2.89%
to Rs 1,849.10), Tata Consultancy Services (down 3.89% to Rs
880.05), Satyam Computer Services (down 2.76% to Rs 477.90), and
Wipro (down 1.46% to Rs 473.55) edged lower.
Healthcare stocks rose. Ranbaxy Laboratories (up 6.53% to Rs
560.75), Cipla (up 2.13% to Rs 211.05), Dr. Reddy's Laboratories
(up 0.54% to Rs 696.50) edged higher.
Shares of oil state-run oil marketing firms rose today after
witnessing heavy battering over the past few days. HPCL (up 1.86%
to Rs 196.90), BPCL (up 2.24% to Rs 284.65) and Indian Oil
Corporation (up 0.91% to Rs 366.55) edged higher.
IFCI clocked the highest volume of 1.85 crore shares on BSE.
Reliance Petroleum (1.36 crore shares), Ispat Industries (1.34
crore shares), Reliance Natural Resources (1.31 crore shares) and
Spice Communications (1 crore shares) were other volume toppers in
that order.
Reliance Industries clocked the highest turnover of Rs 281.98 crore
on BSE. Reliance Capital (Rs 261.73 crore), Reliance Petroleum (Rs
23.74 crore), Ranbaxy Laboratories ( Rs 213.44 crore) and Anu's
Laboratories (Rs 167.13 crore) were other turnover toppers in that
order.
European markets were weak. Key benchmark indices in France,
Germany and UK were down by between 0.37% to 0.59%.
Stocks dropped in Asia after US Federal Reserve Chairman Ben
Bernanke's warning on inflation on Monday, 9 June 208, fanned
expectations of higher US interest rates later this year. Key
benchmark indices in Hong Kong, Japan, China, South Korea,
Singapore and Taiwan were down by between 1.49% to 7.73%.
The Dow staged a modest rebound on Monday from Friday's nearly
400-point drop, as concerns about US consumer spending and the
troubled US housing market were eased by better-than-expected sales
figures from McDonald's Corp and a surprising gain in pending home
sales. The broader market was little changed, with a drop of more
than $4 in the price of oil helping fuel-dependent sectors such as
manufacturers, mitigating sharp losses in the financial and
technology sectors. The Dow Jones industrial average was up 70.51
points, or 0.58%, to end at 12,280.32. The Standard & Poor's 500
Index was up 1.08 points, or 0.08%, at 1,361.76. But the Nasdaq
Composite Index was down 15.10 points, or 0.61%, at 2,459.46.
A surge in global commodity prices led by crude oil spooked stocks
across the globe in the past few days. In India, foreign funds have
pressed heavy sales. FIIs sold shares worth a net Rs 2984.20 core
in the first few days of this month, till 6 June 2008. They had
dumped stocks worth a net Rs 5011.50 crore in May 2008. Their
outflow in calendar 2008 reached Rs 18660.60 crore, till 6 June
2008. There has been heavy buying by domestic funds led by
insurance firms in the past few days, but that has failed to stop
the slide on the bourses.
Brokerage earnings downgrades of Indian firms/stock prices amid
rising input and interest costs for India Inc, high inflation and
drying up of global liquidity due to credit crisis remain major
concern for the Indian stock market. If inflation remains high, the
Reserve Bank of India (RBI) would be forced to hike repo rate - a
move that could choke overall growth of the economy. The Indian
industry and consumer have already been reeling under high interest
rates over the past few months. A further hike in rates would raise
interest costs of corporate India and hit bottomline.
After 10 days of debate, the Union government on Wednesday, 4 June
2008 agreed to raise retail petrol and diesel prices by about 10%,
more than expected, to help curb losses at its state-owned
refiners. A sharp fall in the rupee against the dollar in the past
few days has heightened concerns about inflation. This is because
the fall in rupee will raise cost of imports which in turn will
result in further rise in inflation.
According to rating agency CRISIL, headline inflation is expected
to increase by 95 basis points on account of direct and indirect
effects of the fuel price hike. The indirect impact which will be
felt over the course of the next few months, it states in a note.
A well distributed monsoon will bolster food production, helping
douse inflation. Agricultural output in India depends on good
rains. The Indian Meteorological Department (IMD)'s second monsoon
forecast for the crucial annual south-west monsoon (June-September)
due this months which may indicate spatial rainfall distribution in
the main sowing month of July 2008, will be keenly watched by
market men. The IMD has forecast the 2008 monsoon rains would be
near-normal and 99% of the average between 1941 and 1990.
A section of the market is of the view that the central bank may
only use the reserve requirement route to tame inflation, fearing
any hike in rates would further hurt growth already seen moderating
to a still strong 8%-8.5% this fiscal year from 9% in 2007/08. To
rein in inflation, in its monetary policy review for 2008-09 on 29
April 2008, the RBI raised cash reserve ratio (CRR) by 25 basis
points to 8.25% to suck out excess liquidity in the banking system.
RBI often says pass-through of high global oil prices is incomplete
in India, complicating policy making.
According to a latest monthly June 2008 strategy report by HSBC
Global Research, a possibility of Left parties withdrawing support
to the government at the centre over the fuel price hike issue,
cannot be ruled out. In such an environment with prospects of
mid-term polls, the stock market is likely to remain nervous, HSBC
says. Parliamentary elections are due in India in May 2009. HSBC's
2008 year-end (calendar year) target for Sensex is 17,500, compared
to current Sensex level of 15,066.10.
Another 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.
Market may also be keeping a watch on the industrial production
numbers for April 2008, which the government will unveil on
Thursday, 12 June 2008, which will give a cue on the extent of
slowdown in the Indian economy caused by high interest rates.
The BSE Sensex may fall to a 10-month low of around 13,000 points
by end-2008, as the Reserve Bank of India may raise interest rates
to check inflation due to record oil prices, Credit Suisse said on
Monday, 9 June 2008. "The market is still not pricing in the much
lower earnings growth being forecast by corporates and banks,"
Nilesh Jasani, head of research at the Indian unit of the Swiss
bank told reporters at a briefing on Monday, 9 June 2008.
Uncertainty ahead of national elections will also weigh on the
minds of investors, Jasani said.
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