The market extended Monday's (3 October 2008) steep fall on weak
Asian stocks. Sensex hit its lowest level in more than two years
while Nifty hits 1-½ year low. Sensex was down 313.50 points.
Metal, banking and realty stocks plummeted. Jaiprakash Associates
was down 6.5% and Sterlite Industries was down by more than 7%.
The financial crisis spread further to Europe and doubts persisted
about the effectiveness of the US administration's $700 billion US
financial sector bailout plan. The uncertainty over the nuclear
deal with the United States persisted Condoleezza Rice, US
secretary of state, left New Delhi at the weekend without signing
the US-India nuclear deal. The domestic bourses also ignored
reports that the market regulator Securities & Exchange Board of
India (Sebi) may relax norms of participatory notes. The market
also ignored fall in inflation and further fall in oil & commodity
prices.
At 10:19 IST, the BSE 30-share Sensex was down 313.50 points or
2.5% to 12,212.82. The index shed 406.13 points at the day's low of
12,120.19, hit in early trade, its lowest level since 20 September
2006. The Sensex fell 241.83 points at day's high of 12,284.49, in
early trade.
The S&P CNX Nifty was down 110.65 points or 2.9% to 3,707.65. Nifty
hit a low of 3,688.65, its lowest level since 3 April 2007.
The BSE Mid-Cap index was down 2.29% at 4,570.45 and the BSE
Small-Cap index was down 1.73% at 5,370.83.
The market breadth was weak on BSE with 277 shares advancing as
compared to 1,039 that declined. 26 shares remained unchanged.
India's largest private sector company by market capitalization and
oil refiner Reliance Industries fell 1.53% to Rs 1,733.90. The
promoters of Reliance Industries converted their 12 crore warrants
into an equal number of shares. Post-transaction, the promoter
group holds 49% stake in the company, with 52% voting rights. This
involves an infusion of around Rs 15,142 crore into the company.
The shares have a lock-in period of three years.
Reliance Industries is reportedly mulling the merger of its
different formats -- Reliance Hypermart, Reliance Super and
Reliance Fresh -- to make its retail arm more efficient.
Metal stocks declined on falling global metal prices. BSE Metal
index declined 4.13% to 8,069.18 and was the major loser from the
sectoral indices on BSE. Sterlite Industries (down 7.73% to Rs
365.15), National Aluminum Company (down 6.06% to Rs 328.05), Tata
Steel (down 5.03% to Rs 374), Steel Authority of India (down 3.53%
to Rs 110.60) Hindalco Industries (down 1.48% to Rs 96.25),
Hindustan Zinc (down 1.93% to Rs 397), edged lower.
Banking stocks declined. ICICI Bank (down 2.52% to Rs 491.80), HDFC
Bank (down 1.83% to Rs 1,248.55) and State Bank of India (down
1.33% to Rs 1,460) edged lower.
Inflation based on the wholesale price index rose 11.99% in 12
months to 20 September 2008, below the previous week's annual rise
of 12.14%, government data released after trading hours on Friday,
3 October 2008, showed. Inflation for the week ended 26 July 2008
was revised upwards to 12.53% from 12.01%.
Realty stocks declined. Indiabulls Real Estate (down 3.28% to Rs
155.55), Unitech (down 4.68% to Rs 106.90) and DLF (down 4.43% to
Rs 321.50) edged lower.
Jaiprakash Associates (down 6.5% to Rs 108.55), Bharti Airtel (down
4.22% to Rs 725), Tata Power Company (down 4.67% to Rs 847) and
Wipro (down 4.13% to Rs 326.90) , Larsen & Toubro (down 4% to Rs
1112.15), Reliance Infrastructure (down 3.81% to Rs 713), Relaince
Communications (down 3.36% to Rs 322), HDFC (down 3.15% to Rs
2,015) edged lower from the Sensex pack.
India's largest electric equipment maker by sales Bharat Heavy
Electricals declined 2.59% to Rs 1,526. Bharat Heavy Electricals
and Nuclear Power Corporation of India are reportedly in talks with
foreign firms Siemens, Alstom and GE for a third partner in their
planned joint venture to set up nuclear power projects in India.
Fortis Healthcare fell 1.82% to Rs 62. The company is reported to
be in final stages of talks to enter into a joint venture with
Bangalore-based NU Hospitals. Fortis is expected to initially
invest Rs 50 crore for a minority stake and take management
control.
Dr Reddy's Laboratories' fell 2.48% to Rs 533.80. The company's new
experimental diabetes drug Balaglitazone could reportedly be
delayed as Rheoscience A/S, the Danish firm conducting phase III
clinical trials on it, has runs into a financial crisis.
Rheoscience's parent, Nordic Bioscience, is likely to take over the
trials, the reports added.
Cambridge Solutions hit 5% upper circuit at Rs 62.35. As per
reports, Knowledge-based back office services provider Xchanging
Plc has agreed to acquire 75% stake in IT services firm Cambridge
Solutions for about 83 million pounds (Rs 686.84 crore).
Asian stocks fell today, 6 October 2008, led by shares of
exporters, after a hectic weekend in Europe as the financial crisis
gathered steam there, knocking the euro to the lowest in a year.
Fears that damage from dysfunctional financial systems in developed
economies would almost certainly push them closer to recessions,
weighed on Asian stocks. Key benchmark indices in Hong Kong, China,
Japan, South Korea, Singapore and Taiwan were down by between 3.31%
to 4.75%.
Germany gave blanket bank deposit guarantee on Sunday, 5 October
2008, to prevent panic as officials clinched deals to rescue
Germany's Hypo Real Estate -- after an initial bailout failed --
and recapitalize two other European banks.
US stocks declined in volatile trade on Friday, 3 October 2008, on
concerns whether the $700 billion rescue plan, which was approved
by the US Congress would be quickly implemented and whether it
would be enough to shore up the economy. The Dow Jones Industrial
Average slid 157.47 points or 1.5% at 10,325.38. The tech laden
Nasdaq Composite index shed 29.33 points or 1.48% at 1,947.39.
The market regulator Securities & Exchange Board of India (Sebi) is
expected to review restrictions on issue of participatory notes
(P-Notes) at a board meeting today, 6 October 2008. Reports suggest
that Sebi may ease restrictions on P-Notes. However, the Reserve
bank of India has always been against allowing investments through
P- Notes. P-Notes are derivative instruments issued by foreign
institutional investors (FIIs) to other overseas investors seeking
to invest in Indian securities, but are not registered with the
stock market regulator Securities & Exchange Board of India (Sebi)
either out of choice or regulatory issues.
As per provisional data released by the stock exchanges, foreign
funds sold shares worth a net Rs 1,662.26 crore on Friday, 3
October 2008. Domestic funds bought shares worth a net Rs 56.75
crore.
Foreign institutional investors (FIIs) have been pulling out their
investments from India and other emerging markets to shore up
resources to beat the global liquidity crunch. In India, FIIs sold
shares worth a net Rs 8278.10 crore last month. The outflow has
reached Rs 36991.70 crore in calendar year 2008 (till 1 October
2008).
With the end of third quarter of the calendar year 2008 on Tuesday,
30 September 2008, hedge fund are bracing for heavy redemption amid
US financial sector crisis which has already spread to Europe.
Investors in hedge funds are usually allowed to exit funds only on
the final day of the financial quarter. Large-scale investor
redemption in hedge funds may trigger further selling by foreign
funds in India. Hedge funds mainly operate through the
participatory notes route in India. However, there is no data
available on the quantum of hedge funds' investment in India.
The next major trigger for the market is Q2 September 2008 results.
IT bellwether Infosys kickstarts the reporting season on 10 October
2008.
Oil prices fell around $2 to just below $92 a barrel dragging down
prices of metals and grains.
Last-minute administrative hitches forced Condoleezza Rice, US
secretary of state, to leave New Delhi at the weekend without
signing the US-India nuclear deal to end more than three decades of
isolation for India's nuclear programme. The deal is now expected
to be signed by US president George Bush on Wednesday, 8 October
2008. Cautious Indian negotiators have been keen for Bush to sign
the deal into US law and to publish a presidential statement before
signing the agreement themselves.
The agreement allows US companies to provide India with technology
for its civilian nuclear programme, ending an embargo in place
since India tested a nuclear weapon in 1974. It also gives India
international status as an acceptable nuclear power, even though it
is not a signatory to the Nuclear Non-proliferation Treaty.
The BSE 30-share Sensex had plunged 529.35 points or 4.05% to
12,526.32, on Friday, 3 October 2008.
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