Firm European markets trigger recovery; IT pivotals in demand


MID-SESSION - Market Commentary

Firm opening of European markets, which opened after Indian market, lifted sentiment in afternoon trade. The market had suffered a sharp fall in early afternoon trade triggered by dismal industrial production data. The industrial production growth dropped sharply to 3% in March 2008.

The market had slumped in early trade due to fall in US markets on Friday, 9 May 2008. Asian markets, which opened before Indian market, reversed early losses with most of them trading in green.

At 13:28 IST, the 30-share BSE Sensex was almost unchanged at 16,737.51. Sensex hit a low of 16,546.55 in early-afternoon trade. At the day’s low, Sensex lost 190.52 points. Sensex gained 37.43 points at the day's high of 16,774.50 struck in early afternoon trade.

The broader based S&P CNX Nifty was down 10.70 points or 0.21% at 4,971.90.

Industrial production rose 3% in March 2008 from a year earlier, slowing from the previous month's unrevised 8.6%, government data showed on Monday, 12 May 2008. It was the slowest annual growth since a 2.4% rise in February 2002.

Manufacturing production rose 2.9% in March 2008 from a year earlier, compared with 8.6% growth in February 2008. Industrial output rose 8.1% in 2007/08 compared with 11.6% in 2006/07.

The market breadth was weak on BSE with 1998 shares declining as compared to 555 that advanced. 44 remained unchanged.

The BSE Mid-Cap index was down 2.13% to 6,843.74 while the BSE Small-Cap index shed 2.17% to 8,321.08. Both these indices underperformed the Sensex

The total turnover on BSE amounted to Rs 3418 crore by 13:30 IST as compared to Rs 2746 crore by 12:30 IST

Among the 30-member Sensex pack, 18 declined while the rest gained.

Diversified company Grasim lost 3.43% to Rs 2259.80 on 18,559 shares. It was the top loser from Sensex pack.

Jaiprakash Associates (down 3.30% to Rs 243, off day’s low of Rs 235), Reliance Energy (down 1.55% to Rs 1311.50, off day’s low of Rs 1275.10), and DLF (down 2.15% to Rs 616.90, off day’s low of Rs 607.75), though in the red were off their day’s low.

India’s largest private sector company in terms of market capitalisation and oil refiner Reliance Industries (RIL) declined 0.74% to Rs 2509 on 5.10 lakh shares. The stock had dipped to low of Rs 2480 in early trade.

Banking stocks staged smart recovery from lower levels. India's biggest commercial bank, State bank of India was down 1.12% to Rs 1657, off day’s low of Rs 1620. India's biggest private sector bank in terms of net profit, ICICI Bank was down 0.20% to Rs 872.40, off day’s low of Rs 861.15. India’s second largest private sector bank in terms of net profit HDFC Bank rose 0.20% to Rs 1455 recovering from session's low of Rs 1430.

India’s largest pharma company in terms of sales, Ranbaxy Laboratories advanced 2.89% to Rs 482.55 on 1.79 lakh shares. It was the top gainer from Sensex pack. The company is reportedly mulling a research & development deal with a foreign company.

IT stocks advanced on fresh buying as the rupee fell below 42 level against the dollar, at its lowest in almost 13 months. India’s fourth largest software services exporter Satyam Computer Services (up 2.87% to Rs 487), TCS (up 0.90% to Rs 925.15), Wipro (up 1.42% to Rs 508.30), and Infosys Technologies (up 1.97% to Rs 1784.90), advanced.

A depreciating rupee augurs well for IT companies as they derive over 50% of their revenues from exports to US.

Aishwarya Telecom was the top traded counter on BSE with turnover of Rs 290.01 crore followed by Reliance Petroleum (Rs 193.03 crore), Reliance Capital (Rs 169.93 crore), Reliance Industries (Rs 129.51 crore), and Cairn India (Rs 111.48 crore), in that order

Shares of state-run oil marketing companies declined as US light crude for June delivery was hovering near $126.14 a barrel today, 12 May 2008 after soaring to a record high of $126.27 in late trade on Friday, 9 May 2008. Bharat Petroleum Corporation (down 5.14% to Rs 355.65), Hindustan Petroleum Corporation (down 3.65% to Rs 233.45), and Indian Oil Corporation (down 6.25% to Rs 415), declined.

The sharp spurt in crude prices is putting further pressure on fuel retailers as they continue to sell products below the cost price.

However oil exploration company Cairn India surged 5.88% to Rs 290.05 after striking an all time high of Rs 292.10 buoyed by anticipation that higher crude oil prices will boost realisations.

The spiraling inflation has been a major cause of concern for Indian equities market. The wholesale price index rose 7.61% in the 12 months to 26 April 2008, marginally higher than previous week's annual rise of 7.57%, government data showed on Friday, 9 May 2008. The rate was the highest since an annual reading of 7.68% on 13 November 2004. The WPI remained above the 7%-mark (significantly above RBI's revised target of 5.5% for the year) for the past four weeks.

Meanwhile, the Left parties may reportedly issue another warning soon to the ruling United Progressive Alliance (UPA) government following the failure of the government to stem burgeoning prices and its efforts to operationalise the Indo-US nuclear deal. The Left parties are slated to meet on 23 May 2008, six days ahead of their ninth round of deliberations with the UPA on the nuclear issue.

US light crude for June delivery rose 18 cents to $126.14 a barrel today, 12 May 2008, as violence in the Middle East heightened worries of supply disruptions in the world's largest crude producing region. It had struck a record high of $126.27 in late trade on Friday, 9 May 2008.

European markets which opened after Indian market, were key benchmark indices from United Kingdom (up 0.43% to 6,231.40), France (up 1.04% to 5,010.90) and Germany (up 0.67% to 7,050.25) advanced.

Asian markets reversed early losses with most of them trading with gains today, 12 May 2008. Nikkei 225 Average (up 0.56% at 13,732.01), Straits Times index (up 0.24% at 3,169.67), and Taiwan Weighted index (up 0.43% at 8,830) advanced. However Sanghai Composite index slipped 0.76% at 3,586.01.

US markets slumped on Friday, 9 May 2008, as American International Group Inc (AIG), the world's largest insurer, reported huge losses while crude oil surged to a new high. The Dow Jones industrial average slipped 120.90 points at 12745.88 and the Nasdaq Composite declined 5.72 points at 2445.52. The S&P 500 index shed 9.40 points to 1,388.28.

Back home, the market tumbled on Friday, 9 May 2008, hit by a series of bad news on the domestic and global front. The 30-share BSE Sensex lost 343.58 points or 2.01% at 16,737.07 while the broader based S&P CNX Nifty lost 99.10 points or 1.95% at 4982.60, on that day.

Sensex plunged 863.05 points or 4.9% to 16,737.07 and the S&P CNX Nifty fell 245.6 points or 4.69% to 4,982.60 in the week ended 9 May 2008.

As per provisional data, foreign funds sold shares worth a net Rs 619.34 crore on Friday 9 May 2008. Domestic funds bought shares worth a net Rs 180.16 crore on that day.

Foreign institutional investors (FIIs) were net buyers of Rs 122.49 crore in the futures & options segment on Friday, 9 May 2008. They were net sellers of index futures to the tune of Rs 484.85 crore and bought index options worth Rs 725.67 crore. They were net sellers of stock futures to the tune of Rs 85.18 crore and sold stock options worth Rs 33.15 crore.

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