Key benchmark indices extended initial losses to slide to their lowest level in more than a week as data showing sustained selling by foreign funds this month weighed on sentiment. Weak Asian equities and lower US index futures also weighed on sentiment. The 50-unit S&P CNX Nifty fell below the psychological 5,000 mark. The barometer index BSE Sensex was down 251.50 points or 1.49%, off 327.51 points from the day’s high and up 16.75 points from the day’s low. The market breadth was weak.
Foreign institutional investors (FIIs) sold shares worth a net Rs. 407.68 crore on Wednesday, 17 August 2011, as per provisional data from the stock exchanges. FIIs have sold shares worth a massive Rs. 7565.21 crore this month, till 17 August 2011, as per data from the stock exchanges. There was a huge outflow of Rs. 5279.30 crore in just three trading sessions between 5 August 2011 and 9 August 2011.
Investors investing in India are worried that higher interest rates will crimp corporate profit growth. Commercial banks have raised lending rates over the past few days after the Reserve Bank of India (RBI) late last month raised its key lending rate by a steeper-than-expected 50 basis points at a policy review. Three top commercial banks, State Bank of India, ICICI Bank and HDFC Bank, last week, raised lending rates by half a percentage point.
Reliance Industries, ICICI Bank, State bank of India, Hindalco Industries, Jindal Steel and Power, Tata Motors, Tata Power and Wipro hit 52-week lows. Telecom stocks were in demand on fresh buying. Bank stocks saw an across the board decline on concerns higher interest rates may crimp loan growth. Interest rate sensitive auto stocks fell on concerns higher interest rates could crimp sales of automobiles. Software pivotals were under pressure on concerns that a likely economic slowdown in the US and Europe will hit technology spending by overseas clients.
The market edged lower in early trade on weak Asian shares. A bout of volatility was witnessed in mid-morning trade as the Sensex cut losses soon after a sudden slide. The market extended losses to hit fresh intraday low in early afternoon trade.
At 12:29 IST, the BSE Sensex was down 251.50 points or 1.49% to 16,589.30. The Sensex lost 268.25 points at the day’s low of 16,572.55 in early afternoon trade, its lowest level since 9 August 2011. The index rose 76.01 points at the day’s high of 16,916.81 in early trade.
The S&P CNX Nifty was down 82.30 points or 1.63% to 4,974.30. The Nifty hit a low of 4,969.80 in intraday trade, its lowest level since 9 August 2011. The Nifty high of 5,078.60 in intraday trade.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,780 shares fell and 706 shares rose. A total of 120 shares remained unchanged.
The total turnover on BSE amounted to Rs. 1169 crore by 12:25 IST compared with Rs. 820 crore by 11:25 IST
Among the 30-share Sensex pack, 24 declined while the rest gained.
Index heavyweight Reliance Industries (RIL) was down 0.68% to Rs. 750, after sliding to a 52-week low of Rs. 746.60 in intraday trade today, 18 August 2011. RIL, last week, said it has received the government’s formal approval to sell a 30% stake in 21 oil and gas production sharing contracts to BP PLC. Following the approval, Reliance and BP will work together to conclude the deal expeditiously, RIL said in a statement.
The initial proposal was for RIL to sell the stake in 23 blocks to BP for $7.2 billion plus another $1.8 billion linked to exploration success. However, the government cleared only 21 blocks and RIL had said it would continue to seek approval for the remaining two blocks.
State-run Coal India fell 0.53%, reversing initial gains, on profit booking after two-day gains triggered by strong Q1 results. Consolidated net profit rose 64.05% to Rs. 4143.92 crore on 28.29% rise in total income to Rs. 16057.97 crore in Q1 June 2011 over Q1 June 2010. The company announced Q1 results after market hours on Friday, 12 August 2011.
Coal India on Wednesday, 17 August 2011, overtook Reliance Industries (RIL) as India’s largest company in terms of market capitalization. State-run Coal India produces and markets coal and coal products as well as provides related consulting services.
India’s largest steel maker by sales Tata Steel declined 1.57% to Rs. 464.95. The stock had hit a 52-week low of Rs. 461.05 in intraday trade on Wednesday, 17 August 2011. The company’s consolidated net profit surged 192.91% to Rs. 5346.55 crore on 35.33% rise in total income to Rs. 36882.43 crore in Q1 June 2011 over Q1 June 2010. Tata Steel announced the first quarter results late last week.
Tata Steel’s net profit zoomed due to 6445.71% jump in other income to Rs. 3882.26 crore in Q1 June 2011 over Q1 June 2010. The other income includes profit of Rs. 2879.29 crore on disposal of Tata Steel Global Mineral Holding’s investment in Riversdale Mining. The other income also includes profit of Rs. 511.01 crore on sale of part of investment in Tata Refractories. The other income also includes Rs. 597.71 crore relating to arbitration with the Teeside Cast Products Consortium.
India’s largest listed cellular services provider by sales Bharti Airtel rose 0.35%. Junior finance minister Namo Narain Meena on Tuesday, 16 August 2011, said that Enforcement Directorate, a unit of the finance ministry, has begun a probe into suspected foreign exchange violations by Bharti Airtel. Meena also said that on that day that the stock market regulator–the Securities and Exchange Board of India–has received complaints over an alleged increase in share holding by its founders to 67.15% from 60.91% in the company between June 2007 and September 2008, without extending an open offer to public shareholders.
Meena also said on that day that the Central Board of Direct Taxes has received a reference containing allegations regarding improper accounting treatment of license fee and spectrum charges by the company. Bharti Airtel said in a statement on Tuesday, 16 August 2011, that it has always complied with all rules and regulations laid down by various agencies and the licensing authority, the Department of Telecommunications. We will provide all relevant details to the concerned authorities as and when required and will offer full assistance to clarify any concern, the company said.
Reliance Communications rose 1.79% on bargain hunting, halting three-day declining spree. The stock had hit a record low of Rs. 74.10 in intraday trade on Wednesday, 17 August 2011.
Idea Cellular rose 0.69% after Malaysia’s Axiata bought an additional 0.9% stake or 2.98 crore shares in the company on 5 August 2011, raising its holding to about 20%. The announcement was made during trading hours on Wednesday, 17 August 2011. Shares of Idea Cellular had risen 2.16% to Rs. 94.45 on that day.
Bank stocks saw an across the board decline on concerns higher interest rates may crimp loan growth. India’s largest private sector bank by net profit ICICI Bank lost 4.21% to Rs. 872.20, after sliding to a 52-week low of Rs. 866.50. The bank, last week, raised its base rate upwards by 50 basis points to 10%. The bank had also announced an increase of 0.5% in its benchmark prime lending rate and in its Floating Reference Rate (FRR) for consumer loans (including home loans).
India’s largest bank by net profit and branch network State Bank of India fell 2.59% to Rs. 2117.20, after falling to 52-week low of Rs. 2110.10 today, 18 August 2011. The bank’s consolidated net profit fell 25.34% to Rs. 2512.47 crore on 20.3% rise in total income to Rs. 39454.89 crore in Q1 June 2011 over Q1 June 2010. The bank announced Q1 results on Saturday, 13 August 2011.
India’s second largest private sector bank by net profit HDFC Bank shed 0.09%. The bank has hiked its lending rates by half a percentage point, in line with the rate hikes by other top lenders after the central bank raised its policy rate by the same margin in late July 2011. The bank has also raised interest rates on some deposits by between 25 basis points and 75 basis points
Interest rate sensitive auto stocks fell on concerns higher interest rates could crimp sales of automobiles. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.
India’s largest small car maker by sales Maruti Suzuki India fell 0.88% on recent reports that the company has cut production of most of its models, including the best selling Alto, by 5% due to slump in demand in the domestic market. Maruti on Wednesday, 17 August 2011, unveiled its much awaited sportier and stylish car, new Swift. The new Swift is priced in the range 4.22 lakh to 5.53 lakh for petrol variant and 5.17 lakh to 6.38 lakh in diesel variant.
Speaking at the launch of the new Swift, Shinzo Nakanishi, Managing Director and CEO, Maruti Suzuki on Wednesday said, We have launched the new Swift at a time when there was significant demand for the ongoing model. In keeping with the Swift’s iconic status, we had to ensure that the brand continues to offer the latest and the best in terms of features, design, performance and aspiration. I am confident that the new Swift will create new benchmarks with its improved fuel efficiency, stylish and sportier looks and high performance.
India’s largest tractor and utility vehicles maker by sales Mahindra & Mahindra (M&M) declined 0.27%. The company’s consolidated net profit rose 6.7% to Rs. 662.30 crore on 66.2% rise in gross revenue and other income to Rs. 14256 crore in Q1 June 2011 over Q1 June 2010. The result was announced during trading hours on Wednesday, 17 August 2011.
Commenting on the results, Mahindra Group Executive Director and Chief Financial Officer Bharat Doshi said, We are delighted to announce the consolidated financials of the Mahindra Group which in addition to the auto and farm businesses are a reflection of the robust growth of the various group companies in the IT, finance, real estate, hospitality and Systech sectors. Mahindra Satyam’s significant growth in margins and profit and SsangYong Motor Company’s improved sales volume is heartening to note; it is with great satisfaction that we see the integration of both these companies in the group.
India’s largest commercial vehicle maker by sales Tata Motors dropped 3.21% to Rs. 754.20 after global sales fell 6% to 85,392 units in July 2011 over July 2010. The stock hit 52-week low of Rs. 756.20 today. While sales of luxury sedans of Jaguar brand were down 23% to 4,372 units, Land Rover sales were up by 8% at 14,747 units in July 2011 over July 2010. Total passenger vehicles sales fell 24% to 38,154 units in July 2011 over July 2010. Commercial vehicles sales were up by 16% to 47,238 units.
The company at the fag end of the trading session on Tuesday, 16 August 2011, had informed the stock exchanges that a committee of directors vide its Circular Resolution dated 12 August 2011 approved 13 September 2011 as the record date for the purpose of sub-division of the Ordinary Shares and ‘A’ Ordinary Shares (collectively the shares) both having face value of Rs. 10 into 5 shares having face value of Rs. 2 each.
India’s largest bike maker by sales Hero MotoCorp rose 0.99%. The company recently unveiled a new brand. India’s second largest bike maker by sales Bajaj Auto shed 2.22%.
Software pivotals were under pressure on concerns that a likely economic slowdown in the US and Europe will hit technology spending by overseas clients. The US and Europe are the two biggest markets for Indian IT firms. India’s largest software services exporter TCS fell 4%.
India’s third largest software services exporter Wipro tumbled 4.59% to Rs. 328.45 and was the top loser from the Sensex pack. The stock had hit 52 week low of Rs. 326.65 in intraday trade today, 18 August 2011.
India’s second largest software services exporter Infosys declined 3.48% to Rs. 2,363.80. The stock had hit 52-week low of Rs. 2,343.70 in intraday trade on Friday, 12 August 2011. Infosys Chief Operating officer S.D. Shibulal today, 18 August 2011, said the company is facing a challenging environment as the main outsourcing markets–the US and Europe–remain weighed by debt crisis and slowing economic growth. Shibulal will take over as the new chief executive officer of Infosys on 21 August 2011.
Shibulal said that, despite the weak economic environment, Infosys will continue to make investments in the short term for sustainable growth in the long term.
HCL Technologies slipped 4.07%. The company said after trading hours on Wednesday, 17 August 2011, that Canada’s largest credit union has selected HCL Technologies to automate enterprise-wide loan origination & processing.
HCL Infosystems plunged 5.65% after consolidated net profit tumbled 78.5% to Rs. 11.48 crore on 4.2% fall in net sales to Rs. 2615.40 crore in Q4 June 2011 over Q3 March 2011. The company declared its results after market hours on Wednesday, 17 August 2011.
India’s largest real estate developer by sales DLF gained 2.7% to Rs. 182.40 and was the top gainer from the Sensex pack. The stock rose on bargain hunting after a steep recent slide triggered by a hefty Rs. 630-crore fine imposed on the realty major by the competition regulator for abusing dominant market position. The stock had hit a 52-week low of Rs. 173.40 in intraday trade on Wednesday, 17 August 2011.
Private sector power utility Tata Power slipped 1.29% to Rs. 1061.50 after declining to a 52-week low of Rs. 1059.20 today
Hotel Leelaventure shed 1.84%. The company said it will sell its luxury hotel property at Kovalam in Kerala to Travancore Enterprises for Rs. 500 crore in an effort to reduce its debt. The announcement was made after market hours on Wednesday, 17 August 2011.
Sadbhav Engineering gained 0.29% after the company in joint venture with Hyderabad-based GKC Project secured an order worth Rs. 201.82 crore from Bihar State Road Development Corporation. The company announced the new order win after market hours on Wednesday, 17 August 2011.
Panacea Biotec fell 3.84% after the firm said the World Health Organization has delisted three vaccines of the company from its list of pre-qualified medicines. The announcement was made after market hours on Wednesday, 17 August 2011.
Kabra Extrusion Technik tumbled 5.79% after the stock turned ex-dividend today, 18 August 2011, for dividend of Rs. 1.75 per share for the year ended March 2011.
Plastiblends India fell 2.65% after the stock turned ex-dividend today, 18 August 2011, for dividend of Rs. 7 per share for the year ended March 2011.
Indian firms relying on European and US markets are worried about a likely economic slowdown in the US and Europe. Indo-Europe trade stands at $67 billion, making it India’s largest trading partner globally. Bilateral trade between India and the US stood at $36.5 billion in 2010.
The food price index rose 9.03% and the fuel price index climbed 13.13% in the year to 6 August 2011, government data on Thursday, 18 August 2011, showed. In the previous week, annual food and fuel inflation stood at 9.90% and 12.19% respectively. The primary articles index was up 11.64%, compared with an annual rise of 12.22%.
Reserve Bank of India (RBI) Governor D Subbarao last week said it is important to bring down inflation to sustain growth and that it is too early to signal a change in monetary stance. The Reserve Bank of India (RBI) is scheduled to undertake a mid-quarter policy review on 16 September 2011.
The wholesale price index (WPI) for the month of July 2011 came in at 9.22%, lower than 9.44% rise in June 2011. The government also raised May’s inflation reading to 9.56% from a provisional 9.06%. Chief Economic Adviser Kaushik Basu on Tuesday, 16 August 2011, said he expects inflation to remain between 9% and 10% until December. Finance Minister Pranab Mukherjee on Tuesday said the government will take steps to cool inflation, although he didn’t elaborate what these measures might include.
Industrial production grew 8.8% in June 2011 from a year earlier, helped by strong growth in manufacturing output, data released by the government on Friday, 12 August 2011, showed. The reading was sharply higher than the upwardly revised 5.95% industrial output growth in May 2011. The June reading also beat market expectations by a wide margin.
Food Minister K.V. Thomas on Wednesday, 17 August 2011, said that the government plans to introduce a food security bill, which promises to give cheap food grains to 70% of the country’s population, in the winter session of parliament. Thomas told reporters that the bill won’t be introduced in the ongoing session of parliament, as earlier planned, because the consultation process with state governments and different ministries is still on. A ministerial panel had cleared the draft law last month.
Asian stocks fell on Thursday, 18 August 2011, with Japanese exporters hit by a stronger yen. The key benchmark indices in China, South Korea, Hong Kong, Japan, and Taiwan fell by between 0.52% to 1.7%. The key benchmark indices Indonesia and Singapore in rose 1.07% and 0.35% respectively.
The performance in Asia came after a lackluster session on Wall Street, with US stocks posting mild gains on Wednesday, 17 August 2011, as markets calibrated to an even keel after the manic swings earlier this month. The Dow Jones Industrial Average inched up 4.28 points, or 0.04%, at 11410.21. The Standard & Poor’s 500-stock index gained 1.13 points, or 0.09%, to 1193.89, while the Nasdaq Composite fell 11.97 points, or 0.47%, to 2511.48.
Trading in US index futures indicated that the Dow could fall 82 points at the opening bell on Thursday, 18 August 2011.
Source:http://www.indiainfoline.com/Markets/News/Nifty-falls-below-5000-IT-bank-stocks-lead-decline/3895779272
