Post Market Commentary - March 17 2008

Sensex slumps 951 points in second biggest single day fall

A setback in global markets rattled domestic bourses today as the Sensex posted its biggest single-day point fall. The fall on the bourses accentuated in late trade as BSE Sensex fell more than 1,000 points at the fag end of the trading session. Heavy selling was seen in banking stocks. ICICI Bank, HDFC, Hindalco Industries, Reliance Communications, Tata Steel and Reliance Energy were among the top losers from Sensex pack. The market breadth was weak.

The market tumbled today as the fire sale of ailing US bank Bear Stearns and the Federal Reserve's emergency cut in its discount rate intensified concerns that there could be more victims of the global credit crisis.

The 30-share BSE Sensex lost 951.03 points or 6.03% at 14,809.49. It hit a low of 14,739.72 in late trade, its lowest level since late August 2007.

S&P CNX Nifty was down 242.70 points or 5.11% at 4,503.10.

The fifth-largest US investment bank Bear Stearns said on Friday, 14 March 2008, its liquidity position had deteriorated significantly in the last 24 hours and a cash crunch forced it to turn to the Federal Reserve and JPMorgan Chase for emergency funds. JPMorgan said on Sunday, 16 March 2008, it would buy Bear Stearns in an all-stock deal, and that the Fed would fund up to $30 billion of Bear Stearns' less liquid assets.

In a major development, the US Federal Reserve on Sunday, 16 March 2008, cut its discount rate to 3.25% from 3.5% and said that it was creating a facility to let primary dealers borrow at that rate.

"Global meltdown and sell-off by troubled foreign institutional investors in domestic markets, is playing havoc with sentiments of domestic investors. Fear of more disturbing news from global markets is weighing heavy on traders’ mind. Even long term domestic players like insurance firms and mutual funds are staying clear of the market", Going by valuations, the current fall provides a great buying opportunity for investors.

Reliance Industries declined 6.08% to Rs 2,180.60..

Jaiprakash Associates (down 11.94% to Rs 208.05), HDFC (down 11.07% to Rs 2,225.55), Reliance Energy (down 8.13% to Rs 1,190.80), Hindalco Industries (down 9.2% to Rs 164.85), Tata Steel (down 7.93% to Rs 658.50), Grasim Industries (down 6.55% to Rs 2,670.85) and Larsen & Toubro (down 7.03% to Rs 2,703.50), were major losers from Sensex pack.

Banking stocks declined further in late trade. India�s largest commercial bank by net profit State Bank of India declined 4.72% to Rs 1,633.40. ICICI Bank (down 13.76% to Rs 757.40), HDFC Bank (down 5.89% to Rs 1,238.50) edged lower.

Consumer durables stocks extended losses. Titan Industries (down 13.03% to Rs 930.05), Rajesh Exports (down 15.58% to Rs 79.65), Videocon Industries (down 7.46% to Rs 279.30) and Blue Star (down 10.26% to Rs 380.50) edged lower.

India's biggest power-equipment maker by sales Bharat Heavy Electricals (BHEL) declined 4.41% to Rs 1,796.05. As per reports, the company will acquire Vizag-based Bharat Heavy Plates and Vessels by the first half of 2008/09.

India's largest telecom services provider by sales Reliance Communications fell 6.87% to Rs 482.75. It added 1.61 million mobile subscribers in February 2008. The firm had 42.6 million mobile subscribers at the end of January 2008.

Reliance Power declined 6.45% to Rs 315.70. It has reportedly struck a deal to buy out a coal mine in Indonesia. The valuation of the coal mine, based on its reserves, is estimated to be around Rs 20,000 crore.

Fertiliser stocks slumped. National Fertiliser (down 13.45% to Rs 38.60), Mangalore Chemicals & Fertilisers (down 10% to Rs 18.20), Nagarjuna Chemicals & Fertilisers (down 7.79% to Rs 36.10), Chambal Fertilisers & Chemicals (down 7.23% to Rs 48.75), Coromandel Fertilisers (down 7.81% to Rs 103.30), Deepak Fertilisers (down 12.85% to Rs 92.60) edged lower.

Cairn India declined 6.61% to Rs 213.30. The company said today, 17 March 2008 before market hours its board will meet on 17 March 2008 to consider a preferential issue of equity shares.

Reliance Natural Resources clocked the highest volume of 2.26 crore shares on BSE. Orchid Chemicals & Pharmaceuticals (1.54 crore shares), Reliance Petroleum (1.37 crore shares), V-Guard Industries (1.3 crore shares) and Ispat Industries (1.11 crore shares) were the other volume toppers in that order.

Reliance Industries clocked highest turnover of Rs 274.22 crore on BSE. GSS America Infotech (Rs 237.04 crore), Reliance Natural Resources (Rs 232.49 crore), Reliance Petroleum (Rs 215.46 crore ) and Orchid Chemicals & Pharmaceuticals (Rs 206.98 crore) were the other turnover toppers in that order.