Post Market Commentary ,Tuesday, June 24, 2008

Bears rule the roost

Bears are in total command of the proceedings on the stock exchanges. Bulls are in hibernation. Equities extended losses for the fifth straight day today with the barometer index BSE Sensex falling below the psychologically important 14,000 mark for the first time in 10 months since late August 2007. However, it settled above that level. Heavy selling pressure in index pivotals during the second half of the trading sessions spooked the market. Metal, IT and FMCG shares were the worst hit in today’s trade.

Choppy swings were witnessed in late trade with the Sensex even bouncing in the green for a while led by solid rally in index heavyweight Reliance Industries (RIL). However, as RIL quickly pared gains, the Sensex plunged in late trade. The market breadth was weak. All sectoral indices in BSE suffered losses. Asian and European markets were trading lower.

Fears of further increase in interest rates to tame inflation continued to weigh on the market sentiment. Reserve Bank of India (RBI) governor signaled on Monday, 23 June 2008, that the central bank will tighten monetary policy further to tackle inflation that surged past 11% in early June 2008 to a 13-year high.

As per provisional data, foreign funds today, 24 June 2008, bought shares worth a net Rs 90.06 crore. Domestic funds bought shares worth a net Rs 475.94 crore.

BSE Sensex was down 186.74 points or 1.31% at 14,106.58. Sensex lost 302.01 points at day’s low of 13,991.31 hit at the fag end of the trading session. It was the Sensex's lowest level in 10 months since 22 August 2007.

At the day’s high of 14,432.90, the Sensex gained 139.58 points in early trade.

S&P CNX Nifty slumped 75.30 points or 1.76% at 4,191.10. Nifty hit a low of 4,156.10, its lowest level in 10 months since 24 August 2007.

In a crucial global event, the US Federal Reserve is expected to hold key rate for short-term lending at its current 2%, at its two-day policy meeting that begins today, 24 June 2008. Investors will scrutinise the statement accompanying the decision for clues on the future course of monetary policy.

Meanwhile, a crucial UPA-Left meeting on the controversial civilian nuclear deal with the United States is scheduled tomorrow, 25 June 2008. The left allies, whose parliamentary support is crucial to the Congress-led United Progress Alliance (UPA) government at the Centre, have said they would withdrew support if the government went ahead with the deal.

Reliance Industries (RIL) saw high volatility in the day. The stock settled 0.80% higher to Rs 2038.30 on 16.45 lakh shares. The stock swung wildly in a range of Rs 2012 and Rs 2133.70 during the day. As per recent reports, RIL plans to open its first North American plant in North Carolina by investing $215 million.

NTPC lost 4.84% to Rs 154.20. As per reports, NTPC had paid 6.9% lower advance tax at Rs 188 crore in the first installment of this financial year over the corresponding period in the previous year.

Oil & Natural Gas Corporation (ONGC) fell 4.75% to Rs 845.15. ONGC has decided to exit projects to set up a refinery and a special economic zone Andhra Pradesh, the company said on Monday, 23 June 2008. ONGC will unveil its Q4 and year ended March 2008 results on Wednesday, 25 June 2008.

Banking stocks slipped on selling pressure. ICICI Bank (down 2.95% to Rs 700.10), HDFC Bank (down 4.62% to Rs 1046) and State Bank of India (down 0.17% to Rs 1203), edged higher.

Software stocks slipped in the red after firm start. Satyam Computer Services (down 2.09% to Rs 450.50, off day’s high of Rs 465.75), Infosys Technologies (down 4.08% to Rs 1772.05, off day’s high of Rs 1859.90), and TCS (down 1.26% to Rs 847, off day’s high of Rs 864.80) declined.

Wipro, the country’s third largest software services exporter was down 2% to Rs 470. Wipro has reportedly raised close to Rs 1,400 crore (35 billion Yen) through external commercial borrowings (ECBs). The company has been pursuing an aggressive acquisition strategy over the last few years and it concluded two major acquisitions in the year ended March 2008 including Unza and Infocrossing for a cumulative value of close to $900 million. As of 31 March 2008, Wipro had cash and bank balance Rs 3,927 crore.

Reliance Communications (RCom), the country’s second largest telecom services provider in terms of market capitalisation slumped 2.85% to Rs 474. RCom’s proposed merger deal with South Africa based global operator, MTN is reportedly expected to close by first week of July 2008 with RCom likely to acquire 40% stake in the merged entity.

Ranbaxy Laboratories gained 2.44% to Rs 526 on 14.58 lakh shares. It was the top gainer from Sensex pack.

Bharat Heavy Electricals (Bhel), the country’s largest state-run engineering company in terms of order book, gained 2.10% to Rs 1390. As per reports, Bhel has paid 42.8% higher advance tax at Rs 300 crore in the first installment of this financial year over the corresponding period in the previous year.

Indian Hotels Company declined 4.36% to Rs 88.90 on reporting 0.3% rise in net profit to Rs 134.88 crore on 10.4% rise in sales to Rs 557.63 crore in Q4 March 2008 over Q4 March 2007. The company announced result after trading hours on Monday, 23 June 2008.

Jetking Infotrain soared 12.73% to Rs 310 after the company said its board will meet on 30 June 2008 to consider issue of bonus shares. The company made this announcement during trading hours today, 24 June 2007.

Orchid Chemicals & Pharmaceuticals fell 4.81% to Rs 225.50 after the company said it had secured Canadian regulatory approval to sell a combination antibiotic injection in that country. The company made this announcement during trading hours today, 24 June 2007.

Tech Mahindra slipped 2.21% to Rs 745 despite signing a contract with Telecom New Zealand for program management and systems integration for the latter's retail business.

Tata Power Company declined 6.93% to Rs 1110 despite reporting 24.8% rise in net profit to Rs 869.90 crore in the year ended March 2008 over the year ended March 2007 The company announced the results after trading hours on Monday, 23 June 2007.

GAIL India tumbled 5.42% to Rs 357.90, off sharply from day’s high of Rs 394, after its board recommended issue of bonus shares in the ratio of one equity share for every two shares held. The company made this announcement before trading hours today, 24 June 2007.