The key benchmark indices slumped once again in mid-afternoon trade on weak industrial production data for the month of August 2008 Capital goods stocks fell. The market had recovered in mid-morning trade from an across the board selling witnessed at the onset of the trading session. The BSE 30-share Sensex was down 859.30 points. A global sell-off in equities on the worries about a global recession created havoc on the domestic bourses.
PSU OMCs slumped. Banking stocks declined. IT stocks fell on Infosys’ weak outlook. ICICI Bank was down more than 20 per cent while Jaiprakash Associates fell more than 14 per cent. Reliance Infrastructure and Reliance Communications were down more than 10 per cent each.
India's industrial production rose at a dismal 1.3 per cent in August 2008 compared to a 10.9 per cent growth in August 2007. Manufacturing grew a poor 1.1 per cent in August 2008 versus 10.7 per cent growth in August 2007. Consumer durables production rose 5.1 per cent in August 2008 verses 6.2 per cent growth in August 2007. Capital goods production rose 2.3 per cent in August 2008 verses 14.7 per cent growth in August 2007. Meanwhile, industrial production growth for July 2008 was revised upwards to 7.4 per cent from 7.1 per cent.
Stocks fell across the globe despite worldwide central bank measures to stave off a crisis. Bank bailouts, liquidity injections and interest rate cuts across the world have failed to quell investor anxiety with Asian stocks tumbling today, following overnight setback in US stocks.
Back home, the Reserve Bank of India (RBI) toady cut the cash Reserve Ratio (CRR) second time in the week. The central bank cut CRR by 100 basis points after 50 basis point cut earlier in the week.
US futures slumped today indicating a weak opening of US markets today, 10 October 2008. Nasdaq futures were down 35.75 points while Dow Jones futures were down 254 points.
At 12:23 IST, the BSE 30-share Sensex was down 859.30 points or 7.59 per cent to 10,476.59. The index plunged 1,088.50 points at the day's low of 10,239.76 at the onset of the trading session, its lowest level since 24 July 2006. The Sensex fell 424.33 points at day’s high of 10,904.13, in early trade.
The S&P CNX Nifty was down 239.40 points or 7.12 per cent to 3,274.24. Nifty hit a low of 3,198.95, its lowest level since August 9, 2006.
The BSE Mid-Cap index was down 7.75 per cent at 3,699.59. The BSE Small-Cap index was down 6.34 per cent at 4,401.42. Both the indices outperformed Sensex.
The market breadth was extremely weak. On BSE, 272 shares advanced as compared to 2,047 that declined. 35 shares remained unchanged.
India’s largest private sector company by market capitalization and oil refiner Reliance Industries slumped 7.24 per cent to Rs 1,531.
Some banking shares slumped once again after an initial rebound from lower level triggered by Reserve Bank of India's CRR cut announcement. BSE Bankex declined 9.58 per cent to 5,219.44 and was the major loser from the sectoral indices on BSE. India's biggest private sector bank by market capitalisation ICICI Bank was slumped 20.29 per cent at Rs 361.50.
India's second biggest private sector bank by market capitalisation HDFC Bank was down 7.39 per cent at Rs 1,023.90, off the session's low of Rs 984.20.
India's largest state-run lender by market capitalisation State Bank of India fell 2.52 per cent to Rs 1,288.80, off a low of Rs 1181.15.
Capital goods declined on weak industrial production figures. India’s largest engineering and construction firm by sales Larsen and Toubro fell 9.79 per cent to Rs 872. International majors such as Philips, General Electric (GE) and Siemens are reportedly in the race for acquiring the medical equipment business of Larsen and Toubro. Suzlon Energy (down 12.71 per cent to Rs 99.20) and Bharat Heavy Electricals (down 10.39 per cent to Rs 1,314.90), slumped.
IT stocks tumbled on Infosys’s weak outlook. India’s second largest IT exporter by sales Infosys fell 5.52 per cent to Rs 1,185.05. The stock recovered from the session’s low of Rs 1,127.33. Infosys said it has revised the US dollar guidance downwards to reflect the current economic situation and the drastic depreciation of major global currencies against the US dollar. Infosys expects earnings per American depository share at $2.23 for the year ending March 2009, a growth of 12.6 per cent. At the time of Q1 June 2008 results, the company had forecast earnings per American depository share at $2.31 to $2.35 for the year ending March 2009, a growth of 16.7 per cent to 18.7 per cent.
Infosys consolidated net profit rose 9.9 per cent to Rs 1432 crore on 11.6 per cent growth in sales to Rs 5418 crore in Q2 September 2008 over Q1 June 2008. The company announced the results before trading hours today, 10 October 2008.
Tata Consultancy Services (down 5.63 per cent to Rs 515.80), Wipro (down 10.04 per cent to Rs 254) and Satyam Computer Services (down 11.03 per cent to Rs 235.50) tumbled.
The Indian rupee fell to a record low past 49.07 per dollar today as the spreading global financial crisis hurt sentiment in Asian stock markets, leading to concerns of a large outflow of foreign funds from India. IT exporters benefit from the weaker rupee as they derive most of their revenues in dollars.
Three PSU OMC stocks. BPCL, HPCL and Indian Oil Corporation fell between 4.92 per cent to 7.79 per cent. As per reports, commercial banks had stopped lending to the three state-run refiners owing to the industry-wide liquidity crunch and the high debt these companies have accumulated because they sell petroleum products below production cost.
Meanwhile, crude oil fell to the lowest in a year, trading below $84 a barrel in New York, as demand declined amid a worsening economic outlook caused by a global credit crisis.
Among the major sensex losers were, Jaiprakash Associates (down 14.57 per cent to Rs 77.70), Reliance Infrastructure (down 12.49 per cent to Rs 558) and Reliance Communications (down 12.48 per cent to Rs 263.20), slumped.
India’s largest aluminum maker by sales Hindalco Industries slumped 4.41 per cent to Rs 86.80 even as the company said IGH Holdings, a promoter of the company has acquired 8.94 lakh shares or 0.05 per cent of equity capital of the company by way of open markets purchases. The stock recovered from the session’s low of Rs 85.05.
Tata Power Company declined 3.96 per cent to Rs 772.55. The company is reportedly exploring the option of raising its stake in Indonesia's Bumi Resources Tbk, the world’s second largest coal company, after a sharp erosion in the value of the shares pledged by Bumi's parent firm, Bakrie & Brothers, with various lenders.
India’s largest steel maker by sales Tata Steel slumped 9.55 per cent to Rs 305.10. ArcelorMittal SA and Tata Steel have reportedly shown interest in mining coal in collaboration with Coal India from the latter's 18 abandoned underground mines.
JSW Steel was down 5.21 per cent to Rs 277.40, having recovered from a 52-week low of Rs 244, after the company posted 14 per cent growth in net crude steel production to 10.01 lakh tonnes in Q2 September 2008 over Q2 September 2007.
Biocon slipped 2.91 per cent to Rs 133.50, even as the company said on Friday, 10 October 2008, its joint venture company NeoBiocon has launched Arbaxane in United Arab Emirates for the treatment of breast cancer.
Overnight, US stocks slumped more than 7 per cent on fears that credit markets would stay frozen, paralysing the world's financial system and slowing economies to a standstill.