Fresh selling pulled key benchmark indices in red once again in early afternoon trade after rebounding sharply from day's low in highly choppy trade. The market fell today as political uncertainty ahead of state elections and lower US index futures offset expectations of a further cut in interest rates and gains in Asian stocks.
Polling for assembly elections in Chhattisgarh began on Friday, 14 November 2008. Chhattisgarh is the first state out of a total of five states in which polling is being held for assembly elections. These polls are widely seen as a test of the popularity of the country's main political parties viz. the Congress and the BJP, ahead of national elections in the first half of calendar year 2009
Lower US index futures offsets firm Asian markets. Trading in US index futures indicated the Dow could slide 54 points at the opening bell. Most Asian markets rose today, 14 November 2008, snapping a four-day losing streak, as investors stepped in to snap up battered stocks. Key benchmark indices in China, Hong Kong, Japan, Singapore, and Taiwan were up by between 0.34% and 3.02%. However, South Korea's Seoul Composite was down 0.02%
Lower interest rates boost stocks as they help rise in corporate bottomline by way of lower borrowing costs. Softening inflation will enable the Reserve Bank of India (RBI) to further cut interest rates to create more liquidity in a slowing economy. RBI has already signaled an easier rate regime and cut a key short term rate earlier this month along with cuts in bank reserve ratios to free up funds for lending.
Inflation, as measured by the wholesale price index, declined sharply to 8.98% in the week ending 1 November 2008 from 10.72% in the previous week mainly due to sharp drop in oil prices.
At 13:29 IST, the BSE 30-share Sensex was down 93.07 points, or 0.98%, to 9,443.26. At the day's high of 9,826.25 hit in early trade, the Sensex gained 284.92 points. The Sensex lost 234.03 points at the day's low of 9,302.30 in early afternoon trade.
The S&P CNX Nifty lost 14.90 points, or 0.59%, to 2,831.75
The market breadth, indicating the overall health of the market, was negative with 1328 shares declining on BSE as compared to 959 that rose. A total of 88 shares remained unchanged.
The total turnover on the BSE amounted to Rs 2058 crore by 13:30 IST as compared to Rs 1602 crore by 12:30 IST
Among the 30-member Sensex pack, 16 slipped while the rest gained. Jaiprakash Associates (down 2.92% to Rs 74.85), Sterlite Industries (down 2.13% to Rs 232), and HDFC (down 2.92% to Rs 1593), edged lower from the Sensex pack.
HDFC Bank (up 1.90% to Rs 1027), and Ranbaxy Laboratories (up 0.25% to Rs 214.65), edged higher from the Sensex pack.
Defensive buying helped the BSE FMCG index outperform the Sensex. The BSE FMCG index fell 0.49% to 2,929.07. ITC (down 1.56% to Rs 167.25), Hindustan Unilever (down 0.10% to Rs 234.25), and Nestle (down 1.64% to Rs 1328), slipped.
Auto stocks slipped on concerns economic downturn and higher borrowing cost will choke-off sales. Around 70% of vehicle sales in the country (90% in case of commercial vehicles) are financed through loans.
India's top truck maker by sales Tata Motors slumped 4.48% to Rs 143 and was the top loser from the Sensex pack.
Mahindra & Mahindra (down 2.72% to Rs 332.90), and Maruti Suzuki India (down 0.82% to Rs 554.20), slipped from the auto pack.
India's largest private sector company by market capitalization and oil refiner, Reliance Industries (RIL), recovered sharply from day's low of Rs 1088.65 and was now down 1.47% to Rs 1145. Concerns of weakening refining margins amid sluggish demand for petroleum products weighed on the stock. The stock retraced sharply from day's high of Rs 1208.
Telecom pivotals advanced after reversing last two days' losses after Japan's NTT DoCoMo on Wednesday, 12 November 2008, signed an agreement to acquire a 26% stake in unlisted Tata Teleservices (TTL). India's top mobile operator by market capitalisation, Bharti Airtel rose 4.55% to Rs 660 and was the top gainer from the Sensex pack.
India's second largest cellular services provider by market capitalisation Reliance Communications gained 2.88% to Rs 222.35. The deal between NTT DoCoMo and unlisted TTL announced the deal after trading hours on Wednesday, 12 November 2008.
Tata Teleservices Maharashtra (TTML), jumped 15.18% to Rs 20.72 on high volumes of 1.26 crore shares after NTT DoCoMo and Tata Sons announced a 20% open offer for the shareholders of Tata Teleservices Maharashtra (TTML) at Rs 24.70 a share. Tata Sons, the holding company of the Tata Group, holds 20.7% of the capital of TTML. The unlisted TTL owns 37.65% stake of TTML.
Tata Communications gained 2.32% to Rs 490 after American depository receipt shot up 18.3% on Thursday, 13 November 2008 on the NYSE.
Telecom pivotals had succumbed to selling pressure in the past two days on reports new telecom companies planning to enter the Indian market to offer 3G services may have to pay 3% of their aggregate revenues to the government.
Private sector power generation companies rose on recent reports of a 20-30% increase in tariffs. India's largest private sector power generation firm by sales Reliance Infrastructure gained 2.46% to Rs 554. India's second largest private sector power generation firm by sales Tata Power rose 1.41% to Rs 742.
Jet Airways slipped 1.52% to Rs 181.95 after denying stake sale talks to Temasek for Rs 250 crore.
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