Fresh selling in index pivotals dragged key benchmark indices to fresh day's low in afternoon trade. Lower start from European markets, data showing slowdown in infrastructure sector growth and concerns a glut in share sales will suck liquidity from the secondary market also weighed on the bourses. The BSE 30-share Sensex was down 201.72 points or 1.40% to 14,578.83, off 328.65 points from day's high and up 5.16 points from the day's low. All the BSE sectoral indices were trading with losses
After a strong opening triggered by firm global stocks, the market soon lost ground as the Sensex slipped into the red. The barometer index moved between positive and negative zone amid volatile trade. Volatility remained high as the market weakened in mid-morning trade. The market extended losses in early afternoon trade. Fresh selling led further losses on indices in afternoon trade.
India's infrastructure sector output grew 2.8% in May 2009 from a year earlier, slower than an upwardly revised 5% growth in April 2009, government data released today, 30 June 2009 showed. Output had risen 3.1% in the same month last year.
Market men are concerned that a glut in share sales will suck liquidity from the secondary market. A number of firms have announced plans to raise funds through shares sales to institutional investors, taking advantage of a solid surge in share prices in the past three months. Brokers expect companies to raise over 10 billion in the current financial year by way of share placements and initial public offers. The large equity sales may keep a natural lid on share prices.
The key event to watch out for will be the Union Budget 2009-10 about to be presented on 6 July 2009. The Annual economic survey is scheduled to be presented on 2 July 2009 followed by the Rail Budget on 3 July 2009.
The corporate sector is expecting a removal of the fringe benefit tax (FBT) in the budget. Under the current dispensation, an employer has to pay FBT at 30% on the fringe benefit, the taxable value of which is determined in accordance with a formula. FBT is a tax levied on perquisites-or fringe benefits -provided by an employer to his employees.
Meanwhile, domestic brokerages and fund houses want the government to remove securities transaction tax (STT) on trading in securities in the Budget. The Securities & Exchange Board of India (Sebi) members have already forwarded the demand of premier stock exchanges, BSE and NSE, to Finance Minister Pranab Mukherjee for scrapping STT in the Budget.
STT, which was introduced in the Union Budget 2004-05 by the then Finance Minister P Chidambaram, taxes every purchase and sale of securities entered into in a recognised stock exchange in India in securities like shares, debentures, bonds, and units of mutual funds. Equity investors pay an STT of 0.125% for every transaction in cash for the delivery of shares.
Meanwhile, before the budget, investors will also be keenly watching the outcome of the Employees' Provident Fund Organisation (EPFO's) apex advisory body meet on 4 July 2009. The Central Board of Trustees (CBT) will take a view on the Finance Ministry's proposal to invest 15% of its corpus in equity. The EPFO has a corpus of about Rs 1,82,000 crore and the permission to invest 15% funds in equity could have positive implications for the capital market. A proposal to park funds in the stock market was earlier rejected by the EPFO's Finance and Investment Committee (FIC) at its meeting on 26 March 2009.
Analysts expects that the new government will provide thrust on the infrastructure sector and push economic reforms to boost growth. Citigroup expects the economy to grow by 6.8% in the year ending March 2010 (FY 2010) and 7.8% in the year ending March 2011 (FY 2011).
Finance Minister Pranab Mukherjee would present the budget on 6 July 2009. The Railway Budget will be presented on 3 July 2009 and the Economic Survey would be presented on 2 July 2009.
A comfortable victory last month for the Congress-led United Progressive Alliance (UPA) government in elections for the 15th Lok Sabha has raised hopes for economic reforms. Reforms virtually came to a halt in the past five years of the Congress-led alliance government at the centre, when the Communists provided support to the government from outside for a large part of the five-year term. Left parties are opposed to economic reforms.
Investor expectations from the new government are high. Investors expect financial sector reforms such as increase in the cap on foreign direct investment in insurance sector to 49%, from 26% at present.
European markets opened on a subdued note today, 30 June 2009, seeing an unsteady start to the day. Key benchmark indices in UK, Germany and France were down by between 0.18% and 0.47%.
Most Asian stocks rose on optimism a recovery in the global economy will lift earnings for producers of commodities and electronics. Key benchmark indices in Hong Kong, Singapore, South Korea, and Taiwan were up by between 0.12% and 1.02%.
Japan's Nikkei 225 Stock Average climbed 1.79% as the government said household spending unexpectedly increased in May, even as unemployment reached a five-year high.
However China's Shanghai Composite slipped 0.54%
Trading in the US index futures indicated the Dow could rise 8 points at the opening bell today, 30 June 2009.
US stocks rose on Monday, 29 June 2009 as higher oil prices lifted shares of energy companies and fund managers snapped up recent winners to embellish their portfolios a day before the close of the second quarter. The Dow Jones Industrial Average rose 90.99 points, or 1.08%, to 8,529.38. The Standard & Poor's 500 Index added 8.33 points, or 0.91% to 927.23 and the Nasdaq Composite index gained 5.84 points, or 0.32%, to 1,844.06
At 13:25 IST, the BSE 30-share Sensex was down 201.72 points or 1.40% to 14,578.83. The Sensex opened points 45.23 higher at 14,830.97. At the day's high of 14,907.48, the Sensex rose 121.74 points in early trade. The Sensex lost 212.07 points at the day's low of 14,573.67 in afternoon trade
The S&P CNX Nifty was down 64.60 points or 1.47% to 4,326.35
The BSE clocked a turnover of Rs 4505 crore at 13:25 IST as compared with Rs 3396 crore by 12:25 IST
The market breadth, indicating the overall health of the market, was weak. It had turned negative in midmorning trade after a strong start. On BSE, 1709 shares declined as compared with 768 that gained. 74 shares remained unchanged.
Among the 30-member Sensex pack, 23 slipped while the rest gained
India's largest commercial vehicle maker by sales Tata Motors slumped 5.36% to Rs 297.10, extending yesterday's 7.77% slide triggered by weak financial performance. The company reported a net loss of Rs 2505.25 crore in the year ended March 2009 as compared with net profit of Rs 2167.70 crore in the year ended March 2008. The results were announced after market hours on 26 June 2009. It was the top loser from the Sensex pack.
Other auto shares edged lower on crude oil prices. India's largest small car maker by sales Maruti Suzuki India slipped 0.39% and India's largest tractor maker by sales Mahindra & Mahindra dropped 0.80%.
Light, sweet crude futures for delivery in August 2009 gained $1.35 or 1.89% to $72.84 per barrel on Asian electronic trading on Tuesday, 30 June 2009.
Infrastructure stocks slipped on profit booking after a recent run-up on hopes the government may announce higher spending for the infrastructure projects in the Union Budget 2009-10. Bharat Heavy Electricals (down 1.40%), Jaiprakash Associates (down 4.89%), GVK power Infrastructure (down 4.15%), Reliance Infrastructure (down 2.34%), Punj Lloyd (down 4.49%), GMR Infrastructure (down 6.94%), slipped.
However, India's largest engineering and construction company by sales Larsen & Toubro rose 0.36%. The company bagged six orders aggregating to Rs 1230 crore for electrical projects in the domestic market. The company made this announcement before market hours on Monday, 29 June 2009.
India's top pharma firm by market capitalisation Sun Pharma gained 1.94% to Rs 1121.70, reversing two-day steep losses on bargain hunting. It was the top gainer from the Sensex pack. The stock had tumbled in the past two days hit by reports the US drug regulator has seized generic drugs made by Caraco Pharmaceutical Laboratories, a US subsidiary of Sun Pharma after the agency found manufacturing defects at company plants, including oversized tablets. Sun Pharma holds 70.21% stake in Caraco Pharmaceutical Laboratories.
India's largest private sector firm by market capitalisation Reliance Industries (RIL) slipped 2.49% to Rs 2031.25 after striking day's high of Rs 2105.10. The Bombay high court on 15 June 2009 asked RIL to supply gas to Anil Ambani Group firm Reliance Natural Resources (RNRL) at rates much lower than approved by the government. The stock slipped from day's high of Rs 2011.90
The court has asked RIL to supply 28 million metric standard cubic meters per day (mmscmd) of gas for 17 years at $2.34 per million metric British thermal unit (mmbtu) to RNRL. This is much lower than the price fixed by the government for gas sale from the RIL block in the KG basin at $4.2 million per metric British thermal unit. According to analysts the lower gas sale price will result in lower-than-expected earnings from gas sales for RIL.
Meanwhile, the Bombay High Court on Monday, 29 June 2009 approved the merger between RIL and Reliance Petroleum (RPL) but stayed its own order for four weeks to enable those objecting to the amalgamation to file appeal before division bench.
In March 2009, the boards of director of the two firms approved the merger, creating one of the world's largest petrochemical entities. The deal offered shareholders of RPL one RIL share for every 16 shares held by them.
Shares of firms which rely on orders from Indian railways rose on expectation of some positive announcement in the forthcoming Railway Budget on 3 July 2009. Kernex Microsystems (up 0.36%), Beml (up 2.75%), Hind Rectifiers (up 0.61%), Texmaco (up 0.29%), Titagarh Wagons (up 0.26%), Kalindee Rail Nirman Engineers (up 0.19%), Stone India (up 0.81%), rose
Among the side counters Tulip IT Solutions (up 14.11%), BPL (up 9.99%), Force Motors (up 9.20%), Henkel India (up 6.14%), and Aries Agro (up 6.01%), gained.
However Panam Petrochem (down 9.98%), Lloyd Electric (down 9.60%), DCM Shriram Industries (down 8.77%), Metrochem Industries (down 8.59%), and Nelcast (down 8.14%), slipped
United Spirits tumbled 3.97% to Rs 880.50 after group firm Shaw Wallace & Company sold its entire 10.27% stake in the company in the open market via multiple block deals today, 30 June 2009. It was the top traded counter on BSE with turnover of Rs 651.22 crore followed by Suzlon Energy (Rs 167.64 crore), HDIL (Rs 153.02 crore), Reliance Capital (Rs 103.84 crore), and Educomp Solutions (Rs 102.09 crore).
United Spirits and Shaw Wallace & Company made the announcement made the announcement about the sale during market hours today after nearly 1.28 crore shares, or 12.86% equity of United Spirits changed of hands in three block deals on the BSE and the NSE.
In the first block deal, 4.42 lakh shares were transacted on the BSE at Rs 880 each. Later, around 52.60 lakh shares transferred at Rs 900 on the BSE. In the final deal, 71.85 lakh shares changed hands at Rs 880 on the NSE. The name of the buyer in the block deals was not immediately known.
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