Sustained selling in index pivotals continued to drag key benchmark indices lower which hit a fresh intra-day low in midafternoon trade. Global cues were mixed. Concerns that a glut in share sales will suck liquidity from the secondary market weighed on Indian stocks. Data showing slowdown in infrastructure sector growth also spoiled the sentiment. The BSE 30-share Sensex was down 217.15 points or 1.46% to 14,569.50, off 337.98 points from the day's high, but up 39.67 from the day's low. BSE cash market turnover rose from that in the previous day.
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. The market weakened further in afternoon trade. Indices hit fresh day's low in midafternoon trade as selling accentuated in index pivotals
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 in the secondary market
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 a thrust to the infrastructure sector and push economic reforms to boost growth. 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 were trading slightly lower today, 30 June 2009 as traders booked profits in commodities and oil companies. Key benchmark indices in UK, Germany and France were down by between 0.03% and 0.23%.
Asian stocks turned mixed today, 30 June 2009. Key benchmark indices in Singapore, South Korea, and Taiwan were up by between 0.12% and 0.64%. However China's Shanghai Composite slipped 0.54% and Hong Kong's Hang Seng index fell 0.81%
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.
Trading in the US index futures indicated the Dow could rise 18 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 14:25 IST, the BSE 30-share Sensex was down 217.15 points or 1.46% to 14,569.50. 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 255.91 points at the day's low of 14,529.83 in midafternoon trade
The S&P CNX Nifty was down 69.85 points or 1.68% to 4,317.55
The BSE clocked a turnover of Rs 5212 crore at 14:25 IST as compared with Rs 4505 crore by 13:25 IST. The turnover is higher as compared to Rs 4123 crore by 14:25 on Monday, 29 June 2009.
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, 1763 shares declined as compared with 786 that gained. 62 shares remained unchanged.
Among the 30-member Sensex pack, 24 slipped while the rest gained. Reliance Communications (down 4.52%), Jaiprakash Associates (down 5.16%), and Ranbaxy Laboratories (down 5.23%), edged lower from the Sensex pack.
India's second biggest realty firm in terms of sales, Unitech, led fall in realty shares. Unitech was down 6.04% on concerns of equity dilution after the company allotted 22.75 crore convertible warrants at Rs 50.75 each to Harsil Projects, a promoter group company. If Harsil Projects decides to convert the entire warrants into equity shares, it will result into an 11.12% equity dilution.
India's largest real estate developer by sales DLF tumbled 6.06% to Rs 317.80 and was the top loser from the Sensex pack. Parsvnath Developers (down 4.26%), Sobha Developers (down 2.19%), Omaxe (down 3.98%), Akruti City (down 2.49%), HDIL (down 9.51%), edged lower.
India's largest commercial vehicle maker by sales Tata Motors slumped 5.89%, 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.
Cement shares slipped on recent reports prices are likely to soften by Rs 3-5 per 50 kilogram bag next month due to the twin effect of excess supply and lower demand. ACC (down 1.75%), Grasim (down 0.31%), Ambuja Cement (down 0.70%), India Cement down 3.94%), UltraTech Cement (down 2.21%), slipped.
Post this price cut, retail cement prices will come down to Rs 255 in Mumbai, Gujarat, South India and to around Rs 245 in the northern and eastern markets. Grasim, ACC and Ambuja Cement are expected to announce price cut on 1 July 2009, reports added.
India's top pharma firm by market capitalisation Sun Pharma gained 1.24% to Rs 1114.50, 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 2.11% to Rs 2041 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.
However India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) rose 0.95% on rise in crude oil prices which would result in higher realizations from crude sales.
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.
Banking stocks, which were on roll recently, fell on fears of rising defaults in a weakening economy. India's biggest bank in terms of branch network State Bank of India (SBI) slipped 1.08% to Rs 1745.35. The stock came off the day's high of Rs 1781.70.
India's second largest private sector bank by net profit HDFC Bank slipped 1.54% to Rs 1483 after hitting a day's high of Rs 1525. India's largest private sector bank by net profit ICICI Bank shed 4.11% to Rs 717.90, off the day's high of Rs 800
Hopes banks may get tax relief on interest earned on infrastructure lending and other favorable announcements in the Union Budget 2009-2010 had triggered recent gains.
United Spirits tumbled 4.08% 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 665.49 crore
GEE rose 1.43% after the company recommended a 1:4 bonus issue. The company made this announcement during trading hours today, 30 June 2009.
Motherson Sumi Systems rose 1.66% after consolidated net profit jumped 98.6% to Rs 122.83 crore in Q4 March 2009 over Q4 March 2008. The company announced the results during trading hours on Monday, 29 June 2009, when the stock had galloped 11.97% to Rs 75.30.
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