Intense selling pressure in index pivotals especially heavyweight Reliance Industries triggered a sell-off in key benchmark indices in mid-afternoon trade. Weak start from European markets, subdued Asian markets and trading in index futures showing weak start from US markets later in the day accentuated the fall. High volatility was the hallmark of the day's trading session. The BSE 30-share Sensex was down 276.77 points or 1.73%, off sharply by 337.55 points from the day's high and up just 13.85 points from the day's low. The market breadth was weak.
Cement and metal stocks declined on selling pressure. Telecom shares saw divergent trend with Bharti Airtel rebounding from a 52-week low on bargain hunting after a steep recent slide. However, Reliance Communications dropped on poor earnings. India's largest firm by market capitalisation and oil refiner Reliance Industries (RIL) slumped 4.11% to Rs 1851.60 on reports the Comptroller and Auditor General of India (CAG) will soon audit RIL books of accounts.
Intraday volatility on the bourses was high. After an initial slide triggered by weak global stocks, the market recouped almost the entire losses shortly. However, the intraday rebound was short-lived. The market weakened again later. The market once again staged a strong intraday rebound with the Sensex entering the positive zone. However, weak global stocks pulled the market into the red again later. Bargain hunting in index pivotals helped the market once again regain positive zone in early afternoon trade. The Sensex surged to the day's high in early afternoon trade. But the market faltered again later. Weak European markets triggered a sell-off in mid-afternoon trade
Asian stocks had dropped on Monday, 2 November 2009 when the Indian markets were closed on account of a public holiday. US stocks had declined sharply on Friday, 30 October 2009.
The HSBC Markit Purchasing Managers' Index (PMI), based on a survey of 500 Indian companies, fell to 54.5 in October 2009 from 55 in September 2009. A reading above 50 means activity expanded during the month. Growth in domestic new orders may be beginning to suffer from the impact of a drought, but stronger foreign demand was helping to cushion the blow, HSBC senior Asian economist Robert Prior-Wandesforde said.
Oil product sales rose 0.8% in September 2009, its lowest level since May 2009, as demand for diesel and naphtha softened, data showed on Tuesday.
A news agency today, 3 November 2009, quoted G. Bhujabal, economic advisor in the Ministry of Commerce and Industry as saying that he expects declining trend of exports reversing by December 2009 or January 2010. Exports declined 13.8% in September 2009 to $13.6 billion. Exports fell 28.5% in the April-September 2009 period to $77.9 billion.
Crude oil imports in September 2009 rose 10.5% to 2.77 million barrels per day (bpd) as Indian refiners processed 3.4% more crude. Fuel exports were down by 27% in September 2009 versus a year ago. The data does not include imports and exports by Reliance Industries' new 580,000 barrels per day export-focused refinery at Jamnagar in Gujarat.
European markets opened on a weak note today, 3 November 2009 as poor results from UBS and a shake-up of Lloyds and Royal Bank of Scotland rattled investors. Key benchmark indices in UK, Germany and France were down by between 1.41% and 1.63%.
Most Asian stocks fell on Tuesday, 3 November 2009, as concern over the withdrawal of stimulus measures overshadowed Ford Motor Co.'s unexpected profit and a rally in gold prices. Key benchmark indices in Hong Kong, Singapore, Taiwan, and South Korea were down by between 0.17% and 1.76% respectively. However China's Shanghai Composite index rose 1.22%.
Japanese markets were closed today, 3 November 2009, for a national holiday.
Australia's central bank on Tuesday raised its key policy rate for a second month in a row, hiking it by a quarter of a percentage point to 3.50%, as expected. The Reserve Bank of Australia left some analysts speculating that policy could be on hold in December 2009 after it said that interest rate rises in October 2009 and November 2009 would work to temper inflation and ensure a sustainable upswing in the economy.
Asian markets had dropped on Monday, 2 November 2009 as worries about the US financial sector resurfaced after CIT Group Inc, the lender to small and mid-sized US companies, filed for bankruptcy.
But Wall Street edged higher on Monday, 2 November 2009 as manufacturing expanded more than expected last month. The Dow Jones industrial average gained 76.71 points, or 0.8%, to 9,789.44. The S&P 500 index added 6.69 points, or 0.7%, to 1,042.88, and the Nasdaq Composite index rose 4.09 points, or 0.2%, to 2,049.20.
Among the economic data, the ISM reported its gauge of manufacturing activity at 55.7 in October 2009, the third straight month of growth and the highest reading since April 2006. Also pending-home sales rose to their highest level in nearly three years in September 2009, boosted by the first-time homebuyer's tax credit. Also construction spending rose 0.8% in the month of September.
Trading in US index futures indicated Dow could fall 49 points at the opening bell on Tuesday, 3 November 2009.
It is widely expected that the US Federal Reserve at a regular two-day policy meeting on 3-4 November 2009 will hold interest rates at their lowest-ever range of 0% to 0.25%, where they stood since December 2008. However, there's plenty of unease about the contents of the Fed's accompanying policy statement. A section of the market sees the Fed altering its statement to a less dovish tone. There is speculation that the Fed might drop or alter its pledge to keep rates low for an extended period.
Financial markets are also looking for clues from other central banks about when stimulative policy may have to come to an end. The European Central Bank (ECB) meets on Thursday, 5 November 2009. No rate change is expected and few expect it to offer clues on when it might change tack. The Bank of England (BOE) meets the same day and the market is waiting to see if it tops up its quantitative easing programme after the economy unexpectedly contracted between July-September 2009 period.
Governments and central banks around the world have injected trillions of dollars in the past year or so to pull the world out of a most severe recession since the 1930s Great Depression.
Closer home, the Reserve Bank of India (RBI) at its monetary policy review on 27 October 2009 left its key rates unchanged, but raised the wholesale price-based inflation projection for end-March 2010 sharply to 6.5% with an upward bias, from 5 % earlier.
The IMF said on 29 October 2009 the economies of India, China and Australia were recovering especially rapidly, suggesting it notices growing pressures for authorities there to tighten monetary policy ahead of others in the region. It called the three economies special cases, while adding a tightening of monetary policy seemed unnecessary elsewhere in the region in the near future.
It also advised Asian central banks not to raise interest rates only to calm asset price growth, saying lifting rates ahead of advanced economies could attract carry trade-type capital inflows and aggravate asset price pressures.
Closer home, there are concerns that a fund raising spree by Indian firms will suck liquidity from the secondary equity market. As per reports, Indian firms have garnered about $9 billion (Rs 32,400 crore at the current exchange rates) through sale of shares and convertible bonds to institutional buyers since April 2009. Indian companies are taking advantage of a surge in liquidity to recapitalize and fund capital expenditure after being starved of cash last year.
Unlisted Reliance Infratel announced on 22 September 2009 its intention to raise Rs 5,000 crore from the primary market. Divestment of state-run firms by the government may also increase the supply of paper in the market.
The government recently approved stake sales in state-run power producer NTPC and another unlisted power firm Satluj Jal Vidyut Nigam which reflects the country's resolve to speed up reforms and raise more resources for social schemes.
The government has approved a follow-on public offering of 20% of state run Steel Authority of India, the steel minister said on 21 October 2009. The Government of India owns nearly 86% of Sail. Also the government gave its approval for 15% follow on public offer for Rural Electrification Corporation on 29 October 2009.
At 14:25 IST, the BSE 30-share Sensex fell 276.77 points or 1.73% to 15,619.51. The Sensex opened 57.65 points lower at 15,838.63. The Sensex rose 78.78 points at the day's high of 15,957.06 in early afternoon trade. It lost 290.60 points at the day's low of 15,605.66 in mid-afternoon trade.
The S&P CNX Nifty slipped 81.80 points or 1.74% to 4629.90
The market breadth, indicating the overall health of the market was weak. On BSE, 1910 shares declined as compared with 749 that rose. A total of 66 shares remained unchanged.
The total turnover on BSE amounted to Rs 3869 crore by 14:25 IST as compared with Rs 2869 crore by 14:25 IST
Among the 30-member Sensex pack, 20 slipped while the rest of them gained.
India's largest firm by market capitalisation and oil refiner Reliance Industries (RIL) slumped 4.11% to Rs 1851.60 on reports the Comptroller and Auditor General of India (CAG) will soon audit RIL books of accounts. The stock oscillated in a band of Rs 1925 - 1850 so far in the day. The stock had lost 3.62%% on Friday, 30 October 2009, hit by disappointing Q2 results. The results were announced after market hours on Thursday, 29 October 2009.
The company reported a 6.4% fall in net profit at Rs 3,852 crore despite 6% rise in total income to Rs 47,476 crore in Q2 September 2009 over Q2 September 2008. Refining margins more than halved to $6 a barrel from $13.3 a barrel a year earlier.
The government on 27 October 2009 allocated additional 50 million cubic metres a day (mmscmd) of gas from Reliance Industries-operated east coast block D6. Power plants and refineries will get the bulk of Reliance Industries' gas from the Krishna-Godavari basin beyond the previously allotted 40 million metric standard cubic metres per day (mmscmd).
The empowered group of ministers (eGoM) also made some allotments for Reliance's petrochemical plants and refineries.
India's largest realty player by sales DLF tumbled 7.73% to Rs 340.40, extending a recent sharp fall, after the RBI in its monetary policy review meet on 27 October 2009 raised the provisioning requirements for loans to commercial real estate from 0.4% to 1%. It was the top loser from the Sensex pack.
India's largest private sector aluminium maker by sales Hindalco Industries lost 6.72% after net profit declined 52.2% to Rs 344.05 crore on a 13.2% decline in sales to Rs 4892.56 crore in Q2 September 2009 over Q2 September 2008. The result was announced on Saturday, 31 October 2009.
IT pivotals declined on profit booking after recent upmove. Infosys (down 1.61%), Wipro (down 4.12%), and TCS (down 2.03%), edged lower.
India's largest cement maker by sales ACC shed 7.01% after shipments in October 2009 fell marginally to 1.69 million tonnes from 1.70 million a year ago. The company said production fell to 1.71 million tonnes from 1.74 million tonnes a year ago.
India's largest private sector power generation firm by sales Reliance Infrastructure slipped 4.31%. The company on Saturday, 31 October 2009, reported 6.2% rise in net profit to Rs 306.90 crore in Q2 September 2009 over Q2 September 2008. Total income rose to Rs 2,812.82 crore from Rs 2,674.86 crore in the same period last year.
Telecom pivotals witnessed divergent trend. India's second largest telecom company by sales Reliance Communications slumped 3.92%. The company reported 51.66% decline in its consolidated profit at Rs 740 crore in Q2 September 2009 over Q2 September 2008. Consolidated revenue increased to Rs 5,703 crore in the quarter under review from Rs 5,645 crore in the year-ago period. The result was declared on 31 October 2009.
However India's largest cellular services provider by sales Bharti Airtel surged 3.23% to Rs 301.60, on bargain hunting after a sharp recent slide. The stock rebounded from an initial slide which had taken the stock to a 52-week low of Rs 280.05. It was the top gainer from the Sensex pack
Bharti Airtel on Friday introduced a 'pay per second' plan across the country. In this plan, called Freedom Plan, Airtel customers will be charged one paise per second for all local and STD calls to Airtel numbers and 1.20 paise per second for local and STD calls to other networks.
Meanwhile, Singapore Telecommunications has bought additional 1.52% stake in Bharti Airtel and will pay up to Rs 3008.4 crore in three installments ranging over 18 months. In a notice to Singapore Stock Exchange, SingTel said it has entered into a conditional share purchase agreement with Bharti Group entity to buy an additional 7,30,000 issued shares in Bharti Telecom, a promoter company of Bharti Airtel.
India's largest private sector bank by net profit ICICI Bank advanced 1.70% after a 2.29% spurt in its American depository receipt (ADR) on Monday. The bank's net profit rose 2.6% to Rs 1040.13 crore on a 12.7% decline in total income to Rs 8480.73 crore in Q2 September 2009 over Q2 September 2008. The result was announced during trading hours on 30 October 2009.
India's largest bank by net profit State Bank of India fell 3.52%. The bank's consolidated net profit rose 28.29% to Rs 3,133.16 crore on 22% rise in consolidated income to Rs 33,101.65 crore in Q2 September 2009 over Q2 September 2008.
India's largest oil exploration firm by market capitalisation Oil & Natural Gas Corporation (ONGC) gained 0.91% on reports the company is planning to enter the nuclear power space. ONGC, which last year announced plans to enter uranium mining, is now seriously exploring the possibility of setting up nuclear power plants in the country, reports added.
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