Global woes and a huge sell-off by institutional investors plunged the key benchmarks sharply lower for a second day today, as the market fell for the fifth day in a row
As suggested in our weekly report, the market continued to decline today. In fact, the market indices crashed heavily once again for the second consecutive trading session.
The Sensex began with an opening gap down of 22.61 points (three points on the Nifty) and made an intra-day high of 19,720.43 (5,907 on the Nifty). This is the lowest intra-day high in the past 19 days. Massive and steady selling soon took over. The Sensex broke through the support of 19,500 before noon and in the closing session witnessed a sharp sell-off.
The indices made a 20-day low hitting the 19,158.43 mark, after easily breaking the support of 19,500. Finally, the Sensex closed at 19,224.12 (down 2.38%) and the Nifty at 5,763 (2.38%). The 1,319-point gain in the 16-day rally which started on 10 December 2010 has been completely wiped off in the past five days.
The advance-decline on the National Stock Exchange (NSE) was, however, slightly better today 176:1,228 from that on Friday. The market has sharply fallen for the past five days and there is some scope for a bounce back after the morning session tomorrow. But this doesn't mean that the decline which started on 4th January will come to a halt soon. After a day or two of rally, if at all, the market will fall again. The support may come around 18,500 on the Sensex and 5,600 on the Nifty.
All sectoral indices ended in the red today. BSE Realty (down 3.55%), BSE Capital Goods (down 3.52%), BSE Consumer Goods (down 3.26%), BSE Bankex (down 3%) and BSE Oil & Gas (down 2.99%) were the top losers.
Infosys (up 0.90%) and Bharti Airtel (up 0.04%) were the only gainers on the Sensex. The laggards were led by HDFC Bank (down 5%), BHEL (down 4.76%), HDFC (down 4.44%), Hindalco Industries (down 4.44% each) and Jaiprakash Associates (down 4.18%).
The market breadth was pathetic. The Sensex closed with 28 losers and two gainers, while the Nifty had 47 declining stocks against three advancers. In line with the benchmarks, the BSE Mid-cap index lost 2.34% and the BSE Small-cap index fell 2.83%.
Meanwhile, the Supreme Court today issued a notice to the Centre on a plea seeking cancellation of second generation (2G) spectrum licenses allocated during the tenure of former telecom minister A Raja. The apex court also issued notices to 11 companies which allegedly did not fulfil their roll-out obligations as per the terms and conditions of allocation of the spectrum.
The markets in Asia ended mostly lower on speculation that central banks in the region will rejig interest rates to rein in rising prices, and renewed concerns about the debt crisis in Europe. Weak US jobs data announced on Friday, also played on investors' minds.
The Shanghai Composite tumbled 1.66%, the Hang Seng declined 0.67%, the Jakarta Composite plunged 4.21%, the KLSE Composite fell 0.55%, the Straits Times tanked 0.98% and the Seoul Composite declined 0.26%. The Taiwan Weighted was the only benchmark that bucked the trend, ending 0.40% higher. The Nikkei 225 was closed on account of a local holiday.
Back home, in a move that could further push up onion prices, traders in Nashik and adjoining areas today went on a two-day strike against income-tax raids and disrupted supply to contracting traders from other states who are being forced to sell the vegetable at "below the cost price". The retail price of onion, which is ruling at Rs55-Rs60/kg in metros, is expected to shoot up further in the next few days in the wake of a short supply due to the strike.
Buying by domestic institutional investors (DIIs) on Friday was offset by offloading by foreign institutional investors (FIIs). While DIIs pumped in Rs1,115.83 crore in the equities segment on the last day of the week, FIIs pulled out funds worth Rs1,040.74 crore.
US-based iGate said today that it has acquired nearly 63% stake in Patni Computer Systems (up 0.82%), India's sixth largest IT firm, for $1. 22 billion. iGate will buy 45.6% of the shares of the three founders of Patni-Narendra Patni, Gajendra Patni and Ashok Patni-along with the 17.4% stake of private equity firm General Atlantic, iGate CEO Phaneesh Murthy told reporters in Bangalore.
The transaction, which is expected to be completed in the first half of 2011, is valued at approximately $1.22 billion, including the mandatory 20% open offer to be made to the public shareholders of Patni, he added.
Active pharmaceutical ingredients (API) major Ind-Swift Laboratories (down 3.22%) has drawn up plans to pump in Rs500 crore in the next two to three years to ramp up its manufacturing capacity by 40% in two years. Part of the funding will come through internal accruals, the company's top management said.
IT services major for the communications segment, Subex (down 4.90%), has bagged a managed service-cum-license contract worth $12 million from a global telecom services provider, for its industry leading ROC Data integrity management solution. The managed services portion is for three years and is renewable at the end of that period, the company said in its filing with the exchanges.
New Delhi: Anil Ambani-led Reliance Power is believed to have signed the power purchase agreement with the state-owned NTPC for its upcoming 100MW solar power project at Jaisalmer in Rajasthan, reports PTI.
Reliance Power signed the power purchase agreement with NTPC Vidyut Vypar Nigam (NVVNL), a wholly-owned subsidiary of NTPC, for its 100MW solar thermal power project, sources in the know of development said.
The private sector power utility major won this project in tariff-based competitive bidding under the government's Jawaharlal Nehru National Solar Mission.
The project which is being set up in Jaisalmer is expected to be commissioned within the next 28 months i.e. by May 2013.
The project will be implemented by Rajasthan Sun Technique Energy Private Ltd (RSTEPL) a subsidiary of Reliance Power.
Reliance Power is currently generating 1,200MW of electricity from its coal-based power project at Shahjahanpur in Uttar Pradesh. The total capacity of the project is 2,400MW.
The Jawaharlal Nehru National Solar Mission is a major initiative of the Centre and state governments to promote ecologically sustainable growth while addressing India's energy security challenge.
New Delhi: If exports maintain an annual growth trend of 25%, Indian exports can cross $500 billion by 2014-15 from $220 billion expected in the current fiscal, reports PTI quoting the Federation of Indian Export Organisations (FIEO).
India's apex exporters body Federation of Indian Export Organisations president Ramu S Deora said emerging markets in Asia, Latin America, Africa and Middle-East countries would play an important role to achieve this ambitious target.
"Out of $500 billion exports, a major chunk will be contributed by Asia with a share of $230 billion with ASEAN alone importing more than $100 billion from India. Exports to Africa and Latin America will zoom," Mr Deora told reporters.
He said that central Asian nations like Kazakhstan and Uzbekistan and Commonwealth of Independent States (CIS) countries like Russia and Ukraine would also contribute in increasing Indian exports.
However, he said that the country's exports to traditional destinations-the US and Europe-would go down to 15% and 10%, respectively.
Currently, the US and EU accounts for about 35% of India's exports.
"Share of Europe and North America will be down to 15% and 10%, respectively as growth in advance economies will taper off," he added.
India's exports grew by 29.5% to $164.7 billion during April-December 2010-11. In December 2010, the shipments grew by 36.4% year-on-year.
In 2010-11, outbound shipments are expected to touch $220 billion.
Commerce secretary Rahul Khullar has said that demand for Indian goods are increasing in emerging markets.
"Over $500 billion exports by 2014-15 would require a compounded annual growth rate of about 25% which is ambitious but definitely achievable," he said.
The president had asked the government to act immediately on the bottlenecks like infrastructure and reducing transaction cost to achieve the milestone.
"Quantum jump in investment would be required in roads, ports, airports, containers, power and telecommunications, cold storage and refrigerated vans and warehouses, so as to augment the installed capacity," Mr Deora said.
He added that fluctuation in exchange rate hurts exporters and importers, so the government should consider full convertibility of Indian rupee to curb high volatility.