Sensex sheds 344 points, closes at 16,855

Weak Asian cues, sustained buying pressure impact Indian bourses

Indian markets crumbled on the back of sell-offs across all sectors after a setback from Asian markets. The Sensex declined 344 points from the previous day’s close, ending the day at 16,855 while the Nifty closed at 5,006; down 102 points. As per reports, at the end of Wednesday, 25 November 2009, trading rollover of Nifty positions was about 64% while the market wide rollover stood at 66%.

During the day, Balaji Amines was up 4% after the company announced commercial production of a niche product, Polyvinylpyrrolidone (PVP K-30), under the brand name ‘Bolidone’. The product PYP K-30 is an ingredient binder for granules & tablets, used in many pharmaceutical formulations.

Gujarat Fluorochemicals has planned a total investment of about Rs500 crore to increase the installed capacity of its plants at Dahej in Gujarat to meet increased product demand for domestic and international markets and for captive power consumption. The stock was down 1%.

Tata Steel slumped 3% as the company revealed its consolidated financials for the September 2009 quarter. The company posted net sales of Rs25,270 crore compared to Rs44,050 crore in the September 2008 quarter. It posted an operating profit of Rs371.80 crore compared to Rs8,226.80 crore in the September 2008 quarter.

As per data released by the government, the food price index rose 15.58% and primary article index rose 11.04% in 12 months to 14 November 2009. The fuel price index declined 1.51%.

Meanwhile, in a bid to converge Indian accounting norms with International Financial Reporting Standards (IFRS) by 2011, the Indian government said all concerns of the industry would be addressed before convergence takes place.

However, the industry fears that there are ambiguous issues which demand more clarity. The Institute of Chartered Accountants of India has still not legally notified the syllabus containing IFRS and the tax implications of the convergence are still not known.

Meanwhile, the government is likely to postpone a plan to recapitalise State-owned banks to the next financial year, as some key approvals to the process are yet to come about. The World Bank had sanctioned a loan of $2 billion to the Indian government to recapitalise 15-16 State-owned banks.

Another set of reports indicated that the government plans to move a Bill early next year to amend a banking law for allowing foreign investors in private banks to have voting rights in proportion to their shareholdings. Currently, voting rights of foreign investors are capped at 10%.

During the day, Asia’s key benchmark indices in China, Hong Kong, Singapore, Japan, South Korea and Taiwan were down by between 0.22%- 3.62%. The markets slipped on concerns that the Chinese government may lift capital adequacy ratios or reserve requirements for larger State lenders next year after a lending boom.

As per reports, China needs far-reaching structural reforms to root out industrial overcapacity, which is doing untold damage to domestic growth and the global economy. According to the study by the European Union Chamber of Commerce in China, excess capacity is a long-standing scourge in China, but its impact has become ever more destructive as a result of the global financial meltdown.

On Wednesday, 25 November 2009, the Dow Jones Industrial Average gained 31 points while the S&P 500 and Nasdaq Composite rose five and seven points respectively as investors welcomed a bigger-than-expected drop in weekly jobless claims.

As per US economic data, the new claims for unemployment posted the biggest drop last week, falling to 466,000—a 14-month low—whereas new home sales were up 6.2% in October 2009 to an annualised rate of 430,000, at a 1-year high. Personal income for October 2009 increased 0.2% and personal spending for October 2009 increased 0.7%.

On Thursday, 26 November 2009, US markets were closed for the Thanksgiving holiday.
— Swapnil Suvarna [email protected]

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  • Stocks climb to five-week high

    Sensex gains 68 points to close at 17,199 in volatile trade

    The stock market climbed to a five-week high in volatile trade on Wednesday, with the BSE Sensex gaining 68 points to close at 17,199 while the Nifty closed 18 points up at 5,108. Market volatility is expected to continue over the next two days as traders roll over positions in the derivatives segment ahead of expiry of the November 2009 contracts on Thursday. At the end of Tuesday’s trading, rollover in Nifty futures was about 54% while rollover in Mini Nifty futures was about 33%. The market-wide rollover was about 48%.
    Reliance Industries (RIL) rose 1% on reports that the company has reopened 900 gas stations, which were shut down when state-run oil marketing firms were selling heavily subsidised fuel.

    India’s largest small-car marker Maruti Suzuki India rose 1% on reports that the company will spend Rs2,000 crore to expand production capacity at its Manesar factory in Haryana.

    However, India’s largest commercial vehicle maker Tata Motors fell 1% on reports that the company is looking at buying private equity firm Actis’s stake in truck and bus-maker Swaraj Mazda.
    Mahindra Satyam slumped 11% on reports that the Central Bureau of Investigation found evidence of an additional Rs4,739 crore corporate fraud in the company, committed by its founder R Ramalinga Raju and his associates.

    Bajaj Hindusthan was up 5% on reports that a foreign fund hiked its stake in the firm.
    Unitech fell 2% on equity-dilution worries following reports that the company has sought approval from the department of industrial policy and planning and the Reserve Bank of India to raise $700 million through foreign currency convertible bonds.

    J Kumar Infraprojects’ order book is worth Rs1,475 crore after receiving pilling works orders from Larsen & Toubro and others worth Rs8.75 crore. The stock remained flat.

    Welspun Gujarat Stahl Rohren was up 3% on reports that the company has successfully mobilised $250 million.

    During the day, Asia’s key benchmark indices in Hong Kong, China, Japan, Singapore, South Korea and Taiwan rose by between 0.34%-2.07% on expectations of stronger economic growth.

    As per data released by the Japanese finance ministry, Japan’s exports fell 23.2% in October, compared with a 30.6% decline in September.

    On Tuesday, in the US markets, the Dow Jones Industrial Average was down 17 points while the S&P 500 and the Nasdaq Composite slipped one point and seven points, respectively.

    As per reports, US Federal Reserve officials are confident that the US economic recovery will be durable, but they do not see employment or inflation picking up soon. The US Fed projected the economy will shrink 0.1% to 0.4% this year and grow by 2.5% to 3.3% in 2010. US GDP growth in the September 2009 quarter was revised to 2.8%, lower than the initial reading of 3.5%. The conference board’s gauge of consumer confidence rose to 49.5 in November 2009 from 48.7 in October 2009 and home prices improved for a fifth straight month in September 2009.

    According to the Office for National Statistics in London, the UK’s gross domestic product fell 0.3% less than previously estimated in the third quarter as consumer spending stopped falling and the service industries’ slump eased.
    — Swapnil Suvarna [email protected]

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