Market Closing Session - 06th Nov

The market drfited lower, coming sharply off day's high as investors booked profit after the early rise. Volatility was high. Banking and telecom stocks were worst hit. Power stocks ended strong. Some of the Reliance group stocks tumbled.

Asian indices ended on a mixed note after Monday (5 November 2007)'s fall caused by worries about the credit crunch in the US. European markets were trading firm.

The 30-share BSE Sensex settled 190.11 points or 0.97% lower at 19,400.67. Sensex hit a high of 19919.34 in mid-morning trade. At day's high of 19919.34, Sensex had risen 328.56 points. It hit a low of 19,337.85 in late trade. At day's low, Sensex lost 252.93 points.

The broader based S&P CNX Nifty was down 61 points to 5786.50.

The market breadth was negative with decliners outpacing advancers. On BSE, 1606 stocks declined, while 1108 stocks advanced and 70 shares were unchanged. From the Sensex pack, 18 out of 30 stocks were in red.

BSE clocked a turnover of Rs 9840 crore, compared to Monday (5 November 2007)'s Rs 9,049.87 crore.

The BSE Mid-Cap index was down 60.51 points, or, 0.75% at 8,015.30, while the BSE Small-Cap index fell 43.99 points, or, 0.45% at 9,803.03. Both these indices outperformed the Sensex

Telecom stocks dropped. Reliance Communications lost 4.35% to Rs 745.25 and Bharti Airtel shed 2.52% to Rs 918.45.

, Larsen & Toubro (down 3.77% to 4125.70), and Satyam Computer (down 2.34% to 453.10) were among other top Sensex losers.

Hindalco Industries (up 4.19% to Rs 191.30), Dr Reddy's Laboratories (up 2.59% to Rs 613.35), Bajaj Auto (up 2.49% to Rs 2454.65), Bharat Heavy Electricals (up 2.29% to Rs 2724.25) and ACC (up 1.34% to Rs 1021.75) were the major gainers from Sensex.

The BSE Bankex fell 221.44 points, or, 2.01% to 10,786.51. The banking index underperformed the Sensex in today’s trade.

ICICI Bank dropped 2.36% to Rs 1240.80. ICICI Bank said during trading hours today, it will cut interest rates on deposts by 0.25% to 0.50% points 12 November 2007.

State bank of India fell 1.41% to Rs 2208.75, HDFC Bank fell 0.21% to Rs 1705.95, Bank of Baroda skid 6.12% to Rs 359.65 and Bank of India slipped 3.84% to Rs 367.90.

The BSE Capital Goods index fell 354.99 points, or, 1.77% at 19,697.29. The BSE Metal index lost 195.63 points, or, 1.12% at 17,206.06. The BSE Oil & Gas index fell 116.33 points, or, 1.01% at 11,389.21. All these indices underperformed the Sensex

Oil and Natural Gas Corp (ONGC) ended up 0.13% to Rs 1300.75 on reports the state-run firm was in talks to buy a 30% stake in Sudan's Block 8 from Malaysia's Petronas, as well as a second exploration block.

Bajaj Auto, India's second biggest motorbike maker by sales, rose 2.49% to Rs 2454.65 on reports that it subsidiary has bought 14.5% in Austrian sports motorbike maker KTM Power Sports AG for more than Rs 300 crore.

Real estate firm Unitech settled lower 0.26% to Rs 385.15 on reports that the promoters of the company are said to be close to acquiring up to 40% stake in Orissa Sponge Iron and Steel.

Biotech firm Biocon edged higher by 1.93% to Rs 573.75 on reports that the company is in the final stages of negotiations with a drug marketing and distribution firm in the US.

Reliance Energy was up 1.32% to Rs 1844.95. It was the only gainer from the Reliance pack. Reliance Petroleum lost 17.64% to Rs 220.35, Reliance Natural Recources shed 9.02% to Rs 162.45, Reliance Industrial Infrastructure fell 5% to Rs 2388.20, Relaince Communications dropped 4.35% to Rs 745.40 and Reliance Capital slipped 3.62% to Rs 1833.55.

Reliance Industries fell 0.31% to Rs 2655.50. Morgan Stanley raised the price target on the stock by 25% to 3,150 and raised its earnings forecast by 4% for the year ending 31 March 2008. The key reasons for the upgrade were news flows on exploration and production business, including pricing contracts being signed, retail business being executed ahead of expectations and higher global refining and petrochemical margins.

New additions in MSCI index announced by MSCI as part of a semi-annual rejig were mixed. GMR Infrastructure ended up 3.01% to Rs 196.50), DLF rose 1.40% to Rs 927.90, NTPC gained 1.16% to Rs 239.55 and Sterlite Industries rose 0.07% to Rs 991.65.

United Spirits (down 3.26% to Rs 1816.80), Cairn India (down 1.85% to Rs 217.95), HCL Technologies (down 0.44 to Rs 305.85) and Reliance Natural Resources (down 9.02% to Rs 16.45), edged lower.

The change is effective 30 November 2007. Stocks earmarked to be added to the MSCI indexes tend to rise, as funds tracking these indexes will have to buy them.

Reliance Petroleum clocked highest volumes of 7.62 crore shares on BSE, followed by Reliance Natural Resources (7.22 crore shares), Tata Teleservices (1.96 crore shares), Power Grid Corporation of India (1.81 crore shares) and Ispat Industries (1.73 crore shares), in that order.

Reliance Petroleum clocked highest turnover of Rs 1845.38 crore on BSE, followed by Reliance Natural Resources (Rs 1315.38 crore), Reliance Energy (Rs 372.57 crore), Power Grid Corporation of India (Rs 287.86 crore) and Housing Development Finance Corporation of India (Rs 211.76 crore), in that order.

Diamond Power Infrastructure rose 10% to Rs 374 after the company said it will raise Rs 228 crore from GE Capital and Clearwater Capital Partners, to fund expansion.

Subhash Projects & Marketing ended lower 1.28% to Rs 307.55 despite securing an order worth Rs 52.06 crore for a water supply project in Rajasthan.

Fiber optics cables maker Sterlite Optical Technologies rose 1.43% to Rs 304.55 after bagging a Rs 143 crore order from BSNL for supply of copper telecom cables.

Great Eastern Shipping Company rose 1.70% to Rs 478.75 after the company said its subsidiary signed a contract for 2 multi purpose platform supply and support vessels.

Mahindra & Mahindra, India's largest tractor and utility vehicle maker by revenue, moved down 0.26% to Rs 740.95 on reports that it has put in the highest bid of 105 million pounds to take over Italian gear maker Metalcastello.

Brokerage house Motilal Oswal Financial Services fell 1% to Rs 1193 after credit rating agency CRISIL assigned "P1+" rating to its short term debt programme to raise Rs 50 crore.

Infrastructure development firm Pratibha Industries moved up 2.09% to Rs 256.85 on securing an order for designing and constructing storm water pumping station at Irla, Andheri West, Mumbai from Municipal Corporation of Greater Mumbai.

Asian markets were mixed today. Hang Seng was up 1.71% at 29,438.13, Nikkei was down 0.12% at 16,249.63, Taiwan Weighted was down 0.17% at 9,292.80, Straits Times was up 0.35% at 3,683.10 and Seoul Composite was up 1.91% at 2,054.24.

The European markets held firm. France’s CAC 40 was up 0.21% at 5,696.72, Germany’s DAX was up 0.43% at 7,841.04 and UK’s FTSE 100 rose 0.30% at 6,481.

US stocks crumbled on Monday, 5 November 2007, after Citigroup warned of billions of dollars in loan losses, reigniting fears about the health of financial firms and the broader US economy. Dow Jones Industrial Average lost 51.70 points or 0.38% to 13,543.40. The tech-laden Nasdaq Composite index lost 15.20 points or 0.54% to 2,795.18.

FIIs have turned sellers in equities recently after a slowdown in their inflow was witnessed at the fag end of October 2007 and at the onset of this month. FIIs sold shares worth a net Rs Rs 656.90 crore on Monday, 5 November 2007, the day when Sensex had lost 385.45 points or 1.93% to 19,590.78 on renewed fears over the impact of US credit crisis after US financial giant Citigroup said it may suffer up to $11 billion in write-downs for subprime losses. FIIs had sold shares worth a net Rs 761.40 crore on Friday, 2 November 2007.

FII sales/slowdown in inflow comes when Securities & Exchange Board of India (Sebi) put restrictions on issue of participatory notes (PNs) and it also directed unwinding of some exiting PNs within 18 months. The Sebi restrictions on use of PNs came into force from 25 October 2007.

Massive FII inflow had send the market surging in the last two months. FII inflow was a robust in the last two months - at Rs 16132.60 crore in September 2007 and Rs 20590.90 crore in October 2007. FII inflow had surged as huge liquidity infused by a steep 50 basis points cut in Fed funds rates in mid-September 2007 found its way into emerging markets.

The Q2 September 2007 results of India Inc.were decent to strong which means that strong fundamentals would support Indian equities at declines. At the macro level, the India’s economy is expected to post decent to strong growth for a long period of time, mainly due to favourable demographics. Mutual funds are said to be sitting on a strong cash pile of about Rs 14000 crore and they may step up buying if and when there is a steep correction on the bourses.

At current 19,400.67, Sensex trades at a PE multiple of 18.47 to 19.40 based on projected FY 2009 EPS of Rs 1000-to-Rs 1050 for 30 Sensex companies.

Source - Capital markets