Market plunges amid a roller-coaster ride

Weak global stocks pulled the market sharply lower in what was a volatile trading session. Auto and metal stocks led the decline. The BSE 30-share Sensex provisionally lost 374.08 points or 3.68%, below the 10,000 mark. A strong rebound in mid-afternoon trade on Finance minister P Chidambaram’s comments that the Securities & Exchange Board of India (Sebi) has asked foreign institutional investors (FIIs) to reverse short positions on borrowed shares, proved short-lived. Chidambaram told a television channel that the reversal of FIIs' short postions on borrowed shares, is likely to take place over the next few days. Early this week, Sebi had disapproved overseas lending of shares by foreign funds after data showed that FIIs had lent equities worth Rs 348 crore to overseas entities for the purpose of short selling, during 10 October-14 October 2008. The data had later showed that their FIIs had lent equities worth Rs 1000 crore between 10 October-17 October 2008. European markets fell as bearish updates from engineering group ABB and auto group Daimler added to worries about the global economy that sent banks and commodity shares sharply lower. Key benchmark indices in France, UK and Germany fell by between 2% to 3.88%. Asia markets, which had tumbled earlier in the day on fears of a severe global downturn, cut losses on news the Federal Deposit Insurance Corp Chairman Sheila Bair is expected to suggest in a Senate Banking Committee on Thursday that the government give banks incentives to turn troubled loans into more affordable mortgages. Trading in US index futures suggested the Dow would rise 13 points at the opening bell. Easier overseas borrowing norms announced by the Reserve Bank of India (RBI) after trading hours yesterday, 22 October 2008, had failed to stem a steep slide on the domestic bourses at the opening bell caused by setback in Asian stocks. As per the provisional figures on BSE, the BSE 30-share Sensex was down 374.08 points or 3.68% to 9.795.82. The index rose 90.65 points at the day's high of 10,260.55 in mid-afternoon trade soon after the FM's comments on short selling. The Sensex fell 488.62 points at day’s low of 9,681.28 in early trade, its lowest level since 15 June 2006. The S&P CNX Nifty was down 114.15 points or 3.72% to 2,951 as per the provisional figures. Nifty hit a low of 2,918.10 in early trade its lowest level since 24 July 2006. BSE clocked a turnover of Rs 3747 crore today as compared to a turnover of Rs 3,095.17 crore on 22 October 2008. The BSE Mid-Cap index was down 3.16% at 3,380.26 and The BSE Small-Cap index was down 3.33% at 3,974.71. Both the indices outperformed the Sensex. The market breadth was weak. On BSE, 641 shares advanced as compared to 1,885 that declined. 68 shares remained unchanged. India’s largest private sector company by market capitalization and oil refiner Reliance Industries fell 6.88% to Rs 1,225, ahead of Q2 September 2008 results today, 23 October 2008. Ranbaxy Laboratories (down 9.97% to Rs 23.45), HDFC (down 7.88% to Rs 1754.90) and Bharti Airtel (down 6.95% to Rs 621) were the other major losers from the Sensex pack. Grasim Industries (up 4.31% to Rs 1,210.10) Bharat Heavy Electricals (up 2.71% to Rs 1,170), and ONGC (up 2.42% to Rs 779.70) were the gainers from the Sensex pack. Metal stocks extended recent losses on slump in metal prices on the London Metal Exchange. The BSE Metal index was down 10.98% and was the major loser from the sectoral indices on BSE. Hindustan Zinc, National Aluminum Company, Steel Authority of India fell by between 9.99% to 15.3%. Sterlite Industries fell 8.15% desipte 18.51% rise in net profit to Rs 1280 crore on 0.3% rise in net sales to Rs 6590 crore in Q2 September 2008 over Q2 September 2007. Concerns that the global economy will slide into recession rattled commodities markets on Wednesday, 22 October 2008. India’s largest steel maker by sales Tata Steel fell 10.66% tumbling for the second day in a row, after Moody's Investors Service yesterday lowered outlook on corporate family rating to negative from stable due to weak operating enviourment at its UK unit. The stock had plunged 12.04% yesterday, 22 October 2008. Auto stocks tumbled across-the-board on prospects of dismal Q2 September 2008 results from auto majors, as higher interest rates hit demand. Mahindra & Mahindra, Maruti Suzuki India, Tata Motors and Hero Honda Motor fell by between 4.94% to 14.57%. Weak rupee had helped IT stocks recover from initial fall caused by overnight slide in American depository receipts (ADRs) and on lower-than-expected results of Tata Consultancy Services, India's largest IT exporter by sales. TCS led the rebound, gaining 0.2% to Rs 547.45, recovering from the day's low of Rs 497. TCS' net profit fell 2.57% to Rs 1173.04 on a 9.36% rise in sales to Rs 5699.96 in Q2 September 2008 over Q1 June 2008. India's fourth largest IT exporter by sales Wipro fell 2.55% to Rs 272.25. Wipro ADR fell 7.75% overnight after the results. India's third largest IT exporter by sales Satyam Computer Services fell 2.73% to Rs 299.75. Its ADR skidded 4.88% overnight. The company raised its earnings guidance in rupee terms at the time of announcing Q2 September 2008 results on Friday, 17 October 2008. India's second largest IT exporter by sales Infosys down 1.35% to Rs 1,282.75. Infosys ADR lost 4.52% overnight. Infosys, Satyam Computer Services, Tata Consultancy Service and Wipro have a weightage of 55.06%, 16.01%, 10.45% and 7.09%, respectively, in the BSE IT index. The Indian rupee dropped to a record low beyond 49.50 per dollar in opening deals on Thursday as sharp falls in Asian shares heightened fears of more capital outflows from the local stock market. The partially convertible rupee was at 49.68/69 per dollar, 0.80% weaker than Wednesday's close of 49.28/29. A weak rupee results in higher revenues for IT companies as they earn most of their revenues in dollar terms. Key banking pivotals dropped in volatile trade on sharp fall in ICICI Bank ADR overnight. India’s largest commercial bank State Bank of India fell 4.84%. India’s largest private sector by bank by net profit ICICI Bank fell 7.79% to Rs 365.55. Its ADR fell sharply by 15.2% overnight. India’s second largest private sector bank by net profit HDFC Bank rose 2.23%. ICICI Bank, State Bank of India and HDFC Bank have a weightage of 24.21%, 22.44% and 20.55%, respectively, in the Bankex. Inflation based on the wholesale price index (WPI) rose 11.07% in the year through 11 October 2008, much lower than previous week’s 11.44% rise, date released by the government during trading hours, showed. The Reserve Bank of India cut repo rate by 100 basis points to 8% on 20 October 2008. The repo rate is the rate at which the RBI provides funds to banks against the collateral of government bonds for a day to three days. India’s largest cement maker by sales ACC fell 2.02% as net profit remained flat at Rs 283.43 crore on 7.9% rise in total income to Rs 1870.65 crore in Q3 September 2008 over Q3 September 2007. According to the new rules notified by the Reserve Bank of India, external commercial borrowings up to $500 million per borrower per financial year would be permitted for rupee expenditure or foreign currency expenditure for permissible end uses under the automatic route. Indian companies can also pay higher interest rate of up to 500 basis points over the six-month libor on external commercial borrowing. Crude oil for December 2008 delivery rose as much as $1.06, or 1.6%, to $67.81 a barrel on the New York Mercantile Exchange today.