Thursday, October 16, 2008

Sensex at 2-year low, hovers near 10K

A rout in global markets and the India stock market regulator's decision to tighten margins in derivatives sent Indian stocks tumbling to their lowest level in more than two years. The BSE Sensex was down 754.08 points or 6.98%. IT stocks slumped on fall in American depository receipts overnight. Reliance was at 52-week low, tanking more than 11%. Latest measures by the central bank to boost liqudity in the banking system failed to avert the sharp slide on the bourses.

Hindalco Industries, Jaiprakash associates and Tata Motors fell more than 10% each. Tata Consultancy Services fell more than 11%. PSU OMC stocks rose on sharp fall in crude oil prices. The market breadth was weak as selling was witnessed across the board.

The market regulator Securities & Exchange Board of India (Sebi) has tightened margins the derivatives segment in a bid to ward of defaults and curb volatility. The exposure margin for gross open positions in single stock futures and gross open positions in stock options will now be higher of 10% or 1.5 times the standard deviation in the notional value of the positions.

A warning of tough times ahead by Federal Reserve Chairman Ben Bernanke sent global markets sharply lower, as investors brace for looming recession. Shrugging-off recent optimism about massive government efforts to prop up the global financial system Wall Street , yesterday, 15 October 2008, suffered its worst one-day percentage decline since the stock market crash of 1987.

At 10:21 IST, the BSE 30-share Sensex was down 754.08 points or 6.98% to 10,055.04. The index declined 781.32 points at the day's low of 10,027.20 hit in mid-morning trade lowest since 24 July 2006. The Sensex fell 391.11 points at day’s high of 11,418.01, in early trade.

The S&P CNX Nifty was down 233.70 points or 7% to 3,104.70. It hit a low of 3,099.90, its lowest level since 26 July 2006.

The BSE Mid-Cap index was down 4.77% at 3,543.11 and The BSE Small-Cap index was down 3.94% at 4,220.30. Both the indices outperformed the Sensex.

The market breadth was very weak. On BSE, 238 shares advanced as compared to 1,921 that declined. 47 shares remained unchanged.

India’s largest private sector company by market capitalization and oil refiner Reliance Industries slumped 11.9% to Rs 1,338.50, tumbling for the second day in a row on fears the company may report fall in its gross refining margins in Q2 September 2008 over Q2 September 2007 largely due to sluggish demand for petroleum products in key Western markets. The stock hit a 52-week low of Rs 1,332 today. The stock had slumped 6.2% yesterday, 15 October 2008

All the stocks from the 30 stock Sensex pack were in the red. Among the major losers were Hindalco Industries (down 10.58% to Rs 71), Sterlite Industries (down 8.95% to Rs 266), Jaiprakash associates (down 10.39% to Rs 65.1535), Tata Motors (down 10% to Rs 253.85).

PSU OMCs rose between 1.07% to 3.68% after crude oil fell for a third day, taking its decline from the July 2008 record to more than 50%. State-run oil marketing firms suffer revenue loss on domestic sale of petrol, diesel, LPG and kerosene at a controlled price.

Crude oil for November delivery fell as much as $1.58, or 2.1%, to $72.96 a barrel on the New York Mercantile Exchange on 15 October 2008, the lowest since 30 August, 2007 .

IT stocks fell on sharp plunge in their American depository receipts (ADR) in US on 15 October 2008. BSE IT index slumped 7.96% and was the major loser from the sectoral indices on BSE.

India’s third largest IT exporter by sales Satyam Computer Services down fell 5.75%. Satyam’s ADR was down 11.54%. India’s largest IT exporter by sales Infosys fell 8.28%. Infosys ADR was down 10.98%. Wipro fell 9.17% on fall in its ADR by more than 5%

India’s largest IT exporter by sales Tata Consultancy Services fell 11.45%.

India’s largest private sector bank by net profit ICICI Bank fell 5.7%. ICICI Bank ADR slumped 14.19% in US on 15 October 2008.

India’s largest private sector bank by net profit HDFC Bank dipped 5.77%. HDFC Bank ADR fell 13.21% in US on 15 October 2008. The bank will announce the Q2 September 2008 result today, 16 October 2008.

Container Corporation of India declined 3.80% on BSE, despite net profit surging 28.48% to Rs 223.68 crore in Q2 September 2008 over Q2 September 2007.

Biocon fell 7.8% after the company’s net profit fell 23.81% to Rs 33.53 crore on 11.16% rise in total income to Rs 268.27 crore in Q2 September 2008 over Q2 September 2007.

Reserve Bank of India (RBI) on Wednesday, 15 October 2008, cut the cash reserve ratio (CRR) by a 100 basis points to 6.5% The CRR cut would release Rs 40000 crore into the banking system. The CRR cut takes effect from the current two-weekly reporting period for banks, which began on 11 October 2008.

With a view to ease the liquidity in the banking system, the central bank has also allowed banks to borrow an additional 0.5% of their net demand and time liabilities using their SLR holdings as collateral under the LAF to meet liquidity requirements of mutual funds. The RBI will also release the first installment of Rs 25,000 crore under the agricultural debt waiver and debt relief scheme to banks immediately, at the government’s behest.

Asian markets declined sharply today, 16 October 2008 on global recession concerns. China's Shanghai Composite, Hong Kong's Hang Seng, Japan's Nikkei, Singapore's Straits Times, South Korea's Seoul Composite and Taiwan's Taiwan Weighted fell between 2.8% to 11.1%

The partially convertible rupee was at 49.00/15 per dollar compared with Wednesday's close of 48.525/540.

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