Nifty hits its lowest level in calendar 2008 before recovering

The key benchmark indices slumped today due to a sharp surge in global crude oil price and setback in US stocks on Friday, 6 June 2008. BSE Sensex fell below 15,000 mark for the first time since 19 March 2008, in intra-day trade. The S&P CNX Nifty hit a fresh 2008 low.

Except the BSE HealthCare index, all the other sectoral indices on BSE were in red. The market breadth was extremely weak. IT, realty, banking and oil & gas stocks were worst hit in today's market fall.

Oil prices surged by their biggest one-day gain ever on Friday, 6 June 2008, rocketing over $10 to a new record high above $139 a barrel, taking this year's gains to 44%. Oil prices edged lower to $137.7 today, 9 June 2008.

The 30-share BSE Sensex lost 506.08 points or 3.25% at 15,066.10. At the day’s low of 14846.18 hit during mid-morning trade, the Sensex lost 726 points.

The broader based S&P CNX Nifty was down 126.85 points or 2.74% at 4,500.95. It hit a low of 4411.60 today in mid-morning trade, falling below 2008 low of 4448.50 hit on 22 January 2008.

From a all-time high of 21,206.77 hit on 10 January 2008 the Sensex has lost 6240.67 points or 28.95% to 15066.10. The Sensex has lost 5220.89 points or 25.73% to 15066.10.

BSE clocked a turnover of Rs 5039 crore today compared to a turnover of Rs 5245.26 crore on Friday 6 June 2008.

Nifty June 2008 futures were at 4486.90, at a discount of 14.05 points as compared to spot closing of 4500.95. NSE's futures & options (F&O) segment turnover was Rs 58,333.52 crore, which was higher than Rs 42,888.38 crore on Friday, 6 June 2008.

The foreign institutional investors (FII)s sold shares worth Rs 1,344.67 crore today,9 June 2007 however domestic funds bought shares worth Rs 1,030.26 crore.

The market breadth was extremely weak on BSE with 474 shares advancing as compared to 2170 that declined. 49 remained unchanged. From the 30-share Sensex pack, 27 fell.

The BSE Mid Cap index declined 2.83% to 6,170.33 and BSE Small-Cap index fell 3.63% to 7,416.54.

All the sectoral indices on BSE ended with losses except the BSE Health Care index. BSE Health Care index (up 0.53% at 4,318.75), BSE Metal index (down 0.81% to 15,389.61), BSE Consumer Durables index (down 1.69% to 3,934.04), BSE FMCG index (down 2.06% to 2,313.24), The BSE Auto (down 2.45% at 4,123.64), BSE PSU index (down 2.95% to 6,469.82), BSE Power (down 2.99% to 2,619.28), BSE Bankex (down 3.21% at 7,033.32), BSE TecK index (down 3.12% to 3,388.89), outperformed the Sensex.

The BSE Realty index (down 7.38% at 5,752.22), BSE IT index (down 4.21% to 4,404.98), BSE Capital Goods (down 3.3% at 11,635.63), BSE FMCG index (down 2.65% to 2,361.88), BSE Oil & Gas index (down 3.29% to 9,676.55) underperformed the Sensex.

Among pharma stocks, Lupin (up 8.05% to Rs 701.70), Ranbaxy Laboratories (up 3.87% to Rs 526.40), Sun Pharmaceuticals Industries (up 2.72% to Rs 1,457.35) and Piramal HealthCare (up 2.89% to Rs 375.55) edged higher. Cipla (down 0.36% to Rs 206.65) and Dr. Reddy’s Laboratories (down 0.07% to Rs 692.75) edged lower.

BSE Realty index was down 7.38% to 5,752.22. It was the top loser from the sectoral indices on BSE. Unitech (down 9.3% to Rs 184.80), Indiabulls Real Estate (down 6.06% to Rs 398.40) and DLF (down 7.39% to Rs 481.55) edged lower from the realty pack.

IT stocks declined. Wipro (down 4.85% to Rs 480.50), Infosys (down 4.46% to Rs 1,904.05), Tata Consultancy Services (down 4.56% to Rs 915.65) and Satyam Computer Services (down 3.42% to Rs 491.45) edged lower.

Banking stocks declined. HDFC Bank (down 4.34% to Rs 1,183.70), State Bank of India (down 3.17% to Rs 1292.80) and ICICI Bank (down 2.69%t o Rs 75.10) edged lower.

Oil & gas stocks fell after global crude oil prices hit the roof. PSU oil marketing companies which had found little solace after government had hiked domestic retail fuel prices were battered today. HPCL (down 9.21% to Rs 193.30), BPCL (down 7.09% to Rs 278.40), and Indian Oil Corporation (down 3.9% to Rs 363.25) edged lower. Reliance Industries (down 3.41% to Rs 2163.10) and ONGC (down 7.02% to Rs 872.60) also edged lower.

India’s second largest telecom services provider by sales Reliance Communication rose 1.34% to Rs 554.10. The stock recovered from session's low of Rs 507.90. Reliance Communication (RCom) and the South African telco MTN will reportedly decide the share swap ratio at which Anil Ambani will transfer his stake in RCom to get stake in MTN. Both the companies have reportedly agreed for the deal, which will result in RCom promoter viz. the Anil Dhirubhai Group (ADAG) emerging as the single-largest shareholder in MTN and the foreign company becoming the holding firm of RCom.

Jaiprakash Associates (down 8.65% to Rs 183.65), HDFC (down 5.99% to Rs 2206.65), Reliance Infrastructure (down 5.65% to Rs 1,038.85), Tata Motors (down 4.25% to Rs 517.10), Ambuja Cements (down 4.1% to Rs 81.95), Bharat Heavy Electricals (down 3.29% to Rs 1,374.65), edged lower from the Sensex pack.

IFCI clocked the highest volume of 1.92 crore shares on BSE. Reliance Petroleum (1.51 crore shares), Reliance Natural Resources (1.14 crore shares), Ispat Industries (1.05 crore shares) and Cairn India (74.54 lakh shares) were the other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 372.06 crore on BSE. Reliance Petroleum (Rs 252.55 crore), Cairn India (Rs 222.75 crore), Reliance Communications (Rs 214.36 crore) and Reliance Capital (Rs 211.24 crore) were the other turnover toppers in that order.

US stocks plunged on Friday, 6 June 2008, marking the Dow's worst day in 15 months, after the US government said the May 2008 unemployment rate jumped the most in 22 years and oil prices shot to another record, renewing fears that the US economy faces 1970s-style stagflation. The Dow Jones industrial average tanked 394.64 points, or 3.13% to end at 12,209.81, its biggest drop since February 2007. The S&P 500 slid 43.37 points, or 3.09%, to finish the day at 1,360.68. The Nasdaq Composite Index lost 75.38 points, or 2.96 percent, to close at 2,474.56.

European markets were trading mixed today. Key benchmark indices in France and Germany were down by between 0.08% to 0.09%. The UK”S FTSE 100 however rose by 0.18%.

In Asia, key benchmark indices in Japan, South Korea, Singapore and Taiwan were down by between 1.27% to 2.13% today. Markets in China, Hong Kong and the Philippines were closed for public holidays.

Surging global crude oil prices, a hike in domestic fuel prices and rising inflation have spooked the domestic bourses in the past few days. Foreign institutional investors (FIIs) pressed heavy sales in the backdrop of a weakening rupee against the dollar, accentuating fall in share prices.

Brokerage earnings downgrades of Indian firms/stock prices amid rising input and interest costs for India Inc, high inflation and drying up of global liquidity due to credit crisis remain major concern for the Indian stock market. If inflation remains high, the Reserve Bank of India (RBI) would be forced to hike repo rate – a move that could choke overall growth of the economy. The Indian industry and consumer have already been reeling under high interest rates over the past few months. A further hike in rates would raise interest costs of corporate India and hit bottomline.

After 10 days of debate, the Union government on Wednesday, 4 June 2008 agreed to raise retail petrol and diesel prices by about 10%, more than expected, to help curb losses at its state-owned refiners. A sharp fall in the rupee against the dollar in the past few days has heightened concerns about inflation. This is because the fall in rupee will raise cost of imports which in turn will result in further rise in inflation.

According to rating agency CRISIL, headline inflation is expected to increase by 95 basis points on account of direct and indirect effects of the fuel price hike. The indirect impact which will be felt over the course of the next few months, it states in a note.

A well distributed monsoon will bolster food production, helping douse inflation. Agricultural output in India depends on good rains. The Indian Meteorological Department (IMD)’s second monsoon forecast for the crucial annual south-west monsoon (June-September) due this months which may indicate spatial rainfall distribution in the main sowing month of July 2008, will be keenly watched by market men. The IMD has forecast the 2008 monsoon rains would be near-normal and 99% of the average between 1941 and 1990.

A section of the market is of the view that the central bank may only use the reserve requirement route to tame inflation, fearing any hike in rates would further hurt growth already seen moderating to a still strong 8%-8.5% this fiscal year from 9% in 2007/08. To rein in inflation, in its monetary policy review for 2008-09 on 29 April 2008, the RBI raised cash reserve ratio (CRR) by 25 basis points to 8.25% to suck out excess liquidity in the banking system. RBI often says pass-through of high global oil prices is incomplete in India, complicating policy making.

Another near term trigger for the market will be corporate advance tax payments for the first installment which falls due on 15 June 2008. The income tax law requires a company to 15% the estimated tax liability for the year as advance tax in the first installment. The advance tax payment by the corporate sector will give a cue on Q1 June 2008 results.

Market may will also be keeping a watch on the industrial production numbers for April 2008, which the government will unveil on Thursday, 12 June 2008, which will give a cue on the extent of slowdown in the Indian economy caused by high interest rates.