Market plunges ahead of weekly inflation data

Bears were in full command as key benchmark indices remained weak throughout the trading session today, 21 August 2008. Rate sensitive realty and banking stocks were clobbered ahead of the weekly inflation data to be released by the government after the trading hours today, 21 August 2008. Weak Asian markets also weighed on the sentiment. Chinese market declined after yesterday’s steep rise.

State Bank of India fell more than 7%. HDFC Bank, NTPC and DLF fell more than 5.5%. Reliance Infrastructure and ICICI Bank fell more than 5% each.

The BSE 30-share Sensex provisionally ended down 476.05 points or 3.24% to 14,202.18. At the day’s low of 14,201.18, the Sensex lost 477.05 points in late trade. At day’s high of 14,646.98, the index lost 31.25 points in early trade.

The S&P CNX Nifty was down 143.05 points or 3.24% to 4,272.70 as per the provisional figures.

BSE clocked a turnover of Rs 4,081 crore today as compared to a turnover of Rs 4,254.87 crore on 20 August 2008.

The BSE Mid-Cap index was down 2.15% to 5,701.15 and the BSE Small-Cap index was down 1.96% at 6,927.62.

The market breadth was weak on BSE with 753 shares advancing as compared to 1,896 that declined. 64 shares remained unchanged.

India’s largest private sector firm by market capitalisation and oil refiner Reliance Industries fell 1.68% to Rs 2,206.55.

Realty stocks slumped in the late trade. BSE Realty index was the biggest loser among the sectoral indices on BSE, falling 5.49% to 4,922.08. Indiabulls Real Estate (down 7.87% to Rs 291), DLF (down 5.74% to Rs 480.65) and Unitech (down 6.18% to Rs 158.70) edged lower.

Banking stocks were clobbered ahead of the inflation data. State Bank of India (down 7.26% to Rs 1,340), ICICI Bank (down 5.44% to Rs 641.40), HDFC Bank (down 5.49% to Rs 1,170) edged lower.

Inflation as measured by wholesale price index rose 12.44% in the week to 2 August 2008, a 16-year high propelled by rise in the cost of pulses, fruits, spices and aviation turbine fuel.

Inflation is expected to accelerate further after the Prime Minister Manmohan Singh's cabinet on 14 August 2008 approved an average 21% salary increase for about 50 lakh government employees. The higher wages will cost the government Rs 3.38 lakh crore this year.

NTPC (down 5.68% to Rs 173.50), Reliance Infrastructure (down 5.45% to Rs 954.70), Jaiprakash Associates (down 4.78% to Rs 163.20), HDFC (down 4.41% to Rs 2,209.55), Reliance Communications (down 3.98% to Rs 398.35), Bharat Heavy Electricals (down 3.75% to Rs 1,669.85), Hindalco Industries (down 3.33% to Rs 129.05), edged lower from the Sensex pack.

India’s largest drug maker by sales Ranbaxy Laboratories rose 1.53% to Rs 513.40 and was the lone gainer from the Sensex pack.

World’s sixth largest steel maker Tata Steel fell 2.63% to Rs 589.30. Anglo-Dutch steelmaker Corus said on Wednesday that it entered into exclusive negotiations with Klesch & Company to sell its two aluminium smelters in the Netherlands and Germany. It follows an unsuccessful attempt in December 2007 to sell the smelters. Corus is controlled by Tata Steel.

India’s largest commercial vehicle maker by sales Tata Motors fell 1.44% to Rs 417.95. It came off from the session’s high of Rs 444. The company said on Wednesday, 20 August 2008, it will scrap a planned Rs 3000 crore convertible preference share issue due to weak stock markets and instead raise funds by selling some investments. However, the plan to sell rights shares worth Rs 4200 crore stands, said the company.

Tata Motors is raising money to fund its $2.3 billion acquisition of Jaguar and Land Rover from Ford Motor Company. The company said it plans to sell its investments in a phased manner, preferably to group firms, at prevailing market prices over the next 6-8 months.

A key event today is the Nuclear Suppliers Group (NSG) meet in Vienna. The United States is set to push the 45-nation Nuclear Suppliers Group (NSG) to agree on a landmark nuclear deal with India despite objections at home and reservations abroad.

In Europe, in key benchmark indices in France, Germany and UK were were down by between 0.8% to 1.28%.

Asian markets were trading lower today, 21 August 2008. China's Shanghai Composite, Japan's Nikkei, Hong Kong's Hang Seng plunged, Taiwan's Taiwan Weighted, Singapore's Straits Times , and South Korea's Seoul Composite were down by between 0.77% to 3.63%.

US stocks gained on Wednesday, August 20, in a volatile session on the seesawing price of oil and mixed feelings about the financial sector. The Dow Jones industrial average rose 68.88 points, or 0.61%, to 11,417.43. The Nasdaq Composite index rose 4.72 points, or 0.20%, to 2,389.08 and the Standard & Poor's 500 Index was up 7.94 points, or 0.63%, at 1,274.63.