Profit booking, rising oil price pull market down

Profit booking after a solid surge in the previous session pulled the market lower today, 22 September 2008. A rise in oil prices also weighed on market sentiments. The 30-share BSE Sensex ended 47.36 points lower. All the sectoral indices on BSE, barring FMCG and metal indices, were negative. Capital goods stocks were battered.

At 16:30 IST, the crude oil was trading at $107.40 on the New York Mercantile Exchange (NYMEX). Oil extended last week's massive gains on hopes the US government's rescue plan for the financial sector would restore stability in the financial system and support global energy

European markets, which opened after Indian market, slipped after a minor recovery earlier in the day. Key indices in UK, France, and Germany were down 0.12% to 0.39%.

Asian stocks rose after the US government proposed a $700 billion plan to solve the world financial crisis by rescuing banks from billions of dollars in risky mortgage debt. Key benchmark indices in Hong Kong, Japan, China, South Korea, and Taiwan were up by between 0.31% to 7.77%. However, Singapore’s Straits Times was down 0.58%.

However, uncertainty about the workings of the government's $700 billion bank bailout drove US stock index futures lower, suggesting the US market may open lower today, 22 September 2008. The S&P 500 futures were down 10.70 points, Nasdaq 100 futures were down 7 points and the Dow futures were down 99 points. The drop in stock index futures came on the heels of Friday's (19 September 2008) massive rally in stocks worldwide -- the largest ever one-day advance as measured by market value.

According to the US administration's proposal, the federal government would buy up as much as $700 billion of illiquid mortgage assets at a deep discount from banks. The Treasury Department would run the program directly, unlike the savings and loan crisis of the 1990s when Congress created the Resolution Trust Company to spearhead a financial bailout. The $700 billion plan, the most sweeping intervention in the financial markets since the Great Depression, is aimed at stemming the credit crisis roiling Wall Street and threatening the global markets.

The BSE 30-share Sensex fell 47.36 points or 0.34% to 13,994.96. The Sensex rose 178.72 points at day’s high of 14,221.04, hit in early trade. The index shed 124.84 points at the day's low of 13,917.48, hit in mid-afternoon trade.

The S&P CNX Nifty fell 22.20 points or 0.52% to 4223.05. Nifty September 2008 futures were at 4230.40, at a premium of 7.35 points as compared to spot closing.

The BSE Mid-Cap index outperformed the Sensex, falling 0.15% at 5,220.96. The BSE Small-Cap index underperformed the Sensex, falling 0.35% at 6,194.11.

The market breadth was negative on BSE with 1234 shares advancing as compared to 1354 that declined. 78 shares remained unchanged.

As per provisional data released by the stock exchanges after trading hours, foreign funds today, 22 September 2008, bought shares worth a net Rs 138.21 crore. Domestic funds sold shares worth a net Rs 206.12 crore.

BSE clocked a turnover of Rs 4871 crore compared with Rs 6,226.77 on Friday, 19 September 2008. NSE's futures & options (F&O) segment turnover was Rs 58188.03 crore, which was lower than Rs 73972.36 crore on Friday, 19 September 2008.

India’s largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) declined 0.72% at Rs 2037.15. The stock accounts for 15.09% of Sensex's weightage.

The company began production of crude oil from its KG-D6 block of the Krishna Godavari basin on 17 September 2008 and the firm plans to commercially release gas from the well by January 2009. The company aims to supply at least 40% of the nation's requirement of oil and gas and become one of the world's largest deep-water developers. According to reports, the company can technically sell its Krishna-Godavari (KG) basin gas at a price higher than the government-discovered price of $4.20 per million British thermal units (mBtu).

India's largest aluminium producer Hindalco Industries fell 2.66% at 109.85. The company's Rs 5050 crore rights share offering opened for subscription today, 22 September 2008. The sale in a ratio of three shares for every seven held at Rs 96 a share will close on 10 October 2008. The company aims to use the funds to repay a bridge loan it had taken to buy Canada's Novelis in 2007.

Software firms fell on lingering concerns about the economic prospects for the United States, their biggest export market. Satyam Computer (down 4.69% to Rs 352.75), and Wipro (down 0.60% to Rs 414.35), slipped. However, India’s second largest software exporter by sales Infosys Technologies rose 0.25% at Rs 1627.85.

Some of the banking pivotals rose. India’s largest private sector bank by market capitalisation ICICI Bank rose 1.01% to Rs 634.45. India’s largest commercial bank State Bank of India rose 0.13% to Rs 1,566.70. However, HDFC Bank fell 0.12% to Rs 1,297.60. The BSE Bankex outperformed the Sensex, falling 0.11% to 7,102.29.

FMCG shares rose on defensive buying. Colgate Palmolive (up 4.67% at Rs 396.95), Godrej Consumer Products (up 2.28% at Rs 118.75), ITC (up 2.12% at Rs 195.10), and Hindustan Unilever (up 1.69% at Rs 249.30), moved higher. The BSE FMCG index outperformed the Sensex, rising 1.43% to 2,206.42.

Metal shares rose. Sesa Goa (up 13.11% at Rs 123.40), Gujarat NRE Coke (up 7.23% at Rs 70.45), and NMDC (up 5% at Rs 228.90), rose. The BSE Metal index outperformed the Sensex, rising 0.99% at 10,132.94.

World's sixth largest steel maker Tata Steel rose 2.95% at 493.75. As per reports, Tata Steel, through its indirect subsidiary TS Global Minerals Holdings, has purchased a 7.3% stake in Riversdale, which has a coking coal project in Mozambique.

Sponge iron producer Jindal Steel and Power rose 1.84% to Rs 1,503.55 on report the company plans to float a wholly-owned subsidiary which would look after the domestic and overseas oil and natural gas operations of the company.

Capital good shares tumbled. Suzlon Energy (down 6.78% to Rs 198.70), Punj Lloyd (down 5.62% at Rs 293.90), Gammon India (down 3.72% at Rs 165.65), and Bharat Heavy Electricals (down 1.57% at Rs 1,683.90), declined. The BSE Capital Goods index underperformed the Sensex, falling 2.24% to 11,477.09.

India's largest engineering and construction firm by revenue Larsen & Toubro fell 2.60% at Rs 2,576.60 on reports company is planning to sell as many as four business units that have not registered significant growth.

State-run oil firms declined on rise in oil price. Indian Oil Corporation (down 3.65% at Rs 382.40), BPCL (down 2.59% at Rs 337.10), and HPCL (down 1.83% at Rs 230.60), declined. The BSE Oil & Gas index outperformed the Sensex, falling 0.74% to 9,398.65.

India's largest state-run oil explorer Oil & Natural Gas Corporation (ONGC) dropped 1.35% to Rs 1,057.65. As per reports, ONGC Videsh (OVL), the overseas investment arm of ONGC, may take a $1 billion short-term loan to partly fund the $2.8 billion acquisition of London Stock Exchange-listed Imperial Energy.

Telecom solutions provider Tulip Telecom surged 13.36% to Rs 1,053.75 after the company bagged a project worth Rs 95 crore for supply and installation of network equipment across Madhya Pradesh.

Offshore services provider Dolphin Offshore Enterprises India surged 3.81% to Rs 252.05 after the company won two separate contracts worth $16 million for charter hire of its diving support vessels.

Automobile components maker Amtek India surged 3.88% to Rs 73.65 on reports private equity firm Chrys Capital has acquired additional 4% stake in the company.

Reliance Industries clocked a highest turnover of Rs 447.20 crore on BSE. Reliance Capital (Rs 353.15 crore), ICICI Bank (Rs 253.32 crore), Bharti Airtel (Rs 221.81 crore), and Sesa Goa (Rs 165.49 crore), were the other turnover toppers on BSE in that order.

Reliance Natural Resources reported a highest volume of 1.49 crore shares on BSE. Sesa Goa (1.38 crore shares), IFCI (86.76 lakh shares), Jaiprakash Associates (73.01 lakh shares), and Idea Cellular (71.33 lakh shares), were the other volume toppers on BSE in that order.

Back home, the September 2008 contracts expire on Thursday, 25 September 2008. Roll over in Nifty futures till Friday, 19 September 2008, was about 18% whereas Mini Nifty has seen rollover of about 31% of positions.

Stocks across the global had risen sharply late last week after regulators and central banks across the globe came to the rescue of the battered markets. The BSE 30-share Sensex had risen 726.72 points or 5.46% to 14,042.32 on Friday, 19 September 2008

The barometer index is down 6292.03 points or 31.01% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 7211.81 points or 34% below its all-time high of 21,206.77 struck on 10 January 2008.