Market slips for the sixth day in a row on selling by FIIs

Subdued-to-weak trend in global equities caused by fears of a deep global recession pulled the domestic bourses lower for the sixth day in a row. The BSE 30-share Sensex lost 163.42 points, or 1.83%, shedding 462.49 points from an intraday high struck in early afternoon trade. Weak global markets raised fears of more foreign fund sales offsetting hopes more measures from the government and the Reserve Bank of India (RBI) may revive the domestic economy.

The market was volatile, with the Sensex swinging 509.47 points in the day. The barometer index which had regained the psychological 9,000 mark earlier in the day fell below that level later.

Foreign funds are dumping stocks in Indian and other emerging markets to shore up resources to beat the global liquidity crunch. As per the provisional data released by the stock exchanges after trading hours, foreign institutional investors (FIIs) today, 19 November 2008, sold shares worth a net Rs 264.98 crore. FII outflow reached Rs 52,612.70 crore in calendar 2008, so far, till 18 November 2008, as against an inflow of a huge Rs 71,466.90 crore in the corresponding period last year.

European shares fell, led by banks and miners, as market players were spooked after US automakers gave a dire warning to lawmakers about their outlook while pleading for $25 billion of bailout funds from Congress. Key benchmark indices in France, Germany and UK were down by between 1.74% to 1.98%. Trading in US futures suggested Dow could fall 94 points at the opening bell.

Asian stocks dropped as fears of a global recession persisted. Key benchmark indices in Japan, Hong Kong, South Korea, Singapore and Taiwan were down by between 0.18% to 1.87%. But Chinese stocks bucked the weak trend, with he Shanghai Composite index surging 6.05%.

The US housing market collapse at the heart of the crisis showed signs of deteriorating further, with the National Association of Home Builders index plunging to a record low of 9 in November 2008, date released on Tuesday, 18 November 2008, showed. Japan's recession could last even longer than feared, the country's economy minister warned today, 18 November 2008. Japan slid into its first recession in seven years in the third quarter as the financial crisis curbed demand for Japanese exports, data on Monday, 17 November 2008 showed.

Citigroup Inc, the No. 2 US bank, on Monday, 17 November 2008, said it would cut 15% of its global workforce or 52,000 jobs, far more than had been expected.

The BSE 30-share Sensex was down 163.42 points, or 1.83%, to 8,773.78. The Sensex lost 210.40 points at the day's low of 8,726.80 in late trade. At the day's high of 9,236.27 hit in early-afternoon trade, the Sensex rose 299.07 points.

The S&P CNX Nifty fell 48.15 points, or 1.79%, to 2,635.

Fears of a global recession, slowdown in the domestic economy and selling by foreign funds have pulled the Sensex down 1,762.78 points or 16.72% in the last six trading sessions from 10,536.16 on 10 November 2008. The barometer index is down 11,513.21 points or 56.75% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 12,432.99 points or 58.62% below its all-time high of 21,206.77 struck on 10 January 2008.

The BSE clocked a turnover of Rs 3538 crore today as compared to a turnover of Rs 3,031.86 crore on Tuesday, 18 November 2008.

Nifty November 2008 futures were at 2619.70, at a discount of 15.30 points as compared to the spot closing of 2635. Turnover in NSE's futures & options (F&O) segment was Rs 41,656.37 crore, which was lower than Rs 43,260.01 crore on Tuesday, 18 November 2008.

The market breadth, indicating the overall health of the market, turned weak from earlier positive breadth. On BSE, 786 shares rose as compared with 1,711 that declined. A total of 76 shares remained unchanged.

The BSE Mid-Cap index down 2.02% to 2,998.39 and the BSE Small-Cap index was down 1.84% at 3,493.12. Both the indices underperformed the Sensex.

The BSE FMCG index (up 1.52% to 1,866.02), the BSE Auto index (p 0.59% to 2,350.24), the BSE Consumer Durables index (up 0.44% to 1,855.87), the BSE Realty index (down 0.43% to 1,830.94), the BSE HealthCare index (down 0.95% to 2,804.81), the BSE Oil & Gas index (down 1.16% to 5,507.48), the BSE IT index (down 1.52% to 2,410.64), the BSE PSU index (down 1.72% to 4,453.96), the BSE Metal index (down 1.77% to 4,436.14) outperformed the Sensex.

The BSE Capital Goods index (down 3.47% to 6,396.76), the BSE Bankex (down 2.86% to 4,596.95), the BSE Power index (down 4.67% to 1,571.98), the BSE Teck index (down 2.68% to 1,898.09), underperformed the Sensex.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 0.66% to Rs 1,133.15, reversing strong intraday gains, on concerns a global slowdown would hit demand for petrochemicals. Meanwhile, as per reports, the company may raise Rs 5,000 crore from the Life Insurance Corporation via 11.5% non-convertible debentures.

Jaiprakash Assocaites (down 6.04% to Rs 63.80), Reliance Communications (down 5.15% to Rs 198.80), Grasim Industries (down 4.62% to Rs 930.65) were the major losers from the Sensex pack.

Capital goods stocks slumped on worries global economic slowdown would crimp orders. Larsen & Toubro, Bharat Heavy Electricals and Suzlon Energy fell by between 2.81% to 5.74%.

Metal stocks declined as worries that global economic slowdown will hit demand offset imposition of 5% import duty on steel by the government to protect the domestic industry. Hindalco Industries, Sterlite Industries, Tata Steel, Steel Authority of India, National aluminum Company fell by between 0.05% to 5.19%.

After trading hours on Tuesday, 18 November 2008, the government imposed a 5% duty on imports of steel and iron products to protect domestic makers from cheaper imports.

Ess Dee Aluminium spurted 8.9% on reports the company will announce acquisition of a majority stake in India Foils later today, 19 November 2008.

Banking stocks fell as fears of rising defaults in a weakening economy offset hopes of increase in lending growth triggered by speculation of further rate cuts. India's largest private sector bank by net profit ICICI Bank fell 3.62%. Its ADR lost 3.26% on Tuesday, 18 November 2008. India's second largest private sector bank by net profit HDFC Bank slipped 3.28% as ADR slumped 2.33% on Tuesday. India's largest commercial bank State Bank of India (SBI) fell 2.6%.

As per reports, the Reserve Bank of India (RBI) is expected to announce another round of rate cuts in a week or so in an effort to shield the domestic economy from the global economic slowdown. The RBI on, 1 November 2008, had cut its repo rate or main short-term lending rate by 50 basis points (bsp) to 7.5% and banks' cash reserve ratio (CRR) by 100 basis points to 5.5%. The repo rate is the rate at which the RBI lends cash to banks. The CRR is the percentage of deposits which the banks must keep with the central bank.

IT stocks fell on mounting worries about the US economy highlighted by data overnight showing confidence at US home builders plunging to a record low. India's third largest IT exporter by sales Satyam Computer Services fell 3.57% as ADR fell 4.37% overnight. India's second largest IT exporter by sales Infosys lost 0.76%, as ADR fell 1.23% on Tuesday. India's fourth largest IT exporter by sales Wipro fell 3.18% as ADR slipped 2.91% on Tuesday. India's largest IT exporter by sales Tata Consultancy Services slipped 0.36%.

Indian IT firms derive a lion's share of revenue from exports to US. Weak US economic data offset a weaker rupee. The Indian rupee fell to 50 per dollar in late trade on Wednesday, hit by losses in the domestic equity market and heavy dollar demand from banks looking to arbitrage between onshore spot and offshore forward rates. The partially convertible rupee was at 49.9800/9875 per dollar, off a low of 50.01, its weakest since 27 October 2008 when it had hit a record low of 50.29. A weaker rupee augurs well for the sector as IT firms earn most of their revenues from exports.

Realty stocks fell on slowdown in the sector due to lower demand and a liquidity crunch. Unitech, Indiabulls Real Estate, Housing Development & Infrastructure, and Omaxe were down by 1.14% to 8.67%. India's largest real estate player by market capitalization DLF rose 0.13%.

The Reserve Bank of India (RBI) had on Saturday (15 November 2008) announced fresh steps to free up liquidity for the troubled realty sector.

Auto stocks rose on hopes a further cut in interest rates will spur demand which is mainly driven by finance. Maruti Suzuki India, the country's top car maker by sales, rose 0.73% after Chairman R.C. Bhargava today said the company does not expect production and sales in the 2008/09 fiscal year to fall below the previous year's level. He was speaking at the launch of Maruti's new A-Star hatchback model.

Hero Honda Motors and Mahindra & Mahindra rose by between 1.03% to 3.69%. However, India's largest commercial vehicle maker by sales Tata Motors fell 2.52%.

Suzlon Energy clocked the highest volume of 1.64 crore shares on BSE. GVK Power & Infrastructure (1.11 crore shares), Reliance Natural Resources (90.60 lakh shares), Cals Refineries (66.76 lakh shares) and Steel Authority of India (59.73 lakh shares) were the other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 467.41 crore on BSE. Reliance Capital (Rs 288.47 crore), Bharti Airtel (Rs 140.42 crore), State Bank of India (Rs 131.98 crore) and ICICI Bank (Rs 129.40 crore) were the other turnover toppers in that order.

Great Eastern Shipping Company rose 1.47%, after a block deal of 6.24 lakh shares was executed on BSE at Rs 163.25 a share.

Kalindee Rail Nirman (Engineers) spurted 5.3% on BSE after a unit of Larsen & Toubro bought additional stake in the company.

Reports that the government will inject Rs 50000 crore on infrastructure projects to pump-prime the economy failed to soothe investors nerves. The RBI is also likely to create a special repo window to allow banks to borrow up to 100 basis points of the statutory liquidity ratio (SLR) - the percentage of deposits invested in government securities - to make available Rs 40,000 crore for infrastructure like national highway projects.