Market changes direction after hitting one-month high; Sensex below 15,000

The key benchmark indices dropped, reversing intraday gains of 2%, as investors booked profits after recent sharp gains. The BSE 30-share Sensex was provisionally down 221.86 points or 1.47%, off close to 495 points from the day's high and up close to 55 points from the day's low. Index heavyweight Reliance Industries (RIL) slipped. Capital goods, power, IT stocks fell.

The barometer index BSE Sensex fell below the psychological 15,000 mark. Weak European markets and lower US index futures soured sentiment. The market breadth was negative compared to a strong breadth earlier in the day. Concerns over the progress of India's annual monsoon triggered profit taking after a recent strong rally in share prices.

India's largest power equipment maker by sales Bharat Heavy Electricals and India's largest dedicated housing finance company
by sales, HDFC dropped despite good Q1 results announced during trading hours. India's largest oil exploration firm by revenue ONGC rose ahead of its Q1 June 2009 results tomorrow, 23 July 2009.

The market was volatile. The market surged in early trade tracking firm global stocks. Reports that the government can fetch a large sum from divestment this year also aided the surge in equities. The market extended gains in morning trade with the barometer index BSE Sensex hitting its highest level in more than a month. The market pared gains in early afternoon trade. The Sensex slipped into the red and fell below the psychological 15,000 mark later as lower European stocks and fall in US index futures soured sentiment. The market cut losses in mid-afternoon trade.

The Sensex had lost 128.52 points or 0.85% at 15,062.49 on Tuesday, 21 July 2009 as profit booking emerged after a recent solid surge. Before Tuesday's slide, the market had surged on the back of good initial batch of Q1 June 2009 results. From a low of 13,400.32 on 13 July 2009, the Sensex had risen 1,790.69 points or 13.36% in just five trading sessions to 15,191.01 on Monday, 20 July 2009.

The Q1 June 2009 results announced so far have encouraging, with lower costs helping bottomline growth. The combined net profit of 283 companies rose 52.1% Rs 15,199 crore on 11.7% growth in sales to Rs 1,13,379 crore in Q1 June 2009 over Q1 June 2008.

But news flow on divestment may keep market firm in the coming months. The steel ministry has reportedly initiated steps to sell small stakes in profit-making state-run firms Manganese Ore India (MOIL) and NMDC (formerly National Mineral Development Corporation), which it estimates could fetch up to Rs 25,000 crore. While the ministry has cleared a proposal to divest 10% in unlisted MOIL through an initial public offering (IPO), a proposal to divest 8-20% stake in listed NMDC is under its active consideration, report said.

The Union Budget, presented by finance minister Pranab Mukherjee on 6 July 2009, refrained from making any major commitment and proposed a modest disinvestment target of Rs 1,120 crore for the current financial year, although the government clarified later that there could be more sell-off proposals later in the year.

Weak rains is a cause for concern. The likely emergence of El Nino, the name given to the warming of the Pacific Ocean and which often influences the Indian monsoon adversely, coupled with the failure of the monsoon to gather momentum in the key north-western agricultural belt, has added to the worry. Under the circumstances, the assertion by the India Meteorological Department (IMD) that much of the rain deficit in June will be made up in July (which is mostly over) and August has fetched little results.

More than two-thirds of the people live in villages and 60 % of the farm land depends on the annual rains. While some sense an imminent drought, resulting in a poor kharif harvest, the agriculture ministry still hopes that agricultural production will be in the normal range. The Finance Ministry is worried, as a drought is the last thing it would like to cope with during an economic downturn.

Meanwhile, Junior trade minister Jyotiraditya Scindia said today that India is unlikely to meet $200 billion export target for FY 2010. He said shrinking global demand is affecting textile, leather, gems and jewellery exports.

India's direct tax receipts in Q1 June 2009 rose 3.65% to Rs 59,465 crore. Corporate tax receipts in the same period rose 3.31% to Rs 35,709 crore an official of the Central Board of Direct Taxes said. Income tax receipts were up 4.38 % to Rs 24,564 crore.

European shares fell in choppy trade on Wednesday, ending a seven-day winning run as profit taking emerged after recent surge. Analysts cautioned about earnings expectations. The key benchmark indices in Germany and France were down by between 0.13% to 0.51%. UK's FTSE 100 was flat.

Asian stocks rose today led by material producers and electronics makers, amid mounting speculation a global recovery will boost earnings. Key benchmark indices in China, South Korea, Hong Kong, Japan, and Taiwan rose by between 0.34% to 2.6%. The key benchmark indices in Hong Kong and Singapore were down by between 0.14% to 1.3%.

Trading in the US index futures indicated Dow could fall 41 points at the opening bell today, 22 July 2009.

US markets ended with modest gains after a late rally on Tuesday, 21 July 2009. The Dow gained 67.79 points, or 0.8%, to 8,915.94. The S&P 500 index rose 3.45 points, or 0.4%, to 954.58. The Nasdaq rose 6.91 points, or 0.4%, to 1,916.20. In key corporate earnings after the bell, Apple posted a quarterly profit way past Wall Street forecasts on strong sales of MAC computers and improved margins. The popular search engine, Yahoo's second-quarter profit rose 8% boosted by the company's cost-cutting measures.

As per the provisional figures, the BSE 30-share Sensex was down 221.86 points or 1.47% at 14,840.63. At the day's high of 15,369.42, Sensex rose 306.93 points in mid-morning trade, its highest level since 12 June 2009. At the day's low of 14,786.58, the Sensex fell 275.91 points in late trade.

The S&P CNX Nifty was down 66.75 points or 1.49% to 4,402.35 as per the provisional figures.

BSE clocked a turnover of Rs 6,643 crore, higher than Rs 6,215.28 crore on Tuesday, 21 July 2009.

The market breadth, indicating the overall health of the market turned negative compared to a strong breadth earlier in the day. On BSE, 1,171 shares rose as compared with 1410 that fell. A total of 105 shares remained unchanged.

From the 30 shares Sensex pack, 26 fell and rest rose.

The BSE Mid-Cap index was down 0.83% and the BSE Small-Cap index was down 0.15%.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) fell 2.04% to Rs 1,976.40. The stock came off the day's high of Rs 2,056.30. The Supreme Court on Monday, 20 July 2009, asked the energy giant and former group firm Reliance Natural Resources (RNRL) why a gas pact between the two should not be cancelled. The court has scheduled next hearing on the dispute over the gas supply to Reliance Natural Resources (RNRL) on 1 September 2009.

RNRL has asked the Supreme Court to dismiss the government's affidavit on the dispute, even as the petroleum ministry has suggested that the court treats the pact between the two brothers null and void. The dispute concerns supply of natural gas from RIL's field, off the Andhra Pradesh coast, as also the price at which Reliance Natural Gas will get the fuel for power projects within the group.

In reply to the lawsuit filed by Reliance Industries challenging the Bombay High Court order, RNRL has said the government has no role to play in the private gas sharing dispute, and certainly not as a party to the row. The government, however, has said that the country's interest must be taken into consideration first and that cannot be held to ransom by a dispute between two industrialists or a previous, private pact between them.

India's largest oil exploration firm by revenue ONGC rose 4.13% ahead of its Q1 June 2009 results on 23 July 2009. Recent reports suggested Oil & Natural Gas Corporation (ONGC) has hired Citigroup to advise it on a bid for Kosmos Energy's stake in an oil field in Ghana in a deal that could be worth between $3 billion and $5 billion.

India's largest dedicated housing finance company by sales, HDFC fell 5.63% even after company's net profit rose 20.68% to Rs 564.92 crore on 22.86% rise total income to Rs 2,849.07 crore in Q1 June 2009 over Q1 June 2008. The lender announced its result during late trade today.

HDFC has reportedly cut lending rates for new customers by 25-50 basis points. The financial institution has restructured its loan baskets to create a new product where loans up to Rs 15 lakh are available at 8.75% as against 9.25% earlier.

Canara Bank declined 1.47% after the bank's gross non-performing assets rose 87.39% to Rs 2,462.94 crore in Q1 June 2009 over Q1 June 2008.

India's largest electric equipment maker by sales Bharat Heavy Electricals (BHEL) fell 3.38% even as net profit rose 22.41% to Rs 470.59 crore on 27.64% rise in total income to Rs 5,898.51 crore in Q1 June 2009 over Q1 June 2008. Bhel outstanding order book stood at Rs 1,24,000 crore. The company announced the result during market hours today.

India's largest engineering and construction firm by sales Larsen & Toubro (L&T) fell 1.78%. The company, last week, stood by its stated outlook of 25% growth in order inflows for the current year even as the first quarter ended with a negative note. At the time of announcing Q1 June 2009 results, L&T had during trading hours on Thursday, 16 July 2009 said its order inflow was down 22 % in Q1 June 2009 over Q1 June 2008. The company's order backlog at the end of the June quarter was Rs 71, 650 crore ($14.7 billion).

Other capital goods stocks, Thermax, Siemens, ABB, Crompton Greaves, fell by between 0.26% to 5.94%.

IT stocks fell on profit taking reversing early gains triggered by better-than-expected Q1 June 2009 result by India's third largest IT exporter by sales Wipro. Wipro fell 1.46%. Wipro's consolidated net profit as per Indian accounting rules rose 0.54% to Rs 1015.50 crore on 2.5% fall in sales to Rs 6289.10 crore in Q1 June 2009 over Q4 March 2009. The company announced the results before trading hours today.

Wipro expects 0.91% to 1.9% growth in consolidated revenue from IT Services at between $1035 million to $1053 million in Q2 September 2009 over Q1 June 2009. The guidance is based on constant currency exchange rates
. Its American depository receipt (ADR) fell 1.17% on Tuesday, 21 July 2009.

India's largest IT exporter by sales TCS fell 2.6%. The company's net profit rose 15.27% to Rs 1276.44 crore on 0.12% fall in sales to Rs 5609.60 crore in Q1 June 2009 over Q4 March 2009. The company announced the result after trading hours on Friday, 17 July 2009.

India's largest IT firm by sales Infosys fell 1.64%. The government has launched a Government-to-Business (G2B) services e-biz project with Infosys as the technology partner. The project is among the 27 Central, State and Integrated Mission Mode Projects (MMPs) under the National E-Governance Plan (NEGP).

Power stocks reversed early gains triggered by strong response to Tata Power Company's global depository receipts. Tata Power Company fell 1.23% to Rs 1,115. The stock was volatile. It hit a high of Rs 1,160 and low of Rs 1,115. Tata Power Company during trading hours today, 22 July 2009, said it has raised $335 million from an issue of global depository receipts (GDR). The company said a strong investor responce enbale the company to raise GDR issue size to $335 million from $250 million.

Other power stocks, Reliance Power, Reliance Infrastructure, Power Grid Corporation of India, fell by between 0.68% to 2.36%.

Hindustan Zinc fell 2.96% after its net profit fell 15.2% to Rs 719 crore in Q1 June 2009 over Q1 June 2008.

NMDC rose 1.59% on reports the steel ministry has initiated steps to sell small stake in the firm.

Piramal HealthCare roe 2.25% after its net profit rose 45.48% to Rs 74.11 crore in Q1 June 2009 over Q1 June 2008.