Sensex settles below 19,000; Nifty below 5,700

The key benchmark indices slumped to four-month lows as European stocks fell and as US index futures edged lower after China's central bank raised lenders' reserve requirements by 50 basis points. Wild intraday swings were the order of the day. Increase in inflation in December 2010 reinforced fears of a rate hike by the Reserve Bank of India (RBI) at a policy review on 25 January 2011, with bank stocks tumbling in choppy trade. Interest rate sensitive auto and realty stocks, too, edged lower. The barometer index BSE Sensex fell below the psychological 19,000 mark and the 50-unit S&P CNX Nifty fell below 5,700 level. The market has declined in eight out of the last nine trading sessions.



Index heavyweight Reliance Industries (RIL) edged lower in choppy trade. Metal shares dropped in choppy trade as commodity prices fell. The market breadth, indicating the health of the market, was weak. All the thirteen sectoral indices on BSE declined. The BSE 30-share Sensex was down 322.38 points or 1.68%, off close to 590 points from the day's high and up close to 50 points from the day's low.

Intraday volatility has been high recently and today's trading session saw intense swings. The market dropped in early trade, as most Asian stocks fell. The key benchmark indices trimmed losses after hitting seven-week lows in morning trade. The intraday recovery gathered further steam in mid-morning trade. The market slipped into the red, soon after regaining positive zone after the monthly inflation data, which hit the market in early afternoon trade. The key benchmark indices hit fresh intraday highs as the market once again moved into positive zone later. The market surged in afternoon trade amid wild intraday swings. The market once again slipped into the red in mid-afternoon trade, reversing strong gains in afternoon trade. Stocks extended losses in late trade.

Foreign funds continue to press sales. Foreign institutional investors (FIIs) sold shares worth a net Rs 112.60 crore on Thursday, 13 January 2011, higher than an outflow of Rs 98.20 crore on Wednesday, 12 January 2011. FII outflow in January 2011 totaled Rs 1869.90 crore (till 13 January 2011). FIIs had bought equities worth Rs 2049.60 crore in December 2010.

The wholesale price index (WPI) rose an annual 8.43% in December 2010 on higher food prices, government data showed on Friday. The annual reading for October 2010 was revised upwards to 9.12% from 8.58%. Rising food and commodity prices are major challenges facing the government, Finance Minister Pranab Mukherjee said on Friday.

The Congress-led coalition government failed to announce major policy decisions on Thursday to tackle soaring food prices after days of wrangling, taking only minor measures seen as unlikely to make a major impact. The government announced a review of the import and export of essential commodities. The government said in a statement it had contracted the import of 1,000 tonnes of onions and would step up purchases of essential commodities such as edible oils and lentils, and create a panel to recommend ways to fight inflation.

"Government will review import and export of all essential commodities on a regular basis and impose controls on exports and ease restrictions on imports, including tariff reduction where necessary, to improve domestic supplies," a statement said.

High food prices have reinforced expectations for interest rate hike by the central bank at a policy review on 25 January 2011. As per a poll by Capital Market, economists widely expect 25 basis points increase each in repo rate and reverse repo rate at January policy review. The current level of food inflation in India is not acceptable, the finance minister said.

European shares dropped on Friday after China's central bank raised lenders' required reserves by 50 basis points, its seventh increase since early 2009. The key benchmark indices in France, Germany and UK fell by between 0.31% to 0.74%

The European Central Bank and the Bank of England kept their main interest rates unchanged Thursday, as inflation concerns were overshadowed by debt tensions and the fear that government spending cuts could crimp economic growth.

Spain and Italy staged successful bond sales on Thursday, buying European leaders a little time to come up with a new package of measures to stem the debt crisis rocking their 12-year old single currency bloc. A day after Portugal surprised many in the markets by selling 10-year debt relatively easily, Spain and Italy passed their first major financial tests of 2011, auctioning a total of 9 billion euros in bonds.

Asian stock markets were mostly lower Friday, 14 January 2011, after Wall Street's losses on Thursday and disappointing US jobless claims data, though solid results from Intel helped some technology-related stocks. The key benchmark indices in China, Japan, Singapore and Taiwan fell by between 0.03% to 1.31%. But, the key benchmark indices in Hong Kong, Indonesia and South Korea rose by between 0.18% to 0.89%.

Trading in US index futures indicated indicated that the Dow could fall 15 points at the opening bell on Friday, 14 January 2011. US stocks retreated on Thursday, 13 January 2011, after a report found that more people applied for unemployment benefits last week. The US Labor Department said first-time applications for unemployment benefits rose 35,000 from the week before to 445,000.

Closer home, data released on Wednesday, 12 January 2011, showed industrial output rose at 2.7% in November 2010 as against a revised 11.30% growth in October 2010, as growth in the manufacturing output slowed sharply.

The trade deficit in December 2010 narrowed to $2.6 billion from $8.9 billion in November 2010, the lowest in the last three years, trade secretary Rahul Khullar said on Saturday, 8 January 2011.

The BSE 30-share Sensex was down 322.38 points or 1.68% to 18,860.44, its lowest closing level since 9 September 2010. The Sensex rose 265 points at the day's high of 19,447.82 in afternoon trade. The index shed 370.86 points at the day's low of 18,811.96 in late trade.

The S&P CNX Nifty was down 97.35 points or 1.69% at 5,654.55, its lowest level since 9 September 2010. The Nifty hit low of 5639.65 in late trade.

The BSE Mid-Cap index fell 1.18%. The BSE Small-Cap index declined 1.04%. Both these indices outperformed the Sensex.

The market breadth, indicating the health of the market, was weak. On BSE, 2,009 shares declined while 882 shares advanced. A total of 97 shares remained unchanged. The breadth had moved between positive and negative zone earlier in the day.

Among the 30-member Sensex pack, 25 declined while the rest advanced.

BSE clocked turnover of Rs 3120 crore, lower than Rs 3564.44 crore on Thursday, 13 January 2011.

Index heavyweight Reliance Industries (RIL) fell 1.39% to Rs 1001.15. The stock came off the day's high of Rs 1028.95. As per recent reports, gas production from RIL's D6 block in Krishna-Godavari basin has dropped to 52-53 million metric standard cubic metres a day (mmscmd) from 60 mmscmd last October. RIL owns 90% in the D6 block, off the east coast, while Canada's Niko Resources holds the remainder.

Reliance Infrastructure declined 1.4%. The Securities and Exchange Board of India (said) said on Friday Reliance Infrastructure (R-Infra) and Reliance Natural Resources (RNRL) misrepresented nature of investments, their profits/losses in annual reports. The two firms misrepresented numbers in reports for years ending March 2007, 2008, 2009, Sebi said.

While passing a consent order, Sebi said R-Infra and RNRL cannot make investments in secondary market listed securities until December 2012. Sebi also said that individual applicants, including Anil Ambani, cannot make investments in secondary market listed securities until December 2011. R-Infra has remitted settlement amount of Rs 25 crore and has settled show-cause proceedings of June 2010 with the regulator.

Metal stocks fell across the board as LMEX, a gauge of six metals traded on the London Metal Exchange declined 0.78% on Thursday, 13 January 2011. Sterlite Industries, Hindalco Industries, Hindustan Zinc, JSW Steel and National Aluminum Company shed by between 1.35% to 3.45%. But, Jindal Steel & Power gained 0.31%, reversing initial losses.

Tata Steel fell 2.47%, with the stock falling for the second straight day. The company said on Friday that it would hold on to its shares in Australian miner Riversdale, calling it a strategic stake. Riversdale, an Africa-focused coal miner, is facing a $3.9 billion bid from Rio Tinto in an agreed deal as it seeks to secure coking coal reserves sought after by steelmakers.

Tata Steel on Tuesday, 11 January 2011, approved a follow-on public offer of 5.7 crore shares to reduce debt and expand Jamshedpur facility. The FPO will result in equity dilution of 6.31%.

Steel Authority of India (Sail) slumped 6.68% after net profit declined 33.90% to Rs 1107.47 crore on 14.91% rise in net sales to Rs 11143.20 crore in the quarter ended December 2010 over the quarter ended December 2009.

Interest rate sensitive realty stocks declined on worries higher interest rates could dent demand for residential and commercial properties. DLF, Indiabulls Real Estate, Unitech and HDIL shed by between 2.3% to 3.84%.

Banking stocks fell in volatile trade as the rate of rise in inflation accelerated in December 2010. India's largest bank by net profit and branch network State Bank of India (SBI) fell 2.28% to Rs 2502.25. The stock came off the day's high of Rs 2587.95.

India's second largest private sector bank by net profit HDFC Bank fell 4.16% to Rs 2053. The stock came off the day's high of Rs 2204. India's largest private sector bank by market capitalisation ICICI Bank declined 1.64% to Rs 1010.55. The stock came off the day's high of Rs 1052.80.

Mortgage lender HDFC fell 3.95% to Rs 641.55 in choppy trade after Q3 results. The stock hit a high of Rs 679.25 and low of Rs 635. Net profit increased 32.7% to Rs 890.88 crore on 20.23% rise in total income to Rs 3321.04 crore in Q3 December 2010 over Q3 December 2009. The results hit the market during trading hours today, 14 January 2011.

Auto stocks declined on worries higher interest rates and hike in vehicle prices could dent demand for vehicles. India's largest truck maker by sales Tata Motors declined 4.62%. India's largest car maker by sales Maruti Suzuki India shed 2.68%. India's top bike maker by sales Hero Honda Motors fell 0.65%. India's second largest motorcycle maker by sales Bajaj Auto shed 3.09%. But, India's leading tractor maker by sales Mahindra & Mahindra rose 0.13%.

IT bellwether Infosys fell 0.32% to Rs 3201.95 extending Thursday's 5% losses triggered by disappointing Q3 result and as its earnings and revenue outlook for Q4 March 2011 disappointed investors. The stock came off the day's high of Rs 3277. Consolidated net profit rose 2.5% to Rs 1,780 crore on 2.3% rise in revenues to Rs 7106 crore in Q3 December 2010 over Q2 September 2010 as per International Financial Reporting Standards. The result was announced before trading hours on Thursday.

India's largest software company by sales TCS fell 0.49%, after declining 1% on Thursday. The company unveils its Q3 December 2010 results on 17 January 2011. But, India's third largest IT exporter by sales Wipro rose 1.77%, after sliding 2.67% on Thursday. The company announces its Q3 December 2010 results on 21 January 2011.

Consumer durables stocks fell on profit taking. Videocon Industries, Gitanjali Gems, Titan Industries, Blue Star and Rajesh Exports shed by between 0.15% to 3.56%.

India's top engineering and construction firm by sales Larsen & Toubro fell 2.25%. The company is likely to come out with an initial public offer of its finance arm this quarter depending on market conditions.

Among other capital goods stocks, ABB, Punj Lloyd and Thermax declined by between 0.49% to 2.24%.

Shree Ashtavinayak Cine Vision clocked highest volume of 7.02 crore shares on BSE. Cals Refineries (1.53 crore shares), Suzlon Energy (90.53 lakh shares), Ispat Industries (60.38 lakh shares) and Alok Industries (50.07 lakh shares) were the other volume toppers in that order.

State Bank of India clocked highest turnover of Rs 209.67 crore on BSE. Reliance Industries (Rs 113.77 crore), Tata Steel (Rs 97.96 lakh shares), Larsen & Toubro (Rs 84.47 lakh shares) and ICICI Bank (Rs 74.68 lakh shares) were the other turnover toppers in that order.