Nifty at 12-week closing low

The key benchmark indices edged lower in a volatile trading session as traders rolled over positions in the derivatives segment from the near-month May 2011 series to June 2011 series, ahead of the expiry of the May 2011 derivatives contracts on Thursday, 26 May 2011. The barometer index BSE Sensex and the 50-unit S&P CNX Nifty hit their lowest level in more than 12 weeks. The Sensex shed 164.73 points or 0.91%, up close to 60 points from the day's low and off close to 130 points from the day's high.



The market breadth was weak. Index heavyweights Reliance Industries (RIL) dropped. IT bellwether Infosys trimmed intraday losses. Power equipment major Bhel hit 52-week low. Realty major DLF slumped to 52-week low after reporting poor Q4 results. Most metal stocks fell on concerns over sluggish global economic recovery. Banking pivotals declined on worries rising interest rates would shrink profit margins.

The market edged lower in early trade as weak Asian stocks sapped risk appetite. The key benchmark indices trimmed losses after hitting 9-week lows in morning trade. The market weakened again in mid-morning trade. The market extended losses to hit fresh intraday low in early afternoon trade. The market hit a fresh intraday low in afternoon trade as European shares dropped in early trade. The market trimmed losses in mid-afternoon trade.

The Sensex lost 164.73 points or 0.91% to 17,847.24, its lowest closing level since 21 March 2011. The Sensex declined 225.84 points at the day's low of 17,786.13 in afternoon trade, its lowest level since 28 February 2011. The index fell 35.61 points at the day's high of 17,976.36 in early trade.

The S&P CNX Nifty was down 45.90 points or 0.85% to 5,348.95, its lowest closing level since 28 February 2011. The Nifty hit a low of 5,328.70 in intraday trade.

The market breadth, indicating the health of the market, was weak. On BSE, 1662 shares declined while 1080 shares advanced. A total of 138 shares remained unchanged.

BSE clocked turnover of Rs 2872 crore, higher than Rs 2607.78 crore on Tuesday, 24 May 2011.

Among the 30-member Sensex pack, 25 stocks declined while only three of them managed gains.

Index heavyweight Reliance Industries (RIL) declined 0.92%. RIL's fuel exports reportedly rose 25% in the first half of May 2011 from a month earlier as it shipped more gasoline to the US and demand for jet fuel grew. RIL exported at least 1 million metric tons of fuel products from its Jamnagar, Gujarat facility in the first half of May 2011 from 800,000 tons in the first half of April 2011.

Separately, RIL is reportedly in talks with banks to arrange as much as $1.5 billion in dollar-denominated loans to replace debt maturing in about two years that has higher interest costs.

PSU OMCs fell on uncertainty about domestic fuel prices which are largely government controlled. HPCL, BPCL and Indian Oil Corporation declined by between 2.28% to 3.35%.

Cairn India fell 0.09%. The company announced after market hours today that consolidated net profit surged 902.4% to Rs 2457.79 crore on 372.99% rise in total income to Rs 3692.83 crore in Q4 March 2011 over Q4 March 2010.

Rahul Dhir, Managing Director and Chief Executive Officer, Cairn India said, "Cairn India's continued focus on safe and efficient operations has helped us to quickly ramp up the Mangala production to 125,000 barrels of oil per day (bopd) and deliver almost 40 million barrels of crude oil to Indian refineries. The successful delivery of the large scale Rajasthan project, the continued focus on life cycle planning and low cost operations in Rajasthan, Ravva and CB/OS-2 along with the application of innovative technologies has created a strong foundation for our future growth. We are therefore, well placed for the exploration drilling campaign in the frontier Mannar Basin in Sri Lanka later this year".

Banking pivotals declined on worries rising interest rates would shrink profit margins. India's largest private sector bank by net profit ICICI Bank fell 0.92%. The bank announced on Friday, 20 May 2011, that it has successfully priced issue of 5.5 year $1 billion international bond offering. The bonds carry a coupon rate of 4.75%.

India's second largest private sector bank by net profit HDFC Bank declined 0.11%. The bank raised its base rate by 55 basis points (bps) to 9.25% per annum and prime lending rate (PLR) by 50 bps to 17.75% effective 12 May 2011.

India's largest commercial bank by branch network State Bank of India (SBI) dropped 1.06%, with the stock falling for the eighth straight day on weak Q4 results. Net profit slumped 98.88% to Rs 20.88 crore on 18.07% rise in total income to Rs 26536.84 crore in Q4 March 2011 over Q4 March 2010. The result was announced on 17 May 2011.

India's largest realty firm by sales DLF slumped 4.04% to Rs 210.10 after sliding to a 52-week low of Rs 208.05 on high volume of 18.83 lakh shares and was the top loser from the Sensex pack. The stock declined as consolidated net profit fell 19.19% to Rs 344.54 crore on 34.53% rise in sales and other receipts to Rs 2683.09 crore in Q4 March 2011 over Q4 March 2010. The result was announced after trading hours on Tuesday, 24 May 2011.

DLF said it is focusing on high margin residential projects. In the commercial leasing segment, the company's strategy is to increase average rentals and focus on leasing of semi-finished and ready-to-occupy properties. DLF also said it intends to strengthen operational cash flows and enhance momentum on non-core divestments. The company said it will moderate investments in land aggregation and capex. DLF said it has raised its overall target for asset divestments to Rs 10000 crore from Rs 4500 crore (ex wind power) previously.

DLF said the genuine actual user consumer/corporate both in both the residential and commercial leasing segments continues to be healthy. However, speculative demand has petered out and investment demand has slowed down considerably as the financing cost equation has changed for the worse, the realty major said. DLF said product pricing by developers will be done keeping the current/future inflationary trends in mind in an attempt to retain product profitability/margins.

India's second largest software services exporter Infosys fell 1.76% to Rs 2795 after the company said after market hours on Tuesday it received a subpoena from a grand jury in a US district court that requires the company to provide certain documents and records related the company's sponsorships for and uses of B1 business visas. Infosys said it intends to comply with the subpoena and to cooperate with the investigation. The stock came off the day's low of Rs 2762.

Other IT pivotals, too, declined on euro zone debt worries. Europe is the second biggest market for Indian IT firms after the US. India's largest software services exporter TCS declined 2.09%, with the stock falling for the third straight day.

India's third largest software exporter Wipro fell 0.93%, with the stock falling for the third straight day. Wipro Infrastructure Engineering -- a division of Wipro, announced today that the company has signed an agreement with Spanish Company CESA for the manufacture of precision engineered components for the aerospace and defence sector. The agreement involves transfer of technology as well as manufacturing workload for aerospace actuators and related precision engineering components from CESA to Wipro.

India's largest power equipment maker by sales Bharat Heavy Electricals (Bhel) fell 1.47% to Rs 1920.90 on worries of pricing of the proposed follow-on public offer (FPO) at a discount to the ruling market price. The stock hit 52 week low of Rs 1903 today. The company's board early this week recommended disinvestment of 5% of the paid up equity capital of the company out of Government of India's shareholding, with reservation of 10% of the issue for employees, subject to the approval of the Government of India. Usually, a large follow-on public offer from a state-run firm is priced at a discount to the ruling market price to attract investors. Government of India holds 67.72% stake in Bhel (as at end March 2011).

India's largest engineering and construction firm by sales Larsen & Toubro's (L&T) lost 2.24% on profit taking after recent strong gains. Shareholders of the firm have passed the ordinary resolution for transfer of Electrical & Automation Business of the company to a subsidiary or associate company or to any other entity. The board of L&T at its meeting held on 6 April 2011 had approved transfer of the electrical and automation business of the company to a subsidiary or associate company or to any other entity as a going concern. L&T said this restructuring of the business is required so that it is able to realize its full growth potential and participate comprehensively in the growth of the industry.

The electrical and automation business of L&T offers products and solutions in the electrical distribution and industry automation space. This division is a leader in low voltage switchgear market in India. Over the years, the division has extended the portfolio to become an integrated solutions provider for its customers.

Most metal stocks fell on concerns over sluggish global economic recovery. JSW Steel, Hindalco Industries, Sail, Sterlite Industries, Nalco, JSW Steel and Sesa Goa fell by between 0.55% to 1.78%. LMEX, a gauge of six metals traded on the London Metal Exchange, rose 1.22% on Tuesday, 24 May 2011.

India's largest steel maker by sales Tata Steel fell 0.83% ahead of its Q4 results today.

Auto shares were mixed. India's largest car maker by sales Maruti Suzuki India rose 0.12%, reversing initial losses. India's top bike maker by sales Hero Honda Motors declined 0.58%.

India's second largest bike maker by sales Bajaj Auto shed 1.46%. Net profit surged 164.89% to Rs 1400.39 crore on 23.54% rise in total income to Rs 4199.97 crore in Q4 March 2011 over Q4 March 2010. Huge extraordinary (EO) income boosted Bajaj Auto's net profit in Q4 March 2011. The result was announced last week.

India's largest tractor maker by sales Mahindra & Mahindra (M&M) skidded 1%. The company unveils its year ended March 2011 result on 30 May 2011.

India's largest truck maker by sales Tata Motors rose 1%. The company's global sales rose 12% to 87,114 units in April 2011 over April 2010 on good demand for both commercial and passenger vehicles. The company unveils its year ended March 2011 result on 26 May 2011.

Sugar shares fell on reports of ample supply in the domestic markets and amid weak global sugar prices. Bajaj Hindusthan, Shree Renuka Sugars and Balrampur Chini Mills shed by between 2.46% to 3.63%.

JSW Energy clocked highest volume of 2.42 crore shares on BSE. Cals Refineries (1.67 crore shares), Sanghvi Forging& Engineering (1.55 crore shares), Resurgence Mines (1.17 crore shares) and Power Finance Corporation of India (87.40 lakh shares) were the other volume toppers in that order.

State Bank of India clocked highest turnover of Rs 206.40 crore on BSE. Sanghvi Forging& Engineering (Rs 190.34 crore), Power Finance Corporation of India (Rs 175.59 crore), JSW Energy (Rs 166.56 crore) and TTK Prestige (Rs 113.95 crore) were the other turnover toppers in that order.

The Q4 March 2011 results announced so far have been a mixed bag. The combined net profit of a total of 2483 companies rose 18.3% to Rs 74060 crore on 23.3% rise in sales to Rs 774403 crore in Q4 March 2011 over Q4 March 2010.

European markets came off the day's lows on Wednesday. The key benchmark indices in UK, Germany and France were down by between 0.01% to 0.19%.

Asian stocks fell on Wednesday as investors continued to worry about the euro zone debt crisis and a slowdown in the US economy. The key benchmark indices in Indonesia, China, Japan, South Korea and Taiwan fell by between 0.15% to 1.26%. The key benchmark indices in Hong Kong and Singapore rose 0.07% and 0.18% respectively.

Trading in US index futures indicated that the Dow could fall 16 points at the opening bell on Wednesday, 25 May 2011. US index futures cut initial losses.