Hello,
It's been the worst weekly performance for the markets. Today, the markets were very close to hitting the 10% circuit filter twice in the session, but pulled back off those lows. At one point, the Sensex was down over 1,000 points. The Reserve Bank was quick to step in with a 150 bps CRR cut, which includes a 50 CRR cut on October 6. But lower August Industrial Productivity numbers at 1.3% versus 10.9% YoY added to the pall of gloom. Even a lower inflation number at 11.80% and reassuring statements from Finance Minister P Chidambaram and Sebi Chairman CB Bhave failed to lift sentiment. The Nifty finally closed at 3,280 down 234 points, while the Sensex shut shop at 10,528 down 800 points.
Metal, realty, capital goods, power, banking, and oil stocks were hammered severely. Midcap and smallcap stocks also took a huge beating.
At various points in the course of trade it seemed that like the Sensex would hit the lower circuit, but fortunately, it did not hit. The lower circuit for Sensex was fixed at 1,275 points while that for the Nifty was at 390 points. The Sensex tumbled 1,088.6 points and the Nifty fell 314.7 points in intraday trade to hit a low of 10,239.76 and 3198.95, respectively.
The Sensex closed with a loss of 800.51 points, or 7.07%, at 10,527.85. The Nifty lost 233.7 points, or 6.65%, to settle at 3,279.95. The BSE Midcap slipped 334.48 points, or 8.34%, at 3,676 and the Smallcap index was down by 343.74 points, or 7.31%, at 4,355.45.
The total market cap as on October 10 was Rs 3,401,515.26 crore as against Rs 3,652,581.27 crore on October 8, a net erosion of Rs 251,066.01 crore.
In the F&O segment, Nifty futures added 36 lakh shares in Open Interest and ended at a premium of nearly 23 points on back of cash based selling. Aggressive short build up was seen in private banking stocks. Metal, infrastructure, telecom and Oil & Gas stocks continued to see short build up. Nifty PCR slipped to 0.74 in today's trade.
This has been the worst weekly performance for the Sensex and Nifty ever. The Sensex ended down by 15.5% or 1950 points and the Nifty closed down by 14% or 550 points at day's low. All sectoral indices fell over 10% this week; BSE Metal and Capital Goods indices were down over 20%. Among the heavyweights, Reliance Industries was down 13%, ONGC down 10% and Bharti Airtel down 9%. Among the index losers, Suzlon tumbled 36% followed by Reliance
Infrastructure and Reliance Communication, which fell 30% each.
The August Index of Industrial Production (IIP) numbers came in at 1.3% versus 10.9% year-on-year (YoY), which was much lower than CNBC-TV18 expectations of 5.79%. Manufacturing growth for August stood at 1.1% versus 10.7% YoY, and the consumer durables growth for the period has come in at 5.1% against 6.2%. Capital Goods growth was at 2.3% versus 30.8% and Mining growth declined to 4% from 14.7%.
M Govinda Rao, Director of National Institute of Public Finance and Policy (NIPFP) and member of Economic Advisory Council (EAC) to the Prime Minister, admits that we are in an industrial recession given the IIP numbers that came in.
Rao, however, feels that a 7% Gross Domestic Product (GDP) growth rate is still within reach, "for the next year though, we are going to have a much more serious problem," he said.
However, RBI has taken initiative to increase liquidity in the system. Central Bank has cut CRR by 150 bps to 7.5% (including earlier announced 50 bps) with effect from October 11, which will inject around Rs 60,000 crore in the banking system. Bankers feel that this is good news from RBI.
Finance Minister P Chidambaram said the 150 bps CRR cut will infuse Rs 60,000 crore into the system. "In about 10-12 days, substantial liquidity will be infused. However, further steps are required to infuse liquidity into the market. We recognise that flow of credit smoothly is vital to the system," he said. According to Chidambaram, banks are well capitalised and regulated.
"Deposits are safe, so there is no need to worry about deposits."
He said it is difficult to talk about the impact on broader economy. "We are confident that our economy will continue to grow."
Chanda Kochhar, Joint MD and CFO, ICICI Bank said, "The CRR cut announced by RBI today is very welcome and a needed step in terms of rupee depreciation. I think this should have a cooling effect on the call money and the inter-bank borrowing rates that have been prevailing in the recent past."
Inflation for the week ended September 27 has fallen to 11.80% as against 11.99% in previous week.
On the global front, it was a worst session across the globe due to fear of Morgan Stanley going belly up, which was down 25% on Thursday. Moody's put Morgan Stanley long-term credit ratings on review for a possible downgrade. Hedge fund is facing redemption to the tune of 40-50% of net asset.
Asian markets like Nikkei lost 9.62%. Straits Times and Hang Seng closed down over 7%. Kospi fell 4.13% and Shanghai fell 3.57%. Taiwan market was shut today.
European markets were trading sharply lower due to bad cues from the US markets. FTSE, CAC and DAX were down by 8-9%, at 4:22 pm.
This has been terrible week for the global markets as well. Asian, US and European markets dropped 12-25%, 15-17% and 13-15%, respectively. Nikkei, Russian and Romania markets hit lower circuits this week. Sensex was 0.5% away from 10% lower circuit.
Coordinated global rate cut announcement made this week, which also did not stop markets from falling. Asian currencies declined 10-15% this week against dollar. Yen breached 100 to a dollar mark this week.
G7 meetings will be held today and tomorrow in Washington to discuss the financial turmoil. US government could guarantee bank deposits.
Dow Jones Futures was down 222 points and Nasdaq Futures fell 22.5 points.
Back to our markets, Reliance Communication, ICICI Bank, Reliance Infrastructure, Jaiprakash Associates, Tata Steel and Suzlon Energy fell 15-21%.
However, there were only two gainers on the Sensex and Nifty. Ranbaxy Labs gained 4.71% and SBI rose 2.27%.
Market breadth was pathetic; about 549 shares have advanced while 2432 shares have declined. About 202 shares remained unchanged.
Total turnover traded was very low, it stood at Rs 68,100.82 crore. This includes Rs 14,727.85 crore from NSE Cash segment, Rs 48,279 crore from NSE F&O and balance Rs 5,093.97 crore from BSE cash segment.
BSE Realty Index underperformed other indices; tumbled 321.27 points or 11.30%, to close at 2,523.07. Indiabulls Real, HDIL, Mahindra Life, Peninsula Land and Anant Raj Inds fell 15-19.5%. Unitech lost 12.38% and DLF fell 8.79%.
Sectoral Indices
Index
Current Value
Change (%)
REALTY
2523.07
-11.3
METAL
6542.57
-9.25
CG
7983.04
-9.22
POWER
1855.04
-8.8
BANKEX
5319.5
-7.84
OIL&GAS
7272.31
-6.72
AUTO
3255.68
-5.43
FMCG
1860.55
-4.46
IT
2584.25
-4.33
HC
3213.28
-3.92
Metal Index ended at 6,542.57, down 666.89 points or 9.25%. Welspun Gujarat, Gujarat NRE Coke, JindalStainless and Tata Steel tumbled 15-22%. Hindalco, Jindal Saw, Bhushan, Sesa Goa and SAIL fell 6.5-11%.
Capital Goods Index was down by 810.33 points or 9.22%, to settle at 7,983.04. Elecon Engg, Jyoti Structure, Punj Lloyd, Areva T&D, Alstom Projects, Crompton Greaves and Havells India fell 11-20%. Siemens, BEML, BHEL and L&T fell 8-10%.
Power Index fell 179.04 points or 8.8%, to settle at 1,855.04. Reliance Infrastructure, Suzlon Energy, GMR Infra and CESC went down 13.5-20%. Reliance Power and Torrent Power fell 9-10%.
BSE Bankex plunged 452.77 points or 7.84% at 5,319.50. Yes Bank, ICICI Bank, Axis Bank and IndusInd Bank fell 11-21%. Karnataka Bank, IDBI Bank, PNB and HDFC Bank lost over 5-6%.
ICICI Bank was down 27.96% at one point of day but managed to close at 364.10, down Rs 89.4, or 19.71% after clarification from the bank and some buying at lower levels.
Chanda Kochhar, Joint MD and CFO, ICICI Bank, said the bank has adequate rupee and global liquidity of Rs 12,000 crore. "We have no international investments, only loans on our balance sheet. We do not use rupee liquidity to fund global activities."
Kochhar said the bank has not seen a scale-down in deposit growths. "The focus this year is on current and savings accounts." According to her, the bank has not seen an increase in NPAs, or Non Performing Assets, as the corporate sector is holding up. "About 90% of total loans are India related."
Commenting on the banks' UK operations, Kochhar said exposures in the market there are very small given our size and profitability. "NPAs at 0% in UK subsidiary. Over 90% of investment in
UK market are to companies with atleast 'A' rating."
Telecom stocks Reliance Communication lost 21.02%, MTNL -10.80%, Tata Communication -8.97%, Bharti Airtel -5.68% and Idea Cellular -3.04%.
Oil & Gas Index slipped 524.15 points or 6.72% at 7,272.31. Essar Oil and Cairn India fell 11-13%. HPCL, Reliance Inds, GAIL, Reliance Petroleum and ONGC lost 5-8%.
Auto stocks also lost the road. Amtek Auto fell 23.68%. Ashok Leyland, Hero Honda, M&M,
Exide Industries, Bharat Forge and Tata Motors were other losers. Index lost 186.98 points or 5.43% to 3,255.68.
FMCG Index was down by 86.78 points or 4.46%, to settle at 1,860.55. United Spirits, United Breweries, Dabur India, Tata Tea, Marico, GlaxoSmith Consumer and HUL were major losers.
IT Index fell 116.98 points or 4.33%, to close at 2,584.25. NIIT, Mphasis, Tech Mahindra, Patni Computer, Financial Tech and Oracle Financial fell 10-16%. HCL Tech, Wipro, Satyam and TCS were also losers.
Infosys Technologies has reported good numbers; it reported consolidated net profit of Rs 1,432 crore versus Rs 1,302 crore, a jump of 10% quarter-on-quarter and net sales of Rs 5,418 crore versus Rs 4,854 crore. However, the company has lowered its FY09 guidance; it is expecting FY09 EPS at USD 2.24/ADR, revised down from earlier USD 2.32/ADR and consolidated revenues are seen at USD 4.72-4.81 billion, revised down from USD 4.97-5.05 billion. Due to which, the stock was down over 11% at one point of the day. It closed at 1,226.70, down Rs 27.65, or 2.2% on the BSE.
S Gopalakrishnan, CEO & MD of Infosys said, "If one looks at constant currency terms our guidance for the year actually comes down to 16-18%, 3% drop becuase of the currency movement. Almost all the currencies against dollar have actually depreciated and that has had a impact, thats why 16-18%. Then when we look at what all has happened in the 4 weeks trial it is prudent to be cautious and that's why we have revised the guidance down to 13.1-15.2%.
The Indian Rupee has depreciated upto 49.16 to a dollar in early trade. It was trading at around 48.475 to a dollar.
Healthcare Index plunged 131.09 points or 3.92% to 3,213.28. Sun Pharma Advanced, Lupin, Bilcare, Opto Circuits and Dishman Pharma tumbled 10-17%.
Among the midcap stocks, India Infoline, Nagarjuna Construction, Amtek Auto, Bajaj Hindustan, Welspun Gujarat and Yes Bank fell 20-25%.
In the small cap space, Glodyne Techno, Sanghvi Movers, Sparsh BPO Svcs, Diamond Cables and ETC Networks slipped 20%.
Worldwide Wipeout:
Asian Markets ends in Deep Red : Hangseng dn 7.1%, Kospi dn 4.1%, Nikkei 225 dn 9.6%, Strait Times dn 7.3%
Carnage on Dalal Street continues
Sensex hits a new 2008 low of 10239.7; Nifty hits a new 2008 low of 3198.9
Worst weekly performance for sensex & Nifty ever; Sensex ends down 15.5% or 1950 points and nifty ends down 14% or 550 points for the week
Sensex ends down 800 points to close at 10527; Nifty ends down 233 points to close at 3279
CNX Midcap Index down 7%, BSE Small-cap Index down 7.3%
Bse Realty Index dn 11.3%, Dlf dn 8.7%, Unitch dn 12.1%, Akruti city 7.2%, Hdil dn 18.8%, Ib Real Estate dn 19.4%
Bse Metal Index dn 9.2%; Tata Steel dn 15%, Hindalco dn 11%, Sail dn 7.2%, Sterlite dn 6.1%
Bse Cap goods dn 9.2%; Punj Lloyd dn 18%, Bhel dn 8%, L&T dn 7.8%, Abb dn 7.4%, Siemens dn 9.4%
Bse Bankex dn 7.8%; Icici Bank dn 19.8%, Yes Bank dn 20.1%, Axis Bank dn 14.6%, Hdfc down 8.8%
Bse Oil & Gas dn 6.7; Reliance Ind dn 7.3%, Cairn dn 11.9%, Rnrl dn 11.7%, Essar Oil dn 12.7%
Index Losers : Rcom dn 20.3% , Rel Infra dn 19.5%, Suzlon dn 17.6%, Rpower dn 9.8%
Relentless selling in midcap stocks : Core Proj dn 42.4%, India Infoline dn 24.9%, Nagar Const dn 24.2%, Bajaj Jind dn 22.3%
Relentless selling in midcap stocks: Welspun Guj dn 22%, United Spirits dn 21.1%, Bajaj Finserve dn 20%, India Bulls Sec dn 20%, Guj Nre Coke dn 19.7%
Horrible NSE Advance:Decline Ratio at 1:11
Total market turnover at Rs 68100.82 crore vs Rs 75587.35 crore
Nse F&O Turnover at Rs 48279 crore vs Rs 57666.95 crore
F&O Snapshot:
Nifty futures adds 36 lakh shares in OI; ends at a premium of nearly 23 points on back of cash based selling
Aggressive short build up in Private Sector banking stocks
Metal, Infra, Telecom and Oil & Gas stocks continues to see short build up
Nifty PCR slips to 0.74 in today's trade
Aggressive short build up in stock fut ; more than 30 stocks adds more than 10% OI build up
Liquid mid cap stocks butchered with selling in cash market
Unwinding in 3400 put continues
Call writing continues in 3400-3600 call options
Regards,
Allies Financial Services
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