Weak trend across global markets forced further decline in the markets today and both frontline indices settled below key levels. The Sensex slipped below 9900 at one point, recovered but still closed below 10000. The Nifty had seen a sharp pull back from below 3000 last week, but the index once again settled below that level.

The session saw considerable volatility after a very weak opening, which was on expected lines. After moving sideways till afternoon, the indices saw a significant rally, which helped them recover almost all their losses.

Just when the markets appeared to be on a recovery path, the indices dropped sharply and went close to the lows seen in early trades. There was no recovery from there as they closed near the lows of the day.

Sensex closed with losses of 256 points at 9957 and the Nifty lost 80 points to close at 2937. Nifty June futures ended at a discount of 50 points to the spot index.

The fuel price hike brought further misery for ONGC after the government said upstream companies would still boot a very high subsidy burden. The stock slipped over 5 per cent at one point before closing more than 4 per cent lower.

Reliance Industries lost more than 2 per cent as the change in import duty rates are negative for domestic refiners. Essar Oil dropped over 6 per cent while Reliance Petroleum declined more than 0.5 per cent. MRPL gave up over 4 per cent.

Reliance Energy, which had announced its interest in setting up nuclear power plants yesterday, was the biggest loser among index stocks and closed more than 7 per cent lower.

Auto stocks came under pressure following the fuel price hike. M&M lost nearly 7 per cent. Tata Motors dropped nearly 2.5 per cent while M&M lost almost a per cent. Bajaj Auto lost nearly 3 per cent.

Select engineering stocks had another rough day today. L&T, which had bucked the trend yesterday and rallied, was the biggest loser to end more than 6 per cent lower. BHEL lost almost 5 per cent.

The fuel price hike could not save the oil marketing stocks either. After opening with modest gains, they slipped into the red and closed with substantial losses. BPCL lost more than 5 per cent while HPCL lost nearly 3 per cent.

Even technology stocks gave up further ground today. HCL Technologies closed nearly 6 per cent lower. Wipro gave up over 2.5 per cent while TCS ended over a per cent lower. Infosys lost 2 per cent and Satyam declined nearly a per cent.

Hindalco was the biggest loser among metal stocks, closing nearly 5.5 per cent lower. Sterlite Industries lost another 6 per cent. Among steel stocks, Tata Steel lost almost 3 per cent while SAIL ended nearly 3.5 per cent lower.

Among FMCG stocks, Tata Tea closed nearly 5.5 per cent lower. HLL and ITC lost more than 4.5 per cent each.

Pharma stocks were no different and continued their downtrend. Ranbaxy ended more than 5.5 per cent lower. Sun Pharma lost nearly 4.5 per cent while Dr. Reddy and Glaxo lost 3 per cent each. Cipla ended 2.5 per cent lower.

There were no gainers among index stocks for much of the session. However, short covering in the afternoon helped 6 Nifty stocks to close with gains.

SBI led the gainers' pack, closing more than 3 per cent higher. ICICI Bank added almost a per cent while PNB ended with modest gains.

Dabur, Hero Honda and Tata Power were among the other gainers.

Global markets / crude oil
US markets slipped substantially yesterday after the Fed chairman said inflation remains a concern. The statement renewed fears that the Fed would continue to raise interest rates. Rate fears had subsided last week after weak economic data.

The Dow and S&P 500 indices lost nearly 1.8 per cent each. Technology stocks were once again worse off and the NASDAQ lost nearly 2.25 per cent.

Asian markets were weak today following the decline in US yesterday. Indonesia was the biggest loser closing nearly 2.5 per cent lower. Japan dropped nearly 2 per cent while Thailand lost over 1.5 per cent. Singapore lost over 0.7 per cent and Hong Kong declined over 0.25 per cent. Shanghai closed one-third of a per cent lower.

European indices have opened considerably weak after losses in the US and Asia. All major indices in Western Europe are trading with losses of around a per cent each.

Crude oil prices remained almost unchanged yesterday after strong gains in Asian and European trades. Near month NYMEX futures settled at $72.6 per barrel yesterday. The commodity is trading with marginal gains in early European trades today.

Large-cap news flow

• JSW Steel has restarted its HR strip mill after modernisation and expansion of capacity from 2 million tonnes to 2.5 million tonnes per annum.

Mid-Cap Action
Mid-caps and small caps declined further in the absence of any buying interest even at substantially lower levels. Stocks which saw buying frenzy till early May are finding no buyers even after declining more than 50 per cent from their highs. At one point, the mid-cap and small cap indices were trading around 4 per cent each lower.

The CNX Mid-Cap index lost 156 points, or 3.71 per cent, to end the day at 4051. Market breadth on the NSE was extremely negative throughout the session.

Property stocks and stocks of companies with real estate plans came under further selling pressure today. Mahindra Gesco and Bombay Dyeing lost more than 12 per cent each. Other like Unitech, Adani, Godrej Industries and Ansal ended at the 5 per cent lower circuits.

Sugar stocks were mixed today as some stocks recovered while others declined substantially. Bajaj Hindustan ended more than 11.5 per cent lower while Balrampur Chini added nearly a per cent and Sakthi Sugars closed nearly 3 per cent higher. Many others closed with losses of between 4 and 5 per cent each.

Lokesh Machine, Titanor Components, Graphite India, Mysore Cements, Man Industries and Magma Leasing were among the major mid-cap gainers.

Ucal Fuel, Prime Securities, India Infoline, Everest Kanto, Godrej Consumer and Tube Investments were among the significant mid-cap losers on the NSE.

Mid-cap news flow

• Gammon India has won 2 new projects from the NHAI for construction of a bridge and a bye-pass road as part of East-West corridor highway project. The company would have a concession period of 20 years for the projects which are expected to cost Rs1,080 crore.
• A consortium including Gammon has won a project for construction of a container terminal at Dakar, in Senegal, West African. The total value of the project is reportedly Rs141 crore.
• Deccan Chronicle has raised advertisement rates by 35 per cent across all editions. The company would do a sale and lease-back transaction for printing equipment to generate cash flows of Rs180 crore. Deccan Chronicle is also considering an equity dilution of up to 10 per cent of authorised capital.
• A consortium including Punj Lloyd has won the contract to construct an LNG terminal at Dabhol from Ratnagiri Gas and Power, the company which took over the Enron power plant. Total value of the project is $93 million. Punj Lloyd would hold a 50 per cent interest in the consortium and the project would be completed in 18 months.
• Berger Paints would issue bonus shares in the ratio of 3 shares for every 5 shares held.
• Four Soft said it has acquired four new customers in the last quarter including international express freight companies, Fedex and TNT.
• has signed a long-term supply contract with JSW Steel for 3,000 tonnes per day of oxygen, nitrogen and argon. The company would set up an air separation unit at JSW Steel's plant in Bellary, Karnataka. The unit would go on stream in two years.
• Diamond Cables will issue 25 lakh equity shares and 1 lakh convertible warrants to private equity firm Clear Water Partners at a price of Rs95 per share. Clear Water would hold a 14.9-per cent stake in the company on conversion of the warrants. The company would also issue 7.5 lakh equity shares and 5.5 lakh warrants to existing promoters.
• Viceroy Hotels has availed term loans of Rs56 crore for its proposed Bangalore project.
• Kirloskar Oil Engines has sold its castings division to Kirloskar Ferrous for Rs21 crore.
• Strides Arcolab has announced an equal joint venture with a US-based company for developing and marketing generic drugs. Strides would manufacture the drugs for the JV. Investment details have not been revealed.
  

*Disclaimer: The author may have positions in some of the stocks specifically mentioned above at the time of writing this article. This analysis / report is only for the purpose of information and is not an investment advice. Readers are advised to consult a certified financial advisor before taking any investment decisions. While efforts have been made to ensure the accuracy of the information provided in the content the author or publisher shall not be held responsible for any loss caused to any person whatsoever.

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