Just a month after starting the decline, the markets have given up all their gains made during this calendar year. The Sensex slipped below 9000 at one point today to levels last seen during December 2005. Mid-caps and small caps are even worse off.

Sustained weakness across global markets saw the indices opening lower. As the other Asian indices declined further, Indian indices followed suit. The weak opening by Europe was the last blow and both frontline indices declined nearly 5 per cent each to their day's lows.

Some amount of short covering in stocks like SBI and ONGC helped the indices to pull back marginally and the Sensex managed to close above 9000.

The Sensex closed with losses of 414 points at 9063 and the Nifty lost 114 points to close at 2663. Nifty June futures ended at a discount of 44 points to the spot index.

Banking and financial sector stocks were once again the worst hit. HDFC tumbled a massive 9 per cent while PNB gave up more than 8 per cent.

HDFC Bank lost nearly 6 per cent while ICICI Bank lost another 3 per cent. Oriental Bank of Commerce lost 4.5 per cent.

However, SBI managed a rally towards the end of the session and closed with gains of 0.5 per cent. The stock was the only gainer among index stocks.

Among metals, Tata Steel lost more than 9 per cent making it the biggest loser among index stocks. SAIL slipped nearly 4 per cent.

Nalco declined 3.5 per cent and Hindalco gave up over 2.5 per cent. Sterlite was the biggest loser among metal stocks, closing more than 11 per cent lower. Hindustan Zinc gave up 8 per cent.

Telecom stocks came under renewed pressure today. VSNL lost more than 7.5 per cent while MTNL ended more than 7 per cent lower. Bharti and Reliance Communications also closed lower.

Among power utilities, Tata Power lost nearly 8 per cent. NTPC lost more than 3 per cent and Reliance Energy declined almost 2.5 per cent.

M&M was the big loser among autos, closing more than 7 per cent lower. Maruti declined nearly 6.5 per cent and Tata Motors lost over 4.5 per cent.

Bajaj Auto crashed more than 10 per cent at one point but recovered and closed 5 per cent lower. Hero Honda gave up nearly 7 per cent.

Capital goods heavyweight BHEL lost close to 7.5 per cent. ABB lost almost 4 per cent while L&T ended over 6 per cent lower.

Among technology stocks, Wipro lost nearly 6.5 per cent while TCS and HCL Tech declined more than 4 per cent each. Infosys lost almost 4.5 per cent and Satyam ended more than 3.5 per cent lower.

Reliance Industries lost more than 4.5 per cent while ONGC recovered and closed with very marginal losses. Gail ended 7 per cent lower.

Global markets / crude oil
US markets declined further yesterday as worries about rising inflation and interest rates persisted. Statements from Fed officials that the central bank is closely watching inflation data kept the markets unnerved. Decline in crude oil prices affected oil stocks while technology stocks were the worst hit on negative news flows on individual companies.

The Dow ended close to a per cent lower while the S&P 500 slipped more than 1.25 per cent. NASDAQ declined for the seventh straight day and closed more than 2 per cent lower.

Asian markets slumped today after showing some signs of a recovery yesterday. Japan had one of the worst declines in the last few years, closing more than 4 per cent lower. South Korea and Indonesia lost nearly 3 per cent each and Hong Kong ended 2.5 per cent lower. Thailand and Singapore ended nearly 2 per cent each lower while Malaysia lost close to 1.5 per cent.

The weakness has spread to Europe as well and European markets all opened with losses of more than a per cent each. Major indices in Western Europe have slipped further and are trading with losses of close to 2.5 per cent each.

Crude oil prices declined yesterday after weather forecasts indicated that a storm in the Gulf of Mexico would miss oil installations. Near month NYMEX futures slipped below $70 for some time yesterday and closed at $70.36 per barrel. The commodity has declined below $70 once again and is trading with losses of more than a per cent in early European trades today.

Large-cap news flow

• Media reports indicate that Maruti would set up joint ventures with Indian and Japanese auto component manufacturers to meet its own demand besides supplying to Suzuki's motorcycle operations in India. Details of its possible partners and investment are not known.
  
  
• Tata Motors has received an export order for buses from Democratic Republic of Congo in Central Africa. The order is worth Rs55 crore.

Mid-Cap Action

Mid-caps and small caps tumbled after resisting a major decline yesterday. They opened weak and most of the stocks declined substantially on panic selling. Many stocks were once again saved by the 5 per cent and 10 per cent circuits.

The CNX Mid-Cap index declined below 3500 and finally closed with losses of 229 points, or 6.24 per cent, to end the day at 3436. Market breadth on the NSE remained extremely negative throughout the day.

The BSE mid-cap index lost 6.31 per cent and the BSE small cap index closed 6.01 per cent lower.

After the very weak listing yesterday, Deccan Aviation lost another 15 per cent today. The stock has lost more than 45 per cent from its issue price of Rs148.

Unity Infraprojects, another new listing yesterday, lost more than 17 per cent.

Alps Industries and KEI Industries closed with losses of close to 20 per cent each. Gitanjali Gems, Carborundum Universal, Hikal, Shah Alloys and SPL lost over 15 per cent each.

Popular mid-caps like IndiaBulls and Bajaj Hindustan lost around 14 per cent each. Balrampur Chini lost close to 10 per cent.

Max India, Ponni Sugars, Trent, i-Gate Global, Celebrity Fashions and Astra Microwave were among the mid-cap gainers.

Mid-cap news flow

• Srei Infrastructure Finance has won various road projects worth a total of Rs3,000 crore in partnership with other construction companies. Most of these projects are on a BOT basis and would be completed over the next 3 years. The company's share in the projects has not been disclosed.
  
  
• Punj Lloyd has won an order worth $79 million from Kazakhstan for laying an oil pipeline and overhead electric lines.
  
  
• Pantaloon Industries said its garment subsidiary Indus League would form an equal JV with Lee Cooper International for marketing various Lee Cooper products including eyewear and footwear in the domestic market.
  
  
• Greenply Industries has allotted 6.7 lakh equity shares and 5.45 lakh convertible warrants at a price of Rs114 per share to a promoter company.
  
  
• Educomp Solutions has signed contracts to provide computer aided education in 500 schools each in the states of Gujarat and West Bengal. Total value of the contracts is Rs50 crore over the next few years.
  
  
• Opto Circuits would issue bonus shares in the ratio of one share for every share held.
  
  
• Bhagyanagar Metals has also announced a bonus issue in the ratio of one share for every share held.
  
  
• South East Asia Marine has taken delivery of an offshore services vessel from Malaysia.
  
  
• Simplex Infrastructure would raise up to $200 million from the domestic or international markets by issuing equity or related instruments. The company would also split its Rs10 shares into 5 shares of Rs2 each.
  
  
• GMR Industries has clarified that it has not allotted any shares to Citigroup Ventures on a preferential basis. The company had announced recently that it had allotted shares at a price of Rs270 per share to Citigroup. Reasons for the cancellation are not known.
  
  
• Khaitan Electricals has postponed the preferential allotment of shares to strategic investors and promoters.
  
  
• Man Industries has received an order worth Rs400 crore from Iran for supply of pipelines. Reliance Industries has also placed a Rs100 crore order with the company.
  
  
• Gujarat NRE Coke has acquired an undisclosed stake in a New Zealand based mining company for NZ$20 million. The company has also contracted to purchase up to 4 lakh tonnes per annum of coking coal from the New Zealand company.
  

*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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