Markets faced the first major correction in the last couple of months today, triggered by the RBI decision to increase CRR and Tata Steel's higher bid to acquire Corus. Despite positive global cues, markets started on a weak note and by mid-morning, frontline indices had lost more than a per cent each.
More losses were in store as banking and telecom stocks saw a free fall. Tata Steel slipped nearly 9 per cent and frontline stocks across sectors saw heavy selling pressure. At one point the Sensex was staring at a 500 point slide as long positions were unwound aggressively.
Sensex closed with losses of 400 points at 13399 and the Nifty ended lower by 112 points at 3850. Nifty December futures closed at a discount of 41 points to the spot index.
PSU banking stocks crashed following the CRR hike by RBI. Higher reserve ratio would result in lower funds available for lending. PNB was the worst performer among index stocks, losing 8.44 per cent. SBI lost 8.04 per cent and OBC closed 4.47 per cent.
Among private sector banks, ICICI Bank slipped 6.76 per cent and HDFC Bank ended 4.89 per cent lower.
All the top-10 losers in the Nifty Junior index were banking stocks. Among them, Bank of India lost 10.15 per cent and Bank of Baroda lost 8.95 per cent. Canara Bank, Syndicate Bank and Corporation Bank all lost over 8 per cent each. IDBI, IOB, Union Bank, Andhra Bank and Vijaya Bank were the other major losers.
Tata Steel tumbled after the company announced an enhanced bid for Corus. The stock was down nearly 9 per cent at one point and finally ended 6.36 per cent lower.
Among other metals, Hindalco gave up 3.11 per cent and SAIL gave up 2.31 per cent. Nalco lost 4.02 per cent.
Zee Tele continued its decline and lost another 7.26 per cent after the company lost the bid to acquire international cricket telecast rights for the next 7 years.
Among power utilities, Tata Power lost 5.17 per cent and Reliance Energy 4.98 per cent.
ACC was the worst performer among cement stocks, losing 6.22 per cent. Gujarat Ambuja Cement lost 2.66 per cent and Grasim gave up 2.02 per cent.
VSNL tumbled 5.6 per cent while Bharti lost 4.34 per cent and Reliance Communications 4.04 per cent. MTNL lost 3.11 per cent
Among index heavies, Reliance Industries lost 2.3 per cent and ONGC slipped 0.71 per cent
M&M shed 3.65 per cent and Tata Motors gave up 3.16 per cent. Maruti ended 2.81 per cent
There were no gainers among Nifty stocks
Global markets / crude oil
Asian markets were mostly positive following the up trend in US indices on Friday. Shanghai was the best performer, surging more than 4 per cent, while Hong Kong ended a per cent higher.
Singapore gained more than 0.75 per cent while Japan added 0.65 per cent. Malaysia and South Korea ended with modest gains.
Indonesia was the only loser, ending nearly 0.9 per cent lower.
European markets opened on a positive and are holding on to the gains. Major indices are trading with gains of between 0.1 and 0.7 per cent each in early afternoon trades.
Crude oil prices have corrected today and have slipped below the $62 per barrel mark. Near month NYMEX futures are trading nearly 0.5 per cent lower in European trades today.
Large-cap news flow
- Tata Steel has raised its offer for Corus Group to 500 pence per share in cash or a total of $9.17 billion as against the earlier offer of 455 pence. The board of Corus met yesterday and has decided to recommend the higher offer to its shareholders. Later reports indicate that Brazilian company CSN has made an even higher bid at 515 pence per share.
- L&T has won the order worth Rs5,400 crore for the design and construction of new terminals and other expansion at the Delhi airport. The order covers the design and construction of a new passenger terminal and a new runway before 2010. The terminal would have a capacity to handle 37 million passengers per annum while the runway would be 4.43 km long.
- Infosys has become the first Indian company to be a part of the NASDAQ-100 Index of 100 largest non-financial companies by market value on the NASDAQ. The entry into the index would be effective from 18 December.
- Satyam said it has been selected by Microsoft as one of the partners to help companies and customers to migrate to Microsoft's new operating system
- The board of ICICI Bank has approved the merger of Sangli Bank with the bank. The merger ratio has been fixed at 100 shares of ICICI Bank for every 925 shares of Sangli Bank, which would result in a dilution of around 0.4 per cent.
- SBI would raise $300 million from an issue of 5-year medium term notes (MTN) at a coupon rate of LIBOR+50 basis points
Mid-caps and small caps also crashed, in line with the weakness in large caps. Many of the big gainers from recent weeks lost heavily. Banking stocks were among the worst performers in the mid-cap space also. Selective buying continuance and a handful of stocks were locked in upper circuits.
The CNX Mid-Cap index ended with losses of 159 points, or 3.12 per cent, at 5100. BSE mid-cap index lost 2.51 per cent and the BSE small cap index ended with losses of 2.71 per cent.
Goldstone Technologies sustained the up trend from last week and ended at the 20 per cent upper circuit. Indo-Count, FCS Technologies and Sanwaria Agro all closed at 10 per cent upper circuits
Navneet Publications, Vardhman Poly, Lakshmi Percision, Federal Moghul Goetze and Weizman Industries were the other major mid-cap gainers
Blue Bird India had a weak listing today. Issued at Rs105 per share, it opened at Rs128 on the NSE and slumped to a low of Rs91. The stock finally ended nearly 13 per cent below its issue price at Rs91.5.
Among the smaller banking stocks, IndusInd Bank lost 11.43 per cent and Lakshmi Vilas Bank lost 10.8 per cent.
Shreyas Shipping, Piramyd Retail, Hanung Toys, McNally Bharat, Shyam Telecom and Nagreeka Exports were among the major mid-cap losers.
Mid-cap news flow
- Hexaware said it has been selected as a partner by a US-based company for RFID-based solutions. The company would set up a centre on RFID solutions for transportation and supply chain management
- Opto Circuits has received an international certification for quality management
- Accentia Technologies has received High Court approval for the merger of privately held Iridium Technologies and Geosoft Technologies with the company
- Panyam Cement would raise Rs11.5 crore from a preferential issue of equity shares at a price of Rs55 per share
- Mysore Cement said Heidelberg Cement, which had made an open offer for the company's shares, has approached the Securities Appellate Tribunal against a SEBI order to increase the offer price
- Rain Commodities would hike FII investment limit to 49 per cent
- ICSA India is planning to set up a subsidiary in Singapore
- Patni Computers has tied up with Sage Software to offer CRM solutions of the latter in the Indian market
- Borosil Glass is planning to issue convertible warrants to promoters at a price of Rs276.5
- Chowgle Steamships has bought a 1995-built handymax vessel which would join the fleet before March 2007
- Rajesh Exports has formed a subsidiary to consolidate its retail initiatives, which would have 180 retail stores under 3 different brands. The company has formed another subsidiary to develop its real estate holdings in Bangalore
- IVRCL Infrastructure said the 1,655 acres of land under its subsidiary has been assessed to have a value of between Rs3,888 crore and Rs4,297 crore
- Shreyas Shipping would invest up to Rs150 crore for acquiring companies engaged in logistics in India or abroad.
- The board of Aftek has approved the merger of 2 privately held entities with the company along with the merger ratios
- Kew Industries has allotted 70 lakh convertible warrants to raise Rs21 crore
- Aurobindo Pharma said it has received regulatory approval in The Netherlands for a cholesterol-lowering drug Simvastatin.
- Rama Pulp would spend Rs60 crore for its capacity expansion programme.
*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.