Mkts shattered on oil spike, inflation worries;Bank dn 5.3%

Markets were completely under rough weather after free fall in US markets. Crude at new all-time high and likely subsequent impact on Indian Inflation has spooked the markets. Bears smashed out bulls. It was a dreadful opening session for July series as well.

Rate sensitives like auto, banking and realty stocks have taken huge beating. Infrastructure sectors like capital goods, telecom, metal and power also hammered a lot. All indices witnessed huge selling pressure. The Sensex has lost over 650 points, which closed at 13-month low; lowest since May 14, 2007. The Nifty fell over 195 points during the day.

Main reason behind today's fall was sharp sell off in US markets on the back of rising crude oil price and disappointing earnings from tech giants.The Dow Jones fell more than 350 points in Thursday's trade to close at its lowest level since September 2006. Crude Futures has hit new all-time high of $141.71 a barrel on the NYMEX during the day.

Victor Shum, Sr VP of Purvin & Gertz said reduced interest rates and weak dollar have led to crude rally. He also said crude is likely to gain if ECB hikes rates in July.

The Sensex has touched an intraday low of 13,760.24, down nearly 661.58 points over previous close. It ended the day at 13,802.22, down 619.60 points or 4.3%. The Nifty has slipped below 4200, which closed at 4136.65, down 179.2 points or 4.15%. It has hit a low of 4119.20, down 196.65 points over previous close.

Draggers of indices are ICICI Bank, HDFC, Reliance Industries, ONGC, Infosys Tech and L&T. Market breadth was negative; about 701 shares have advanced while 2180 shares declined. Nearly 248 shares remained unchanged. 

Nifty Futures ended at discount of 61 points, which added 33.5 lakh shares in Open Interest. F&O turnover was higher than average on the first day of new series. Nearly 70-80% of F&O stocks was having negative cost of carry. Fresh shorts have seen across sector; mostly in interest rate sensitive stocks. Nifty turnover was highest since November 2007.

Inflation for the week ended June 14 has risen further at 11.42% as against 11.05% in earlier week. Inflation for April 19 revised to 8.23% versus 7.57% earlier. Experts believe that inflation may increase further if crude oil prices stay at these levels.

Inflation Internals

• Primary articles up 0.2%
• Fuel, power, energy up 0.1%
• Manufacturing up 0.6%
• Food articles, textiles up 0.7%
• Metals & alloys up 0.3%, minerals up 3.6%
• Food articles: tea up 3%, fish, marine, milk, maize up 1% each
• Non food articles down 0.5%
• Non food: linseed oil down 3%, groundnut, cotton down 2% each

HSBC spokeperson says that don't expect inflation will have peaked, may go upto 15%. They also see double digit inflation to stay for about 9 months and are cautious on the growth rate outlook for FY10.

Deutsche Bank says it's not done on the rate hike front if oil prices stay at current levels.

Amongst frontliners, NALCO was down -9.84%, Tata Motors -8.94%, Wipro -8.69%, HDFC -8.22% and Reliance Infra -7.72% while Cairn India gained 1.20% and Dr Reddy's Labs 0.07%.

On the weekly basis, the markets witnessed heavy loss. The Sensex plunged by 5.2% and Nifty down 4.8%. BSE Bankex fell 10%. Amongst frontliners, Nalco slid 22% followed by Tata Power -15%, Hindalco -13%, L&T, Maruti, Sterlite, M&M down nearly 12% each. However, RIL shot up by 3.5%, Cairn India 3% and RPL 1.5%. In the midcap segment, S Kumars slumped 25%, HCC and Triveni Engg fell 22% each.

Bankex was the worst hit index in today's session, fell 345.64 points or 5.34% at 6,125.95. Sell off seen in Bank of India, Axis Bank, ICICI Bank, Kotak Mahindra, Yes Bank, SBI, PNB and HDFC Bank.

Ajay Shah of the National Institute of Public Finance and Policy, said the Reserve Bank of India's move is in the right direction and that policy rate has to be higher. He thinks the monetary policy is not very effective at combating inflation in India. Shah said, "We are in for a rough ride on inflation, and there will be further rate hikes."

Auto stocks crushed very badly, index plunged 204.83 points or 5.26% at 3,689.92. Tata Motors, M&M, Bajaj Auto, Exide Industries, Ashok Leyland, Maruti Suzuki and Hero Honda lost the road.

It was a horrified situation for realty stocks, which includes Phoenix Mills, Indiabulls Real, Mahindra Life, DLF, Orbit Corporation, HDIL and Unitech.

Power stocks like Reliance Infra, GMR Infra, Tata Power, Reliance Power, GVK Power, Suzlon Energy, Power Grid Corp, Neyveli Lignite and NTPC completely darkened. Index was down 119.55 points or 4.87% at 2,335.26.

Metal Index slid 630.96 points or 4.53% at 13,292.45 due to selling in NALCO, Sterlite Ind, SAIL, JSW Steel, Hindalco, Tata Steel and Jindal Steel. It also butchered heavily year-to-date.

Technology stocks like HCL Tech, Wipro, Satyam, Infosys, Mphasis and TCS have lost ground. Index fell 177.11 points or 4.24% at 4,004.75.

Capital Goods stocks also whacked, which includes Triveni Engg, Bharat Bijlee, Siemens, ABB, L&T and BHEL . Index closed at 10,442.14, down 445.09 points or 4.09%.

Telecom stocks like Reliance Comm, Tata Comm, Idea Cellular, Bharti Airtel, TataTeleservices and MTNL also remained under heavy selling pressure.

FMCG space also beaten down badly, which includes stocks like United Spirits, Dabur India, Tata Tea, Marico, ITC and HUL Index plunged 3.24% at 2,073.15

Oil & gas stocks also slipped barring Cairn India. Index lost 289.75 points or 2.99% at 9,387.63.

Healthcare Index has recovered a bit though fell 1.4% at 4,150.05. Pharma stocks like Panacea Biotech, Sterling Bio, Divis Labs, Ranbaxy Labs, Cipla and Biocon lost ground.

Midcap Index slid 183.29 points or 3.19% at 5,558.75 and Small Cap fell 191.01 points or 2.68% at 6,938.07. Amongst midcap stocks, Hind Const, Phoenix Mills, IRB Infra, Atlas Copco, Sintex India, Triveni Engg, Panacea Biotech, TV 18, Asian Hotels, Nagarjuna Fert, IBN18 Broadcast and Deccan Aviation fell around 8-14%.

In the small cap space, Vipul, Prime Securities, TVS Motor, Bartronics, Satra Properties, Sanghvi Movers, Sahara One, Alok Industries, Kemrock Indus and Surana Ind were down over 8%.

Year to date perfomace of Indices

Most active counters on the bourses were Reliance Ind, ACC, Tata Steel, L&T, Reliance Petroleum and Bharti Airtel.

Turnover traded for the markets stood at Rs 64128.33 crore. This includes Rs 12716.76 crore from NSE Cash segment, Rs 45408.54 crore from NSE F&O and the balance Rs 6003.03 crore from BSE Cash segment.

On the global front, Asian markets ended sharply lower following weak cues from US markets. Shanghai fell -5.3%, Nikkei -2.01%, Taiwan Weighted -3.4%, Hang Seng -1.84% and Kospi down 1.93%. European markets were trading weak, at the time of writing market report. FTSE 100 fell 0.5%, CAC 40 -1.2% and DAX down 1.6%.

Markets Snapshot

• Sensex closes at 13-month low; lowest since May 14, 2007
• Inflation at 11.42% Vs 11.05% for week ended June 14
• Sensex ends down 620 pts at 13802; Nifty ends down 179.2 pts 4136.65
• CNX Midcap Index down 2.8%; BSE Small-cap Index down 2.7%
  Interest rate sensitives take a knock
• BSE Bank Index down 5.5%; ICICI Bank down 6.5%, SBI down 5.1%, HDFC Bank down 3.7%
• BSE Auto Index down 5.2%; Tata Motors down 9%, M&M down 7.25%
• BSE Metal Index down 4.5%; Nalco down 9.8%, SAIL down 6.7%
• BSE Realty Index down 4.5%; DLF down 6%, Unitech down 2.4%
• Index Losers; Wipro down 8.7%, HDFC down 8.2%, Rel Infra down 7.7%
• Losers; Kaveri Telecom down 20% for 2nd day running
• S Kumars down 17.8%, HCC down 13.2%, IRB Infra down 10%, Prime Sec down 10%
• Bank of India down 9%, Nag Fert down 8%, Chambal Fert down 7.7%, GMR Infar down 7.4%, JP Ass down 7%
• NSE Advance Decline at 1:6
• Total market turnover at Rs 64128 cr; F&O turnover at Rs 45408 cr

F&O Snapshot

• Nifty Futures discount at 61 pts; add 33.5 lakh shares in OI
• F&O turnover higher than average on the 1st day of new series
• Nearly 70-80% of FNO stocks having negative cost of carry
• Fresh shorts seen across sector; mostly in interest rate sensitive stocks
• Nifty turnover highest since Nov 2007
• Fresh Shorts
  NTPC down 3.6%; add 30 lakh shares in OI; negative cost of carry
  Tata Steel down 5%; add 20.5 lakh shares in OI; negative cost of carry
  Power Grid down 5.5%; add 19.2 lakh shares in OI; negative cost of carry
  ICICI Bank down 7.8%; add 10.2 lakh shares in OI; negative cost of carry
  ONGC down 3.7%; add 9.5 lakh shares in OI; negative cost of carry
  Unitech down 4.6%; add 23.1 lakh shares in OI; negative cost of carry
  Bharti down 3.5%; add 10.7 lakh shares in OI; negative cost of carry
  RIL down 2.5%; add 6.8 lakh shares in OI; negative cost of carry
• Options:
  Nifty Dec 3800 Puts turn active; adds 6.2 lakh shares
  Nifty 4000 put adds 34.7 lakh shares
  Nifty 4100 put adds 26.5 lakh shares
  Nifty 4300 call adds 29.6 lakh shares
  Nifty 4400 call adds 26.7 lakh shares
• Fresh long:
  Cairn up 2.4%; adds 13.1 lakh shares 

Markets This Week

• Sensex down 5.2%, Nifty down 4.8%
• CNX Midcap Index down 8%, BSE Small Cap down 6.2%
• BSE Bankex down 10%, ICICI Bank down 11%, HDFC Bank, SBI down 7%
• Index Losers - Nalco down 22%,Tata Power down 15%, Hindalco down 13%, L&T, Maruti, Sterlite, M&M down nearly 12%
• Index Gainers - RIL up 3.5%, Cairn up 3%, RPL up 1.5%
• Midcap Losers - S Kumars down 25%, HCC, Triveni Engg down 22%, HDIL, IFCI down 18%
• Non-Index Losers - Kotak Mah Bank, Reliance Power down 18%, GMR Infra, Indiabulls Fin down 13%

Contd on Page 2..........