Sensex Sheds 2.4%, Industrial Production Surges

Ivaylo
12 Feb, 2007
New York City

The market opened with a negative gap and kept its downward trend for the whole session. The market-breadth was appalling as there were seven decliners to every advancer and not a single stock in the Sensex ended in positive territory. Hindalco led the decliners, Reliance Comm, BHEL and Bharti Airtel also plummeted. India

[R]7:00AM NY-6:00PM Mumbai Sensex plummets on selling pressure.[/R]
The Sensex on BSE finished 348.20 points, or 2.39%, lower at 14,190.70. The market-breadth was very weak as there were seven decliners for each advancer. For 2,312 shares that declined on BSE, only 334 advanced and only 27 shares were unchanged. The turnover on BSE was Rs 3,266 crore, lower than Rs 4,332 crore on Friday. The turnover on NSE was Rs 8,908.45 crore, compared to Rs 9,175.13 crore on Friday.

Economic news

Industrial production in December 2006 advanced 11.1%, compared with 5.7% in the same month last year. The growth figure for November 2006 has also been revised upwards to 15.4%, from the earlier estimate of 14.4%. Growth in the manufacturing sector was 11.9% in December 2006, higher than 6.4% in December 2005, while electricity grew by 9.3% in December 2006, compared with 3.4% in the same month last year. The figures raised concerns that the Reserve Bank of India may hike the interest rates in order to curb inflation and to prevent overheating of the economy.

Vodafone won the battle for Hutch-Essar with a $19 billion bid. Vodafone will offer ultra low-cost handsets, and bring Vodafone live! to India. Hutch-Essar will aim at 20% to 25% of the market share. The management team will not be changed.

Trading highlights

Global Broadcast was the most-active stocks with a turnover of Rs 247 crore followed by Hindalco and newly-listed Technocraft.

IPO

Technocraft Industries India ended at 100.90 on BSE on its first day on the market, with a volume of 98.63 lakh shares. It listed at Rs 125 on BSE, which is 19.04% over the IPO price of Rs 105. It reached an intra-day low of Rs 97.35, and an intra-day high of Rs 130.

Decliners

Hindalco Industries, the aluminum large-cap, led the decliners plunging 14% after acquisition of Novelis worried investor about a short-term tension on financials as Hindalco will have to pay in cash. The company ended at Rs 149.05. The deal stood at $6 billion, including nearly $2.4 billion in debt. Novelis is the largest flat rolled products company in the world with a 19% share of the global market.

Reliance Communications also took a plunge of 4.63% to Rs 453.55, as it lost the bid to buy the Hutch Essar in a bid rivalry with Vodafone. Other large-cap decliners included BHEL shedding 6.25% to Rs 2,348, Bharti Airtel off 4.62% to Rs 718 and Gujarat Ambuja Cements losing 4.54% to Rs 132.50. Of stocks with heavy weightage in the Sensex, Reliance Industries finished at Rs 1,354, losing 2.5%, Infosys dipped 0.5% to Rs 2,350 and oil leader ONGC slipped 2.12% to Rs 865. ICICI Bank ended at Rs 965 and TCS at Rs 1,254, each lower around 2.7%.

Advancers

In a day of heavy losses, there were no prominent advancers on BSE.