Sensex down 1.3%, Morgan to Buy Stake in NSE

Ivaylo
09 Mar, 2007
New York City

The benchmark index opened with a positive bias and until noon was on the rise. Then, news came of the agreement cement large-caps have reached with the government not to raise cement prices. That coupled with the higher inflation figures dampened sentiment. High volatility also troubled investors. Grasim, ACC led the decliners, while NTPC and Hero Honda led the gainers. Inflation rose 6.1% in the twelve months to February 24. Morgan Stanley, Citigroup and Actis, to buy 6% stake in the NSE.

[R]8:00AM NY-7:00PM Mumbai; Sensex tumbles on higher inflation and cement prices.[/R]
The Sensex on BSE closed 164.36 points, or 1.26%, lower at 12,884.99. The market-breadth was negative as 1,308 stock declined, 1,098 advanced and 60 were unchanged. Of the 30 stocks in the Sensex 6 advanced, while the rest declined. The turnover on BSE was Rs 4,339.08 crore. The turnover on NSE was Rs 9,641.18 crore, higher than Rs 7,954.06 on Thursday.

Economic news

The annual inflation rate was just above 6% in late February, thus keeping alive the prospect of another hike in interest rates. Data on Friday showed wholesale price index rose 6.10% in the 12 months to Feb. 24, little changed from the previous week annual increase of 6.05%. Wholesale price-based index inflation rate stood at 4.18% during the corresponding week last year.

Morgan Stanley, Citigroup and Actis have agreed to buy a total of 6% in NSE for an undisclosed amount. While Morgan Stanley will purchase 3% equity stake in NSE, Citigroup and Actis will buy 2% and 1%, respectively. The Bombay Stock Exchange Ltd announced on Wednesday, February 7, that it was selling a 5% stake to Singapore Exchange at Rs 5,200 per share.

The cement companies today promised to keep prices stable for a year even if the costs of inputs go up. The companies, however, refused to roll back the recent hike which has been done because of rise in excise on 50-kg bags costing Rs 190 or more.

The government said that there is no ceiling on export credit given by public sector banks to small-scale companies. Finance Minister P Chidambaram said that banks usually sanction the working capital, including export credit, after assessing individual customer performance.

IPO

Idea Cellular, a leading mobile operator in India, made a strong debut on the bourses today, opening at Rs 85, with 13.33% premium and touched an intraday high of Rs 92 supported by strong buying interest from investors despite volatility in the markets. It ended at Rs 85.70, up 14.27%.

Trading highlights

New issues Idea Cellular was the most-active stock with a turnover of Rs 559.20 crore followed by Century Textiles and MindTree Consulting.

Advancers

NTPC led the gainers, up 2.7%, to Rs 140. The company is planning to float a subsidiary for its international operations and build a 700 Mw gas-based power plant in Nigeria and 500 Mw thermal power plant in Sri Lanka.

Hero Honda was up 2.5% to Rs 690, Tata Steel gained 1.5% at Rs 434.

Tata Steel surged after it acquired 100% stake in Rawmet Industries Private, a company having its registered office in Kolkata, for an enterprise value of Rs 101 crore.

Decliners

Cement shares were down sharply after India's cement companies agreed to hold prices of the key building material for a year. Grasim slumped 7.5% to Rs 2,069, ACC tumbled over 6% to Rs 781, and Gujarat Ambuja shed 2.6% to Rs 110. India Cements plunged over 8% to Rs 153, and UltraTech Cement plummeted 4.8% to Rs 780.

Other decliners included BHEL and ITC declining around 3.5% each to Rs 2,095 and Rs 154, respectively. Cipla shed 3.2% to Rs 229 and Hindalco tumbled 3.1% to Rs 128.

Hindustan Lever was down 0.14% to Rs 183.55, after rallying close to 10% on significant volume on Thursday. Cigarette large-cap ITC was down 3.44% to Rs 154.35.

Index heavy Reliance Industries shed 2% to Rs 1,308.05. Reliance Communications lost 2.5% to Rs 423, L&T declined 2.5% to Rs 1,482 and Dr Reddey’s dropped to Rs 660.


[R]6:30AM Europe was lower Friday on weak metal, drug and mining sectors.[/R]
European markets were off to a weak start on Friday. By mid morning, Frankfurt Xetra Dax fell 0.5% to 6,677.11, the CAC 40 in Paris shed 0.8% to 5,482.19 and London FTSE 100 lost 0.4% to 6,203.8.

Advancers

Thales, the French defence electronics group, topped the earnings table after posting a better-than-expected 4.5% increase in full-year operating profit, while guiding strong revenue growth for the next two years. Thales shares added 4.1%. Sanofi-Aventis advanced 0.1% after Goldman upgraded it to buy, saying concerns over Plavix and Lovenox are now priced in. Ahold, the Dutch retailer, was up 1.6% as bids circulated in for the company US Foodservice division, valued at around $6 billion.

Decliners

EADS, the European aerospace group, fell 1.8% after losses at its Airbus unit were largely resposible for an 86% drop in 2006 operating profits. The pharmaceuticals sector was led lower after Goldman Sachs lowered its rating on the UK GlaxoSmithKline from neutral to sell. GlaxoSmithKline dropped 1.7%. Meanwhile Novartis, the Swiss drugmaker, fell 2.1% as investors took profits on its recent strong performance.

Oil and gold

Oil prices were almost flat in Asian trading Friday as market participants looked for trading cues from U.S. jobs data due later in the day. Crude oil for April delivery dropped 6 cents to $61.71 a barrel in electronic trading on the New York Mercantile Exchange, mid-afternoon in Singapore. Brent crude for April delivery fell 3 cents a barrel on London ICE Futures Exchange. Gold opened Friday at a bid price of $652.90 a troy ounce, up from $651.20 late Thursday.

Currencies

The euro gained slightly against the U.S. dollar on Friday before US expected release of key economic data. The euro bought $1.3147 in morning European trading, up from $1.3135 the night before in New York. The British pound dropped slightly to $1.9290 from $1.9293 the night before, while the dollar rose to purchase 117.43 Japanese yen from 117.14 in New York.

[R]5:00AM Copper rallied Thursday, while gold and silver gained modestly.[/R]
On the New York Mercantile Exchange, March copper gained 5.35 cents to settle at $2.8255 per pound, while most active May added 5.15 cents to $2.8335. April gold edged up $2.60 to end at $655.50 a troy ounce, while May silver settled up 1.5 cents at $13.12. April platinum reached $1,218.80, which is its strongest level since Friday, before ending at $1,214.50 an ounce, up $22. June palladium settled down 70 cents at $353.05 an ounce.

April gasoline advanced 3.06 cents at $1.9261 a gallon, the highest for a front month contract since Aug. 22. The front-month April crude oil contract lost 18 cents to close at $61.64 a barrel, after earlier hitting $62.30. April heating oil fell 0.61 cent to $1.7613 a gallon. April natural gas settled down 12.7 cents at $7.239 a million British thermal units.

On the New York Board of Trade, May Arabica coffee futures ended up 0.20 cent at $1.1240 a pound, with July up 0.20 cent at $1.1530. Futures on raw sugar in foreign ports closed down 0.09 cent at 10.59 cents a pound, with July off 0.07 cent at 10.51 cents. March corn ended 3.75 cents lower at $4.12 per bushel, May settled 3 cents lower at $4.21.50, and December finished 1.50 cent higher at $4.10.75.