Sensex Loses 1.2%, Rupee Soars

Ivaylo
26 Mar, 2007
New York City

The benchmark index opened with a positive bias but quickly plunged into negative territory dragged by selling in large caps. Investors exited long positions ahead of the March 2007 derivative contracts expiry. Banks, auto stocks and IT shares lost. Tata Motors and HDFC Bank led the decliners, while Satyam was among the few advancing large-caps. The government proposed creating sugar buffer.

[R]8:00AM NY- 7:00PM Mumbai Sensex plunges on selling pressure, rupee surges.[/R]
The Sensex on BSE finished 161.61, or 1.22%, lower at 13,124.32. The market-breadth was weak as there were more than two decliners for each advancer. As 1,740 stocks declined, 843 advanced and 60 remained unchanged. Of the 30 stocks in the Sensex only four advanced, while the other 26 declined. The turnover on BSE was Rs 3,126 crore. On NSE, the turnover was Rs 6,753.15.

Economic news

The sugar industries received a boost as the government declared the creation of a buffer stock mechanism, as also export incentives for two years. There would be an export subsidy of Rs 1,350 per ton for coastal sugar mills and an export subsidy of Rs 1450 per ton for northern mills. There would be an incentive of Rs 440 per tonne for export of raw sugar.

The rupee surged sharply to near 20-month high of 43.4150/43.4250 against the U.S. dollar in late morning deals tracking sharp increase in forward dollar trading and local banks sold dollar holdings to relieve tight cash conditions in the banking system.

Arcelor Mittal announced on Sunday the company could build steel plants in two Indian states, rather than just one. Mittal had signed an initial agreement with the state government of the Jharkhand in 2005 to build a $9 billion steel plant there but progress has been slow on problems over securing an iron ore mine.

Trading highlights

Indiabulls Real Estate was the most-active stock with a turnover of Rs 261.70 crore followed by Reliance Communications and MindTree.

Advancers

IT large-cap Satyam Computers led the gainers, up 1.73% to Rs 472.2, on a volume of 5.15 lakh shares. ONGC added 1.2% to Rs 853.2 and Tata Steel advanced 0.7% to Rs 441.9. Reliance Comm gained slightly 0.2% to Rs 426.3. Reliance Communications is planning to set up an overseas initial public offering for its international communication subsidiary FLAG Telecom, and has short-listed four merchant bankers for the float.

Decliners

Tata Motors was the top-loser, down 4.51% to Rs 754, on 2.66 lakh shares traded on BSE, after dipping to a low of Rs 749.35. Maruti Udyog lost 2.48% to Rs 818.9, while Hero Honda lost 1.72% to Rs 667.9. HDFC Bank plunged 3.5% to Rs 976.

Bajaj Auto shed 0.34% to Rs 2,525. The company is planning to manufacture small car to compete with proposed car from Tata at one lakh rupees.

Other large-cap decliners included HDFC, off 2.03% to Rs 1,562 and Reliance Energy shedding 2.30% to Rs 475. Maruti and Wipro slipped 2.5% each to Rs 819 and Rs 586, respectively.

Index heavy Reliance Industries lost 0.74% to Rs 1,369, on a volume of 3.70 lakh shares. Reliance Industries informed BSE that a separate meeting of equity shareholders, secured creditors, including debenture-holders & unsecured creditors will be held on April 21, 2007, to approve merger of Indian Petrochemicals Corporation with the company.

[R]7:00AM European equities declined Monday on weak utilities, Iran tensions.[/R]
European stocks were lower on Monday morning. German Xetra Dax lost 15.2 points, or 0.2%, at 6,884.09 and in Paris, the French CAC 40 eased 16 points, or 0.2%, at 5,619.16, the U.K. FTSE 100 index declined 0.1% to 6,331.50.

Advancers

Porsche announced it planned a buyout offer fo VW. Porsche rose 3.1%. Porsche was forced to launch an offer after exercising an option to take its stake above 30%, to 31% from 27.3%.

OMV gained 2% after Citigroup boosted its price target for the refiner and reiterated a buy recommendation. UK homebuilders surged. Taylor Woodrow shares rose 15.6% while Wimpey shares increased 10.4%.

French information technology services company Atos Origin shares rose 3.3% as it said that its supervisory board has decided to explore strategic options following recent expressions of interest in the company.

Decliners

Volkswagen shed 3.4% after rival carmaker Porsche said it planned a buyout offer for VW shares. Eiffage lost 5.1% as some of the bid speculation which pushed the French construction company up by 40.3% last week faded.

E.On shares declined 0.8% as it raised its offer for Endesa of Spain. E.On said that it will exercise all legal options against Enel and Acciona, which on Friday said they were considering making a bid for Endesa.

Oil and gold

Crude oil surged to its highest in three months after Iran took 15 British servicemen captive and the United Nations imposed new sanctions on the country, heightening worries supplies from the Middle East will be disrupted. Crude oil for May delivery climbed 61 cents, or 1%, to $62.89 a barrel in after-hours electronic trading on the New York Mercantile Exchange, the highest since Dec. 26. It was at $62.77 in early trade in London. Brent crude oil for May settlement rose 73 cents, or 1.2%, to $63.91 a barrel in electronic trading on the ICE Futures exchange.

Gold gained in London, powered higher by investors buying the metal as a haven and hedge against inflation. Gold for immediate delivery in London rose $2.60, or 0.4%, to $660.00 an ounce today.

Currencies

The dollar traded at a one-week high against the euro on speculation a U.S. government report will show a rebound in new home sales in February. The dollar traded at $1.3263 per euro in early trade in London from $1.3283 in New York March 23. Against the euro, the pound was at 67.67 pence in London, from 67.72 on March 23. It also traded at $1.9598, from $1.9614. Against the Japanese currency, the dollar traded at 118.23 Japanese yen, up from 118.05.

[R]5:00AM Cocoa rallies Mondy, while precious metals lose the upside momentum.[/R]
Most-active May cocoa on the New York Board of Trade surged $19 to end at $1,920 a metric ton, after setting a new contract high of $1,924 a ton. The May Arabica coffee contract finished up 1.60 cent at $1.1335 a pound, while futures on raw sugar in foreign ports for May declined 0.02 cent to 10.20 cents a pound.

April gold shed $6.90 to $657.30 a troy ounce on the New York Mercantile Exchange with May silver also down 25.3 cents to $13.227 an ounce. April platinum shed $7.60 to $1,233.40 an ounce, while June palladium added $1.75 to settle at $359.50. The most-active May copper contract lost 0.40 cent to close at $3.0690 per pound.

Crude oil for May delivery settled up 59 cents at $62.28 a barrel, the highest for a front-month contract since Dec. 22. April gasoline also added 4.08 cents to end at $1.9983 a gallon, after trading as high as $2.02, the highest for a front-month contract since Aug. 21. April heating oil dipped 0.69 cent to $1.7102 a gallon and April natural gas also settled down 5.1 cents at $7.269 per million British thermal units.

On the Chicago Board of Trade, May corn ended 6.25 cents lower at $4.0325 per bushel, while May soybeans closed 2.25 cents down at $7.6950. May wheat closed 5.50 cents lower at $4.6150 per bushel.