Sensex crashes by 183 pts during the week

Mumbai, Feb 16: The Bombay Stock Exchange (BSE) Sensex drifted lower by 183.35 points to settle at 14,355.55 for the week ended February 15, while the National Stock Exchange (NSE) Nifty index lost 41.20 points to end at 4,146.20 points due to sustained heavy offloading by local operators in view of the Cash Reserve Ratio (CRR) hike by the Reserve Bank of India (RBI) recently, brokers said.

Brokers said the Sensex declined through the week amidst high volatility. A host of factors contributed to its fall like fears of further rise in domestic interest rates, a large number of Initial Public Offerings (IPOs) are lined up for the next few weeks, rising inflation, heavy unwinding of leveraged derivative positions and a surprise CRR hike.

The market is expected to stay sideways on account of mixed cues.

However,a correction cannot be ruled out. The benchmark Sensex witnessed a 183-point or 1.26 per cent correction in the week from February 9 to 15. It had touched an all-time high of 14,723.88 on February 9.

A consistent rise in the inflation has raised the eyebrows of analysts. As per the latest data released on Thursday, India's wholesale price index rose to 6.73 per cent for the week ended February 3 due to higher food and manufactured product prices.

The Indian government said it was cutting the retail prices of petrol by Rs 2 per litre and diesel by Re 1 a litre. This will put pressure on refining companies, impacting their profitability. The banking sector is also expected to remain under pressure following the latest 50-basis-point increase in CRR.

Volatility is expected to remain high in the week, ahead of the derivative expiry for February, which is scheduled on February 22.

The market is keenly awaiting the Union Budget 2007. It will take a direction based on what announcements are made at the annual event.

Hindustan Lever Ltd (HLL), Blue Dart Express, SKF India, FCI OEN Connectors, Clariant Chemicals (India), Wockhardt, Astrazeneca Pharma India, Gujarat Gas Company, Bosch Chassis Systems India and R S Software (India) will also be announcing their December quarterly results in the next week.

On the global front, a major event scheduled for next week includes the release of minutes of the last Federal Open Market Committee (FOMC) meeting. The markets will try to find clues about the next move of the United States Federal Reserve.

A pessimistic stance by the Fed, suggesting slowing economic growth and easing inflationary concerns, should weaken the US dollar further and assist the already booming global equity markets to appreciate further, experts predict.

On February 12, the Sensex plunged 348.20 points to settle at 14,190.70 and stayed in the red for the entire session, as plenty of stop losses were triggered due to highly leveraged positions in the derivatives market. Weak global markets also played spoilsport.

The Sensex lost 99.72 points on Tuesday to settle at 14,090.98 in a highly volatile trading.

The benchmark index shed 81.08 points to end at 14,009.90 on Wednesday.It had plunged to a low of 13,805.36, but recovered on short-covering in the later half of the day's trading session. The initial fall was because of a surprise hike in the CRR by the RBI to curb inflation and credit growth.

The Sensex rebounced after falling for the past four trading sessions, taking cue from the firm Asian markets and short covering in derivatives ahead of the expiry of February 2007 derivative contracts on Thursday. It jumped 345.65 points to settle at 14,355.55 that day.

The trading in BSE remained officially closed on February 16 for 'Mahashivratri' festival.

Aluminium major Hindalco Industries plunged 13.81 per cent to Rs 151.90 after its large all-cash acquisition of US-based Novelis for approximately US 6 billion dollars, including approximately USD 2.4 billion of debt, raising concerns about a short-term strain on financials.

Novelis posted a net loss of USD 102 million during the third quarter of 2006. The US company has been plagued by high metal prices, brokers said.

Reliance Communications Ltd (RCL) lost 2.05 per cent to Rs 466.10, after it lost the bid to acquire the fourth largest cellular services provider, Hutch Essar. Britain's telecom major Vodafone emerged the top bidder with a US 19 billion dollars bid. Vodafone's emergence as a top bidder has dashed RCL's hopes of becoming the largest mobile operator in the country. RCL added 1.2 million subscribers in January.

ONGC rose 2.25 per cent to Rs 903.50 amid reports that it had initiated talks with Brazil's Petrobras for offering each other a stake in their respective oil and gas blocks.

Reliance Industries Ltd (RIL) hiked by 1.58 per cent to Rs 1410, after it said that crude production from its deepwater gas block, off the country's east coast, was commercially viable.

Bajaj Auto (BAL) declined 1.16 per cent to Rs 3012. The company is targeting revenues of Rs 10,000 crore for the current fiscal with total sales of 28 lakh vehicles. Bajaj Auto also launched its 200 cc Pulsar DTS-i for Rs 65,497 ex-showroom, New Delhi. It will be the first bike with an oil-cooled engine of 18 BHP power.

IT major Infosys Technologies advanced 0.85 per cent to Rs 2382, on reports of the company scouting for mid-sized BPO companies in Europe, with a value of over Rs 400 crore.

Suzlon Energy plunged 19.71 per cent to Rs 1040 on concerns about a short-term strain on its financials due to plans for a big acquisition overseas. It offered USD 1.33 billion for RE Power Systems AG, trumping the offer by Areva of France by 20 per cent.

Suzlon Energy is bidding in consortium with Martifer of Portugal, a steel construction company.

Technocraft Industries India settled at a discount at Rs 100.90 on the day of debut, over the IPO price of Rs 105.

Theater chain operator Cinemax India settled at Rs 152.35, a slender discount as compared to an issue price of Rs 155 per share on February 14, 2007.

On February 15, Redington (India) settled at Rs 163.25, a premium as compared to the IPO price of Rs 113. House of Pearl Fashions, however, settled at Rs 469.40, a discount as compared to the IPO price of Rs 550 on the day of listing.

Growth in industrial output in December slowed from its fastest pace in more than a decade, but its persistent strength and rising inflation kept the prospects of further monetary tightening burning.

Data released on February 12 showed output rising 11.1 per cent in December, 2006, from a year earlier, in line with a median estimate of 10.9 per cent of analysts, but slower than the upwardly revised annual growth of 15.4 per cent in November.

The government estimates that the economy will grow 9.2 per cent in 2006-07, backed by rising industrial output and services.

The wholesale price index rose 6.73 per cent in the 12 months to February 3. It was higher than the previous week's annual increase of 6.58 per cent due to an increase in food and manufactured product prices, according to data released on February 15. The annual inflation rate was 3.98 per cent during the corresponding week of the previous year, brokers added.

UNI