Metals extend Sensex selloff

A recovery from lower level in mid-morning trade proved short-lived as weak global markets weighed on the domestic bourses. The Sensex was down over 400 points. Heavy selling was seen in metal, technology and oil and gas stocks.
After an initial slump caused by weak US economic data, the market had pared losses in mid-morning trade on the back of recovery in some Sensex stocks. A global sell-off was sparked by a fresh batch of dismal US economic data. Concerns that absence of easy access to cheap money to Indian firms may cause slowdown in economic growth, also weighed on the market.A tighter global liquidity environment has dried up access to overseas funding for Indian firms.
Asian markets, which opened before Indian market, mirrored losses in the US as weak US economic data dampened the upbeat market mood from Democrat Barack Obama's victory in the US presidential election. Key benchmark indices in China, Hong Kong, Japan, Singapore, South Korea and Taiwan were down by 2.55% to 7.56%.
US stocks slumped on Wednesday, 5 November 2008. The Dow Jones industrial average slid 486.01 points, or 5.05%, to 9,139.27. The Standard & Poor's 500 Index plunged 52.98 points, or 5.27%, to close at 952.77. The Nasdaq Composite Index lost 98.48 points, or 5.53% to 1,681.64.
Companies in the US cut an estimated 1,57,000 jobs in October 2008, the most in almost six years, a private report based on payroll data showed on Wednesday, 5 November 2008. Meanwhile, the Institute for Supply Management said the US service sector contracted sharply in October 2008.
At 12:30 IST, the 30-share BSE Sensex was down 315.36 points or 3.12% at 9,804.65. The index fell 471.85 points to 9,648.16 in early trade. The barometer index fell 183.87 points at the day's high of 9,936.14 in mid-morning trade
The 50-unit S&P Nifty was down 101.50 points or 3.39% to 2893.45.
The BSE Mid-cap index was down 2.19% to 3,320.42, while the BSE Small-cap index was down 2.16% to 3,879.24.
Market breadth was weak with 1556 shares losing and 644 stocks gainig on BSE. A total of 71 stocks were unchanged.
Hindustan Unilever, Ranbaxy Laboratories, TCS, Jaiprakash Associates, ONGC and Wipro rose between 0.13% to 1.93%. They were the only gainers from the Sensex pack.
Hindalco Industries, Sterlite Industries, Tata Power Company, Grasim Industries, Housing Development Finance Corporation, Reliance Infrastructure were down by 1.24% to 8.73%
World's largest steel maker, ArcelorMittal's poor earnings outlook for the fourth quarter hit steel pivotals. The world's sixth largest steel maker Tata Steel extended loss for the second session, losing 11.70%. The stock had plunged 10.05% in the previous trading session.
JSW Steel, Steel Authority of India, and Jindal Steel & Power were down 6% to 11.10%.
ArcelorMittal, on Wednesday, 5 November 2008, reported third-quarter net profit below expectations and forecast significantly lower earnings in the fourth quarter. The company also announced a series of measures, including more temporary production cuts and a pause in its growth strategy, in response to the economic slowdown.
Tata Motors, India’s largest commercial vehicle maker by sales, tumbled 10.65%, extending losses for the second session, as the firm closed its commercial vehicle plant in Jamshedpur for three days starting today to avoid a build-up of inventory. The stock had declined 6.53% in the previous session, ahead of the announcement.
Banking shares were in bear grip after State Bank of India chief O.P. Bhatt today said there is not enough liquidity in the banking system for money to flow from one bank to another, or from one bank to a customer. India's largest commercial bank State Bank of India fell 3.98% after Bhatt said the bank will announce a 75 basis point cut in its prime lending rate later today.
India's largest private sector bank by market capitalisation ICICI Bank fell 3.02%.
India’s largest private sector firm by market capitalisation and oil refiner Reliance Industries extended losses for the second session. The stock fell 5.49% even as the firm denied a newspaper report that it had shut five polyester and petrochemical plants near Mumbai amid falling demand. The stock had tumbled 12.76% in the previous trading session hit by the media report.
Telecom stocks fell for the second session in a row on concerns that a government move to charge more for radio spectrum may impact their earnings. India's largest telecom services provider by sales Bharti Airtel fell 7.26%, after Morgan Stanley cut the price estimate on the stock by 4.3% to Rs 950 a share.
India's second largest telecom services provider by sales Reliance Communication slipped 2.07% after Morgan Stanley cut price estimate on the stock by 45% to Rs 280.
Idea Cellular and its unit Spice Communication fell 5.42% and 2.19% respectively.
As per reports, the government plans to increase fees telecom firms pay for using additional spectrum by up to 2% of the firms' revenue, and would also levy a one-time charge for granting additional spectrum.
Stocks from the broader healthcare sector gained on defensive buying. Dr Reddy's Laboratories, Orchid Chemicals, Biocon, Fortis Healthcare, Kilitch Drugs, Sharon Bio Medicine, and Amrutanjan flared up by 2% to 4.55%.
Shares of the fertiliser makers extended losses after report yesterday suggested the government will grant lower fertiliser subsidy this fiscal. Nagarjuna Fertilizers & Chemicals, Chambal Fertilisers & Chemicals, Tata Chemicals, National Fertilizers, Gujarat State Fertilizers & Chemicals (GSFC), Rashtriya Chemicals & Fertilizers (RCF) and Zuari Industries, were down by 1.92% to 6.05%.
India's fertiliser subsidy bill for this fiscal year will be Rs 10,000 to Rs 12,000 crore less than the previous estimate of Rs 1,20,000 crore due to falling naphtha prices, reports quoted fertiliser minister Ram Vilas Paswan as saying on Wednesday, 6 October 2008. The government provides subsidy to the industry for selling fertilisers to farmers at prices cheaper than the cost of production.

Source: profit.ndtv.com