Indices decline further as Asian markets see heavy selling

18 January 2006

The markets opened sharply lower on weak global cues. US markets had closed lower yesterday as crude prices surged affecting sentiment across Asia today.

Both the Sensex and Nifty continued to trend lower for most of the session. The afternoon session saw more selling pressure as news of major losses in other Asian markets came in. The last hour saw a recovery which helped the indices to recover part of their losses.

The Japanese stock market was shut down today after a massive sell-off triggered by investigations into the activities of an internet company. The Nikkei dropped close to 5 per cent at one point before trading was halted on worries about the trading system's ability to handle the huge volume of trades.

Almost all other Asian markets lost substantial ground today. South Korea lost more than 2.5 per cent while Indonesia lost over 1.5 per cent.

Banking stocks had a weak day, led by OBC, which lost nearly 3 per cent. PNB also lost nearly 3 per cent while SBI declined over 1.5 per cent.

ONGC declined nearly 2.5 per cent and was responsible for much of the damage to the indices.

Reliance Industries lost from the closing levels of the special trading session held today morning. The stock declined nearly 1.5 per cent and closed at Rs694.

Tata Motors, HPCL and Nalco were the other losers among today's trade.

VSNL was the biggest gainer among index stocks as it recovered from losses of the last few sessions. The stock closed nearly 3.5 per cent higher.

Wipro gained after the announcement of results and closed nearly 3 per cent higher. Hindalco saw a late surge which helped the stock to close nearly 3 per cent higher.

ABB, GAIL, Gujarat Ambuja and Dr. Reddy were the other gainers among index stocks.

Sensex closed at 9238, a loss of 76 points, and the Nifty at 2809, lower by 20 points. Nifty January futures closed at a discount of 16 points to the spot index.

The sharp surge in oil prices pulled down the US indices yesterday. Higher oil prices added to the uncertainties of the results season and traders resorted to selling. Oil stocks gained even as most other sectors lost ground.

The Dow closed more than 0.5 per cent lower while the NASDAQ lost nearly two-thirds of a per cent. S&P 500 index ended with losses of one-third of a per cent.

Reports of possible UN sanctions against Iran over the nuclear issue triggered a major rally in crude prices yesterday. Reports of violence near oil production facilities in Nigeria gave further momentum to the up trend. February crude oil futures on the NYMEX closed at $66.3 per barrel yesterday, higher by nearly 4 per cent. The commodity has gained further and is closing in trading above $67 per barrel in early European trades today.

The special trading session for Reliance Industries between 8:00 am and 9:00 am this morning saw huge volumes as the stock started trading on a de-merged basis.

The stock had a better than expected closing at Rs714. The average price from the special session would be used for index computations from today onwards. In the futures segment, new contracts based on post-demerger prices started trading from today.

Wipro announced better than expected numbers for the quarter ended December. Consolidated net profits were at Rs544 crore as compared to Rs427 crore during the previous year. For the fourth quarter Wirpo expects income to grow 7.8 per cent sequentially.

Wipro added 61 new clients and more than 5,000 new employees during the December quarter. The company said it is expecting major outsourcing contracts in the next few quarters. Analysts are expecting the company to bag a major long term contract from GM.

HDFC has reported a net of Rs285 crore for the December quarter as compared to Rs236 crore during the year ago quarter. Total income for the quarter was higher at Rs1,055 crore as compared to Rs848 crore.

December quarter net profits of Ranbaxy more than halved to Rs67 crore as compared to Rs157 crore reported the same quarter of previous year. For the financial year ended December, Ranbaxy has reported a net profit of Rs259 crore as compared to Rs699 crore for the pervious year. Total revenues were also lower at Rs5,342 crore as against Rs5,513 crore.

Ranbaxy has maintained the revenue growth target of 18 per cent for 2006 and expects total revenues to touch $2 billion in two years. The company said part of the growth would come from acquisitions without giving further details.

SBI Caps, a subsidiary of SBI, has entered into a tie-up with Credit Lyonnais or CLSA for working together on large corporate deals and advisory services. The tie-up may be converted into a joint venture in future. Other details are not known.

Bajaj Auto has reportedly acquired a 27-per cent stake held by the government of Maharashtra in Maharashtra Scooters. After the deal Bajaj Auto would hold a majority stake in Maharashtra Scooters.

Mid-Cap Action

Mid-caps also continued their decline from yesterday and losses on the mid-cap index were only marginally lower than the frontline indices. The CNX Mid-Cap index lost 28 points and closed the day at 4113.

Kale Consultants has announced that it has won a new order from Bangkok Airways. The 5-year contract is for providing revenue accounting services for the airline. The value of the order has not been disclosed.

The board of Bank of Rajasthan has approved a rights issue in the ratio of 1 share for every 5 shares held. The issue would be priced at Rs50 per share.

Opto Circuits has announced that it has acquired a small Bangalore based manufacturing company for less than Rs1 crore.