Sensex, Nifty to fall further: Monday Closing Report

Moneylife Digital Team 23 July 2012

If the Nifty closes below today’s low, the next support would be 5,060

All the Asian indices opened in the negative after a Chinese central bank adviser forecast an economic slowdown and on renewed concern that Greece may not meet its bailout targets, dampening demand for riskier assets. Back home the benchmarks also opened in the red. The Sensex opened 111 points below at 17,048 while the Nifty opened 42 points down at 5,163.

The opening figure of the Sensex was its intraday high while the Nifty hit that level almost immediately at 5,164. As we had mentioned in our Friday’s closing report that the Nifty has to break the range of 5,190 and 5,340 for a reversal. If the market closes below today’s low, we may see the index finding the next support at 5,060. The National Stock Exchange witnessed a volume of 47.62 crore shares.

Greece is in a “Great Depression” similar to the American one in the 1930s, the country's prime minister Antonis Samaras told former US President Bill Clinton on Sunday. Samaras was speaking two days before a team of Greece's international lenders arrive in Athens to push for further cuts needed for the debt-laden country to qualify for further rescue payments and avoid a chaotic default.

Back home, investors will closely watch political developments as the Nationalist Congress Party (NCP) holds a party meeting today to decide the future course of action on continuing its alliance with the Congress-led United Progressive Alliance (UPA) government. The NCP is upset over what it says the Congress’ unilateral approach in decision making. Party chief Sharad Pawar will hold consultations with senior party colleagues to decide the future course of action.

The weakness on the European opening pulled down the domestic indices further. The Sensex and the Nifty touched their lowest levels since 26 June 2012. Their intraday low was at 16,849 and 5,108. All Asian indices ended in the red.

On the Sensex it was the maximum percentage loss of 1.64% since 16 May 2012 and on the Nifty it was the maximum percentage loss of 1.67% since 1 June 2012. The Sensex closed 281 points lower at 16,877 while the Nifty closed 87 points lower at 5,118.

The advance-decline ratio on the NSE was negative at 369:1553.

Among the broader indices, the BSE Mid-cap index closed 1.31% lower and the BSE Small-cap index declined 1.14%.

All sectoral indices settled lower. The top losers were BSE Metal (down 3.35%); BSE Realty (down 2.87%); BSE Power (down 2.70%); BSE Auto (down 2.40%) and BSE Capital Goods (down 1.97%.

Barring Dr Reddy’s Laboratories (up 1.10%) and Cipla (up 0.43%), the remaining 28 stocks on the Sensex ended lower. They were led by Maruti Suzuki (down 5.65%); Sterlite Industries (down 5.19%); Hindalco Industries (down 4.67%); GAIL India (down 4.52%) and BHEL (down 3.95%).

The top two A Group gainers on the BSE were—Shriram Transport Finance (up 3.78%) and Indian Bank (up 3.32%).

The top two A Group losers on the BSE were—Crompton Greaves (down 9.19%) and Pantaloon Retail (down 7.89%).

The top two B Group gainers on the BSE were—SIL Investments (up 13.11%) and

Maestros Mediline Systems (up 12.61%). The top two B Group losers on the BSE were—Landmarc Leisure (down 15%) and Globus Corporation (down 12.82%).

The gainers on the Nifty were Dr Reddy’s Labs (up 1.19%); Cipla (up 0.91%) and ONGC (up 0.76%). The top losers on the index were Maruti Suzuki (down 5.75%); JP Associates (down 4.69%); Sesa Goa (down 4.67%); Sterlite Ind (down 4.66%) and Hindalco Ind (down 4.46%).

On the international front, a Chinese central bank adviser has predicted that the nation's expansion may slow down to 7.4% this quarter, adding to concern that the world's second-biggest economy has yet to bottom out. Song Guoqing, an academic member of the People's Bank of China monetary policy committee, also warned that a decline in producer prices along with consumer inflation may hurt investment returns of industrial companies.

Meanwhile, a German report over the weekend said that the International Monetary Fund may cut off aid to Greece. A visit by the inspectors from the European Commission, the International Monetary Fund and the European Central Bank—is set to start on Tuesday—to determine the fiscal position of the debt-ridden nation.

There is speculation that Spain’s banking sector bailout could widen to include aid for the government, as well. Spain revised down its gross domestic product (GDP) estimates from this year through 2014. Reports also said Spain's Valencia and Murcia regions may seek financial assistance from the government.

Ahead of its quarterly monetary policy review, the Reserve Bank of India (RBI) will hold a meeting tomorrow to firm up the policy action against the backdrop of prevailing macro-economic conditions. The RBI is scheduled to announce first quarter review of monetary policy on 31st July. The central bank is widely expected to maintain status quo as inflation at 7.25% in June is above its comfort level of 5-6%.

At the time of writing the European indices and the US stock futures were trading in the red.

Back home, foreign institutional investors were net buyers of stocks totalling Rs178.11 crore on Friday, whereas domestic institutional investors were net sellers of shares amounting to Rs84.40 crore.

Godrej Industries today said it plans to raise up to Rs 405 crore through a rights issue to institutional players. The company will issue up to 1,56,66,734 equity shares of Re1 each with a right, besides an additional allotment of up to 15,66,673 equity shares in case of over subscription. The stock tanked 5.80% to close at Rs231.50 on the NSE.

Aurobindo Pharma has received final approval from the US Food & Drug Administration (US FDA) to manufacture and market Metformin Hydrochloride Extended-Release (ER) Tablets USP 500 mg and 750 mg (ANDA 079118).

Metformin Hydrochloride ER Tablets are oral anti-hyperglycemic drugs indicated as an adjunct to diet and exercise to improve glycemic control in patients with type-2 diabetes. The annual sale of the product is approximately $230 million. The stock rose 0.05% to close at Rs108.45 on the NSE.

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Choose Carefully

Immediate Annuity Rates (%)

Age in Years	Tata AIG(%)	LIC(%)	Max New York Life(%)
21	7.086	-	-
21	7.086	-	-
21	7.086	-	-
21	7.086	-	-
21	7.086	-	-
21	7.086	-	-
21	7.086	-	-
21	7.086	-	-
21	7.086	-	-
21	7.086	-	-
21	7.086	-	-

Source: Smaller manufacturers for all drugs will have to rely on higher priced local

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Choose Carefully

Immediate Annuity Rates (%)

Age in Years	Tata AIG(%)	LIC(%)	Max New York Life(%)
21	7.086	-	-
21	7.086	-	-
21	7.086	-	-
21	7.086	-	-
21	7.086	-	-
21	7.086	-	-
21	7.086	-	-
21	7.086	-	-
21	7.086	-	-
21	7.086	-	-
21	7.086	-	-

Source: Smaller manufacturers for all drugs will have to rely on higher priced local

Nam dui justo, semper ut elementum ac, facilisis quis justo. Curabitur ac suscipit purus. Curabitur vestibulum arcu sit amet Fusce facilisis tristique fermentum.

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