Sensex

Monday, October 27, 2008

DG - FW: Sharekhan Post-Market Report dated October 27, 2008

 

 

From: The Sharekhan Research Team [mailto:marketwatch@research.sharekhan.com]
Sent: 27 October 2008 17:50
To: The Sharekhan Research Team
Subject: Sharekhan Post-Market Report dated October 27, 2008

 

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October 27, 2008

 

Index Performance

Index

Sensex

Nifty

Open

8,599.58

2,583.75

High

8,739.48

2,585.30

Low

7,697.39

2,252.75

Today's Cls

8,509.56

2,524.20

Prev Cls

8,701.07

2,584.00

Change

-191.51

-59.80

% Change

-2.20

-2.31

 

Market Indicators

Top Movers (Group A)

Company

Price 
(Rs)

%
chg

Gainers

Unitech

42.70

41.86

Godrej Industries

72.15

18.18

Indiabulls Real Estate

111.45

15.07

Nagarjuna Construction

48.75

12.59

Oracle Financial

477.35

10.26

Losers

Glenmark Pharma

259.25

-20.00

Bajaj Holdings

290.00

-17.26

Cairn India

101.40

-15.89

Jet Airways

144.40

-15.73

United Phosphorus

143.10

-15.70

Market Statistics

-

BSE

NSE

Advances

515

224

Declines

2,019

1,247

Unchanged

43

12

Volume(Nos)

31.07cr

65.50cr

 Market Commentary 

Sensex drops by 192 points

The market erased most of its losses from the early crash, with the Sensex ending 2.20% lower and the Nifty dipping by 2.32% at close. 

The Sensex ended the day with a loss of 192 points after crashing to a low of 7,697 during intra-day trades. The market crashed by over 1,000 points,

 

in line with the other major global indices. The day started with the Sensex resuming 101 points lower at 8,701. It tanked by another 940 points to touch the day's low of 7,697 on relentless selling in CD, auto, FMCG and PSU stocks. The Sensex managed to recover around 850 points in the late trades, but still ended with a loss of 192 points at 8,510. The Nifty shed 2.31% or 60 points to close at 2,524.

The market breadth was negative. Of the 2,577 stocks traded on the BSE 2,019 stocks declined, 515 stocks advanced and 43 stocks ended unchanged. Among the sectoral indices, the BSE CD Index tumbled 6.24%, the BSE Auto Index slipped 5.93%, the BSE FMCG Index lost 5.63% and the BSE PSU Index was down 5.43%. However, the BSE Reality, Teck and Oil & Gas indices gained marginally.

Several index heavyweights came under selling pressure and ended in the red. Tata Motors was the major loser and tumbled by 13.95% at Rs140.05. Mahindra & Mahindra at Rs248, JP Associates at Rs53.40, Grasim Industries at Rs952.65, Tata Power at Rs570.25, SBI at Rs1,056.60 and L&T at Rs723.80 slumped by around 7-13% each. 

Select counters logged significant gains on fresh buying support. Bharti Airtel bucked the downtrend and gained 5.99% at Rs566.45. RIL was up 5.83% at Rs1,074.70 whereas Reliance Infra, Reliance Communication, Sterlite Industries, ICICI Bank, TCS, Satyam and Infosys also gained marginally. 

Over 2.73 crore Unitech shares changed hands on the BSE followed by Suzlon Energy (1.55 crore shares), IFCI (1.02 crore shares), RPL (10.07 crore shares) and Hindalco (83.02 lakh shares).

European Indices at 16:00 IST on 27-10-2008

Index

Level

Change (pts)

Change (%)

FTSE 100 Index

3687.11

-196.25

-5.05

CAC 40 Index

2989.76

-204.03

-6.39

DAX Index

4126.21

-169.46

-3.94

Asian Indices at close on 27-10-2008

Index

Level

Change (pts)

Change (%)

Nikkei 225

7162.90

-486.18

-6.36

Hang Seng Index

11015.84

-1602.54

-12.70

Kospi Index

946.45

7.70

0.82

Straits Times Index

1600.28

0.00

0.00

Jakarta Composite Index

1166.41

-78.45

-6.30

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DG - Steps Required From Government

The no of suicide cases are more from the financial crisis arising out of stock market meltdown compared to farmers. Therefore the need of the hour is to restore confidence.

 

Ask FII's to reverse all their lending within 30 days. 30 days time frame is more sufficient to cover all lending in the light of the fact that FII's themselves agree that selling is more due to redemption pressure. This act will provide exit to all wanting to sell due to forced sell. It will act as balancer.

 

Reduce STT to pre budget level to bring back jobbers which used to provide handsome amount of liquidity. Govt can afford to forgo small amounts of tax worth Rs 300 to 1000 crs on capital gains and STT as they are now saving over Rs 1 lac crores in OIL.   

 

Make short term capital gains tax zero as this will help only domestic investors and help divert savings. FII's are in any case using tax heavens to avoid tax in India.

 

Bank lending against shares to be raised from Rs 20 lacs to Rs 200 lacs and the margin should be only 30 pc instead of 50 pc to restored to 50 pc after market reached 10000 plus.

 

All M F investments should be made dividend tax free. All savings diverted to MF will get IT benefit upto Rs 5 lacs across the board from the existing Rs 1 lac selectively.

 

Cut the CRR rate repo rate and interest rate simultaneously to create across the board impact on liquidity and consumption.

 

Use the market stabilization funds by investing in the stock market which is being done by all Govt's world over.  

 

 

What exchanges and market regulators can do…

 

Differentiate between long and short by imposing double margins on shorting. The margin on long had been increased to 25% in case of nifty recently which has also triggered in huge winding up of long due to margin as well as mark to mark. At the same time shorting has seen mark to mark credit giving upper hand to short sellers. Margins should be made 50 pc in case of shorting which could provide level plying. This will help short covering.

                           

Increase the creeping acquisitions limits to 15% across the board so that all promoters wish to provide exit to investors mat use this opportunity to buyback their shares.

 

Introduce physical settlement immediately. JPC in 2003 has directed FNIMIN and market regulator to introduce the physical settlement which has till date not been implemented. This has been used to distort the share prices on the last day of the settlement. If this is not possible then the derivative market be renamed as speculative markets as the very purpose of hedge is missing.        

 

There is mechanism to bring the price rigging to book where even Rs 50000 benefit has met with market regulators action in rising market but there is no mechanism in vertical fall in scrips. There is no instance where investigation has resulted in action in shorting.

 

All IPO should have a condition of market making for 12 months. The price band be fixed. This will allow Govt funds, PF, ESI, trusts and small savings to enter capital markets to make it healthy. This will also stop R Power and Resurger like episode in the market.

 

Bring all foreign broking houses under insider trading rules for making any comments in any share where they have executed buy or sell transactions on behalf of their foreign clients. Typically it is seen they execute huge buy and/or sell orders for weeks and months after the event is getting over they come out with reports and issue comments of weakness and firmness as the case may be. Recently it is seen in Tisco and RIL.    

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