Nifty closes below 3100 on weak global cues; Metal dips 8%

The market has snapped two days of gain. It has fallen in line with global cues. The profit booking was majorly seen in metal, realty, banking, oil and telecom stocks. Midcap and small cap stocks were also under pressure. The Nifty has closed below 3100 mark, after struggling at that level for major part of the day.

Reliance Industries, Bharti Airtel, NTPC, SBI, ONGC, Reliance Communication, ICICI Bank, Cairn India, SAIL L&T, Infosys and Tata Steel were major contributors to this fall.

The Sensex lost 513.49 points or 4.81%, to settle at 10,169.90. The NSE Nifty Fifty closed at lowest level since July 26, 2006. It went down 169.75 points or 5.25%, to end the day at 3065.15.

Devesh Kumar, Managing Director of Centrum Capital said that the market may not bounce in a hurry. He sees a range of plus-minus 1000 points for the market. Kumar added that market looks attractive for investment with 1–2 year horizon. He said export-oriented and auto-component companies may see pain.

Kumar further said that FY09 will reflect impact of tightening liquidity, and that one should expect earnings to build again in FY10.

The Moody's has downgraded the Tata Steel outlook to negative from stable. This downgrade change led by outlook change for Tata Steel UK. It has changed outlook for Corus to negative from stable. On account of this, the share price of Tata Steel fell over 12% and touched new 52-week low of 238.30.

The meltdown was seen in other metal stocks as well. Sterlite Industries, Jindal Steel, NALCO, SAIL, Welspun Gujarat, JSW Steel and Hindalco lost 6-10%. The BSE Metal Index tumbled 482.31 points or 7.9%, to settle at 5,619.45.

The global cues have played a key role in today's session. Among the Asian markets, the Nikkei sliped 6.79% followed by Straits Times, Kospi and Hang Seng, which fell over 5% each. Shanghai lost 3.2% and Jakarta fell 4.19%. Taiwan was down 1.62%.

The Japanese Yen fell below 100 to a dollar and hit 99.08/bbl during the day.

FIIs were net sellers in the Taiwan market trade today (provisional); they sold about USD 128 million. FIIs have net sold USD 2.7 billion in this month till date.

European markets namely FTSE, CAC and DAX were down close to 3%, at 4 pm. The Dow Jones and Nasdaq futures were down about 1.38% and 0.75%, respectively. UK manufacturing confidence has dropped to its weakest level in almost three decades.

In the currency segment, Euro and Pound tumbled on the expectation of rate cuts in Europe and United Kingdom. The Euro fell below 1.28 to a dollar for the first time since November 2006 while the Pound tumbled to a 5-year low.

International Monetary Fund (IMF) said that more European banks may fail. These banks may struggle to raise fresh capital from investors, it said.

Argentina is headed for default. Argentinean government nationalized USD 29 billion of private pension funds. The Thailand proposed USD 350 billion Asian countries funds, or 10% of forex reserves.

Citigroup is going to cut 10% of its workforce at Japanese investment banking unit.

Daphne Roth, Head of Equity Research-Asia, ABN Amro Bank believes the global recession will not be protracted and should be over by 2009-end. She added that the bear market could end by the first half of 2009. She sees a lot of forced selling due to fund redemptions in China, India and feels that it is sentiment and not fundamentals that are driving outflows from India and Korea. She recommends investors to sell into a technical rebound and to focus on companies with high cash component and low gearing.

Back to Indian markets, the market breadth was extremely weak. About 973 shares have advanced while 1991 shares have declined. Nearly 226 shares remained unchanged.

Among the fronliners, Tata Steel, Sterlite Industries, Reliance Communication, ICICI Bank, Jaiprakash Associates, HCL Tech, Idea Cellular, Tata Steel, Ambuja Cements and Unitech lost 8-13%.

Markets Snapshot

Market snaps the 2 day rally, ends at the lowest point of the day

Nifty closes at the lowest levels since July 26, 2006

Sensex down 513 points to end at 10170, Nifty down 169 points to end at 3065

Selloff in Metal and Real Estate stocks

CNX Midcap Index down 3.5% , BSE Small-cap Index down 2%

All BSE sector index closes in RED

BSE Metals down 7.9%, Tata Steel down 11.8%, Sterlite Ind down 10%, Sail down 7.3%

Bse Realty down 7.5%, Indiabulls Real Estate down 12.9%, Unitech down 10%, Dlf down 5%

Bse Bankex down 5.7%, Icici bank down 8%, Union bank down 7.7%, Sbi down 6.4%, BOB down 8.3%

Bse Oil & Gas down 5.5%, Reliance down 5.6%, Cairn down 9.8%, Gail down 6.7%

Non Index Losers: Idea down 11.9%, Ambuja Cem down 11%, Rcom down 8.7%, Bharti down 8%, Tata Motors down 7.8%, Reliance power down 7.6%

Non Index Losers: Ashapura down 19.5%, Ivrcl Infra down 12.7%, Educomp down 11.4%, Balaji Tele down 10.9%

Non Index Losers: Skumurs down 10.7%, GE Ship down 10%, Glenmark down 9%, Praj down 9%

Adv - Dec Ratio at 1:3

Total market turnover at Rs 50046.83 crore versus Rs 64789.63 crore

Nse F&O Turnover at Rs 61861.90 crore vs Rs 49845.05 crore

F&O Snapshot

Short Rollover picks up in markets

Nifty Rollver at 24.3%

Market Wide Rollover at 18%

Fresh short build up in Nifty fut, Oct ends at a premium of 7 points & Nov at a premium of 10 points

Short Rollover picks up in Metals and Real Estate stocks

Fresh short build up in Teleceom stocks

F&O : Cash turnover significantly high at 5.7 times

Options Activity:

Nifty 2900 put adds 7.7 lakh shares

Nifty 3000 call adds 7.1 lakh shares

Nifty 3100 call adds 5.5 lakh shares

Nifty 3100 put sheds 8.2 lakh shares

Fresh Short:

Metals : Tata steel , Hindalco

Real Estate : DLF, Unitech

Telecom : Idea , Bharti , Rcom