The key benchmark indices extended losses in early afternoon trade on fresh selling in index pivotals. Negative cues from global markets dampened sentiment. The sentiment was also hit by reports that Institute of Chartered Accountants of India (ICAI) has asked companies to disclose losses on a mark-to-market basis incurred due to derivatives trades from the current financial year onwards (year ending March 2008), as a precursor to making a new accounting standard — the AS-30 — mandatory from 1 April 2011. This may hit Q4 March 2008 and FY 2008 (year ending March 2008) bottom line of Indian firms.  

Asian markets which opened before Indian market, were in red. US stocks dropped on Friday, 28 March 2008, as a profit warning from US department store chain J.C. Penney raised concerns about slowing consumer spending while persistent worries about credit-related problems throttled financial stocks. A prominent analyst warned that earnings will not support current dividend payouts in 2008 at Citigroup, Wachovia Corp and other US banks.  

The BSE Sensex dipped below 16,000 mark. 28 stocks from the 30-member Sensex pack declined. IT pivotals extended early fall on fresh selling pressure. Despite the sharp fall, the market breadth was positive.  

At 12:27 IST, the 30-share BSE Sensex was down 568.74 points or 3.47% at 15,800.23. It opened with a downward gap of 144.63 points at 16,226.66. Sensex slipped to a low of 15,778.71 in early afternoon trade. At the day’s low, the Sensex lost 592.58 points. 

The broader based S&P CNX Nifty was down 158.05 points or 3.20% at 4,783.95. 

The ICAI norm requires companies to provide for all losses, including those that may occur due to trading in derivatives. Indian companies are sitting on huge losses on account of the forex derivative transactions they undertook during the year. A steep decline in the value of the US dollar against the Japanese Yen and the Swiss Franc has hit Indian corporates which have used these two currencies (Yen and Franc) extensively to swap their rupee denominated debt.  

There are many companies, which are not disclosing these losses, as it is not mandatory to show these numbers in the balance sheets. But with the new accounting norms they now have some compulsions. Companies, which thought that they could escape declaring the losses, will now have to come forward and show their numbers, which could hit their balance sheet, which, in turn, may impact their market capitalisation.  

Earlier, robust corporate advance tax payments in Q4 March 2008 indicated that corporate profit growth will be strong in the quarter. Advance tax figures showed banks, hospitality and software firms were doing better than sectors like automobiles and cement.  

The market breadth was positive: On BSE 1,485 shares advanced as compared to 945 that declined. 41 shares remained unchanged.  

The BSE Mid-Cap index was down 0.37% to 6,498.85 while the BSE Small-Cap index gained 0.54% to 7,944.97 The total turnover amounted to Rs 2382 crore on BSE by 12:30 IST as compared to Rs 1689 crore by 11:30 IST.  

IT pivotals were the worst hit in today’s slump on worries that slowdown in US may impact their revebues. India’s second largest software services exporter Infosys Technologies slumped 6.74% to Rs 1423.40 on 1.54 lakh shares. It was the top loser from Sensex pack.

Other IT pivotals, Satyam Computers (down 4.10% to Rs 391.75), Wipro (down 3.10% to Rs 440), and TCS (down 6.44% to Rs 814.05), also declined IT pivotals derive majority of their revenue from exports to US markers.  

India’s largest private sector company in terms of market capitalisation and oil refiner Reliance Industries lost 1.92% to Rs 2302.50 on 3.77 lakh shares. The stock moved in a range of Rs 2278 and Rs 2340 so far during the day.  

Banking shares declined. ICICI Bank (down 5.41% to Rs 790), HDFC Bank (down 6.03% to Rs 1316.60), and State Bank of India (down 3.10% to Rs 1628.10), declined on selling pressure.  

Grasim (down 4.81% to Rs 2575) and Larsen & Toubro (down 3.88% to Rs 3025) were the other losers from Sensex pack.  

Cipla, the country’s third largest pharma company in terms of sales, gained 1.77% to Rs 221.40 on 2.19 lakh shares. It was the top gainer from Sensex pack. India’s largest cigarette manufacturer in terms of sales, ITC rose 1.16% to Rs 208.70  

Reliance Capital was the top traded counter on BSE with turnover of Rs 94.67 crore followed by Reliance Industries (Rs 88.76 crore), Mundra Port & Special Economic Zone (Rs 76.48 crore), Reliance Petroleum (Rs 70.65 crore), and NTPC (Rs 67.47 crore), in that order.  

Among the side counters, Axon Infotech (up 17.96% to Rs 41.05), Ceat (up 11.98% to Rs 114), Indowind Energy (up 20% to Rs 68.20), and Sulzer India (up 20% to Rs 687), surged IOL Broadband (down 10% to Rs 92.60), Godrej Industries (down 9.45% to Rs 260), and Aurionpro Labs (down 7.23% to Rs 301.05), slipped.  

Four Soft jumped 5% to Rs 27.10 while Take Solutions declined 0.59% to Rs 763. The board of directors of both these companies will consider merger proposal.  

Suven Life Sciences gained 1.51% to Rs 33.55 after the company said it has secured patent rights in Mexico and Korea for two of its new chemical entities for the treatment of disorders associated with neurodegenerative diseases.  

City Union Bank declined 0.69% to Rs 28.80 after bank said it would issue 80 million shares by way of qualified institutional placement. The bank made this announcement after market hours on Friday, 28 March 2008.  

The Cabinet Committee on prices will hold a meeting today, 31 March 2008, to take stock of high inflation that surged to over 13-month high of 6.68% in mid-March 2008. Inflation started its upward climb some weeks back, particularly because prices had risen the most in the case of cereals, vegetables, milk and edible oils. Fiscal measures such as reduction in import duties on edible oils have not yet yielded results in taming the inflationary pressures.  

Asian markets were trading lower today, 31 March 2008. Hang Seng (down 1.91% at 22,840.13), Japan’s Nikkei (down 2.30% at 12,525.54), Taiwan’s Taiwan Weighted (down 0.59% at 8,572.59), Singapore’s Straits Times (down 0.35% at 3,021.72), Shanghai Composite (down 2.62% to 3,486.40), and edged lower. However South Korea’s Seoul Composite rose 0.13% to 1,703.99  

Back home, the 30-share BSE Sensex advanced 355.73 points or 2.22% at 16,371.29 on Friday, 28 March 2008. The broader CNX S&P Nifty was up 111.75 points or 2.31% at 4942 on that day.

The Sensex surged 1,376.46 points or 9.18% to 16,371.29 in the week ended Friday, 28 March 2008 on buying by foreign institutional investors. The S&P CNX Nifty rose 368.05 points or 8.04% to 4,942 in the week.  

As per provisional data, foreign institutional investors (FIIs) purchased sold worth Rs 401.95 crore on Friday, 28 March 2008. Domestic institutional investors (DIIs) were net buyers of shares worth Rs 729.50 crore on that day.  

FIIs were net sellers of Rs 132.21 crore in the futures & options segment on Friday, 28 March 2008. They were net sellers of index futures to the tune of Rs 366.53 crore and bought index options worth Rs 406.38 crore. They were net sellers of stock futures to the tune of Rs 184.53 crore and bought stock options worth Rs 12.47 crore

Stocks In News

Era Infra Engineering survives market fall on securing new contract 

Era Infra Engineering was flat at Rs 596.95 at 12:38 IST on BSE bucking the weak market trend after the company secured a contract worth Rs 20 crore for supply of ready mix concrete in New Delhi. 

Tyre stocks in top gear on plans to hike prices 

Five tyre stocks rose between 3.21% to 11% on reports tyre manufacturers are gearing up to increase prices following a surge in input costs. 

Four Soft hardens on possible merger with Take Solutions 

Four Soft hit 5% upper circuit at Rs 27.10 at 12:04 IST on BSE after Four Soft and Take Solutions said the boards of the two companies will consider merger proposal. 

Suven Life Sciences gains on patent rights 

Suven Life Sciences gained 1.66% to Rs 33.60 at 11:48 IST on BSE after the company said it has secured patent rights in Mexico and Korea for two of its new chemical entities for the treatment of disorders associated with neurodegenerative diseases. 

Chowgule Steamships sets sail on unit’s expansion plan 

Chowgule Steamships hit 5% upper circuit at Rs 38.90 on BSE after Chowgule Ports & Infrastructure, a company co-promoted by Chowgule Steamships, signed an agreement with Maharashtra Maritime Board (MMB) for development of a minor port at Jaigad.

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