Key benchmark indices extended losses in late afternoon trade as European markets opened weak and trading in US index futures showed the Dow could fall 88 points at the opening bell.
The BSE 30-share Sensex was down 193.35 points. The Nifty also fell 57 points.
Lower Asian stocks, weak US job data, concerns of sustained outflow by foreign funds and a weak rupee triggered a sharp fall in early part of the day.
After a weak opening triggered by subdued Asian stocks, the market extended losses in early afternoon trade. The Sensex cut losses soon after that. It weakened again later. The market once again recovery in afternoon trade. A brief recovery was once again derailed in mid afternoon trade tracking weak start from European markets.
The market sentiments remains weak due to sustained selling by foreign funds. Foreign institutional investors (FIIs) have pressed heavy sales this year. FII outflow in February 2009 totaled Rs 2707 crore. FII outflow in calendar year 2009 totaled Rs 9128.30 crore (till 5 March 2009). Globally, investors are pulling out money from hedge funds, forcing hedge fund managers to dump assets.
At the same time, global banks and insurers are selling assets after amassing $1.2 trillion of credit losses and writedowns since the start of 2007. More recently, fears have intensified about the exposure of Western European banks and companies to deteriorating economic conditions in Eastern Europe.
Domestic institutional investors (DIIs) have been absorbing selling by foreign funds.
However, due to political uncertainty, investors are unlikely to build large positions with general election to be held in mid-April 2008 to mid-May 2009. More so at a time when it is highly unlikely that either Congress or BJP comes to power on its own i.e. without the support of other smaller/regional parties.
Meanwhile, volatility in the rupee and global commodity prices have added to the woes of India Inc. The recent sharp slide in the rupee will increase in the cost of servicing overseas debt to the extent of the rupee's slide unless the company (which has overseas borrowings) has adopted an effective hedging strategy.
European markets were subdued in opening trade today, 9 March 2009 as banks slipped after the UK government increased its stake in Lloyds Banking Group. Key benchmark indices in UK, Germany and France were down by between 0.68% and 1.31%.
Asian markets extended early losses on concern corporate earnings will deteriorate further as the World Bank predicted the global economy to shrink for the first time since World War II. Key benchmark indices in China, Hong Kong, Singapore, and Taiwan were down by between 0.55% and 4.84%.
Japan's Nikkei 225 index fell 1.21% to 7,086.03, its lowest close since October 1982.
However, South Korea's Seoul Composite index rose 1.58% after reports quoting a Finance Ministry official indicated South Korea will allow local banks to roll over $720 million in loans maturing today, 9 March 2009 and inject an additional $50 million.
The market breadth, indicating the overall health of the market, was weak on BSE with 1458 shares declining as compared with 762 that advanced. A total of 76 shares remained unchanged.
Among the 30-member Sensex pack, 27 slipped while only 3 of them rose.
Rate sensitive realty stocks fell on recent reports falling interest rates have failed to revive housing demand. India's largest real estate developer by sales DLF plunged 5.02 and was the top loser from the Sensex pack.
India's largest FMCG major by sales Hindustan Unilever slumped 4.58% extending a fall of 8.44% in the previous three trading session triggered by foreign brokerage JPMorgan Chase & Company cutting its rating on the stock to 'underweight' from 'neutral', citing weakening growth and increasing competition.
India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 2.23% to Rs 1143.55 on fears a worsening global economy will hit demand for petrochemicals.
India's largest state-run oil exploration firm by sales Oil and Natural Gas Corporation extended earlier fall and was now down 1.58% to Rs 662.50 even as the company trashed a report by investment banking firm Goldman Sachs, saying Goldman's analysis of explorer was devoid of basic facts and was aimed at hurting the company's image. The Goldman report had on Friday, 6 March 2009 questioned corporate governance in ONGC because it was subsidising fuel prices under government orders.
Subsidy discounts to public sector oil marketing companies is a practice of the government since 2003-04, it said. Subsidy discounts are applicable to crude produced from nominated blocks only, where there is no production sharing or profit oil sharing with the government, it added.
Subsidy discounts to public sector oil marketing companies is a practice of the government since 2003-04, it said. “Subsidy discounts are applicable to crude produced from nominated blocks only, where there is no production sharing or profit oil sharing with the government, it added. ONGC said there will be no subsidy burden for ONGC in Q4 March 2009.
ONGC further said it acquired 43 overseas oil and gas assets in lands in just six years. It acquired properties abroad through its foreign arm ONGC Videsh (OVL). OVL had only one property in 2003. The percentage of overseas production to total production of ONGC group has moved from 7.23% in 2002-2003 to 15.42% in 2007-08. The company added 255.01 million tonne oil equivalent (MTOE) of reserves through acquisition of overseas properties since 2003-04, it said.
Pointing at the cash flow of its wholly-owned subsidiary, ONGC said OVL has already paid back a loan amount of Rs 11,820 crore. The parent company has extended total Rs 25,684 crore to OVL as loans.
India's largest engineering & construction company by sales Larsen & Toubro shed 2.70% to Rs 564.10 after the company reportedly said it will go ahead with a bid for beleaguered software firm Satyam Computer Services. L&T is the single largest shareholder in Satyam with a 12% stake.
Meanwhile Satyam Computers jumped 18.05% after it said today it was commencing a competitive bidding process to sell a 51% stake
India's largest dedicated housing finance company by total income HDFC advanced 2.92% to Rs 1260.10 and was the top gainer from the Sensex pack. The stock had surged 6.4% on Friday, 6 March 2009 after foreign fund house Growth Fund of America Inc picked up 1.7% stake in HDFC worth Rs 560 crore through bulk deal. The name of the seller was not known.
Auto sales outperformed the Sensex after Society of Indian Automobile Manufacturers (SIAM) data showed 10.61% rise in auto sales to 10.4 lakh units in February 2009 over February 2008.
India's largest tractor maker by sales Mahindra & Mahindra rose marginally by 0.02%. However Maruti Suzuki India (down 0.98%), and Tata Motors (down 0.61%), fell.
