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Publication : Capital Market News
Provider : Capital Market Publishers Pvt. India Ltd.
July 14, 2004

Sensex sheds 51 points on monsoon worries, turnover tax concerns

The market extended losses on Wednesday, led by heavy selling in the heavyweights as investors worried about the deficient monsoon and the finance minister's decision on the rollback of the turnover tax. Barring select tech and steel shares, stocks declined almost across the board. Moving in an intra-day range of nearly 100 points, the 30-share BSE Sensitive index (Sensex) ended with a loss of 50.69 points at 4,848.30.

The benchmark index had shed 46 points on Tuesday on monsoon worries.

The NSE S & P CNX Nifty index shed 16.55 points to end at 1,522.75.

After early gains, the market turned bearish amid the concerns over the outcome of the finance minister's meeting with the representatives of the broking community over the issue of the turnover tax and the patchy monsoon. According to the Indian Meteorological Department reports, while the monsoons have been below average as yet, their distribution has also been uneven, affecting crops in various regions. A normal monsoon is crucial for the economy to grow over 7% targeted rate. In the event of a deficient monsoon, the government's growth target may go haywire.

Uncertainty over the outcome of the meeting of the representatives of the broking comminity with Finance Minister P Chidambaram on Tuesday evening to discuss a proposed 0.15 percent tax on exchange-based purchases of securities also kept the players sit on the fence. The proposal, announced in the Union Budget last Thursday, has sparked strong opposition from brokers and driven down the volumes on the bourses.

ITC (down 3.38% to Rs 1,010) lost further ground on sustained selling pressure amid worries over the progress of monsoon. From a recent high of Rs 1,072 touched on 9 July, the ITC stock has lost nearly 6%.

ONGC (down 2.05% to Rs 652.35) ended lower after the company said that several new taxes imposed in the budget will hit the company's FY-05 profit by Rs 300 crore. In the budget presented last Thursday, the finance minister imposed a 2% education cess on all taxes and also introduced a 10% service tax on surveys conducted by oil exploration companies.

Other heavyweights Reliance Industries (down 2.90% to Rs 417.95), ICICI Bank (down 0.89% to Rs 234.65) and Hindustan Lever (down 1.01% to Rs 122.45) also contributed to the weakness of the Sensex.

Two-wheeler majors Hero Honda Motor (down 3.65% to Rs 450.55) and Bajaj Auto (down 3.05% to Rs 863.15) lost ground on sustained selling pressure amid worries that a deficient monsoon may affect agriculture growth and rural incomes, which are key for the growth of auto sector.

Cement pivotals Grasim (down 2.30% to Rs 937.10) and ACC (down 0.93% to Rs 228.95) traded lower on sustained selling pressure amid worries that a deficient monsoon may mean poor offtake of cement.

Tech pivotals Wipro (up 3.21% to Rs 511.85), Infosys Tech (up 1.29% to Rs 1,420.60) and Satyam Computer (up 0.75% to Rs 322.70) ended higher - yet off their day's highs - on sustained buying interest on the back of strong quarterly performance of the tech bellwether Infosys Technologies.

Tata Steel (up 1.98% to Rs 313.65) gained ground on fresh buying interest after the government revoked the Duty Entitlement Pass Book (DEPB) benefit for steel exporters effected in March 2004. Steel majors will now get the DEPB benefit with retrospective effect, with adjustments in rates as per the import duty cuts on steel announced in March 2004.

HDFC Bank (down 0.15% to Rs 364.65) ended marginally lower - coming off its day's high of Rs 372 - even after the company announced impressive Q1 results today. For quarter ended 30 June 2004 , the banking major posted a 30.47% rise in the net profit to Rs 139.97 crore (Rs 107.28 crore) on total income of Rs 810.59 crore (Rs 709.26 crore).

State Bank of India (up 0.37% to Rs 430.50) ended marginally higher - recovering from the day's low of Rs 426.10 - on selective buying after the bank announced that it has agreed to sell 37% of its stake in SBI Mutual Fund to SocGen AMC.

Pharmacia Healthcare (Rs 102.85) was frozen at the 10% lower limit of circuit breaker as investors sold, disappointed by the share swap ratio ahead of its merger with Pfizer. The board of Pfizer today approved the
merger of Pharmacia Healthcare with it. The swap ratio for the merger has been set at one share of Pfizer for every five shares of Pharmacia Healthcare.

Kochi Refineries (down 3.36% to Rs 153.80) ended lower after the company announced quarterly results. For quarter ended 30 June 2004 , the refining PSU posted a 9.50% fall in the net profit to Rs 153.10 crore (Rs 169.30 crore) on total income of Rs 2,958.30 crore (Rs 2,263.20 crore).

iGate Global Solutions (up 4.97% to Rs 250.10) firmed up after the company announced quarterly results. For the quarter ended 30 June 2004 , the company posted a loss of Rs 3.54 crore (NP Rs 6.34 crore) on total income of Rs 103.12 crore (Rs 93.96 crore). On consolidated basis, for the quarter ended
30 June 2004 , the company posted a net profit of Rs 0.11 crore (Rs 7.71 crore) on total income of Rs 143.76 crore (Rs 143.85 crore).

Other non-Sensex tech stocks Geometric Software (up 4.69% to Rs 22.40), Hughes Software 2.22% to Rs 501.90), Subex Systems (up 4.25% to Rs 257) and VisualSoft (up 5.69% to Rs 133.70) also ended higher on buying interest on hopes of improved quarterly results.

Mastek (up 0.47% to Rs 275.10) ended flat - coming off its day's high of Rs 293.80 - on selective buying after the company posted improved Q4 results. On consolidated basis, for quarter ended 30 June 2004 , the Mastek group posted a net profit of Rs 12.42 crore (Rs 2.76 crore) on total income of Rs
118.54 crore (Rs 135.81 crore). For the year ended 30 June 2004 , the Mastek group posted a net profit of Rs 29.57 crore (Rs 50.31 crore) on total income of Rs 410.71 crore (Rs 379.39 crore).

Praj Industries (Rs 137.90) was frozen at the 5% upper limit of circuit breaker after the company announced quarterly results on Monday. For quarter ended 30 June 2004 , the company posted a net profit of Rs 3.62 crore (Rs 1.30 crore) on total income of Rs 26.17 crore (Rs 21.79 crore).

Biocon (up 1.34% to Rs 560.60) ended steady - yet off its day's high of Rs 585 - on selective buying after India's largest biotech company said that its net profit in the quarter ended 30 June 2004, more than doubled to Rs
48.60 crore from a year earlier. Total revenue for the quarter rose to Rs 180 crore from Rs 110 crore a year earlier.

Exide Industries (up 3.33% to Rs 127.10) ended higher after the company announced improved quarterly results in the afternoon. For quarter ended 30 June 2004 , the company posted a 32.75% rise in the net profit to Rs 18.40 crore (Rs 13.86 crore) on total income of Rs 276.52 crore (Rs 232.71 crore).