Post session - Quick review

Profit booking put breaks on three-days gaining trajectory of the bourses, as market-men cashed in some previous session’s sharp gains, to wind off the dilly-dally session of trade in the red zone. Depreciation of rupee, sulk of cement companies in backdrop of globally risk-averse environment, underpinned investor’s to square off their massive position ahead of the weekend. However, value buying in select fundamentally strong blue chip stocks offset some losses, as this led to substantial recuperation of the bourses in the second half of the session. ONGC, Maruti Suzuki and TCS all rallied in the range of 0.75-1%. 30 scrip sensitive index, Sensex after appearing dangerously close to breaching the 16800 level, settled above the 16950 level. Similarly, the widely followed index, Nifty after paring off substantial losses, concluded above the 5100 bastion. For the week, both Sensex and Nifty registered slender profits. Meanwhile, the broader indices, managed to gather slender gains of 0.5%, but were up by over a percentage points for the week.

On the global front, European shares extended the previous session's losses on Friday as recent poor macroeconomic data and a Moody's downgrade of 15 of the world's biggest banks lowered investor appetite for riskier assets. Late on Thursday, Moody's downgraded 15 of the world's top banks, cutting credit ratings by one to three notches to reflect the risk of losses they face from volatile capital markets activities. Credit Suisse suffered a three-notch downgrade. Meanwhile, Asian pacific shares withered under selling pressure to end in the red zone after weak manufacturing data from the United States, Europe and China heightened fears over the outlook for global growth.

Closer home, cement stocks besides bearing the burden of over Rs 6000 crore penalty on alleged cartelization case, were worried more as reports now suggested that CCI was investigating some cement companies on violation of MRTP Act. On the flip side, Retail stocks showcased resilience after the Commerce and Industry Minister Anand Sharma said that political consensus is building over allowing foreign direct investment in multi-brand retail in the next few days. Beneficiaries were REI, Six Ten Retail, Shoppers Stop and Provogue (India). But the session clearly belonged to PSU Oil Market Companies, who rallied after Brent crude, dipped sub $90/ barrel, falling to its lowest in 18 months. Hinging on this development, were HPCL, BPCL, ONGC.  Stocks from Realty, Auto and Power featured in the list of best performers, however, stocks from Metal, Capital Goods and Technology, facing the maximum brunt of profit booking, emerged as the top laggards. The market breadth on the BSE ended neutral; advances and declining stocks were in a ratio of 1360:1389 while 135 scrips remained unchanged. (Provisional)

The BSE Sensex lost 64.88 points or 0.38% and settled at 16,967.68. The index touched a high and a low of 17,016.06 and 16,807.80 respectively. 14 stocks were seen advancing against 16 declining ones on the index (Provisional)

The BSE Mid-cap index gained 0.05% while Small-cap index was up 0.05%. (Provisional)

On the BSE Sectoral front, Realty up 0.36%, Auto up 0.09%, Consumer Durables up 0.07% and Power up 0.01%were the only gainers while, Metal down 1.63%, Capital Goods down 0.61%, TECk down 0.36%, IT down 0.29% and Health Care down 0.29% were the top losers.

The top gainers on the Sensex were ONGC up 1.65%, Cipla up 1.10%, Maruti Suzuki up 0.79%, Hero MotoCorp up 0.75% and M&M up 0.57% while, Hindalco Industries down 3.34%, Tata Steel down 2.75%, Jindal Steel down 1.63%, SBI down 1.42% and Coal India down 1.36% were the top losers in the index. (Provisional)

Meanwhile, Global rating agency Standard & Poor's (S&Ps) in its report named 'Pile-up of Indian foreign currency convertible bond maturities will test issuers and investors' has cautioned 56 Indian companies, which have to pay back $5 billion worth of foreign debt this year and if the companies choose to reschedule these obligations, may see their interest burden increasing up by $700 million, mainly on the back of decline seen in stock valuations since the time of debt issuance and the fall in rupee.   

As per the report, most of foreign currency convertible bonds (FCCBs) that mature in 2012 were issued in 2007-08, when the stock prices were at record high and the rupee was trading at 42 per dollar. Since then, the rupee has declined almost 30% against dollar with most of the FCCBs denominated in the US dollar; it is expected to increase the already mounting worries of the companies.

The rating agency further warned that more than half of the firms would have to streamline the bonds to avoid default. Moreover, with limited access to funds and high borrowing costs, redeeming the bonds will also be a challenging task for many FCCB issuers, under the tepid global economy.

Based on the expected strategy to deal with the maturities, the report has classified these companies into 4 categories: likely to redeem at manageable cost; likely to redeem at high cost; likely to restructure the FCCBs; and could default on payment.

The report also stated that about 28 companies are likely to go for restructuring of their FCCBs in 2012, since they cannot afford to raise additional funds due to the higher cost of funds, mainly due to a RBI limit that demands companies to pay only a maximum of Libor plus 5% for foreign loans. The maximum interest rate allowed on external commercial borrowing route by the RBI is Libor plus 5 percent, which on the other hand, is available only to companies with strong credit profiles.

Further, according to S&Ps report, only 5 out of 56 companies are expected to pay back their FCCBs and others will roll over the bonds with higher coupons or lower the conversion-to-equity price, which would require RBI’s approval or get bondholders to accept only a partial repayment of their principal.India VIX, a gauge for market’s short term expectation of volatility gained 3.20% at 20.58 from its previous close of 19.94 on Thursday. (Provisional)

The S&P CNX Nifty lost 18.05 points or 0.35% to settle at 5,146.95. The index touched high and low of 5,159.80 and 5,094.00 respectively. 20 stocks advanced against 29 declining ones while 1 stock remained unchanged on the index. (Provisional)

The top gainers on the Nifty were ONGC up 1.69%, Bank of Baroda up 1.44%, Kotak Bank up 1.36%, Cipla up 1.19% and Maruti Suzuki up 1.12%.On the other hand, JP Associates down 4.36%, Hindalco Industries down 3.21%, ACC down 3.15%, Ambuja Cement down 2.82% and Tata Steel down 2.62% were the top losers. (Provisional)

The European markets were trading in red, with France's CAC 40 down 0.55%, Germany's DAX down 0.73% and Britain’s FTSE 100 down 0.90%.