Stocks open lower; Metals, IT fall

MUMBAI: Equities opened lower on Monday following the weakness across Asian peers. Metals and technology stocksled declines. ( Watch ) Bombay Stock Exchange’s Sensex was trading at 15738, down 184 points or 1.15 per cent while National Stock Exchange’s Nifty shed 66 points to 4665. “We expect our market to open down but see a recovery from lower levels. We are positive for the day.

Markets are expected to trade between 4693-4629 on the lower side while resistance lies between 4793-4810,” said Religare Research. Asian stocks tumbled, led by mining companies, after Chinese companies reported lower profit. The Nikkei fell 0.35 per cent, Topix lost 0.33 per cent, Hang Seng tumbled 2.19 per cent and Straits Times shed 1.26 per cent. But the worst hit was the Chinese markets.

China's main stock index fell more than 5 percent on Monday to a three-month low, breaking below the key 125-day moving average used by Chinese investors to delineate a bull versus a bear market, as a series of negative factors has relentlessly weighed down the market since early August. US stocks mostly slipped on Friday after a weak consumer sentiment report offset positive news from bell ethers Dell Inc and Intel Corp.

The Dow Jones Industrial Average declined 36.43 points, or 0.38 per cent, to end at 9,544.20. The Standard &Poor's 500 Index lost 2.05 points, or 0.20 per cent, to 1,028.93. But the Nasdaq Composite Index inched up 1.04 points, or 0.05 percent, to close at 2,028.77.

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Markets trade record volumes of Rs 157,891 crore

After a “forced holiday” yesterday due to two circuit breakers, traders rushed back to the market today. The result: Record combined volumes in the market.Markets reported their highest turnover of 157,891 crore. In the cash segment, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) recorded turnovers of Rs 40, 122 crore and Rs 11,781 crore, respectively.

In the futures and options (F&O) segment, the NSE recorded the highest-ever turnover of Rs 105,986 crore.The previous highest turnover was Rs 149,505 crore on October 17, 2007. This was reached immediately after the then Securities and Exchange Board of India Chairman M Damodaran issued guidelines for phasing out participatory notes (P-notes).

The BSE Sensitive Index, or Sensex, opened at 14, 757.82 points, but slipped immediately. In the afternoon session, there was a sharp movement and the index hit the day’s high of 14.930.54.

Market participants said there was initial buying from traders and institutional investors who had to do short covering because of margin calls after yesterday’s sharp spurt in share prices.In the afternoon, institutional players, especially insurance companies, stepped in to do some profit booking. This led to a sharp fall.

The Sensex closed flat at 14,302.03, up 17.82 points, or 0.12 per cent. The CNX Nifty closed down marginally at 4.70 points, or 0.11 per cent, at 4,407.82. “Short covering and buying by FIIs propelled the markets in the afternoon. The markets remained flat as most retail investors were booking profits with every rise,” said V K Sharma, head (research), Anagram Stock Broking.

According to provisional data from the BSE, FIIs bought shares worth Rs 4,792 crore. Domestic institutional investors sold shares worth Rs 1,964 crore. The US market rallied yesterday on better-than-expected results from home improvement retailer Lowe’s which reinforced hopes that the recession is easing. The Dow Jones closed up by 2.9 per cent. S&P and Nasdaq closed higher by 3 and 3.1 per cent, respectively.

The Asian market responded well to the global cues. The Hang Seng and Nikkei rallied 3 per cent. The Strait Times surged 4 per cent.In India, the realty index rose 12.80 per cent. That means that in the last two days, the realty index has risen a whopping 36.25 per cent. Both Bankex and consumer durables index were up 6 per cent.

However, the information technology index lost 10.10 per cent because of the rupee appreciation. A strong rupee will adversely impact the IT companies’ rupee revenue. Most IT companies have already hedged their dollar receivables.DLF rose 19.5 per cent today. It has risen 45.40 per cent in the last two days.

Reliance Communications and SBI rose 12.9 per cent and 12.7 per cent, respectively.“Considering the first two days of trading, the sentiment in Indian markets looks decoupled from the global markets. So, amid volatility, markets will be driven by domestic sentiments.

Going forward, FIIs will increase their investments as compared with what they have done so far on an average basis,” said Anil Ladha, head (capital markets), ICICI Securities.

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Currency futures to clock $1 bn/day in '09: MCX-SX

India’s trading volume in currency futures is expected to cross the $1-billion (Rs 4,800 crore) mark in the current year, a top industry official said.

“I would expect 2009 should see us through the $1-billion volume (per day) in currency futures,” MCX-SX’s Chief Executive Officer (CEO) U Venkataraman said on the sidelines of a Banking and Financial Services Industry (BFSI) summit here on Tuesday.

The average combined daily trading volume in currency futures on NSE, MCX-SX and BSE is estimated at around Rs 2,000 crore.“I would reckon the $1-billion volume per day could be an ideal thing that the market can boast of,” Venkataraman said.

“On Tuesday, we have scaled up to $800 million. Big corporate houses are still not looking at currency futures. Every business exposed to foreign exchange risk needs to have a facility to hedge against such risk,” he said.

Globally, the average volume of currency futures was around $80 billion, but it was much less compared to the $3.2-trillion spot market trades every day, Venkataraman said, adding that futures trading was close to 4-4.5 per cent of the OTC market.In the first phase of operations, only the dollar-rupee pair is traded in the currency futures market.

Asked on launching of other currency futures, Venkataraman said, “We will be looking at introducing other currency pairs as and when allowed by regulatory authorities like the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi)… We expect further reforms to come in.”

Globalisation, integration of markets and progressive increase of cross-border flow of capital have transformed the dynamics of Indian financial markets. This has increased the need for dynamic currency risk management.

The steady rise in India’s foreign trade along with liberalisation in the foreign exchange regime has led to a large inflow of foreign currency into the system in the form of FDI and FII investments.

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