Market gripped by high volatility

The benchmark index, BSE 30-share Sensex, posted modest gains for the second straight day, amid high degree of volatility. Sensex, which had slipped below the psychological 14,000 level in mid-afternoon trade, regained that level in late trade as value buying emerged at lower level. Shares from oil & gas, metal and cement saw buying interest while those of auto and IT were offloaded.

Sensex rose 47.54 points or 0.34% at 14,130.95. It opened higher at 14,122.33 but started declining as fresh selling emerged at every rise till it touched a low a 13,946.99 in mid-afternoon trade. From here it again started rising to strike an intra-day high of 14,153.44 level, as strong buying emerged in late trade The Sensex oscillated 205 odd points in the day.

The S&P CNX Nifty rose 9.60 points or 0.23% at 4,155.2.

Earlier, the market started weakening since afternoon trade after the industrial production data was released in early afternoon trade. India’s industrial production was up 13.6% per annum in April 2007 compared with 9.9% growth in April 2006. Manufacturing output climbed 15.1% in April 2007 against 11% in April 2006. Industrial output growth of March 2007 has been revised upwards at 14.5%.

The strong industrial production growth indicates that further tightening of monetary policy by RBI may be on cards, belying expectation that the interest-rate cycle had peaked.

The Nifty June 2007 futures settled at 4,153.20 compared to the spot closing of 4,155.20. Today's discount was 2 points of Nifty futures over spot price was lower than a discount of 12.90 points on 11 June, indicating that some short covering might have happened today

The total turnover on BSE amounted to Rs 3,820.90 crore, while the NSE futures & options segment turnover was Rs 37,614.56 crore.

The broad market depicted weakness. The market breadth was weak on BSE, with 1,693 shares declining compared with 858 that advanced. 86 remained unchanged. There were around 2 losers for every gainer.

The BSE Mid-Cap index declined 0.74% to 6,084.40 while the BSE Small-Cap Index lost 1.24% to 7,228.88

As per provisional data, FIIs bought shares worth Rs 335.30 crore today, 12 June 2007. Domestic institutions sold shares worth Rs 81 crore today.

Among the Sensex pack, 16 lost ground while the rest gained.

Battered cement stocks made a strong comeback today, on fresh buying after the Cement Manufacturers' Association indicated sales rose 10.6% to 14.21 million tonnes in May 2007. Cement major ACC surged 5.30% to Rs 805 on 5.10 lakh shares and was the top gainer among Sensex constituents. ACC reported a 19% increase in sales in May 2007, more than three times the pace of growth recorded in the previous month, indicating strong demand for cement from homes and other construction projects.

Gujarat Ambuja Cements (up 1.37% to Rs 110.70), Birla Corporation (up 3.46% to Rs 218.25), India Cements (up 4.62% to Rs 174.45) and Madras Cement (up 1.20% to Rs 2561) were the other gainers from the cement pack.

Tata Steel advanced 4.03% to Rs 603.10 after an announcement made by Corus today, 12 June 2007, that it will hike UK wire rod prices by at least 7%. The scrip was also bolstered by block deal, which took place in early trades on NSE - around 4.92 lakh shares changed hands on NSE at Rs 587.80 each. Other metals stocks, Steel Authority of India (Sail) (up 3.82% to Rs 131.75) and Jindal Stainless (up 3.30% to Rs 147.20) also gained. The BSE Metal Index was up 0.99% to 10,359.92.

Index heavyweight Reliance Industries (RIL) advanced 2.45% to Rs 1,709, on 10.49 lakh shares. It had surged to a high of Rs 1711, while its low was Rs 1662. The stocks surged on reports it is looking at buying stake in refineries in US and Middle East. Led by RIL and refinery stocks, the BSE Oil and Gas index rose 1.04% to 7,490.71, and it was the top gainer among the sectoral indices on BSE.

HPCL (up 1.30% to Rs 277.30) and BPCL (up 2.32% to Rs 346) rose after reports that the centre is likely to review retail prices of petrol and diesel in mid-July 2007 to bring them in line with the recent rise in global oil prices. Oil refining and marketing companies suffer losses as they have to bear the burden of under-recovery, which is the difference between the actual controlled selling price and the desirable selling price.

ICICI Bank rose 2.12% to Rs 921 after the bank informed that its consolidated profit after tax under Indian GAAP was Rs 2,760 crore (US$ 640 million) for the year ended March 2007 (FY 2007). As per the reconciliation statement between Indian GAAP and US GAAP, the net income (profit after tax) under US GAAP was Rs 3,127 crore ($726 million) in FY 2007, compared to Rs 2,004 crore ($465 million) in the previous year.

Among the other heavyweights, State Bank of India (SBI) was down 0.28% to Rs 1336, while ONGC lost 0.12% at Rs 860.

Larsen & Toubro rose 0.90% to Rs 1,907 on bagging orders from Oil & Natural Gas Corporation (ONGC) and Steel Authority of India (SAIL). ONGC awarded a Rs 877-crore turnkey project for the NQ Re-construction (NQRC) Project in Mumbai high north fields. This project is the largest brownfield project of its kind awarded in the offshore oil & gas sector in India. L&T said the project will be executed on a lumpsum turnkey basis with the completion scheduled by 8 May 2009.

L&T also announced today that the engineering, procurement and construction and contracts division of the company had secured a Rs 114.43-crore order from SAIL for the turnkey construction of 220/132- kilo vatt gas insulated substation and associated transmission network for its Bhilai steel plant in Chattisgarh.

Hindustan Unilever rose 0.61% to Rs 189.50 after 10 lakh shares changed hands in a single block deal on NSE at Rs 190 each in the counter. The block deal took place in early trade.

IT pivotals declined after a rally in the past few sessions that was triggered by weakening of the rupee against the dollar. The renewed selling in IT stocks today followed firming up of the rupee. The BSE IT Index was down 0.8% to 4,975.50

Satyam Computers (down 3.67% to Rs 479), Wipro (down 0.63% to Rs 539) and TCS (down 0.48% to Rs 1215) declined. However Infosys rose 0.25% to Rs 1985 after its ADR surged 3.90% to $51.66 overnight on Nasdaq.

In early trade, the rupee was at 40.7600/7700 per dollar, moving up from 40.79/80 on 11 June 2007, and heading back towards a recent nine-year peak of 40.28. The rupee's rise was attributed to increased foreign fund inflow to subscribe to the mega IPO of DLF, a real-estate developer. The issue opened on Monday, 11 June 2007 and will close on Thursday, 14 June 2007.

Dr Reddy’s lost 2.50% to Rs 609.60 while NTPC lost 1.35% to Rs 152.90.

Auto pivotals declined on fears sales may be impacted, as the centre is likely to review retail prices of petrol and diesel in mid-July 2007 to bring them in line with the recent rise in global oil prices. Tata Motors (down 1.66% to Rs 641), Maruti Udyog (down 2.20% to Rs 717.90), Bajaj Auto (down 0.32% to Rs 2112), and Mahindra & Mahindra (down 3.08% to Rs 696.50), edged lower. The BSE Auto Index shed 1.23% to 4,646.26 and was the top loser among the sectoral indices on BSE.

UTI Bank rose 4.13% to Rs 588.05 after 3 lakh shares changed hands in the counter in two block deals on BSE and NSE at Rs 580 each. The first block deal took place on NSE where 1.50 lakh shares changed hands and around 1.52 lakh shares changed hands in the second block deal on BSE. The block deal in BSE took place at 12:57 IST.

Welspun Gujarat Stahl Rohren dropped 3.54% to Rs 177.30 after six lakh shares changed hands in a single block deal at Rs 183.45 a share on BSE. The deal was struck in mid-morning trade.

Escorts jumped 3% to Rs 112.85 after the central bank allowed foreign funds to resume buying up to 49% of the company's shares through primary market and stock exchanges under the portfolio investment scheme.

Diamond Cables galloped 9.31% to Rs 166.10 on receiving Rs 75-crore orders from various distribution companies and other customers.

Shree Ashtavinayak Cine Vision jumped 5% to Rs 239.95 on reporting 89.5% growth in net profit in FY 2007 to Rs 14.16 crore as against Rs 7.47 crore in the year ended March 2006. Sales rose 59.21% to Rs 96.07 crore in FY 2007 as against Rs 60.34 crore in FY 2006.

Shipbuilder Bharati Shipyard inched up 0.60% to Rs 477 on securing a Rs 260-crore order for two anchor handling tugs for support to the offshore rigs from a Norwegian firm. The company announced the new order win during market hours Monday, 11 June 2007.

Asian stocks were trading on a mixed note today, 12 June 2007. Japan's Nikkei was down 0.41%, while Hong Kong's Hang Seng was up 0.10%. South Korea's Seoul Composite (up 0.78%), Singapore's Straits Times (up 0.45%) and Taiwan's Taiwan Weighted (up 0.38%) gained.

China’s Shanghai Composite reversed from early weakness and was up 1.91% to 4,072.14.

In the US markets, stocks finished a volatile session without much change on Monday, 11 June 2007, as stubbornly high bond yields discouraged investors from building fresh positions. The Dow Jones Industrial Average (DJIA) rose 0.57 point to 13,424.96, capping a day of trading that saw stocks slip, advance, and then pull back again. Broader stock indicators were narrowly mixed. The Standard & Poor's 500 index edged up 1.45 points to 1,509.12, and the Nasdaq Composite index fell 1.39 points to 2,572.15.

Oil prices dipped but held above $69 on Tuesday, 12 June 2007, as an expected rise in gasoline stockpiles in the US weighed against OPEC supply curbs and worries over Iran's nuclear dispute. London Brent crude was down 15 cents at $69.41 a barrel, after rising 87 cents on the previous day.

Over the next few days, the progress of the July-September monsoon will hold key. The weather office said in April 2007 that this year’s monsoon was likely to be 95% of the long-term average, with a 5% margin of error. The annual monsoon is vital for India’s economic health as it is the main source of water for agriculture, which generates more than a fifth of the gross domestic product.

The IPO of reality major DLF was subscribed 1.28 times by the end of second day of the issue today, 12 June 2007. The IPO had opened for subscription on Monday, 11 June 2007. It closes on Thursday, 14 June 2007.