Small-cap, mid-cap shares hog limelight

The market ended flat in most of the trading sessions last week. The market absorbed global as well as domestic shocks in the week. Trading had begun in the backdrop of a sell-off in US stocks on Friday, 7 September 2007, after data showed US firms cut 4,000 jobs last month. The market also largely shrugged off weak industrial production data for July 2007 and a renewed threat from the left parties over nuclear deal before. Sensex rose in 2 out of the 5 trading sessions in the week.

BSE Sensex rose 13.38 points or 0.09% to settle at 15,603.80 in the week ended 14 September 2007. The S&P CNX Nifty rose 8.5 points or 0.18% to 4,518 in the week.

Small-cap and mid-cap shares were in demand. BSE Small-Cap index rose 139.24 points or 1.65% to 8,572.76 in the week. BSE Mid-Cap index rose 43.35 points or 0.66% or to 6,897 in the week.

The other sectoral indices BSE Auto index (down 4.36 points or 0.09% to 4,885.47) and BSE IT index (down 210.56 points or 4.52% to 4,659.70) edged lower. While, BSE Bankex ( up 40.42 points or 0.5% to 8,136.11), BSE Capital Goods index ( rose 0.65% or 88.32 points to 13,701.56), BSE Realty index ( up 502.48 points or 6.73% to 7,972.75) edged higher.

The BSE 30-share Sensex rose 6.41 points or 0.04% at 15,596.83 on Monday, 10 September 2007. The market had opened on a weak note following a sell-off in US stocks on Friday, 7 September 2007, after data showed US firms cut 4,000 jobs last month, the first such decline since August 2003. It recovered all the lost ground to post marginal gains, on strong buying in index pivotals, especially Reliance Industries. However IT pivotals stayed weak, on fears of US economy heading towards recession. The market breadth was strong on BSE in contrast to initial weakness.

The BSE 30-share Sensex shed 54.06 points or 0.35% at 15,542.77 on Tuesday, 11 September 2007. The market saw trend reversal from initial firmness to end in the red. The sentiment turned nervous ahead of a key meeting of the government with left parties on the Indo-US nuclear deal. The market had opened on an upbeat note tracking steady global markets. A bout of volatility was witnessed in the second half of the day’s trading. Domestic market underperformed its global peers.

The BSE 30-share Sensex declined 37.41 points or 0.24% at 15,505.36 on Wednesday, 12 September 2007. The market saw trend reversal from initial strength to end in the red. The market moved between positive and negative zone throughout the day. It first slipped in negative zone in mid-afternoon trade as data showing slower growth in industrial production raised worries about economic slowdown from a robust growth in the year ended March 2007.

The BSE 30-share Sensex gained 109.08 points or 0.7% to 15,614.44 on Thursday, 13 September 2007. The market broke its two-day loosing streak to post good gains, led by steady buying support for index pivotals. Turnover was high. Asian markets were mixed while European markets were trading lower.

The BSE Sensex declined 10.64 points or 0.07% to 15,603.80 on Friday, 14 September 2007. The market saw a sharp trend reversal as global credit worries resurfaced after a British mortgage lender issued profit warning, dragging all the European bourses which opened after Indian market, lower. The market had opened on an upbeat note tracking rally in US markets overnight.

IT pivotals edged lower after data released on Friday, 7 September 2007, showed US payrolls shrank in August 2007 for the first time in four years, raising fears that the world's largest economy was headed into a recession. They gained some ground on Thursday after the government extended the date for corporates to pay advance tax with respect to Fringe Benefit Tax liability, to 15 December 2007. The first installment was originally to be paid by 15 June and the second installment by 15 September.

India’s third largest software services exporter Wipro declined 5.88% to Rs 450.25. Other IT pivotals Satyam Computers (down 4.24% to Rs 430.70), Infosys Technologies (down 4.12% to Rs 1830.30), and TCS (down 5.08% to Rs 1022.60) also declined. IT companies derive over 50% of their revenue from exports from US.

NTPC, the nation’s largest power generation company, declined 0.8% to Rs 185.65. It signed a memorandum of understanding with Bharat Heavy Electricals to form a joint venture company. It would enable them work jointly to complement their respective strength and to carry out engineering procurement and construction (EPC) activities in the power sector.

World’s sixth largest steel producer in terms of total steel production Tata Steel gained 2.25% to Rs 703.55 on reports that it is looking at building a 5-million tonne steel plant in South Africa. The company denied the report.

India’s largest private sector company by market capitalisation and oil refiner Reliance Industries (RIL) rose 3.73% to Rs 2034.50 . It struck an all time high of Rs 2069.50 on Friday, 14 September 2007. It reached an agreement to acquire assets of Hualon, a leading polyester producer in Malaysia. This acquisition will bestow RIL with more than 7% global market share in polyester fibre and yarn.

The Empowered Group of Ministers (EGoM) headed by External Affairs Minister Pranab Mukherjee cleared Reliance Industries' (RIL) gas pricing formula on Wednesday, 12 September 2007. RIL had proposed to price gas at $4.33 per million British thermal unit (mBtu) or Rs 187.84 per mBtu. The EGoM made a few minor changes in RIL's gas pricing from the Krishna-Godavari (KG) basin by lowering the fuel price by 8.32% to $ 4.20 per mBtu or Rs 172.20 per mBtu at the prevailing Indian rupee-US dollar exchange rate. RIL is reportedly entering shipbuilding and dredging business with two separate companies. It plans to invest around $1 billion each in two companies.

India’s second largest listed power utility company in terms of revenue Reliance Energy (REL) surged 3.79% to Rs 882.65. As per reports, Supreme Court has allowed the company to bid for the Rs 2600 crore Mumbai sea link project.

HDFC (up 4.07% to Rs 2216.85), SBI (up 2.06% to Rs 1,653.55), Bajaj Auto (up 2.26% to Rs 2,376.75) were the other major gainers from the sensex pack.

Motilal Oswal Financial Services settled at Rs 977.45 on the BSE on its debut on 11 September 2007, a premium of 18.47% over IPO price of Rs 825 (the top end of the Rs 725 - 825 per share price band). The scrip debuted at Rs 999, a premium of 21.09% over the IPO price.

Indowind Energy debuted at Rs 80.25, a premium 23.46% over the IPO price of Rs 65- the top end the Rs 55-65 per share price band. It settled at Rs 114.05 on the BSE, at a premium of 75.46% over IPO price of 65.

Securities and Exchange Board of India (Sebi) has initiated adjudication proceedings against 20 private and public sector companies for non-compliance with Clause 49 of the listing agreement. Clause 49 deals with corporate governance by companies listed on the exchanges. According to a Sebi release, of the 20 companies, five are public sector firms against whom proceedings have been launched for non-compliance with provisions relating to board composition.

Securities & Exchange Board of India (Sebi) on 11 September 2007, allowed foreign portfolio investors (FIIs) to submit foreign sovereign securities with "AAA" rating as collateral for derivatives trading. Initially, US government securities will be accepted as collateral.

India's exports of soyameal fell 80% to about 46,000 tonnes in August 2007 from 2.3 lakh tonnes in August 2006. The decline is due to low crushing and inadequate availability of ships because of demand from other commodities.

According to a statement by the Society of Indian Automobile Manufacturers (SIAM), domestic car sales in India improved 18% to 98,893 units in August 2007 over 83,864 units in August 2006. The rise was due to launch of new models and aggressive marketing. Sales of motorcycle fell 11% to 418,702 units in August 2007 from 470,955 units in August 2006. Sales of commercial vehicles (CVs) moved up 2.23% to 36,409 units in August 2007 compared with 35,268 units in August 2006.

The growth in Index of Industrial Production (IIP) dipped 7.1% in July 2007 compared with 13.17% in July 2006. The decline in growth is due to inventory problems and floods.

Prakash Karat, general secretary, Communist Party of India-Marxist (CPI-M), in a public meeting in Vishakapatnam on Saturday (8 September 2007) strongly criticised the nuke deal as the United Progressive Alliance (UPA) government has not mentioned it in the Common Minimum Programme (CMP). Hence, the UPA has to choose between the CMP or its allegiance to the US, he said.

The chief of the Communist Party of India (Marxist) (CPI-M) Prakash Karat renewed the threat by making a strong statement on Thursday, 13 September 2007, on ending support to the UPA coalition if it operationalied the nuclear deal with the United States.

NSE has decided to add realty major Unitech in S&P CNX Nifty in place of IPCL. The change will take effect from 5 October 2007. Due to the proposed merger of IPCL in Reliance Industries, trading in IPCL will get suspended and therefore the change in the index composition.

Annual inflation growth declined to a two-year low of 3.52% in the week ended 1 September 2007 from 3.79% in the week ended 25 August 2007, due to falling prices of pulses, vegetables, condiments and spices. Wholesale price index (WPI) stood at 5.34% in the corresponding week a year ago.