Small-cap, mid-cap indices outperform Sensex

Hopes that the central bank may cut rates further and reports that the government is likely to come out with a second fiscal stimulus for the economy helped the key benchmark indices bounce back in the last one hour of trade. The recovery materialized after the market had weakened in mid-afternoon trade and the rebound helped the market end with tiny losses. The BSE 30-share Sensex slipped 9.44 points or 0.10% to 9,645.46, recovering 203.49 points from the day's low. Recovery in US index futures also aided rebound on the domestic bourses in late trade

The market breadth, indicating the overall health of the market, was strong, as data showing further fall in inflation raised hopes of further cuts in interest rates by the central bank. Inflation based on the wholesale price index rose 8% in the year through 29 November 2008, lower than previous week's annual rise of 8.4%, data released by the government today, 11 December 2008, showed. Lower rates may help revive the domestic economy, which has been witnessing a slowdown.

Commerce Minister Kamal Nath today, 11 December 2008, said the government will consider another financial assistance package next week aimed at generating employment and ensuring that the credit needs of the companies are met.

The second stimulus package assumes significance as the World Bank in its report yesterday, 10 December 2008 expressed fears of a deeper and prolonged slowdown which may pull down the global economic growth to less than 1% in 2009. Also many of the developed nations like the US, Japan and some countries in the Eurozone are already in recession and India is witnessing the ripple effects of the global slowdown.

The RBI governor D Subbarao on Wednesday, 10 December 2008, indicated that RBI's forecast of a between 7.5% to 8% economic growth for the current fiscal year may be revised downwards. He also said that the fiscal year 2009-10 will be tougher.

Subbarao today said the RBI will continue to closely monitor the developments in the global and domestic financial markets and will take swift and effective action as and when needed. He said the central bank would endeavour to minimise the stress on various sectors of the economy which have been hurt by the global economic crisis.

India's infrastructure sector output rose 3.4% in October 2008 from a year earlier, below a downwardly revised 4.8% annual growth in September 2008, data released by the government today, 11 December 2008, showed. The infrastructure sector accounts for 26.68% of India's industrial output.

The stock market was volatile. After initial gains triggered by an upmove in bank shares, the market soon slipped into the red on concerns over the weakening global economy and uncertainty about the fate of the beleaguered US automakers. The market cut losses later as stocks recovered in Japan. After moving into positive zone from negative zone in early afternoon trade, the market slipped into the red again later. The market extended losses in afternoon trade.

The market weakened further in mid-afternoon trade as European markets dropped in early trade and on lower US index futures. The market staged a comeback in late trade helped by recovery in index heavyweight Reliance Industries (RIL) in the last one hour of trade. The BSE Sensex swung 304.04 points between the day's high and low.

European stocks dropped on renewed concerns over the health of the global economy and on uncertainties surrounding Washington's auto rescue plan. Key benchmark indices in UK, Germany and France were down by between 0.56% and 1.21%.

The House of Representatives on Wednesday approved a bailout legislation that would force US automakers to restructure or fail. However, prospects for passage of the legislation in the US Senate appears grim, reports suggest. Trading in US futures indicated the Dow could rise 35 points at the opening bell. The US index futures reversed early losses.

Recent economic data continues to highlight the extent of that global slowdown. China's exports shrank unexpectedly in November 2008, while industrial output in several European economies sank, according to data on Wednesday, 10 December 2008.

The Confederation of British Industry's monthly poll showed that the UK factory orders balance improved slightly to 'minus 35' in December 2008 from 'minus 38' in November 2008, but that remains indicative of a strong decline in manufacturing.

The Asian Development Bank today, 11 December 2008, said growth in developing nations in the Asian region is seen slowing to an eight-year low of 5.8% in 2009, joining the chorus of increasingly pessimistic calls made from brokerages to international bodies.

The US recession will tighten its grip next year as unemployment rises and weak home and stock prices imperil consumers, finance firms and debt-laden businesses, a UCLA Anderson Forecast report released on Thursday, 11 December 2008 said. Additionally, a sustained retreat in prices for goods and services is a very real possibility that would further drag on the economy, according to the forecasting unit's report.

Corporate news has added to worries about global growth. Major companies worldwide such as Rio Tinto are announcing steep job cuts as they seek ways to cope with a crisis of a magnitude not seen in decades.

Stocks moved into the green from red in Japan on hopes aggressive rate cuts and government actions around the world to revive economic growth could limit the depth of a global recession. The Nikkei 225 average was up 0.70%. South Korea's KOSPI gained 0.75% after the central bank cut its key interest rate by an unprecedented 100 basis points to a record low 3%, double the reduction that analysts had forecast. Hong Kong's Hang Seng index, too, reversed early losses and was up 0.23%. However, other Asian markets from China, Taiwan, and Singapore, were down by between 0.07% and 2.28%.

Governments worldwide are looking to spend their way out of sharply slowing economic growth via various stimulus measures, while expectations are rising they will also step in to help sectors and companies in trouble. US President-elect Barack Obama announced large infrastructure investment plans last weekend.

The Swiss National Bank today slashed interest rates by 50 basis points, in a bid to save Switzerland's economy from a deeper recession.

The BSE 30-share Sensex slipped 9.44 points or 0.10% to 9,645.46. At the day's high of 9,746.01, the Sensex gained 91.11 points in early trade. The Sensex lost 212.93 points at the day's low of 9,441.97 in mid-afternoon trade.

The S&P CNX Nifty fell 8.10 points at 2,920.15. Nifty December 2008 futures were at 2925.55, at a premium of 5.40 points as compared to the spot closing.

A fiscal stimulus package by the government and cut in interest rates by the Reserve Bank of India (RBI) helped the market stage a rebound this month. The BSE Sensex advanced 562.18 points or 6.18% to 9654.90 on 10 December 2008 from 9092.72 on 28 November 2008. Foreign institutional investors (FIIs) have turned buyers this month. FII inflow in December 2008 totaled Rs 1715.40 crore (till 10 December 2008). As per the provisional data released by the stock exchanges after trading hours, FIIs today, 11 December 2008, bought shares worth a net Rs 444.18 crore.

But the barometer index is still down 10641.53 points or 52.45% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 11561.31 points or 54.51% below its all-time high of 21,206.77 struck on 10 January 2008.

The market breadth, indicating the overall health of the market, was strong on BSE with 1576 shares advancing as compared with 914 that declined. 92 shares remained unchanged.

The BSE Mid-Cap index (up 1.86% to 3,003.08), and BSE Small-Cap index (up 1.42% to 3,443.59), outperformed the Sensex.

The total turnover on the BSE amounted to Rs 4626 crore as compared to Rs 4,638.42 crore on Wednesday, 10 December 2008. Turnover in NSE's futures & options (F&O) segment was Rs 38,606.17 crore, lower than Rs 43,597.57 crore on Wednesday, 10 December 2008.

The BSE Realty index (up 2.12%), the BSE Auto index (up 0.09%), the Bankex (up 0.89%), the BSE Metal index (up 1.37%), BSE Oil & Gas index (up 1.67%), outperformed the Sensex.

The BSE Consumer Durables index (down 2.62%), the BSE Teck index (down 1.38%), the BSE IT index (down 3.90%), the BSE HealthCare index (down 1.13%), the BSE Capital Goods index (down 0.20%), the BSE Power index (down 0.38%), the BSE FMCG index (down 0.31%), and the BSE PSU index (down 0.57%), underperformed the Sensex.

Among the 30-member Sensex pack, 20 declined while the rest advanced. Hindalco (down 4.01% to Rs 51.50), Grasim (down 2.05% to Rs 1076), and Hindustan Unilever (down 1.88% to Rs 240.50), edged lower from the Sensex pack.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) advanced 5.04% to Rs 1289, rebounding sharply from low of Rs 1192.05 hit in mid-afternoon trade, following reports the government has withdrawn an affidavit filed in the Bombay High Court wherein it had asserted that RIL cannot sell its Krishna-Godavari basin gas to anyone without its approval to the pricing formula. In its affidavit filed last month, the government had also said that RIL could not sell KG basin gas at a price less than $4.20 per million British Thermal Units.

Other Mukesh Ambani group companies - Reliance Petroleum (up 10.16% to Rs 81.50), Reliance Industrial Infrastructure (up 4.01% to Rs 383), also surged.

The withdrawal came following insistence by Anil Dhirubhai Ambani Group (ADAG) firm Reliance Natural Resources (RNRL)'s counsel Ram Jethmalani to cross-examine the government on the issue. RNRL galloped 31.92% to Rs 57.45 on massive volumes of 3.32 crore shares. While the government approved price of gas for KG basin is $4.20 per million British Thermal Units (mBTU), RNRL is seeking the gas at $2.34 mBTU.

Other ADAG firms - Reliance Capital (up 6.71% to Rs 497.30), Reliance Power (up 5.18% to Rs 118.85) rose. India's top private sector power generation firm by sales Reliance Infrastructure was down 0.30% to Rs 600.25, recovering from a low of Rs 580.

India's top dam builder by sales Jaiprakash Associates galloped 10.96% to Rs 83 on high volumes of 1.63 crore shares on momentum buying after its contract in derivative segment saw a build up of 10 lakh shares in open interest with the total reaching to 1.37 crore shares on Wednesday, 10 December 2008. It was the top gainer from the Sensex pack.

India's top copper producer by sales Sterlite Industries (India) jumped 9.52% to Rs 298 boosted by a 12.2% surge in ADR on Wednesday, 10 December 2008.

India's second largest cellular services provider by sales Reliance Communications jumped 5.52% to Rs 240.85 on reports that strategic investors, including telecom groups from the US and Europe, are in talks with the company to acquire around 20-26% stake

Banking shares rose on expectations of a further rate cut to ease liquidity after inflation declined further in the week ended 29 November 2008. India's top private sector bank by net profit ICICI Bank gained 2.29% to Rs 409.10 as its American depository receipt (ADR) jumped 8.68%.

State Bank of India (up 0.91% to Rs 1200), Bank of India (up 5.09% to Rs 263), Kotak Mahindra Bank (up 4.71% to Rs 380.15), gained.

But India's second largest private sector bank by net profit HDFC Bank fell 1.17% to Rs 914.

Outsourcing firms slumped on fears a weak global economy would cut the amount firms spent on technology. India's largest IT exporter by sales Tata Consultancy Services lost 6.55% to Rs 506 and was the top loser from the Sensex pack

India's third largest IT exporter by sales Satyam Computer Services plunged 5.58% to Rs 223.10 despite its ADR gaining 0.49%

India's second largest IT exporter by sales Infosys slipped 3.32% to Rs 1135 even as its ADR rose 0.56% on Wednesday, 10 December 2008. India's fourth largest IT exporter by sales Wipro slipped 4.76% to Rs 249.20 even as its ADR gained 1.71%.

A firm rupee also weighed on IT shares. The rupee was trading firm at 48.50/52 per dollar, compared with Wednesday's close of 49.03/04. A stronger rupee affects operating margins of IT firms negatively as they earn most of their revenues from exports.

Select shares retraced sharply from the day's high. DLF (down 2.91% to Rs 255, after hitting a day's high of Rs 270), Tata Steel (down 0.51% to Rs 216.30, off day's high of Rs 225.90), and ONGC (down 1.91% to Rs 664, easing from early high of Rs 684), slipped.

Cement stocks surged on reports a host of multinational cement makers are in talks to buy out promoters in Andhra Cements at a huge premium to the ruling market price. ACC (up 3.29% to Rs 492.05), UltraTech Cement (up 7.74% to Rs 352), and India Cement (up 4.42% to Rs 98), rose.

Andhra Cements hit 20% upper circuit at Rs 22.46 on reports a host of multinational cement makers including Lafarge, CRH and Italcementi, are in the race to buy out promoters at Rs 75 a share, at a huge premium of 233% over the current market price.

Sri Digvijay Cements (up 20% to Rs 7.17), Mysore Cements (up 20% to Rs 14.72), Prism Cement (up 7.10% to Rs 18.56), Sagar Cements (up 5% to Rs 129.45), Saurashtra Cement (up 10% to Rs 18.12), and Gujarat Sidhee Cement (up 5% to Rs 7.35), surged.

Sugar stocks gained tracking sugar futures which rose for a fifth straight day in the commodities market. Shree Renuka Sugars, Dhampur Sugar, Bajaj Hindustan and Balrampur Chini were up by between 4.93% to 8.50%. The sugar futures price was lifted by a firm spot market and on a court ruling in favour of higher cane price set by Uttar Pradesh state government on 8 December 2008.

Shipping stocks advanced tracking recovery in the Baltic Dry Index. GE Shipping (up 18.38% to Rs 197), Mercator Lines (up 33.21% to Rs 36.50), and Shipping Corporation of India (up 12.20% to Rs 80.95), surged. The Baltic Dry Index gauges changes in the prices of shipping commodities.

State-run oil marketing companies (OMCs) slipped on rise in crude oil. HPCL (down 1.90% to Rs 224.40), BPCL (down 4.05% to Rs 322), and IOC (down 2.47% to Rs 377), slipped.

US crude for January 2009 delivery was up 21 cents at $43.73 a barrel today, 11 December 2008 on signs that top oil exporter Saudi Arabia has slashed January supplies ahead of next week's organisation of petroleum exporting countries (OPEC) meeting. State-run oil firms suffer revenue losses on domestic sale of petrol, diesel, LPG and kerosene at a controlled price.

Reliance Industries was the top traded counter on BSE with turnover of Rs 416.25 crore followed by DLF (Rs 234.10 crore), Reliance Capital (Rs 216.70 crore), SBI (Rs 213.50 crore) and Reliance Natural Resources (Rs 168.55 crore).

Reliance Natural Resources led the volume chart on BSE clocking volumes of 3.33 crore shares followed by Suzlon (2.47 crore shares), Unitech (2.15 crore shares), GVK Power Infrastructure (2.13 crore) and Jaiprakash Associates (1.64 crore shares).

Anant Raj Industries galloped 20% to Rs 69.45 boosted by a bulk deal of 8.22 lakh shares struck on the counter at Rs 56 a piece on BSE at 12:44 IST.

Steel Strips Wheels gained 1.36% to Rs 52.15 on bagging an export order worth Rs 2.4 crore. The company announced the order win during trading hours today, 11 December 2008.

Nitin Fire Protection Industries spurted 20% to Rs 167.15 after Nitin M Shah, a promoter, increased his stake to 19.47% in the company after acquiring 20,000 shares on 10 December 2008 through open market purchases. The company announced the increase in promoters' stake during trading hours today, 11 December 2008.

KIC Metaliks galloped 18.13% to Rs 22.15 after Karni Syntex made an open offer to acquire 11.19 lakh shares at Rs 28 per share. The company made this announcement during trading hours today, 11 December 2008.

TVS Motor Company gained 5.73% to Rs 24.90 on launch of a new motorcycle model, Apache RTR 160 RD.