Small-cap, mid-cap stocks outperform the market

Hopes of stimulus package and expectations of a further rate cut by the central bank to boost the economy helped key benchmark indices cut early losses. The market edged lower in three out of five trading sessions. Small and mid-cap stocks outperformed the market.

The BSE 30-share Sensex lost 127.52 points or 1.40% to 8,965.20 in the week ended Friday, 5 December 2008. The S&P CNX Nifty declined 40.70 points or 1.47% to 2714.40 in the week.

The BSE Mid-Cap gained 46.48 points or 1.63% to 2,892.95 and the BSE Small-Cap index rose 25.81 points or 0.78% to 3,323.54 in the week. Both the indices outperformed the Sensex.

Sustained selling by the foreign institutional investors (FII) to shore up resources to beat the global liquidity crunch, have weighed heavily on the bourses since 2008. FIIs outflow reached Rs 54,521.80 crore in calendar 2008, till 4 December 2008.

Trading for the week started on a dull note as weak European indices, fall in US index futures and dismal economic data heightened concerns about the weakening domestic and global economy on Monday, 1 December 2008. The BSE 30-share Sensex lost 252.85 points, or 2.78%, to 8.839.87 and the S&P CNX Nifty slipped 72.20 points, or 2.62%, to 2,682.90.

The market extended losses the next day. The BSE 30-share Sensex was down 100.63 points and the S&P CNX Nifty fell 25.10 points, or 0.94%, to 2,657.80 on Tuesday, 2 December 2008.

Hopes of government measures to boost domestic economy, easing margin norms and firm Asian stocks supported domestic bourses on Wednesday, 3 December 2008. The BSE 30-share Sensex was up 8.19 points, or 0.09%, to 8,747.43.

Hopes of a cut in interest rates, firm European stocks and rebound in US index futures boosted the domestic bourses on Thursday, 4 December 2008. The BSE 30-share Sensex jumped 482.32 points, or 5.51%, to 9,229.75 and the S&P CNX Nifty jumped 131.55 points, or 4.95%, to 2,788

A sell-off in index heavyweights on concerns about the weakening global economy dragged market lower on Friday, 5 December 2008. The BSE 30-share Sensex lost 264.55 points or 2.87% at 8,965.20 and the S&P CNX Nifty fell 73.60 points or 2.64% to 2714.40 on that day.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 1.15% to Rs 1,118.60 on concerns a global slowdown would hit demand for petrochemicals.

Real estate stocks rose on reports the government will unveil measures for the realty sector, which may include incentives for low-cost housing and lower loan rates, on Saturday 6 December 2008. Indiabulls Real Estate (up 9.75% to Rs 103.60), DLF (up 2.47% to Rs 203.15), Unitech (up 33.33% to Rs 30.80), gained.

Banking stocks were mixed despite reports the Reserve Bank of India (RBI) may come out with cuts in repo rate and reverse repo rate on Saturday 6 December 2008 to stimulate growth

India's largest commercial bank State Bank of India (SBI) rose 4.48% to Rs 1135.60. India's largest private sector bank by net profit ICICI Bank rose 2.01% to Rs 358.45. However India's second largest private sector bank by net profit HDFC Bank slipped 3.42% to Rs 888.95

Most auto stocks slipped on dismal November 2008 monthly sales figures. India's largest tractor maker by sales Mahindra & Mahindra lost 10.46% to Rs 252.20 after total vehicle sales (excluding tractors) declined 41% at 10,430 units in November 2008 over November 2007.

India's largest motorbike maker by sales Hero Honda Motors fell 4.91% to Rs 761.50 after two-wheeler sales rose a marginal 0.5% to 2,89,426 units in November 2008 over November 2007.

India's largest scooter maker by sales Bajaj Auto slipped 1.82% to Rs 315 on 37% fall in two-wheelers sales to 1,32,421 units in November 2008 over November 2007.

India's largest car maker by sales Maruti Suzuki India declined 8.50% to Rs 490.30 on 24.4% fall in sales to 52,711 units in November 2008 over November 2007. The company unveiled the monthly sales data during trading hours on Monday, 1 December 2008.

However India's largest commercial vehicle maker by sales Tata Motors gained 12.28% to Rs 153.10 on reports the government is mulling excise duty cut on trucks and buses as well as extending the special line of credit for non banking financial companies that are instrumental in financing commerical vehicle sales.

IT stocks slipped on worries about the US economy which is already into a recession for a year now. Satyam Computer Services (down 7.65% to Rs 224.40), Infosys (down 8.46% to Rs 1135.70), Wipro (down 6.65% to Rs 227.15), and Tata Consultancy Services (down 6.51%. to Rs 521.70), slipped.

Indian IT firms derive a large part of revenue from exports to the United States.

India's largest steel maker by sales Tata Steel jumped 21.10% to Rs 182.80 after the company reported 215.77% surge in consolidated net profit to Rs 4703.64 crore on a 36.17% increase in total income to Rs 44283.34 crore in Q2 September 2008 over Q2 September 2007, on 2 December 2008.

State run oil marketing companies slipped on reports the government is mulling a hefty reduction in fuel prices. BPCL (down 3.90% to Rs 340.30), HPCL (down 5.3% to Rs 224.20), and Indian Oil Corporation (down 6.22% to Rs 383.95), declined.

Among the side counters, NDTV (up 42.72%), Sun TV (up 30.59%), LIC Housing Finance (up 29.26%), and EIH (up 27.26%), jumped.

However, Bombay Rayon Fashions (down 16.19%), Rolta India (down 15.28%), and Mercator Lines (down 14.10%), slipped.

The stock market regulator Securities & Exchange Board of India (Sebi), on Tuesday, 2 December 2008, extended the facility of cross margining across cash and derivatives segments to all categories of market participants.

Exports declined an annual 12.1% to $12.82 billion in October 2008, the first year-on-year fall in nearly three years, as slowing output at home and weakening economies in key overseas markets slashed demand, data released on Monday, 1 December 2008 showed.

Inflation based on the wholesale price index rose 8.4% in the year through 22 November 2008, lower than previous week's 8.84% rise, data released by the government on 4 December showed.

The Bank of England slashed interest rates by a full percentage point on 4 December 2008 to shore up Britain's crumbling economy and head off the threat of deflation. The cut took rates to 2% their lowest level since 1951. The central bank in Sweden slashed its key interest rate by a record 175 basis points to 2%, a shock move to try and prevent the economy from sliding deeper into recession. On the same day, the European Central Bank dropped its benchmark rate by 0.75 percentage point.

Meanwhile the US economy entered a recession a year ago this month, the panel that dates American business expansion said on 1 December 2008. Federal Reserve Chairman Ben Bernanke said the central bank is mulling extreme policy measures such as buying more government bonds to revive growth.