Sensex up, Nifty down in volatile market

The key benchmark indices showed a divergent trend, with the Sensex gaining 0.59% and the broader-based S&P CNX Nifty shedding 0.28%. In a choppy trade, the market rebounded from intraday low in late trade. Index heavyweights Reliance Industries (RIL), and Infosys were responsible for volatility on the bourses in late trade. A fall in these two stocks in mid-afternoon trade pulled the market sharply lower at about 14:25 IST. Both these stocks bounced back in late trading, aiding recovery on the bourses.

The market was caught between concerns about Q3 results and coordinated fiscal and monetary measures by policymakers to boost sagging growth. Analysts widely expect dismal quarterly earnings due to a sharp fall in demand, slowing economic growth and recession in major economies such as the United States, eurozone and Japan. The earnings parade will be kicked off by private sector lender Axis Bank on Friday, 9 January 2009, followed by IT bellwether Infosys Technologies on 13 January 2009.

Stocks were volatile. After a subdued start, the market moved into green in early volatile trade as Asian stocks rose. The market extended gains in morning trade, before sliding into the red again. The market later oscillated between positive and negative zones, moving in a narrow range. The market firmed up in early afternoon trade. The market extended gains in afternoon trade. It pared gains later. The market slumped in mid-afternoon trade, before bouncing back.

The Reserve Bank of India (RBI) on Friday, 5 January 2009, cut the repo rate and the reverse repo rate by 100 basis points each, with immediate effect. Repo rate is the rate at which RBI lends to commercial banks and reverse repo rate is the rate at which RBI accepts deposits from banks. After the latest cuts, the repo rate is now at 5.5% and the reverse repo is now at 4%, the lowest ever.

The RBI also announced a cut in cash reserve ratio, the proportion of deposits banks must keep with the central bank, by 50 basis points to 5% with effect from 17 January 2009. Lower interest rates may revive the domestic economy which has been slowing faster than expected due to high interest rates and the global financial crisis.

Complementing monetary easing by the RBI, the government enhanced the spending power of states with specific measures to boost credit availability in the second fiscal stimulus package. It offered additional sops to exporters and the small-scale sector, besides raising the level of protection for cement and steel sectors a tad. It has also incentivised purchase of commercial vehicles. Both the RBI and the government measures were announced after trading hours on Friday, 5 January 2009.

European shares rose on Tuesday on hopes fiscal stimulus plans by US President-elect Democrat Barack Obama and the German government will help a recovery in equities. Key benchmark indices in France, Germany and UK were up by between 1.07% to 1.57%. Germany's second fiscal stimulus could reach 50 billion euros, nearly double the amount expected just a week ago, reports suggest.

Asia-Pacific stocks extended recent gains on Tuesday, 6 January 2009, on hopes big government stimulus spending packages around the world will help revive growth. Key benchmark indices in China, Japan, Australia, and Taiwan were up by between 0.42% to 3%. But key benchmark indices in Hong Kong and South Korea fell by between 0.35% to 0.58%.

Many market players are looking for a large US spending package and tax cuts to help support the world's largest economy. As per reports, about 40% of US President-elect Barack Obama's economic package estimated at $775 billion would be in the form of tax breaks for businesses and the middle class.

Still, the global economy showed few signs of near-term improvement. The world's biggest auto maker Toyota Motor Corp on Tuesday, 6 January 2009, said it would suspend operations at 12 vehicle and parts plants in Japan for six days next month and five in March 2009 in response to declining demand. Britain's Nationwide Building Society today, 6 January 2009, said house prices in UK, the world's fifth biggest economy, fell another 2.5% in December to make 2008 the worst performing year on record.

In the United States, auto sales fell 36% in December 2008, figures showed on Monday 5 January 2009, to close out the weakest year since 1992 in the world's biggest market.

US stocks fell on Monday, 5 January 2009, as investors booked profits after last week's run-up, while concerns about slowing cell phone sales hit shares of the biggest telecommunications companies. The Dow Jones industrial average fell 81.80 points, or 0.91%, to 8,952.89. The Standard & Poor's 500 Index shed 4.35 points, or 0.47%, to 927.45. The Nasdaq Composite Index slid 4.18 points, or 0.26%, to 1,628.03.

The BSE 30-share Sensex was up 60.33 points, or 0.59%, to 10,335.93. The Sensex rose 116.52 points at the day's high of 10,392.12 hit in late trade. The Sensex fell 124.92 points at the day's low of 10,150.68 in mid-afternoon trade.

The S&P CNX Nifty fell 8.65 points, or 0.28%, to 3,112.80.

Resumption of buying by foreign funds has boosted the market sentiment. As per provisional data released by the stock exchanges after trading hours, foreign funds on Monday, 5 January 2009, bought shares worth a net Rs 469.56 crore. Foreign funds had bought shares worth a net Rs 214.20 crore in two trading sessions from 1 January 2009 to 2 January 2009. After a sustained inflows earlier in the month in December 2008, FIIs had turned sellers towards end of that month.

The BSE Mid-Cap index was down 0.19% while BSE Small-Cap index was down 0.23%. Both the indices underperformed the Sensex.

The BSE Metal index (up 2.02%), the BSE Bankex (up 1.62%), the BSE Auto index (up 1.51%), the BSE FMCG index (up 0.78%) outperformed the Sensex.

The BSE Realty index (down 3.98%), the BSE Consumer Durables index (down 3.34%), the BSE Teck index (down 1.47%), the BSE Power index (down 0.96%), the BSE PSU index (down 0.62%), the BSE Oil & Gas index (down 0.03%), the BSE Capital Goods index (up 0.27%), the BSE IT index (up 0.33%), the BSE HealthCare index (up 0.48%) underperformed the Sensex.

The BSE Sensex has risen 1,007.01 points or 10.79% from a recent low of 9,328.92 on 26 December 2008.

The market breadth, indicating the overall health of the market, was even. On BSE, 1244 stocks advanced and 1,271 stocks fell. A total of 91 stocks remained unchanged. The breadth had turned negative in mid-afternoon trade from a strong breadth earlier in the day.

The BSE clocked a turnover of Rs 4,685 crore today higher than Rs 4,188.28 on Monday, 5 January 2009.

Nifty January 2009 futures were at 3126, at a premium of 13.20 points as compared to the spot closing of 3112.80. Turnover in NSE's futures & options (F&O) segment increased to Rs 39,420.34 crore, from Rs 34,219.31 crore on Monday, 5 January 2009.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) rose 0.17% to Rs 1,368.05 after its unit Reliance Petroleum (RPL) started processing crude at its 5,80,000 barrels per day refinery on 25 December 2008. The stock was highly volatile and moved between positive and negative zone. The stock rose 1.33% at the day's high and fell 2.47% at the day's low.

Telecom stocks slipped on concerns of tighter profit margins due to stronger competition. India's second largest telecom services provider by sales Reliance Communication fell 5.65% as investors booked profit after a recent sharp surge. It had gained 23.91% to Rs 263.75 on 5 January 2009 from Rs 212.85 on 29 December 2008, after it announced a nationwide rollout of its GSM-based cellular services during trading hours on 30 December 2008.

India's largest telecom services provider by sales Bharti Airtel slipped 4.17% on fears the company may reduce tariffs to retain costumers following an aggressive nationwide rollover of the GSM-based cellular services by Reliance Communication (RCom).

Realty shares fell on reports recent steps taken by the government to boost the housing sector are not enough to boost housing demand. DLF, Housing Development & Infrastructure, Indiabulls Real Estate and Unitech fell by between 2.8% to 5.41%.

In an effort to boost the cash-starved realty sector, the government on 2 January 2009 allowed the developers of integrated townships to borrow funds from overseas and also asked states to release land for low- and middle-income housing schemes. Earlier, as part of the first stimulus package announced last month, the public sector banks had lowered rates on home loans up to Rs 20 lakh.

Steel stocks rose after the government on 2 January 2009 withdrew exemptions from countervailing duty on TMT bars, used in construction activity. Bhushan Steel, JSW Steel, Steel Authority of India, Jindal Steel rose by between 2.9% to 5.35%.

India's largest steel maker by sales, Tata steel rose 0.67% on reports of signing an agreement with Northern Iron of Australia for supply of iron ore concentrates to its UK unit Corus. This is a positive development for the company as it would provide stable iron ore linkages for Corus.

India's largest zinc maker by sales Hindustan Zinc rose 9.25% after the government on, 2 January 2009, withdrew exemption from basic customs duty on zinc.

Banking shares rose on speculation falling bond yields and lower rates would accelerate loan growth and profitability. India's largest private sector bank by net profit ICICI Bank rose 4.7% after its American depository receipt (ADR) rose 1.89% on Monday, 5 January 2009. The bank had recently cut its main lending rates by 50 basis points from Wednesday, 31 December 2008.

India's second largest private sector bank by net profit HDFC Bank gained 5.53% even as its ADR fell 3.69% on Monday. However, India's biggest bank in terms of total assets and branch network, State Bank of India fell 2.72%.

India's largest dedicated housing finance firm by operating income HDFC rose 3.43%.

Outsourcing firms fell on fears a weak global economy would cut the amount firms spent on technology. India's largest IT exporter by sales Tata Consultancy Services fell 1.43%. India's third largest IT exporter by sales Wipro fell 1.18% as its ADR fell 0.72% on Monday.

India's second largest IT exporter by sales Infosys fell 0.58% to Rs 1,167.65. The stock came off the session's low of Rs 1,146.35.

India's fourth largest IT exporter by sales Satyam Computer Services surged 7.31% after the company denied media reports that Tech Mahindra was considering an all-share merger deal with the company. Talks of a management change at Satyam have been doing the rounds since mid-December 2008, following its botched attempt to take over two infrastructure companies owned by the family of Satyam's founder Ramalinga Raju.

Cement stocks extended gains after the government on 2 January 2009 reinstated the countervailing duty on structural cement which will help protect the domestic industry from cheaper imports. ACC and Ambuja Cements rose by between 7.31% to 8.62%.

Grasim Industries jumped 8.37% and UltraTech Cement rose 11.8%. The Aditya Birla Group said on Friday (2 January 2009) that the group's cement dispatches rose 13.4% to 2.98 million tones in December 2008 over December 2007. The group's cement business includes flagship Grasim Industries and UltraTech Cement, with combined production capacity of 35 million tonnes a year.

Infrastructure stocks extended recent gains on government's measures to make funds available for the infrastructure sector. Nagarjuna Construction Company, Hindustan Construction Company and Gammon India rose by between 0.43% to 6.34%.

India's largest engineering and construction firm by sales Larsen & Toubro fell 0.68%, giving up a 1.58% gain triggered by the company announcement during trading hours its buildings and factories segment, a part of its construction division, had bagged orders aggregating to Rs 1100 crore in the quarter ended December 2008. The stock had fallen 2.62% at the day's low in early trade ahead of the announcement which it the market in early afternoon trade.

Maytas Infra gained 4.3% after the company said it got a construction order worth Rs 110 crore from the Southern Railways.

Government on 2 January 2009 said India Infrastructure Finance Company (IIFCL), which has already been authorized to raise Rs 10,000 crore through tax free bonds by 31 March 2009 for refinancing bank lending of longer maturity to eligible infrastructure bid based public-private partnership projects, will be accessing the market next week for raising the first tranche of the amount. This will enable the funding of mainly highways and port projects on hand of about Rs 25000 crore.

To fund additional projects of about Rs 75,000 crore at competitive rates over the next 18 months, IIFCL will be allowed access in tranches an additional Rs.30,000 crores by way of tax free bonds once funds raised in the current year are effectively utilized.

Bharati Shipyard galloped 5.41% after the founder of Great Offshore pledged another 8 lakh shares, or 2.15%, of the company to Advitiya Urja, a wholly-owned subsidiary of Bharati Shipyard.

BGR Energy Systems soared 10.58% after the company raised Rs 2,105 crore of loan for its working capital requirements from a consortium of five banks.

Unitech clocked the highest volume of 3.06 crore shares on BSE. Reliance Natural Resources (2.47 crore shares), Suzlon Energy (Rs 2.17 crore shares), IFCI (2.06 crore shares) and Jaiprakash Associates (1.23 crore shares) were the other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 274.89 crore on BSE. Reliance Capital (Rs 240.94 crore), ICICI Bank (Rs 177.43 crore), Satyam Computer Services (Rs 165.13 crore) and Reliance Natural Resources (Rs 155.51 crore) were the turnover toppers in that order