Market snaps three-day losses; volatility high

The key benchmark indices snapped last three days' losses, posting small gains, in a highly volatile trading session. Index heavyweight Reliance Industries edged higher in choppy late trade. The BSE 30-share Sensex rose 64.82 points or 0.43%, up close to 210 points from the day's low and off close to 140 points from the day's high. The Sensex alternatively moved above and below the psychological 15,000 mark, ultimately closing above that mark. The barometer index BSE Sensex had plunged 894.06 points or 5.62% in the preceding three trading sessions.

Auto stocks rose on bargain hunting after heavy losses in the past three trading sessions. But IT stocks fell. The market breadth swung between positive and negative zone in late trade.

Intraday volatility was high. The key benchmark indices fell in early trade extending last three days' near 6% losses on concerns below-normal rains may hamper a nascent economic recovery. Bargain hunting triggered a recovery later. The barometer index regained the psychological 15,000 mark in morning trade after falling below that mark in early trade.

The Sensex surged in early afternoon trade after Finance Minister Pranab Mukherjee said the government is prepared to manage a drought and a contingency plan was also in place. The market pared gains in afternoon trade. The market jumped to hit fresh intraday high in mid-afternoon trade. A sudden slide pulled the market into the red shortly thereafter. The market regained positive zone later.

Investors are worried that scanty rains may hamper a nascent revival in the domestic economy. The India Meteorological Department (IMD) on Monday, 10 August 2009, pared its forecast for the June-September South West monsoon for a second time in three months and said state governments were free to announce drought. Rain in the June-September season will be 87% of the long-period average, compared with 93% in June 2009, Ajit Tyagi, director general at India Meteorological Department said. Rainfall could be 4% more or less than the estimate, he said.

The June-September rains are the main source of irrigation for farms and are crucial for Asia's third-largest economy as more than two-thirds of the people live in villages and 60% of the farm land depends on the annual rains.

Finance minister Pranab Mukherjee today said that threat of a drought looms large over 161 districts and sowing of crops was down by a fifth. Mukherjee said the government is sticking to a gross domestic product (GDP) growth target of more than 6% for the year ending March 2010 (FY 2010). He was confident that direct tax receipts target for FY 2010 would be surpassed.

European shares edged lower on Tuesday on profit taking after recent strong gains. Key benchmark indices in Germany and UK were down by between 0.13% to 0.17%. But France's CAC 40 rose 0.13%.

Most Asian stocks edged higher after the latest data showed China's industrial production and investments in urban fixed assets increased at a rapid in July 2009, keeping alive expectations government policies will continue to support an economic recovery. The data was, however, short of market expectations. Key benchmark indices in China, Hong Kong, Taiwan, South Korea and Singapore were up by between 0.2% to 1.88%.

China's industrial production climbed 10.8% in July 2009 after a 10.7% advance in June 2009.

Japan's Nikkei rose 0.58%. The Bank of Japan kept interest rates unchanged at 0.1% and refrained from unveiling any new measures as policy makers focused on the risk that recent economic improvements will fail to translate into a sustainable recovery.

Trading in US index futures indicated Dow could fall 18 points at the opening bell on Tuesday, 11 August 2009. US index futures moved between gains and losses.

Investors focus this week is on a meeting of the US Federal Reserve which begins later in the day. While the Fed is likely to keep interest rates unchanged, the focus will be on an accompanying statement to see whether it will give any hints about how long the Fed will continue its highly stimulative monetary policy. The two-day Fed meeting ends on Wednesday, 12 August 2009.

US stocks retreated after a choppy start on Monday, 10 August 2009 as investors booked profits after a four-week rally in the absence of market-moving earnings announcements and no economic data.

The Dow Jones Industrial Average was down 32.12 points, or 0.3%, to 9,337.95. The S&P 500 index fell 3.38 points, or 0.3%, to 1,007.10, while the Nasdaq Composite Index fell 8.01 points, or 0.4%, to 1,992.24.

Back home, the initial public offer (IPO) of NHPC, which opened for subscription on Friday 7 August 2009, was subscribed 5.54 times. At 16:00 IST on Tuesday, 11 August 2009, the NHPC IPO received bids for 929.01 crore shares compared to the issue size of 167.7 crore shares. NHPC is planning to raise Rs 6,040 crore at the upper end of the issue price band of Rs 36. The government kickstarts the divestment process by selling shares in NHPC.

Investors feel economic reforms will boost economic growth and corporate earnings over the medium term. The Q1 June 2009 results of India Inc were encouraging, with lower costs helping bottomline growth. The combined net profit of 3,247 companies rose 17% to Rs 73670 crore on 5% fall in sales to Rs 725409 crore in Q1 June 2009 over Q1 June 2008.

Meanwhile, cases of swine flu viral infection are going up as it spreads its wings across the country. Swine flu has so far claimed seven lives. Stopping short of pressing the panic button following alarming rise of swine flu cases, the Centre on Monday decided to rush expert teams to all the state headquarters to assess the preparedness in terms of isolation capacity and clinical assessment in different hospitals both in the Government sector and the private sector.

This was part of a series of decisions taken after an emergent meeting chaired by Union health minister Gulam Nabi Azad as deaths due to swine flu continue to rise. With cases of viral infection going up, Prime Minister Manmohan Singh had on Sunday asked the Health Ministry to co-ordinate with state governments to check further spread of the disease.

The BSE 30-share Sensex rose 64.82 points or 0.43% at 15,074.59. The Sensex rose 208.88 points at the day's high of 15,218.65 in mid-afternoon trade. At the day's low of 14,864.23, the Sensex fell 145.54 points in early trade.

The S&P CNX Nifty rose 33.70 points or 0.76% to 4,471.35. Nifty August 2009 futures were at 4468, at a discount of 3.35 points as compared to the spot closing of 4471.35. Turnover in NSE's futures & options (F&O) segment was Rs 63,519.37 crore, lower than Rs 68,493.48 crore on Monday, 10 August 2009.

Foreign funds are selling equities this month after heavy purchases last month. FII outflow in August 2009 totaled Rs 1116.60 crore (till 10 August 2009). FII inflow in calendar year 2009 totaled Rs 35,040.90 crore (till 10 August 2009).

Equities have risen sharply this year on the back of heavy buying by foreign funds. The Sensex was up 5427.28 points or 56.25% in calendar year 2009 as on 11 August 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex was up 6,914.19 points or 84.72% as on 11 August 2009.

BSE clocked a turnover of Rs 5057 crore, lower than Rs 5536.75 crore on Monday, 10 August 2009.

The market breadth, indicating the overall health of the market, moved between positive and negative zone throughout the day. On BSE, 1,352 shares advanced as compared with 1,280 that declined. A total of 95 shares remained unchanged. The breadth was negative in early trade.

Among the 30-member Sensex pack, 17 rose while the rest fell.

The BSE Mid-Cap index was up 1.1% and the BSE Small-Cap index was up 0.55%. Both the indices outperformed the Sensex.

The BSE Auto index (up 3.07%), the BSE Realty index (up 2.14%), the BSE Metal index (up 2%), the BSE Healthcare index (up 0.95%), the BSE Power index (up 0.81%), the BSE Oil & Gas index (up 0.68%), the BSE Teck index (up 0.58%), the BSE Bankex (up 0.52%), the BSE FMCG index (up 0.51%), the BSE Capital Goods index (up 0.49%), outperformed the Sensex.

The BSE PSU index (down 0.02%), the BSE IT index (up 0.2%), the BSE Consumer Durables index (up 0.33%), underperformed the Sensex.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) rose 0.49% to Rs 1996. The stock hit a high of Rs 2047.30 and a low of Rs 1975. Days after Anil Ambani, Chairman of Reliance Natural Resources (RNRL) unleashed a scathing attack against his elder brother and Chairman of petrochemical major Reliance Industries (RIL), on the issue of supply of gas from the Krishna Godavari basin (KG basin) by RIL to RNRL, the Mukesh Ambani group on Friday, 7 August 2009, rejected all the allegations as baseless and malafide.

Clarifying RIL's point, Atul Chandra, RIL's president for petroleum business, started by saying that Anil Ambani had attempted to convert a legal issue pending in the highest court of the country into a public matter for purely self serving interest aimed at personal and private gain, while overwhelmingly rejecting all of Anil's accusations. He said it was a smartly orchestrated campaign unleashed to malign RIL in the public domain even when the issue was subjudice.

Earlier, petroleum minister Murli Deora in Parliament on Thursday, 6 August 2009 said that the price approved by the empowered group of ministers (eGoM) for RIL gas from the KG D6 field was lower than the price it had approved for some of the other operators in the country. Deora said the price of $4.2 was lower than the price of $5.5 charged for gas from the Panna-Mukta-Tapti (PMT) field by a group consisting RIL, ONGC and British Gas. The Anil Ambani group (ADAG) had called the price of $4.2 exorbitant, pointing out that most of the natural gas in the country is being sold at $1.8 to $2.4 per unit.

The Ambani brothers have been at loggerheads since the death of their father in 2002, and a 2005 settlement saw the Reliance group split into two. The Supreme Court on 30 July 2009 said, it will give a date on 1 September 2009 to expedite the decision.

Shares of three public sector oil marketing companies rose on expectations that a hike in retail fuel prices in early July 2009 may boost Q2 September 2009 results. HPCL and Indian Oil Corporation (IOC) rose by between 0.11% to 0.3%. But fell 0.5%. On 1 July 2009, the government had hiked petrol price by Rs 4 per litre and diesel by Rs 2 per litre.

The three public sector oil marketing firms reported strong Q1 June 2009 results as they incurred negligible underrecoveries on domestic sale of fuel at controlled prices. The strong performance was despite lack of any oil bonds from the government.

Auto stocks gained on bargain hunting after heavy losses in the past three trading sessions triggered by concerns over scanty rains. Auto firms derive substantial revenue from rural India. Mahindra & Mahindra, Maruti Suzuki India, Bajaj Auto rose by between 2.74% to 3.55%.

India's largest commercial vehicle maker by sales Tata Motors was up 6.81% on reports the company has secured a debt facility for its Jaguar and Land Rover operations.

Bank stocks were mixed. India's biggest commercial bank in terms of branch network State Bank of India (SBI) rose 1.04% to Rs 1729.70. The stock hit a high of Rs 1754 and a low of Rs 1706.50.

India's largest private sector bank by net profit ICICI Bank fell 0.38% to Rs 716.60 as its ADR fell 5.71% on Monday, 10 August 2009. The stock hit a high of Rs 730 and a low of Rs 708.60.

India's second largest private sector bank by net profit HDFC Bank was flat at Rs 1379.15. The stock hit a high of Rs 1390 and a low of Rs 1353.50.

IT stocks fell in volatile trade on profit taking after recent strong gains triggered by hopes of recovery in the US economy. India's IT companies derive a lion's share of revenues from exports to the US.

India's second largest IT exporter by sales Infosys fell 0.25% to Rs 2,081.65 as its American depository receipt (ADR) fell 1.03% on Monday. The stock hit a high of Rs 2109 and a low of Rs 2055. The company, last week, signed an agreement with BanColombia SA for its Finacle software to be used by the Colombian bank and its overseas units.

India's third largest IT exporter by sales Wipro fell 0.64% to Rs 509.55 even as its ADR rose 1.89% on Monday. The stock hit a high of Rs 522 and a low of Rs 501.50. The company, last week, bagged a five-year contract with US apparel retailer Charming Shoppes Inc. to provide information technology services.

But India's largest IT exporter by sales TCS rose 0.53%. The company recently bagged an order from multi-brand discount chain The Loot. TCS will manage the back-end and software support system for the retail chain.

Power stocks rose as the NHPC IPO received robust investor response. Reliance Infrastructure, Reliance Power, PowerGrid Corporation of India, CESC, GVK Power & Infrastructure, rose by between 0.59% to 6.87%.

Metal shares rose on strong Chinese economic data. Hindalco Industries, National Aluminum Company, Jindal Steel, JSW Steel, Hindustan Zinc, rose by between 0.11% to 5.81%. China is the world's largest consumer of copper and aluminum.

India's largest steel maker by sales Tata Steel rose 1.57% on reports the company plans to raise Rs 5000 crore through issue of securities and is seeking shareholder approval for the fund raising. The funds will be used for capital expenditure, the repayment of debt, acquisitions and working capital.

India's largest copper maker by sales Sterlite Industries rose 0.47% after the company said it has revised its offer to acquire Asarco, reducing the value of a copper price participation deal to $208 million, from a previous level of $770 million. The company will also offer $1.59 billion in cash. The consideration was changed to reflect an increase in copper prices and to meet the expectations of creditors, the firm said.

Sterlite and Grupo Mexico are facing off in a Texan court in the final stage of a year-long tussle for acquiring the US based copper miner, which sought court protection in 2005 amid a worker strike and more than $1 billion of environmental damage and asbestos claims.

Rate sensitive realty shares rose on bargain hunting after a recent fall. The government's thrust on housing sector in the Union Budget 2009-2010 may help extend recovery in housing demand witnessed in the past few months. Unitech, Phoenix Mills, Omaxe, Indiabulls Real Estate, Anant Raj Industries, Ackruti City, rose by between 0.89% to 12.17%.

India's largest realty player by market capitalization DLF was little changed at Rs 362.55 after an intraday volatility on reports a consortium of the company and IL&FS plans to raise Rs 700 crore ($146 million) to part fund the construction of a metro rail system in New Delhi suburbs. The stock hit a high of Rs 372.35 and a low of Rs 357.30.

Companies making oseltamivir (Tamiflu) rose following the spread of the deadly swine flu in India. Ranbaxy Laboratories, GloxoSmithkline Pharma and Natco Pharma rose by between 1.59% to 18.93%. But Cipla fell 0.48%

India's largest mobile services provider by sales Bharti Airtel rose 2.23%. As per reports, Bharti Airtel's attempts for a merger deal with South Africa's MTN may run into turbulence with a group of investors asking market regulator Sebi to investigate multiple aspects of the proposed deal. The Indian Investors Protection Council (IIPC) has reportedly written to the Securities & Exchange Board of India (Sebi) chairman C B Bhave asking the stock market regulator to investigate if regulations have been breached for exempting MTN from making an open offer to Indian shareholders.

India's second largest mobile services provider by sales Reliance Communications rose 0.55%. Idea cellular rose 1.09%.

Construction shares rose on bargain hunting after recent fall. The government's thrust on the infrastructure sector in the Union Budget 2009-2010, may result in increase order flow for construction firms. Nagarjuna Construction Company,Gammon India, Era Infra Engineering, Hindustan Construction Company, rose by between 0.32% to 2.87%.

Some cement stocks fell on profit taking after a recent surge triggered by healthy July 2009 monthly sales. UltraTech Cement, Grasim Industries, Birla Corporation fell by between 0.04% to 0.97%.

Sugar stocks rose as the price of the sweetener soared more than 20% in the overseas market in the past eight sessions to new historic high. Dhampur Sugar, Balrampur Chini, Shree Renuka Sugars and Bajaj Hindustan rose by between 0.33% to 4.97%.

Unitech clocked highest volume of 1.43 crore shares on BSE. Cals Refineries (1.37 crore shares), Ispat Industries (1.32 crore shares), Suzlon Energy (1.32 crore shares), GVK Power & Infrastructure (1.04 crore shares) were the other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 197.14 crore on BSE. ICICI Bank (Rs 181.07 crore), Aban Offshore (Rs 140.11 crore), Tata Steel (Rs 138.26 crore) and Reliance Capital (Rs 135.21 crore) were the other turnover toppers in that order.