Sensex up 320 points from the day's low

The key benchmark indices registered small losses, recovering sharply from a steep intraday slide triggered by a sharp setback in Chinese stocks
. Stronger-than-expected domestic industrial production data and recovery in European stocks
aided the rebound in the second half of the trading session. The BSE 30-share Sensex lost 54.43 points or 0.36%, up 320 points from the day's low.

The barometer index regained psychological 15,000 mark in late trade after falling below that level in earlier in the day. Healthcare, telecom and readlty stocks gained. Index heavyweight Reliance Industries recovered from intraday low. IT and metal stocks fell. The market breadth, indicating the overall health of the market, was negative.

Intraday volatility was high. Equities cut losses after an early slide triggered by weak global stocks. However, the recovery proved short-lived. The market weakened in mid-morning trade. The market witnessed an intraday recovery once again in early afternoon trade soon after a stronger-than-expected industrial data hit the market. The Sensex slumped later as Chinese stocks declined sharply. The market cut losses after hitting a fresh intraday low in afternoon trade. The recovery gathered steam later as Eur7opean stocks rose.

Industrial output expanded at its fastest pace in 16 months in June 2009, beating forecasts by a wide margin, as higher salaries of government employees and stimulus spending boosted consumer demand. Industrial production jumped 7.8% in June 2009, data released by the government at about 11:55 IST today, 12 August 2009, showed. The growth was much higher than a revised 2.2% growth in May 2009. The growth in industrial production for May 2009 was revised downwards to 2.2% from 2.7%. Planning commission deputy chairman Montek Singh Ahluwalia said positive trend in industrial output will continue.

But, fears of slower economic growth ahead and lower yields of key crops rose on reports India's monsoon rainfall deficit since the beginning of the season on 1 June 2009 rose to 29% as on 10 August 2009. The seasonal rains were 28% deficient until 9 August 2009. The June-September rains were 42% short until 10 August 2009 over the cane-growing region of northwest India, same as the rainfall quantum until the previous day. The shortfall in rains over the soybean-growing region of central India widened by 1% point to 20%.

Finance Minister Pranab Mukherjee said on Tuesday 161 districts were drought prone and sowing of crops was down 20% from last year. 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.

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 a previous forecast of 93% in June 2009.

Mukherjee said the government is prepared to manage a drought and a contingency plan was also in place. The Finance Minister 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.

The initial estimates showed that India's exports declined 26.2% in July 2009 to $13.6 billion due to a slump in global demand.

Concerns about the spread of swine flu remain. A Maharashtra schoolboy succumbed to swine flu just hours after three others in the state died of the same disease on Wednesday morning. With these deaths, the toll due to the viral infection has risen to 11 in the state and 15 in the country. A worried health minister Ghulam Nabi Azad has urged the chief ministers to take urgent steps to tackle the H1N1 disease that was unknown to India till the first case was reported 16 May 2009.

European shares reversed initial losses in volatile trade as investors awaited the outcome of a two-day meeting of the US Federal Reserve. Key benchmark indices in France, UK and Germany were up by between 0.3% to 0.65%.

The US Federal Reserve started its two-day meeting on Tuesday, with expectations that it will leave benchmark interest rates near zero and let a $300 billion programme to buy Treasury securities expire on schedule in September 2009 as economic gloom lifts.

In Asia, the Shanghai Composite index plunged 4.66% as investors took flight amid mounting concerns government-led investment and lending growth are beginning to moderate. The sharp decline comes a day after the People's Bank of China said lending by Chinese banks totaled 355.9 billion yuan ($52.1 billion) in July 2009, a decline of 77% from the prior month, and fixed-asset investment growth eased to 30% in July 2009 from a rise of 35% in June 2009.

In other Asian markets, key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan were down by between 0.15% to 3.03%.

US index futures rose in volatile trade. Trading in US index futures indicated the Dow could rise 21 points at the opening bell on Wednesday, 12 August 2009.

There was broad-based selling in US markets on Tuesday, 11 August 2009. Financial stocks led the decline. The Dow Jones Industrial Average fell 96.50 points, or 1%, to 9,241.45. The broader S&P 500 index fell 12.75 points, or 1.3%, to 994.35. The Nasdaq Composite Index fell 22.51 points, or 1.1%, to 1,969.73.

In US economic news, the second quarter productivity increased at a better-than-expected 6.4%, the strongest increase since the third quarter of 2003. Unit labour costs fell 5.8% during the second quarter. The fall was sharper than expected and the steepest drop in eight years.

In other economic news, wholesale inventories fell for the 10th straight month by dropping a sharper-than-expected 1.7% in June 2009.

Closer home, the government after trading hours today, 12 August 2009, released a brand new Direct Taxes Code that will replace the 1961 Income Tax and other direct tax laws, providing a simple tax structure for better compliance. The new code will provide for a simple structure for capital gains tax, savings instruments and non-profit organisations, Mukherjee said, while releasing the Direct Taxes Code adding that there will be less scope for litigation.

The BSE 30-share Sensex was down 54.43 points or 0.36% at 15,020.16. At the day's low of 14,701.05, the Sensex fell 373.54 points in afternoon trade. The Sensex fell 30.97 points or 0.21% to 15,043.62 at the fag end of the trading session.

The S&P CNX Nifty was down 13.85 points or 0.31% to 4,457.50. Nifty August 2009 futures were at 4472.10 at a premium of 14.60 points as compared to the spot closing of 4457.50. Turnover in NSE's futures & options (F&O) segment surged to Rs 73,347.15 crore from Rs 63,519.37 crore on Tuesday, 11 August 2009.

BSE clocked a turnover of Rs 5,668 crore higher than Rs 5,072.56 crore on Tuesday, 11 August 2009.

The market breadth, indicating the overall health of the market, was negative. Nevertheless, the breadth improved when compared to a weak breadth earlier in the day. On BSE, 1208 shares advanced as compared with 1367 that declined. 99 shares remained unchanged.

Among the 30-member Sensex pack, 18 fell while the rest gained.

Foreign funds are selling equities this month after heavy purchases last month. FII outflow in August 2009 totaled Rs 412 crore (till 11 August 2009). Foreign funds had bought equities worth Rs 11,625.20 crore in July 2009. FII inflow in calendar year 2009 totaled Rs 35,745.10 crore (till 11 August 2009).

Equities have risen sharply this year on the back of heavy buying by foreign funds. The Sensex was up 5372.85 points or 55.74% in calendar year 2009 as on 12 August 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex was up 6,859.76 points or 84.06% as on 12 August 2009.

Coming back to today's trade, the BSE Mid-Cap index was up 0.28% and the BSE Small-Cap index was up 0.47%. Both these indices outperformed the Sensex.

The BSE Realty index (up 2.15%), the BSE Healthcare index (up 1.31%), the BSE Auto index (up 0.36%), the BSE Consumer Durables index (up 0.35%), the BSE Teck index (up 0.15%), the BSE FMCG index (down 0.17%), the BSE Power index (down 0.2%), outperformed the Sensex.

The BSE IT index (down 1.78%), the BSE Metal index (down 1.63%), the BSE PSU index (down 0.7%), the BSE Oil & Gas index (down 0.63%), the BSE Bankex (down 0.5%), the BSE Capital Goods index (down 0.42%), underperformed the Sensex.

India's largest mobile services provider by sales Bharti Airtel gained for the second straight day, rising 5.84%. The Securities Appellate Tribunal (SAT) on Tuesday adjourned till 28 August 2009 the hearing on an appeal seeking greater clarity on a Securities & Exchange Board of India (Sebi) order, which exempts South Africa's MTN from making an open offer to shareholders of Bharti, if a merger deal between two telecom companies materialises.

On seeking guidelines on the proposed merger with MTN, Sebi in an order dated 22 June 2009 had said that telecom giant MTN need not make an open offer to Bharti shareholders in India as its stake in the domestic mobile company would be through the Global Depository Receipts (GDRs). The appeal was filed by a shareholder Deepak Mehra, who holds around 200 shares, arguing that MTN has to make an open offer to Bharti shareholders.

India's second largest mobile services provider by sales Reliance Communications rose 1.14% on reports the company has tied-up with US-based Kodiak Networks for a nationwide roll-out of mobile conferencing service

Sun Pharmaceutical Industries rose 2.73% after the company got USFDA approvals for generic versions of Eloxatin and Imtrex.

India's largest drugmaker by sales Ranbaxy Laboratories rose 4.49% after company entered the protein foods market with the launch of the 'Revitalite' brand.

Other healthcare stocks, Wockhardt, Cipla, Glaxosmithkline Pharma, Pfizer, Sterling Biotech rose by between 0.03% to 3.22%.

Auo stocks fell on concerns arising from scanty rains. Auto firms derive substantial revenue from rural India. Mahindra & Mahindra, Maruti Suzuki India, TVS Motor Company fell by between 0.07% to 4.69%.

But, India's largest commercial vehicle maker by sales Tata Motors rose 4.41% on reports the automaker has almost finalized short term funding for its two British luxury brands without the loan guarantee from the UK government.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) was down 0.39% to Rs 1991.75. The stock came off the day's low of Rs 1943.05. Reliance Industries (RIL) has reportedly filed a caveat in the Supreme Court, seeking to be heard before it considers any petition by National Thermal Power Corporation (NTPC). NTPC is expected to file a petition challenging last month's order of the Bombay High Court that allowed RIL to amend its plea in its dispute with NTPC.

RIL had bid to supply gas to NTPC's projects for 17 years at $2.34 per mmbtu. But RIL did not sign the contract and the matter is pending in Bombay High Court for resolution.

A dispute between Reliance Industries and Reliance Natural Resources on gas sales is before the Supreme Court. Cross-appeals between RIL and RNRL, will come up for hearing before the Supreme Court on 1 September 2009.

Oil exploration stocks fell as oil prices declined on Tuesday on fall in US stock markets and speculation supplies increased in the United States, the largest energy-consuming nation. Cairn India fell 2.91%. India's largest state-run oil exploration firm by sales ONGC fell 1.82%. US light crude ended down $1.15 a barrel to $69.45 on the New York Mercantile Exchange. Fall in crude oil prices would result in lower realizations from crude sales for oil exploration firms.

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. BPCL, HPCL and Indian Oil Corporation (IOC) rose by between 0.44% to 3.04%. 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.

Rate sensitive realty shares reversed early losses as 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, Indiabulls Real Estate, Ansal Properties, DLF rose by between 0.91% to 5.61%.

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

India's second largest IT exporter by sales Infosys fell 1.87% as its American depository receipt (ADR) fell 1.16% on Tuesday. India's third largest IT exporter by sales Wipro fell 0.68% as its ADR fell 2.68% on Tuesday. India's largest IT exporter by sales TCS fell 4.11%.

Metal shares fell after LMEX, a gauge of six metals traded on the London Metal Exchange, fell 1.96% on Tuesday, 11 August 2009. Hindalco Industries, National Aluminum Company, Hindustan Zinc, JSW Steel, Sterlite Industries fell by between 0.68% to 3.23%.

India's largest steel maker by sales Tata Steel fell 4.2% on reports the company has reduced prices of long products, used primarily in the construction sector, by Rs 1,000-1,500 a tonne with immediate effect.

Some construction and cement shares rose as the government's thrust on the infrastructure sector in the Union Budget 2009-2010, may result in increase order flow for construction firms and may help boost cement demand. IVRCL Infrastructure & Projects, Era Infra Engineering, Hindustan Construction Company, Nagarjuna Construction Company rose by between 0.01% to 2.63%.

India's largest engineering and construction firm by sales Larsen & Toubro (L&T) fell 1.57% even a joint venture of the company a Rs 4000-crore equipment order

From cement pack, UltraTech Cement, Grasim Industries, ACC, Ambuja Cements, rose by between 0.25% to 1.66%.

Power stocks fell even as the NHPC IPO received robust investor response. The IPO was subscribed 23.53 times by 17:00 IST on the last day of issue today. Reliance Infrastructure, NTPC, Reliance Power, PowerGrid Corporation of India, Tata Power Company, CESC, GVK Power & Infrastructure, fell by between 0.09% to 1.56%.

Bank stocks fell on weak American depository receipts (ADR) on Tuesday. India's largest private sector bank by net profit ICICI Bank fell 0.84% as its ADR fell 1.41% on Tuesday, 11 August 2009.

India's biggest commercial bank in terms of branch network State Bank of India (SBI) fell 1.58%.

But, India's second largest private sector bank by net profit HDFC Bank rose 1.64% even as its ADR fell 2.74% on Tuesday.

Among PSU banks, Punjab National Bank, Bank of India and Union Bank of India, fell by between 0.32% to 2.23%.

Raj Oil Mills settled at Rs 119.30 a discount of 0.58% over its offer price of Rs 120 on its debut today.

Raj Oil Mills clocked highest volume of 1.73 crore shares on BSE. Unitech (1.73 crore shares), Suzlon Energy (1.43 crore shares), Cals Refineries (1.2 crore shares) and GVK Power & Infrastructure (1.05 crore shares) were the other volume toppers in that order.

Reliance Industries clocked highest turnover of Rs 223.78 crore on BSE. Sesa Goa (Rs 219.60 crore), Tata Steel (Rs 213.01 crore), Raj Oil Mills (Rs 207.47 crore) and Aban Offshore (Rs 167.98 crore) were the other turnover toppers in that order.