Nifty retreats from multi-month high amid volatile global stocks month

Key benchmark indices edged lower in the week ended Friday, 4 September 2009 mirroring volatile global indices. Sentiment across the globe remained fragile throughout the week with Chinese markets influencing global market trend. Investors booked profits following a rally which propelled the S&P CNX Nifty to its highest closing in last 15 months in the previous week. The week ended on positive note after four straight days of fall in preceding sessions. Auto stocks posted strong gains on healthy sales in August 2009.

Monsoon has shown some signs of revival. Late monsoon revival boosted depleted hydropower and irrigation reservoirs and helped the soybean crop, but the overall farm outlook remained gloomy after three months of patchy rains and food prices are soaring. Government reportedly said rainfall in the past seven days was 4 % above average, the third straight week of near-normal rainfall. Monsoon rains made a shaky start this year with the driest June in 83 years and unusually low rain in early August, making the seasonal rainfall 23 % below average so far, which is the worst since 1972.

Last week's normal rains helped water levels in India's main reservoirs fill up to 45 % of capacity, rising three percentage points in a week, which is the normal rate for the period.

Analysts are concerned that a sharp surge in food prices in the past few days due to scanty rains may stoke inflationary pressures in the economy. Interest rates could rise on higher inflation which in turn may impact a nascent economic recovery and corporate profits.

The wholesale price index (WPI) declined 0.21% in the year to 22 August 2009 compared to previous week's annual decline of 0.95%, data released by the government on Thursday showed. The government revised upwards WPI for the week ended 27 June 2009 to a fall of 1% from an estimated decline of 1.55%.

On the positive side, a survey by HSBC on Thursday showed that the growth in services sector accelerated in August 2009, as a strong pipeline of new orders helped companies raise prices. The HSBC Markit Business Activity Index based on a survey of 400 firms rose to an 11-month peak of 54.9 in August from 54.7 in July. The index has been above 50, which separates expansion from contraction, for four months.

But a slowdown in the manufacturing sector and falling exports remains a cause for concern. The same survey had showed two days back that the growth in the manufacturing sector had slowed to a five-month low in August 2009.

India's gross domestic production (GDP) grew 6.1% in Q1 June 2009 compared with the year-earlier, figures released by the Central Statistical Organisation announced on Monday, 31 August 2009, showed. The segment grouping financing, insurance, real estate and business services led growth in GDP, gaining 8.1% on year. The category including trade, hotels, transport and communication was also up 8.1%.

The GDP growth was lower than 7.8% achieved in Q1 June 2008 but it accelerated from the 5.8% expansion in Q4 March 2009.

The BSE 30-share Sensex fell 232.22 points or 1.46% to 15,689.12 in the week ended Friday, 4 September 2009. The S&P CNX Nifty fell 51.95 points or 1% to 4,680.40 in the week.

The BSE Mid-Cap index fell 0.52%. The BSE Small-Cap index rose 0.43%. Both the indices outperformed Sensex.

Equities have risen sharply this year on the back of heavy buying by foreign funds. The Sensex is up 6041.81 points or 62.62% in calendar year 2009 as on 4 September 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 7528.72 points or 92.25% as on 4 September 2009. FII inflow in calendar year 2009 totaled Rs 39368.40 crore (till 3 September 2009)

The key benchmark indices took a breather on Monday, 31 August 2009 after strong gains in the past seven trading sessions as a setback in Chinese stocks offset optimism arising from India's strong Q1 GDP growth data. The BSE 30-share Sensex fell 255.70 points or 1.61% to 15,666.64 on that day.

A tepid debut of state-run power firm NHPC pulled the market lower on Tuesday, 1 September 2009 in what was a choppy trading session. Weak European stocks also dampened investor sentiment. The BSE 30-share Sensex fell 115.45 points or 0.74% to 15,551.19 on Tuesday.

The key benchmark indices edged lower on Wednesday, 2 September 2009 extending losses for the third straight day, as weak global stocks weighed on investor sentiment. The BSE 30-share Sensex lost 83.73 points or 0.54% to 15,467.46 on Wednesday.

The key benchmark indices extended losses for fourth straight trading sessions on Thursday, 3 September 2009 bucking firm global stocks on worries a surge in food prices may stoke inflationary pressures in the economy. The BSE 30-share Sensex fell 69.13 points or 0.45% to 15,398.33 on that day.

Strong global cues triggered a solid rally on the local bourses, helping them break their four-day declining trend on Friday, 4 September 2009. The BSE Sensex rose 290.79 points or 1.89% to 15689.12 on that day.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) fell 4.32% to Rs 1980.90 in the week. The government on Tuesday amended the special leave petition filed in the Supreme Court stating that the country's largest utility NTPC and Anil Ambani's Reliance Natural Resources (RNRL) were not on the same footing with regard to the supply of gas from the Krishna-Godavari basin by Reliance Industries (RIL). The price of gas to be paid by NTPC, the government said in its application, will be considered in-dependently of the RIL-RNRL case.

The biggest change in the government's stand on Tuesday is its categorical assertion that the government-set price of $4.20 per MMBTU was not applicable to a disputed contract between NTPC and RIL.

The Bombay High Court had asked RIL to supply 28 million standard cubic meters (mmscmd) of gas to RNRL at $2.34 per mmbtu. RIL has appealed this decision in the apex court. Subsequently, the ministry of oil and natural gas had also moved the apex court by filing an independent SLP. It was only an intervenor before the high court in the case.

Auto stocks rose triggered by healthy sales in August 2009. Indian largest tractor maker by sales Mahindra & Mahindra rose 4.61%. Mahindra & Mahindra's (M&M) total vehicle sales rose 15% to 22,063 units in August 2009 over August 2008. The company announced August sales figures during market hours on Tuesday.

India's largest truck marker by sales Tata Motors rose 3.79%. The company's vehicle sales rose 14.23% to 49810 units in August 2009 over August 2008. The company announced August sales figures after market hours on Tuesday.

Maruti Suzuki, India's top car maker by sales, rose 8.75%. The company's total vehicle sales rose 41.6% to 84,808 units in August 2009 over August 2008. The company announced August sales figures during market hours on Tuesday.

India's largest motorbike maker by sales Hero Honda Motors rose 6.99%. The company's sales rose 36% in August 2009 over August 2008. TVS Motor company rose 5.4%. The two wheeler maker reported a 10.95% jump in sales to 126,842 units in August 2009 over August 2008. Both Hero Honda and TVS announced August sales figures during market hours on Tuesday.

Bajaj Auto jumped 2.22% after the company reported a 6% rise in total vehicle sales to 2.13 lakh units in August 2009 over August 2008. The company announced sales figures during market hours on Wednesday

IT stocks fell on profit taking after recent solid surge on hopes of a recovery in the US economy. US is the biggest market for IT firms. India's largest software services exporter TCS fell 1.62% even after a foreign brokerage raised its rating on the stock to 'overweight' from 'neutral'. The brokerage said the company is a 'solid defensive investment'.

India's third largest software services exporter Wipro fell 2.15%.

India's second largest software services exporter Infosys Technologies rose 0.58%. A foreign brokerage, last week, reduced its rating on the stock 'underweight' from 'equal-weight', saying the stock's valuation is 'rich'.

Realty stocks fell on profit taking after recent gains on reports prices in key regions like New Delhi-NCR (National Capital Region) and Mumbai have moved up 10-15% on gradual return of residential property buyers. Indiabulls Real Estate (down 5.79%), Omaxe (down 6.62%), Housing Development &Infrastrucutre (down 5.71%) declined.

The demand for residential projects in major cities is picking up on lower home loan rates, property price cuts by developers and a recovery in the job market. Realty market had slumped last year amid a global credit crunch and buyers fearing job losses.

India's largest steel maker by sales Tata Steel fell 1.93% even as company has increased prices by 3-4% in the domestic market. Its UK unit Corus, too, has increased prices of long products by 25-40 pounds sterling per tonne on improved demand.

India's largest copper maker by sales Sterlite Industries fell 3.66%. A US bankruptcy court has rejected Sterlite Industries' bid to acquire Asarco, six months after the Indian company had signed an agreement to acquire the beleaguered US copper miner. The bankruptcy court in Corpus Christi, Texas, recommended the offer of rival Grupo Mexico. The case has been sent to the US District Court Judge Andrew S Hanen in Texas for a final decision, which is expected in the next four to six weeks time. Sterlite has been chasing Asarco since last year.

India's second largest mobile services provider by sales Reliance Communication surged 10.1% on reports its telecom tower unit may revive a plan to raise funds through an initial public offer.

Shares of state-run hydropower generator NHPC settled at Rs 36.70 on BSE on the day of its debut on Tuesday 1 September 2009 a premium of less than 2% over the IPO price.