Small-cap, mid-cap indices nudge higher

Volatility ruled the roost as the key benchmark indices slipped with investors taking home some cash ahead of a long weekend and with the market open only for three days next week. Mostly lower global stocks also weighed on sentiment. The market remains closed for a public holiday on Monday, 28 September 2009 and again on Friday, 2 October 2009.

The BSE 30-share Sensex fell 88.43 points or 0.53%, up about 80 points from the day's low and off close to 120 points from the day's high. Pharmaceutical stocks surged even as IT, metal and banking stocks fell. Index heavyweight Reliance Industries rose. Quite a few small-cap and mid-cap stocks surged. The market breadth was strong.

Global stocks were mostly lower as weak US housing data and plans by world central banks to scale back infusions of US dollars into their banking system kept investors worried. Major world central banks announced on Thursday, 24 September 2909, that they planned to scale back massive injections of US dollars into their banking systems as financial markets stabilise after a devastating crisis.

Closer home, intraday volatility was immense. The market cut losses soon after an early slide triggered by weak Asian stocks. The Sensex hit positive zone for a short while in morning trade. It slipped into the red again later. The market moved in a narrow range in early afternoon trade. The market once again slipped into the red after hitting a fresh intraday high in early afternoon trade. The market cut losses after hitting a fresh intraday low in mid-afternoon trade. But the market weakened again later.

World leaders at the two-day G20 meeting which began on Thursday have reportedly agreed to keep emergency economic supports in place until a durable recovery is secured. They have also reportedly agreed to work together when time comes to remove the economic stimulus. The G20 nations have also reportedly agreed to take steps to rein in financial industry excesses that led to the financial crisis, and to act together to raise capital standards for banks.

Media reports also suggest that the G20 nations have agreed on a 5 percentage point shift in International Monetary Fund voting power from controlling developed countries to underrepresented countries. The move is part of efforts to give emerging economic powers more say in the IMF to recognize their growing influence in the world economy.

Closer home, the next trigger for the market is Q2 September 2009 results of India Inc next month. There is optimism about Q2 September 2009 results after advance tax collections registered a positive growth in the second quarter after witnessing a negative growth in the first quarter. Corporate advance tax and advance personal income-tax were up by 14.7% and 1.7%, respectively in the September 2009 quarter.

Meanwhile, a news agency quoted an unnamed finance ministry official as saying that the government's excise duty collection have risen 22.7% in August 2009 from the previous month.

India's exports fell an annual 19.7% in August 2009, as the global slump hit demand for Indian goods, Trade Minister Anand Sharma said on Thursday.

Coming back to stocks, a section of the market is concerned that a glut in share sales may suck liquidity from the secondary market. The corporate sector has raised large sums of money through equity and equity related instruments in the past six months or so to either to retire high cost debt or to fund expansion. The supply of paper by Indian firms appear limitless, raising concerns that additional share sales will suck liquidity from the secondary market.

As per one report, companies plan to raise at least Rs 40,000 crore through initial public offers (IPOs)/follow on public offers (FPOs) in the second half of the current financial year. Power companies such as GMR Energy, Indiabulls Power and JSW Energy and state-run Bharat Heavy Electricals and NTPC are likely to tap the primary market. Reliance Infratel also announced on Tuesday, 22 September 2009, its intention to raise Rs 5,000 crore from the primary market. A number of companies are also in the fray to raise funds by way of qualified institutional placement (QIP), reports suggest.

European shares edged higher in volatile trade on Friday, 25 September 2009. Key benchmark indices in France, UK and Germany were up by between 0.06% to 0.67%.

But Asian stocks dropped after Japan's biggest brokerage Nomura Holdings announced a record $5.6 billion share offering and sales of existing US homes unexpectedly declined. Key benchmark indices in China, Hong Kong, Singapore South Korea, Japan were down by between 0.14% to 2.64%. But Taiwan's Taiwan Weighted rose 0.29%.

Trading in US index futures indicated Dow could rise 26 points at the opening bell today, 25 September 2009.

US markets fell for a second day in a row on Thursday after the Federal Reserve announced plans to start unwinding some stimulus measures and a report showed existing-home sales fell last month. The Dow Jones Industrial Average shed 41.11 points, or 0.4%, to 9,707.44. The S&P 500 index fell 10.09 points, or 1%, to 1,050.78, and the Nasdaq Composite Index fell 23.81 points, or 1.1%, to 2,107.61.

In economic data, existing US home sales disappointed after it fell 2.7% in August against economists expectations of a 2.9% increase. Meanwhile, the initial jobless claims fell to its lowest level in two months. The figure came in at 530,000 which was less than estimates. Continuing claims were also below expectations at 6.14 million against the predicted 6.18 million.

The BSE 30-share Sensex fell 88.43 points or 0.53% to 16693. The Sensex rose 30.59 points at the day's high of 16,812.01 in early afternoon trade. The barometer index fell 168.21 points at the day's low of 16,613,22 in afternoon trade.

The S&P CNX Nifty fell 27.60 points or 0.55% to 4,958.95. Nifty October 2009 futures were at 4960.30 at a premium of 1.35 points as compared to the spot closing of 4958.95. Turnover in NSE's futures & options (F&O) segment was Rs 59,792.44 crore, sharply lower than Rs 1,16,850.34 crore on Thursday, 24 September 2009.

BSE clocked a turnover of Rs 5865 crore, higher than Rs 5420.01 crore on Thursday, 24 September 2009.

The market breadth, indicating the overall health of the market was strong. On BSE, 1621 shares rose as compared with 1137 that declined. A total of 90 shares remained unchanged.

Among the 30-member Sensex pack, 20 fell and rest rose.

The Sensex is up 7,045.69 points or 73.03% in calendar year 2009 as on 25 September 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 8,532.60 points or 104.56% as on 25 September 2009. FII inflow in the calendar year 2009 totaled Rs 54212.80 crore (till 24 September 2009).

Coming back to today's trade, the BSE Mid-Cap index rose 0.65% and the BSE Small-Cap index rose 0.91%. Both the indices outperformed the Sensex.

The BSE Healthcare index (up 5.33%), the BSE Oil & Gas index (up 0.97%), the BSE Consumer Durables index (up 0.82%), the BSE Realty index (up 0.69%), the BSE FMCG index (up 0.68%), the BSE PSU index (down 0.21%), the BSE Auto index (down 0.23%), the BSE Power index (down 0.47%), outperformed the Sensex.

The BSE Metal index (down 2.23%), the BSE IT index (down 1.72%), the BSE Teck index (down 1.3%), the BSE Bankex (down 1.14%), the BSE Capital Goods index (down 0.56%), underperformed the Sensex.

Index heavyweight Reliance Industries (RIL) reversed early losses, gaining 1.21% to Rs 2129.80. As per reports, RIL has issued a notice to Reliance Infrastructure, an Anil Ambani group company, threatening to stop gas supplies to the latter's 220-MW power plant at Samalkot in Andhra Pradesh, claiming that it has defaulted on payment. In its reply, Reliance Infrastructure has said it had stopped payment as the marketing margin imposed by RIL in the nature of sales price/price of sale of gas is illegal, unauthorised and unwarranted.

RIL said on Thursday it has signed gas supply agreement with state-run utility NTPC to supply gas for some of its power plants for five years. Reliance will supply 0.61 million standard cubic metres a day (mscmd) to NTPC, and expects to start supplies within a week.

Meanwhile, recent report suggest the outlook for Asian oil refiners, previously hit by a sharp fall in margins, is now improving on a likely ramp-up in demand and slowing capacity expansion.

The RIL counter was under pressure late last week following a large treasury share sale by the company in the secondary market. Petroleum Trust on Thursday sold 1.5 crore equity shares of RIL through block deals on the bourses at Rs 2125 per share. The financial impact of the transaction will be reflected in the consolidated statements, RIL said.

Oil exploration stocks rose even as US crude oil futures settled at the lowest level in eight weeks on Thursday as weak US home sales suggested a slow economic recovery in the world's biggest economy and added to demand worries following a US government report on Wednesday of a surprise large increase in fuel stockpiles. Fall in crude oil prices would result in lower realizations from crude sales for oil exploration firms. On the New York Mercantile Exchange, front-month November crude settled down $3.08, or 4.47% at $65.89 a barrel.

India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) rose 0.75%. ONGC on Wednesday said it will invest over Rs 5000 crore in the next two years in bringing new oil and gas finds into production. Cairn India rose 1.1%

PSU OMCs rose as fall in crude oil prices will reduce underrecoveries on domestic sale of petrol, diesel, kerosene and LPG at controlled prices. HPCL and BPCL rose by between 1.31% to 1.77%. Indian Oil Corporation (IOC) rose 1.77%. The company's board approved a liberal 1:1 bonus issue on 14 September 2009.

The government last week issued bonds worth over Rs 10,306 crore to three oil marketing PSUs to compensate them for the losses incurred on account of selling petroleum products below market price. While bonds worth Rs 6,207.06 were issued to IOC, Rs 2,033.99 crore worth bonds were given to HPCL and Rs 2,065.28 crore worth of bonds were given to BPCL.

India's largest cellular services provider by sales Bharti Airtel fell 1.17%. A delegation of South African officials has reportedly told Indian policymakers on Thursday that the latest change in takeover rules would make it more difficult for telecom major MTN to execute a proposed merger deal with Bharti Airtel. Securities & Exchange Board of India (Sebi) announced early this week the takeover laws would apply to all future issues of American Depositary Receipts (ADR) or Global Depositary Receipts (GDR) with voting rights.

Bharti and MTN have been in negotiations since 25 May 2009 on a $23 billion cash and share-swap deal aimed at an eventual full merger. The deadline for the talks has been extended twice, most recently the deadline was put back another month to 30 September 2009.

Metal stocks fell as LMEX, a gauge of six metals traded on the London Metal Exchange fell 2.64% on Thursday, 24 September 2009. Tata Steel, Steel Authority of India, Jindal Saw, Hindalco Industries, JSW Steel fell by between 1.65% to 3.81%.

India's largest copper maker by sales Sterlite Industries fell 1.53%. A US bankruptcy judge on Thursday rejected attempts by India's Sterlite Industries Ltd to sweeten its offer for U.S. copper miner Asarco LLC, and recommended for the second time that rival bidder Grupo Mexico SAB de CV regain control of the company. Sterlite, however, maintained it was still in the race to acquire the copper miner.

Sterlite said on Monday that it would release Grupo Mexico from a potential legal liability of nearly $8 billion if the Indian miner can win control of bankrupt US copper miner Asarco LLC.

In a court document filed on Monday, Sterlite said that if a federal court approves its plan to acquire Asarco over rival bidder Grupo Mexico's offer, it would not hold Grupo Mexico liable for more than about $900 million of liability related to the 2003 transfer of a Peruvian mine. Sterlite, a unit of India-focused mining company Vedanta Resources, has been facing off with Mexican miner Grupo Mexico for acquiring control Asarco, which has been under bankruptcy protection since 2005.

IT stocks fell on weak US home sales data. US is the biggest market for Indian IT firms. India's third largest software services exporter by sales Wipro fell 2.04%.

India's largest IT exporter by sales Tata Consultancy Services fell 2.06%. TCS recently secured a five-year Rs 140-crore project to build and operate a state-wide area network in southern Andhra Pradesh state.

The new head of Tata Consultancy Services N. Chandrasekaran, who takes over as chief executive when S. Ramadorai retires on 5 October 2009 said in an interview to a news agency on Thursday that it would take another few months to tell whether business spending was recovering, as customers were still working on their IT budgets for 2010.

India's second largest software services exporter by sales Infosys fell 1.74% on concerns of higher expenses after a report it plan to give pay rises and promotions next month.

Banking stocks fell on profit taking. Banking stocks have risen sharply in the past few days on higher advance tax payment by some top banks in the second installment this fiscal. India's largest private sector bank by net profit ICICI Bank fell 2.5% as its ADR fell 2.89% on Thursday.

India's second largest private sector bank by net profit HDFC Bank fell 0.84% as its ADR fell 1.64% on Thursday.

India's largest bank by net profit and branch network State Bank of India fell 0.9%. Chairman O.P. Bhatt on 8 September 2009 said the bank's earnings are likely to grow 30-35% in Q2 September 2009 over Q2 September 2008.

Realty stocks rose on reports 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. DLF, Indiabulls Real Estate and Ansal Properties, Ackruti City rose by between 0.51% to 4.1%.

Pharmaceutical stocks hogged the limelight with a number of stocks in the sector surging. According to a recent prepared by the Federation of Indian Chambers of Commerce and Industry (Ficci) alongwith Ernst and Young (E&Y), the Indian pharmaceutical market will treble to $20 billion by 2015 from $7.1 billion in 2007, with a compounded annual growth rate (CAGR) of 12.3%.

Dr. Reddy's Laboratories surged 10.5% after the company's American depository receipt, or ADR, jumped 5.35% to $19.49 on the New York Stock Exchange on Thursday, 24 September 2009.

Among other pharma stocks, Ranbaxy Laboratories, Sun Pharmaceutical Industries, Cipla and Pfizer rose by between 3.17% to 6.63%.

Some cement stocks fell on profit taking. ACC, Ambuja Cements, Ultratech Cement fell by between 0.01% to 1.19%. A thrust on the infrastructure sector in the Union Budget 2009-2010 may keep cement demand strong. But cement makers recently cut prices by Rs 3 per 50 kilogram bag in Mumbai.

Construction shares rose as higher government spending on infrastructure sector in the Union Budget 2009-2010 to provide a stimulus to the economy, may result in increase order flow for construction. Nagarjuna Construction Company, Gammon India, Gayatri Projects, Valecha Engineering rose by between 0.17% to 5.28%.

The government has set a target of spending $20 billion a year on road construction.

Jaiprakash Associates rose 0.1%. The company on Wednesday raised around Rs 1,190 crore through sale of 5 crore treasury shares by way of bulk deals on the bourses.

FMCG pivotals rose on revival of annual monsoon since mid-August. FMCG firms derive substantial revenue from the rural sector. Nestle India, Marico, Hindusatn Unilever, ITC, United Spirits, Dabur India Britannia Industries rose by between 0.38% to 3.57%.

Fertiliser shares rose on revival of annual monsoon since mid-August. GSFC, GNFC, National Fertilizer, Rashtriya Chemical & Fertilisers rose by between 3.19% to 17.69%. Fertilizer sales are directly dependent on monsoon. A bountiful monsoon boosts sales whereas a drought hits sales adversely.

Revival in the monsoon in mid-August 2009 has improved prospects for an early sowing of winter crops including wheat and canola, and replenished water levels in reservoirs. Farmers use this water to grow wheat and oilseeds planted between October and December.

India's largest engineering and construction firm by sales Larsen & Toubro fell 0.71% on profit tasking. The company on Thursday won an order worth more than Rs 2000 crore from GMR Energy.

Among other capital goods stocks, Bharat Heavy Electricals, BEML, ABB, Praj Industries, fell by between 0.18% to 1.67%.

Auto stocks fell on profit taking. The stocks rallied recently on hopes of strong sales in the upcoming festive season. India's largest tractor maker by sales Mahindra & Mahindra fell 1.3%. India's largest motorbike maker by sales Hero Honda Motors fell 0.12%.

But, India's top small car maker by sales Maruti Suzuki rose 0.47%. As per reports, the government will release pay arrears to government employees under the second and final installment ahead of big festivals in October 2009. The payout would boost demand for cars and motorcycles.

India's largest truck maker by sales Tata Motors fell 1.65%. Tata Motors-owned Jaguar Land Rover on Thursday unveiled a new business plan for the next decade, under which it will invest substantially in a new range of eco-friendly vehicles. The plan, designed to increase global competitiveness, drive growth and sustain profitability, envisages an investment of £800 million (over Rs 6,200 crore) on environmental innovation alone, part-supported by the European Investment Bank.

The plan will also see the company shutting down of one of its plants, in a bid to cut costs and to improve its financial health.

Domestic car sales rose 26% to 120,669 units in August 2009 over August 2008 boosted by new launches and availability of cheaper loans, data released by the industry body Society of Indian Automobile Manufacturers on 8 September 2009, showed. Sales of trucks and buses rose 18.5% to 40,624 units and motorcycle sales rose 26% to 611,173 units.

Sugar stocks reversed early gains as farm minister Sharad Pawar on Thursday said the government will extend tax-free imports of white sugar beyond November 2009. The move is aimed at keeping a lid on prices of the commodity which have risen sharply due to fall in production. Dhampur Sugars, Bajaj Hindustan and Balrampur Chini fell by between 0.12% to 0.86%.

Union Cabinet late last week extended limits on stocks that can be held by traders of sugar until September 2010.

Cals Refineries clocked highest volume of 10.81 crore shares on BSE. Ispat Industries (1.32 crore shares), King Fisher Airlines (1.25 crore shares), IFCI (1.14 crore shares) and Suzlon Energy (0.98 crore shares) were the other volume toppers in that order.

Reliance Industries clocked highest turnover of Rs 222.99 crore on BSE. Tata Steel (Rs 155.45 crore), DLF (Rs 143.61 crore), IDBI Bank (Rs 121.36 crore) and Educomp Solutions (Rs 113.04 crore) were other turnover toppers in that order.