Bank stocks lead 1.2% Sensex slide

The key benchmark indices slumped on weak global stocks and lower US index futures. Index heavyweight Reliance Industries (RIL) fell in volatile trade as the hearing on a gas dispute with Reliance Natural Resources (RNRL) continued in the Supreme Court for the second day in a row today, 21 October 2009. RIL was primarily responsible for volatility in the Sensex.

Bank stocks fell on concern a proposed new interest rate system will intensify competition among lenders. Metal, FMCG and auto stocks also edged lower. The market breadth was negative in contrast to a strong breath in early trade.

The BSE 30-share Sensex fell 213.84 points or 1.24%, off close to 240 points from the day's high and up close to 15 points from the day's low. The Sensex fell below psychological 17,000 mark level for a short while in late trade before regaining that level. A section of the market is concerned that a glut in share sales by Indian firms may suck liquidity from the secondary market.

Intraday volatility was high. The market drifted lower in choppy early trade on subdued Asian stocks and lower US index futures. It soon bounced back in morning trade and moved into green from red. But the intraday recovered proved short lived as the market once again slipped into the red. The market cut losses after hitting a fresh intraday day low in early afternoon trade. The Sensex hit a fresh intraday low in mid-afternoon trade. It soon trimmed losses. The market slumped in late trade on weak global stocks.

The Prime Minister's economic advisory council today, 21 October 2009, said the economy is likely to grow 6.5% in 2009/10 with inflation at around 6 % by the end of March 2010. The panel also forecast a consolidated fiscal deficit, which includes shortfalls at the state level, of 10.09 % of GDP in the current fiscal year, compared with 8.6% last year, and the influential panel urged a return to fiscal consolidation.

The panel of advisers headed by former central bank governor C. Rangarajan said growth in the current fiscal year would be at least 6.25% and could reach 6.75%. The panel said the recently poor summer monsoon would erode farm output in the current fiscal year by 2% although 8.2% growth in both the industrial and services sectors would help offset that. Rangarajan said growth in the fiscal year that ends in March 2011 would accelerate to 7 to 8%.

Prime Minister Manmohan Singh said on Tuesday the Indian economy will expand at 6-6.5% in the year to March 2010, despite uncertainty whether signs of a global recovery will lead to a return to a sustained growth path. Singh also said the drought in the country, the worst in decades, had further hit the poorest sections of its people.

Govinda Rao, a member of the Prime Minister's Economic Advisory Council today, 21 October 2009, said the government may collect Rs 4 lakh crore as direct tax for the current fiscal year ending March 2010. There is an unexpected increase in recent direct tax collections, he said.

According to a survey by Hewitt Associates, base salary levels in India are poised to jump nearly 10% in 2010 as the Asian region continues to rebound from global recession. Salaries in Indonesia and China will also surge, by 8.7% and 6.7% respectively, according to the survey. The survey covered more than 2,000 local and joint-venture companies in the Asia-Pacific region.

Rangarajan said today, 21 October 2009, the central bank's accommodative monetary policy may continue until the end of March 2010, with the need for tightening once inflation picks up.

Finance secretary Ashok Chawla said on Tuesday the Reserve Bank of India (RBI) would hopefully continue its current easy monetary stance when it reviews policy later this month as it was justified for the present economic scenario. The RBI governor D Subbarao is scheduled to meet the Prime Minister and finance ministry officials on 23 October 2009 to review the economic situation ahead of the policy.

Faster industrial output growth and rising inflationary pressures have strengthened case for an end to the RBI's accommodative monetary stance next year. Industrial output grew at its fastest pace in 22 months in August at 10.4 %.

The RBI pumped in massive liquidity in the banking system in the past one year or so to help revive the domestic economy in the aftermath of the global financial crisis. While as exit from the loose monetary policy is imminent, speculation on the bourses is the timing of the exit policy. The RBI is expected to keep its benchmark lending and borrowing rates on hold at a quarterly monetary policy review on 27 October 2009.

The supply of paper by Indian firms appear limitless, raising concerns that additional share sales will suck liquidity from the secondary equity market. As per reports, Indian firms have garnered about $9 billion (Rs 32,400 crore at the current exchange rates) through sale of shares and convertible bonds to institutional buyers since April 2009. Indian companies are taking advantage of a surge in liquidity to recapitalize and fund capital expenditure after being starved of cash last year.

Most of these companies - from industries ranging from liquor and spirits to infotech - issued equity shares to a select group of investors by way of qualified institutional placement or QIP. If the enabling resolutions passed by the companies are any indication, Indian firms are gearing up to raise $15 billion (Rs 69,427 crore) in the next six months. The list includes Hindalco (Rs 2,900 crore), JSW Steel ($1 billion), India Cements ($100 million), Essar Oil ($2 billion), Tata Steel (Rs 5,000 crore), Jet Airways ($ 400 million) and Bharat Forge ($150 million).

Unlisted Reliance Infratel announced on 22 September 2009 its intention to raise Rs 5,000 crore from the primary market. Divestment of state-run firms by the government may also increase the supply of paper in the market.

The government on Monday approved stake sales in state-run power producer NTPC and another unlisted power firm Satluj Jal Vidyut Nigam which reflects the country's resolve to speed up reforms and raise more resources for social schemes. On Monday, Trade Minister Anand Sharma said the Union Cabinet had approved a 5% stake sale in NTPC, and 10% in, an unlisted power producer. On Friday, 16 October 2009, Prime Minister Manmohan Singh said many state-run firms are eager to list their shares in the stock market as it would help unlock their value.

The government has approved a follow-on public offering of 20% of state run Steel Authority of India, the steel minister said on Wednesday, 21 October 2009. The Government of India owns nearly 86% of Sail.

Stock and sector-specific activity may dominate trade on the bourses in the coming days based on expectations on Q2 September 2009 results. Auto firms are seen reporting strong Q2 results on strong volume growth and on lower input costs. Lower interest rates and pay hike for government employees has boosted auto sales this year after last year's slowdown in demand. Government employees have started receiving the balance 60% of their wage arrears as per the recommendations of the VIth Pay Commission.

Cement firms, too, are seen reporting good Q2 numbers on the back of volume growth, higher realisation and decline in costs like imported coal. Metal firms are seen reporting fall in net profit due to a sharp fall in metal prices on year-on-year basis.

Fall in volumes in the commercial property segment and lower realisations in both commercial and residential property segments, will pull earnings of realty firms lower.

Banks are seen reporting a sedate growth in core lending amid sluggish credit offtake. On the flip side, PSU banks will benefit from treasury gains amid volatility in prices of government securities during the quarter.

Strong growth in new subscriber additions will aid topline growth of telecom firms. But falling average revenue per user (ARPU) and revenue per minute due to intense competition will cap bottom line growth.

European shares pulled back from early gains in a choppy session on Wednesday, with Peugeot, Deutsche Bank and PPR Group all declining after updating on third-quarter progress. The key benchmark indices in France, Germany and UK were down by between 1.22% to 1.63%.

The Bank of England's Monetary Policy Committee voted 9-0 in favor of the decision to leave its asset purchase plan unchanged at 175 billion pounds and to maintain its key lending rate at a historic low of 0.5%, according to minutes of the 7-8 October 2009 meeting released Wednesday.

Asian stocks declined today led by materials and technology companies, on declines in commodity prices and worse-than-forecast US housing starts. Key benchmark indices in Hong Kong, Japan, South Korea, China, Singapore and Taiwan fell by between 0.3% to 0.67%.

Bank of Japan Deputy Governor Kiyohiko Nishimura on Wednesday warned that the downside risks facing the country's economy remain high, meaning the central bank must stick to its easy monetary policy for now. Nishimura said the biggest risk facing the Japanese economy remained the world economic outlook. The bank's main scenario is for the world economy to return to moderate growth, but Nishimura also outlined some of the risks to that scenario.

China banking regulators warned Wednesday about rising risks in the sector and urged banks to keep their lending within reasonable levels in the current quarter, according to a media report Wednesday. The China Banking Regulatory Commission (CBRC), which expressed the view in comments made during a video-and-teleconference call with banks across the country Wednesday, did not spell out what it viewed as an appropriate lending level.

In a later statement that was posted on its Website, the CBRC also urged banks to closely monitor possible repercussions on market liquidity caused by global capital flows, macroeconomic trend changes, or policy adjustment.

US stock futures on Wednesday pointed to a second straight day of declines, ahead of a slate of earnings from Wells Fargo and Morgan Stanley and an assessment of the economy from the Federal Reserve. Trading in US index futures indicated Dow could fall 56 points at the opening bell on Wednesday, 21 October 2009.

US markets retreated on Tuesday on poor economic data even though several earnings reports beat expectations. The Dow Jones Industrial Average fell 50.71 points, or 0.5%, to 10,041.48. The S&P 500 index fell 6.85 points, or 0.6%, to 1,091.06. The Nasdaq Composite index was down 12.85 points, or 0.6%, to 2,163.47.

In the day's economic news, housing starts were the bigger disappointment gaining 0.5% last month, less than the 2.8% increase expected. In earnings from the US, Yahoo reported a profit that was higher than last year and went past expectations.

The Obama administration will shutter programs at the heart of a $700 billion financial bailout but remains focused on supporting a fledgling economic recovery, Treasury Secretary Timothy Geithner said in an interview to a news agency on Tuesday. The administration will focus on "more-targeted programs directed at what are the principal areas where there's still weakness in access to credit," he said, specifically citing housing and small businesses.

San Francisco Federal Reserve President Janet Yellen said Tuesday that the Fed is not likely to tighten monetary conditions during the next few months and still has not decided on which tool to use first when it decides it's time to drain extra liquidity out of the system.

Hedge funds attracted $1.1 billion from investors in the third quarter ended September 2009, ending a one-year streak of net withdrawals, according to Hedge Fund Research Inc. More than two-thirds of hedge funds experienced inflows in the quarter. Funds with assets of more than $5 billion experienced outflows while those with less than $500 million attracted money in the quarter.

Meanwhile, hedge fund manager Galleon Group's founder Raj Rajaratnam was arrested Friday, 16 October 2009, on charges of insider trading. Galleon Hedge Fund, which currently has assets under management of about $3.7 billion, has a 7% stake in broking firm Edelweiss Capital, 4.6% stake in construction firm Shriram EPC and 0.3% stake in Pipavav Shipyard.

Rajaratnam's lawyer has insisted his client isn't guilty of the charges. But investors in the group's funds could follow the lead of Rochdale Investment Management, which said Monday it was liquidating its stake in the Galleon Diversified fund. If enough investors left Galleon, managers at the firm could be forced to sell shares of companies it owns in order to meet those redemptions. Galleon could also seek to prevent investors from redeeming money immediately.

Emerging-market equity fund inflows surged in the second week of October 2009 on optimism improving US earnings and China's trade figures signal increased demand for commodities, fund tracker EPFR Global said on Friday, 16 October 2009. Heavy inflows were seen in funds specialized in BRIC countries -- Brazil, Russia, India and China. Asia ex-Japan funds received $823 million in the week ended 14 October 2009.

The BSE 30-share Sensex fell 213.84 points or 1.24% to 17,009.17. The Sensex rose 25.68 points at the day's high of 17,248.69 in early trade. The barometer index fell 225.15 points at the day's low of 16,997.86 in late trade.

The S&P CNX Nifty fell 50.85 points or 0.99% to 5,063.60. Nifty October 2009 futures were at 5,068.20, at a premium of 4.60 points as compared to the spot closing of 5,063.60. Turnover in NSE's futures & options (F&O) segment was Rs 67,937 crore, lower than Rs 74,134.92 crore on Tuesday, 20 October 2009.

BSE clocked a turnover of Rs 5976 crore, higher than Rs 5351.43 crore on Tuesday, 20 October 2009.

The market breadth, indicating the overall health of the market turned negative in contrast to a strong breadth in early trade. On BSE, 1173 shares advanced as compared with 1555 that declined. A total of 95 shares remained unchanged.

Among the 30-member Sensex pack, 24 fell while the rest rose.

With foreign funds making heavy purchases, the Sensex is up 7,361.86 points or 76.3% in calendar year 2009 as on 21 October 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 8848.77 points or 108.43% as on 21 October 2009. FII inflow in the calendar year 2009 totaled Rs 68,476.30 crore (till 20 October 2009).

Coming back to today's trade, the BSE Mid-Cap index fell 1.07% and outperformed the Sensex. The BSE Small-Cap index rose 0.23% and outperformed the Sensex.

Sectoral indices on BSE displayed mixed trend. The BSE Auto index (down 2.36%), the BSE FMCG index (down 2.06%), the BSE Bankex (down 2%), the BSE Metal index (down 1.69%), the BSE Healthcare index (down 1.38%), underperformed the Sensex.

The BSE Realty index (up 0.26%), the BSE Teck index (up 0.04%), the BSE IT index (up 0.03%), the BSE Power index (down 0.42%), the BSE Capital Goods index (down 0.51%), the BSE Oil & Gas index (down 0.58%), the BSE PSU index (down 1.17%), the BSE Consumer Durables index (down 1.22%), outperformed the Sensex.

Index heavyweight Reliance Industries was flat at Rs 2182.45. The stock hit a high of Rs 2209 and a low of Rs 2169.95. Reliance Industries (RIL) counsel Harish Salve said Wednesday he will present his arguments in the gas dispute case with Reliance Natural Resources (RNRL) by 29 October 2009. The case is being heard in Supreme Court by a three-judge bench, headed by the Chief Justice of India, K.G. Balakrishnan.

There has to be some process to reach a suitable arrangement, the court said, suggesting arbitration, third-party intervention, mutual settlement and legal resolution as options.

Salve on Tuesday argued in the Supreme Court that the memorandum of understanding (MoU) signed between the members of the Ambani family on 18 June 2005, was not binding on the company, as it had never been shown to its board of directors. But even if it was, RIL would be unable to supply 28 million standard cubic metres per day (mmscmd) of gas to RNRL at $2.34 per million British thermal unit (mmBtu) as it contradicted the government's gas pricing and utilisation policy, Mr Salve said. The proceedings, which lasted for over two hours, were marked by interjections from the three-judge bench.

The apex court will have to rule on a number of issues. Apart from the main dispute, as to whether a valid contract exists and what is the correct price, it will have to decide if the government can intervene in the case.

Meanwhile, the government on Tuesday formed an Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee to allocate additional gas from the RIL's field to new users. Besides Mukherjee and Deora, the EGoM would include Power Minister Sushil Kumar Shinde, Fertilizer Minister M K Alagiri, Law Minister Veerappa Moily and Planning Commission Deputy Chairman Montek Singh Ahluwalia.

PSU OMCs were mixed after Govinda Rao, a member of the Prime Minister's Economic Advisory Council, there is no need to raise fuel prices, if global oil prices remain in the range of $70 to $75 a barrel. BPCL, HPCL fell by between 1.14% to 2.94%. But, Indian Oil Corporation rose 2.04%.

Rao said the government expects international crude oil prices to hover around $70 to $75 per barrel. If prices go beyond that consistently, then the numbers will have to change, Rao said. Rise in crude oil prices normally results in under recoveries for PSU OMCs on domestic sale of petrol, diesel, kerosene and LPG at controlled prices.

Crude oil prices fell on Wednesday as investors took profits after a recent rally sent the market above 80 dollars for the first time in one year. New York's main contract, light sweet crude for December delivery, fell 1.04 dollars to 78.08 dollars a barrel. The November 2009 contract, which had expired Tuesday, briefly touched 80.05 dollars -- the highest level for New York crude since 14 October 2008.

Bank stocks fell after a Reserve Bank of India (RBI) panel on Tuesday proposed a transparent pricing structure for floating rate loans wherein benchmark rates get automatically revised on shrinking cost of funds. India's largest private sector bank by net profit ICICI Bank fell 1.62% as its ADR fell 1.26% on Tuesday. The bank recently reduced auto loan rates by 50 basis points.

India's second largest private sector bank by net profit HDFC Bank fell 1.67% as its ADR rose fell 2.6% on Tuesday. The bank's net profit rose 30.2% to Rs 687.46 crore in Q2 September 2009 over Q2 September 2008. The results, which hit the market last week, were more or less in line with market expectations.

India's largest bank by branch network State Bank of India fell 3.24%. SBI has reportedly raised $750 million (around Rs 3500 crore) in the overseas market through five-year bonds as part of its medium-term note programme (MTN). SBI's $5 billion MTN programme was launched in 2004. It targets investors, including banks, insurance companies, hedge funds and private equities in the global market.

Among other PSU Stocks, Bank of Baroda and Punjab National Bank fell by between 0.68% to 4.46%.

Bank of India lost 2.99%, after the Reserve Bank of India barred further buying in the state-run bank's shares by foreign institutional investors without its prior permission.

The committee headed by RBI executive director Deepak Mohanty has suggested discontinuing the usage of a bank's prime lending rate (PLR) as the benchmark for variable rate loans. Instead, it wants banks to arrive at a base rate that reflects the cost of one-year deposits and price loans over this base rate.

The panel has also proposed a ceiling on the extent of loans that can be granted below the benchmark rate. Most banks typically pass on the benefit of falling rates only to fresh customers. RBI governor D Subbarao has repeatedly said though the central bank has slashed its repo rate (at which it lends to banks) by 425 basis points in the last one year, prime lending rates of banks have fallen by only around 200 basis points.

Lenders currently offer loans at less than the benchmark prime lending rate to about 10 categories of borrowers, according to the central bank. Some of these loans are at rates that don't "make much commercial sense" for the banks, according to the report.

Meanwhile, the central bank may hike the ceiling on the portion of government securities that banks can park in held-to-maturity (HTM) category, possibly at a quarterly monetary policy review on 27 October 2009. Banks do not have to make any mark-to-market provisions on securities held this basket if prices of securities fall. Provisions have to be made out of profit and therefore, impact a bank's bottom line. Yields on ten-year government bonds have risen sharply this year. Bond prices and bond yields are inversely related.

Indian banks can put bonds equal to 25% of the value of deposits in their HTM accounts. The market expectations is for an increase in the ceiling by up to 2 percentage points.

India's largest dedicated housing finance firm HDFC fell 3.07%. HDFC, last week, announced its net profit rose 24.27% to Rs 663.94 crore in Q2 September 2009 over Q2 September 2008. The results beat market expectations.

India's largest engineering and construction firm by sales Larsen & Toubro was flat. Strong project execution is seen driving growth in L&T's top line and bottom line in Q2 September 2009. A total of five brokerages expect a between 19% to 42.3% growth in L&T's net profit at between 546.30 crore to Rs 654.70 crore in Q2 September 2009 over Q2 September 2008. L&T unveils Q2 September 2009 results on Thursday, 22 October 2009.

India's largest power maker by sales Bharat Heavy Electricals fell 0.98%. Strong project execution, fall in input costs and lower employee costs are seen driving growth in Bhel's top line and bottom line in Q2 September 2009. Metal prices were sharply on year on year basis which will help boost margins of the power equipment major. Further, Bhel had provided Rs 116 crore for wage hike provisions in Q2 September 2008 which had pulled down profit in that quarter. The margins will rise with no such provision in Q2 September 2009.

A total of seven brokerages expect a between 10.8% to 32.4% growth in Bhel's net profit at between Rs 681.50 crore to Rs 815.40 crore in Q2 September 2009 over Q2 September 2008. Their expectations peg a between 24.8% to 28% growth in revenue at between Rs 6667.70 crore to Rs 6838.60 crore in Q2 September 2009 over Q2 September 2008. Bhel unveils Q2 September 2009 results on Friday, 23 October 2009

Among other capital goods stocks, ABB, Praj Industries, BEML, Siemens, Thermax, fell by between 0.23% to 4.02%.

Auto stocks fell on profit taking. India's top small car maker by sales Maruti Suzuki India fell 2.6%. The company's total sales rose 17.3% to 83,306 vehicles in September 2009 over September 2008. The figures were released during trading hours on 1 October 2009.

India's largest truck maker by sales Tata Motors fell 2.86%. Tata Motors said after market hours on Tuesday it has acquired full control of Spanish bus and coach manufacturer Hispano Carrocera by acquiring the remaining 79% stake in the firm. Tata Motors had a 21 % stake in the Spain-based company since 2005, it added.

Bajaj Auto fell 1.91%. Bajaj Auto's net profit jumped 117.85% to Rs 402.83 crore in Q2 September 2009 over Q2 September 2008. The company announced the Q2 results during trading hours on 15 October 2009.

India's largest tractor maker by sales Mahindra & Mahindra fell 1.89%. Total sales rose 10.94% to 28434 vehicles in September 2009 over September 2008. The company unveiled the sales figures during trading hours on 1 October 2009.

India's largest motor bike maker by sales Hero Honda Motors fell 2.9% ahead of its Q2 September 2009 result today. Hero Honda is seen reporting robust Q2 results on the back of higher volumes and surge in profit margins due to fall in input costs. A total of nine brokerages expect a between 59.1% to 83.1% growth in Hero Honda's net profit at between Rs 487.20 crore to Rs 560.70 crore in Q2 September 2009 over Q2 September 2008.

Total domestic automobile sales in the country in the first half of the financial year 2009-10 rose by 14.51% year-on-year to 57,82,920 units, according to automobile sales figures released by the Society of Indian Automobile Manufacturers (Siam). The jump in sales for the April-September period came from the double-digit growth posted by the passenger vehicle segment (comprising cars and sports utility vehicles) which grew by 13.46%, by the 15.68% spurt in two-wheeler sales and by an increase of 12.37% in sales of three-wheelers.

FMCG stocks fell on profit taking. Hindustan Unilever, ITC, Tata Tea, Dabur India, fell by between 0.88% to 3.1%.

United Spirits lost 2.29%, on worries of equity dilution, after the company raised Rs 1615.60 crore through a share sale to institutional investors.

Metal stocks fell as LMEX, a gauge of six metals traded on the London Metal Exchange, fell 0.96% on Tuesday. Tata Steel, JSW Steel, Jindal Steel & Power fell by between 0.04% to 3.96%.

Steel Authority of India (Sail) fell 2.13% after the steel minister said the government has approved a follow-on public offering of 20%. The government holds 85.82% stake in Sail.

India's largest copper maker by sales Sterlite Industries fell 1.43%. The company, last week, raised $500 million in convertible senior notes and plans to use the proceeds primarily for expansion of its copper business. The notes are convertible into American depositary shares at $23.33 per share.

Realty stocks rose on recent reports that 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. Indiabulls Real Estate, Omaxe, Ansal Properties, DLF rose by between 0.61% to 3.14%.

India's largest thermal power generator by sales NTPC rose 0.1% extending gains for the second straight day after the Union Cabinet on Monday, 19 October 2009, approved a 5% stake sale in the firm by the government

Ultratech Cement fell 2.25% after the company issued a cautious outlook at the time of announcing Q2 results late last week. Net profit jumped 53% to Rs 251 crore in Q2 September 2009 over Q2 September 2008.

UltraTech said the performance was affected on a sequential basis due to lower demand in Southern India. The net profit dropped 39.94% to Rs 250.90 crore in Q2 September 2009 over Q1 June 2009.

The company said the cement demand may grow 9% in the year ending March 2010 on the back of government's initiative to boost rural development, infrastructure and housing. It, however, said new capacities which at various stages of implementation will result in pressure on margins.

The company said its focus on higher volume growth, captive power generation and capital productivity will help offset the impact of lower prices on margins.

Among other cement stocks, ACC, Grasim Industries, Birla Corporation and Ambuja Cements, fell by between 0.66% to 2.67%.

Jaiprakash Associates fell 3.56% ahead of its Q2 September 2009 result today. Strong order book and higher cement realization are seen driving growth at construction and cement firm Jaiprakash Associates (JAL) in Q2 September 2009. A total of 6 brokerages expect a between a 4.7% fall to a 21.7% growth in JAL's net profit at between Rs 193.50 crore to Rs 247.20 crore in Q2 September 2009 over Q2 September 2008. Their expectations peg a between 64.4% to 83.6% growth in revenue at between 1944.80 crore to Rs 2170.80 crore in Q2 September 2009 over Q2 September 2008.

IT stocks rose after Yahoo Inc, the top US seller of online display ads, reported better-than-expected results on Tuesday. India's third largest software services exporter Wipro rose 0.41% even as its ADR fell 0.43% on Tuesday.

India's largest software services exporter TCS rose 1.94%. The company after market hours on 16 October 2009, reported stronger-than-expected Q2 September 2009 results. Consolidated net profit as per US accounting standards rose 6.81% to Rs 1623.90 crore on 3.16% growth in revenue to Rs 7435.10 crore in Q2 September 2009 over Q1 June 2009.

TCS has a good business pipeline and is pursuing 20 to 25 large outsourcing deals, chief executive N. Chandrasekaran said at the time of announcing Q2 results. The management is seeing signs of recovery but it believes it will be slow. The discretionary spent is still tight but there is spent seen in banking, finance services and insurance (BFSI), retail, utility and pharma verticals, TCS said at a conference call after the results. However, a continuous improvement in volumes cannot be expected, it said. The company is seeing stability in demand environment. The management expects to maintain margins at current levels provided there is no adverse rupee movement.

But, IT bellwether Infosys Technologies fell 0.92%. Its ADR rose 0.27% on Tuesday. Infosys raised its earnings and revenue guidance in both dollar and rupee terms for the year ending March 2010 (FY 2010) at the time of announcing Q2 September 2009 results before trading hour on 9 October 2009.

Infosys, however, said strengthening rupee is a big concern for its earnings. A stronger rupee negatively impacts operating margins of IT firms as the sector earns a lion's share of revenue from exports. The rupee is hovering near its highest level in more than a year.

Telecom stocks were mixed after finance secretary Ashok Chawla said on Tuesday the auctions for the 3G spectrum would take place by December this year. India's largest mobile services provider by market share Bharti Airtel rose 1.22%.

The Department of Telecommunications had earlier said that the auction would start from 7 December 2009, though there are apprehensions about the date since the defence forces are yet to vacate spectrum. The auction has already been postponed several times. With the availability of 3G spectrum, telecom companies are expected to offer a combined mobile and internet platforms.

India's second largest mobile services provider by sales Reliance Communications (RCom) fell 0.06%. Anil Ambani chairman of RCom on Thursday, 15 October 2009, alleged there was a 'vicious and malafide' campaign against his telecom company Reliance Communications by a 'known rival group' and dubbed the special audit report, which claimed that RCom was mis-stating its revenues as 'biased and prejudiced'. But the auditor, Parekh & Co defended its work and also denied a claim by Mr Ambani that it had not sought feedback from RCom.

Sugar stocks fell after government extended tax free white sugar imports till December 2010 to improve supplies to tide over a shortage. Balrampur Chini, Bajaj Hindustan, Shree Renuka Sugars, fell by between 4.32% to 7.07%.

Cals Refineries clocked highest volume of 3.05 crore shares on BSE. Ispat Industries (1.19 crore shares), Unitech (1.15 crore shares), GVK Power & Infrastructure (0.75 crore shares) and SpiceJet (0.69 crore shares) were among the other volume gainers in that order.

DLF clocked highest turnover of Rs 238.02 crore on BSE. Housing Development & Infrastructure (Rs 170.94 crore), State Bank of India (Rs 155.16 crore), Sesa Goa (Rs 135.86 crore) and Infosys (Rs 131.14 crore) were the other turnover toppers in that order.