Small-cap, mid-cap indices nudge higher

Stock-specific buying continued even as the key benchmark indices edged lower in what was a choppy trading session. The BSE 30-share Sensex fell 35.91 points or 0.21%, off close to 155 points from the day's high and up close to 100 points from the day's low. The Sensex and S&P CNX Nifty hit their highest level in nearly 17 months at the onset of the trading session today, 15 October 2009.

IT stocks faltered on a firm rupee. Index heavyweight Reliance Industries fell after a firm start. In contrast, another index heavyweight Larsen & Toubro cut intraday losses. FMCG, telecom stocks fell. But metal and banking stocks rose. The market breadth was marginally positive.

Intraday volatility was high. The market pared gains soon after an initial surged triggered by a strong rally in US stocks on Wednesday. The Dow Jones Industrial Average pushed above 10,000 for the first time in a year on better-than-expected reports from Intel and JPMorgan Chase. The market slipped into the red shortly. The market recovered after hitting a fresh intraday low in mid-morning trade.

The market slumped in afternoon trade with the Sensex hitting a fresh intraday low. The market cut losses amid volatile trade later.

As per provisional data, foreign funds today, 15 October 2009, bought equities worth a net Rs 752.48 crore. Domestic funds dumped stocks worth a net Rs 443.08 crore

The Sensex had risen 588.45 points or 3.53% in two trading sessions to 17,231.11 on Wednesday, 14 October 2009 from 16,642.66 on 9 October 2009, boosted by firm global stocks.

With foreign funds making heavy purchases, the Sensex is up 7,547.89 points or 78.23% in calendar year 2009 as on 15 October 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 9034.80 points or 110.71% as on 15 October 2009. FII inflow in the calendar year 2009 totaled Rs 64545.60 crore (till 14 October 2009).

Inflation based on the wholesale price index (WPI) rose 0.92% in 12 months to 3 October 2009, slightly above previous week's annual rise of 0.7%, data released by the government at 12:00 IST today showed. Within the WPI, the food articles index rose 13.34%. Meanwhile, the government revised upwards inflation for the year through 8 August 2009 to a much smaller decline of 0.37% from an estimated fall of 1.53%.

C. Rangarajan, chairman of the prime minister's Economic Advisory Council said on Wednesday the Reserve Bank of India is likely to hold interest rates at a near decade-low in its policy review this month and the monetary stance can continue until inflationary pressures rise. Robust industrial growth could offset the impact of a 2 to 2.5% contraction in farm output due to weak monsoon, and help the economy grow between 6 and 6.5% in 2009/10, Rangarajan said.

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 %.

Meanwhile, the IPO of Indiabulls Power was subscribed 21.83 times at 17:00 IST on last day of the issue today. Indiabulls Power, a unit of Mumbai-based developer Indiabulls Real Estate, is developing five thermal power plants in western and central India, with total capacity of 6,600 megawatts, and will use the issue proceeds to fund two projects. The issue closes on Thursday, 15 October 2009.

The company has allotted 6.11 crore shares to anchor investors at Rs 45 per shares, at the top end of the Rs 40 to Rs 45 price band for the IPO.

Stock and sector-specific activity may dominate trade 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 fell in volatile trade after after Citigroup reported a third-quarter loss of 27 cents a share. Key benchmark indices in France, UK and Germany were down by between 0.01% to 0.3%.

Asian stocks advanced for a third day on Thursday after US invsetment bank J P Morgan's third quarter earnings topped estimates and South Korean steel giant Posco raised its profit forecast. Key benchmark indices in China, Hong Kong, Japan, South Korea, Singapore and Taiwan were up by between 0.14% to 1.77%.

The Bank of Japan said Thursday the economy has started to pick up and economic conditions in the nation are likely to improve gradually. The BOJ also said that while the overnight call rate has remained at an extremely low level and funding costs for firms have been more or less unchanged at low levels, the "stimulative effects from low interest rates have been limited given the low level of economic activity and corporate profits." The BOJ voted Wednesday to leave its rates steady at 0.1%.

Lending by Chinese banks totaled 516.7 billion yuan ($75.68 billion) in September 2009, accelerating from 410.5 billion yuan in new loans issued in August 2009, according to data released Wednesday by the People's Bank of China. The new lending brings total loans issued in the first nine months of the year to 8.65 trillion yuan ($1.27 trillion), a rise of 149.1% on year.

Trading in US index futures indicated the Dow could slide 44 points at the opening bell on Thursday, 15 October 2009.

US markets rallied and the Dow broke through the 10,000 mark for the first time since last October on Wednesday bolstered by strong earnings from JP Morgan. The S&P 500 & Nasdaq were also at new 2009 highs. Banks surged on the back of JP Morgan's earnings. The Dow gained 144.80 points, or 1.5%, to 10,015.86. The S&P 500 index added 18.83 points, or 1.8%, to 1,092.02. The Nasdaq Composite Index rose 32.34 points, or 1.5%, to 2,172.23.

JP Morgan's third quarter profit beat expectations. The bank's earning per share stood at 82 cents a share, up from 9 cents a share in the same quarter a year ago. The bank's net revenue was 7.5 billion dollar, an increase of 85% from last year.

A government report showed US retail sales, excluding auto purchases, rose for a second month. The data offered cautious optimism that spending could help support the economy as it struggles out of recession.

Back home, a section of the market is concerned that a glut in share sales may suck liquidity from the secondary market. As per reports, 30 companies have filed their draft red herring prospectuses in September 2009 with market regulator Securities & Exchange Board of India (Sebi) for raising funds through initial public offering.

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 over Rs 50,000 crore through initial public offers (IPOs), follow-up public offers, divestment of stake sale in the second half of the current financial year. Reliance Infratel also announced on 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.

Divestment of state-run firms by the government may also increase the supply of paper in the market. As per recent reports, the government is planning to announce a blueprint for selling its stake in state-owned firms in the first week of October 2009. The policy is expected to suggest how the government will eventually bring down its stake in public sector companies to 75% over a period of time.

The BSE 30-share Sensex fell 35.91 points or 0.21% to 17,195.20. The Sensex rose 119.28 points at the day's high of 17,350.39 in early trade, its highest level since 20 May 2008. The barometer index fell 138.28 points at the day's low of 17,092.83 in mid-afternoon trade.

The S&P CNX Nifty fell 9.35 points or 0.18% to 5,108.85. It hit a high of 5152.25 in early trade, its highest level since 20 May 2008. Nifty October 2009 futures were at 5,112.30, at a premium of 3.45 points as compared to the spot closing of 5,108.85. Turnover in NSE's futures & options (F&O) segment surged to Rs 71,611.55 crore from Rs 65,953.48 crore on Wednesday, 14 October 2009.

BSE clocked a turnover of Rs 6325 crore, lower than Rs 6895.35 crore on Wednesday, 14 October 2009.

The market breadth, indicating the overall health of the market was marginally positive. The breadth was strong at the onset of the trading session. On BSE, 1,394 shares advanced as compared with 1,358 that declined. A total of 77 shares remained unchanged.

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

The BSE Mid-Cap index rose 0.55% and the BSE Small-Cap index rose 0.87%. Both the indices outperformed the Sensex.

From a low of 2553.49 on 9 March 2009, the BSE Mid-Cap index has jumped 3985.74 points or 156%. The BSE Small-Cap index has risen 4763.45 points or 166.16% from a low of 2866.68 on 9 March 2009.

Coming back to today's trade, sectoral indices on BSE displayed mixed trend. The BSE Metal index (up 1.72%), the BSE Bankex (up 1.58%), the BSE Power index (up 0.49%), the BSE PSU index (up 0.47%), the BSE Realty index (up 0.39%), the BSE Auto index (up 0.14%), the BSE Capital Goods index (up 0.09%), outperformed the Sensex.

The BSE Teck index (down 1.54%), the BSE IT index (down 1.37%), the BSE Healthcare index (down 1.27%), the BSE Consumer Durables index (down 1.1%), the BSE FMCG index (down 0.6%), the BSE Oil & Gas index (down 0.22%), underperformed the Sensex.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) fell 0.31% to Rs 2,171.40. The stock came off from the day's high of Rs 2,222. RIL is in advanced talks to acquire refinery and petrochemical units in the US and Europe and could finalise a deal by end-2009, Maurice Bannayan, senior vice president at Reliance Industries said on Wednesday.

Anil Dhirubali Ambani group (ADAG) Chairman Anil Ambani called on Sunday, 11 October 2009, for a renewed effort to end a bitter feud with his brother Mukesh Ambani triggered by the carve-up of up a vast family business stretching from energy to telecommunications and financial services.

Anil Ambani said in a statement he believed "all disagreements can be sorted out in a constructive, cordial and conciliatory manner", and called for "a generous heart, a willing mind and accommodating spirit to resolve issues".

Their latest dispute is over a deal for Mukesh Ambani's Reliance Industries to sell gas to Anil Ambani's Reliance Natural Resources (RNRL) at below-market rates as agreed in a 2005 family settlement to divide the business following their father's death in 2002. The dispute has landed in the Supreme Court (SC). Anil Ambani said on Sunday the contentious gas dispute is a large national issue and can only be resolved through the SC.

Reliance Industries (RIL) said it welcomes Anil Ambani's call to make a renewed effort to "resolve, reconcile and reciprocate" and said it hopes that it is a positive change in the negative, calumnious and malafide campaign launched by ADAG against RIL.

RIL, last week, announced liberal 1:1 bonus issue. Both the bonus and the dividend are applicable to shareholders of the erstwhile Reliance Petroleum, which has been merged with RIL. Meanwhile, a sharp year on year fall in refining margins will weight on Q2 September 2009 results of RIL.

Oil exploration stocks were mixed as oil slipped after touching its highest in a year. US industry data on Wednesday showed a surprise fall in crude stockpiles, suggesting that demand in the world's top oil consumer is recovering. Rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms.

Cairn India rose 0.3%. Cairn India, a unit of Cairn Energy, won 2 offshore blocks in the auction. Cairn India, has secured loans worth $1.6 billion to fund its project in the western state of Rajasthan, potentially helping it accelerate development of its oilfields in the region. But, India's second biggest state-run oil exploration firm by revenue Oil India fell 0.77%. Oil India won 5 offshore blocks in the auction.

India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) fell 0.4%. ONGC has bagged over a third of the 70 blocks offered under the government's eighth New Exploration Licensing Policy (NELP 8), amid luke-warm response towards the bidding round. ONGC bid for 25 blocks and was awarded 11 offshore and two onshore concessions.

Nearly half of 70 blocks offered under NELP 8 found no bidder, with 76 bids submitted for 36 exploration blocks, D.N. Narasimha Raju, joint secretary in the oil ministry said on Monday.

PSU OMCs fell as higher crude oil prices will increase under-recoveries on domestic sale of petrol, diesel, kerosene and LPG at controlled prices. HPCL, BPCL and Indian Oil Corporation (IOC) fell by between 0.65% to 2.16%.

Crude oil for November delivery fell 0.37% to $74.91 a barrel on the New York Mercantile Exchange.

IT stocks fell on a stronger rupee. IT bellwether Infosys Technologies fell 1.78% even as its ADR rose 2.77% on Wednesday. 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 Friday, 9 October 2009.

Infosys, however, said strengthening rupee is a big concern for its earnings. The Indian rupee rose to its highest in more than a year as the dollar weakened in global markets. The partially convertible rupee was at 46.09 per dollar stronger than 46.13/14 per dollar on Wednesday. A stronger rupee negatively impacts operating margins of IT firms as the sector earns a lion's share of revenue from exports.

India's largest software services exporter TCS fell 1.72%. A total of ten brokerages expect a between 6.8% fall to a 4.9% growth in TCS' consolidated net profit as per US accounting standards at between Rs 1416.30 crore to Rs 1595.40 crore in Q2 September 2009 over Q1 June 2009. Their expectations peg a between 0.4% to 3.8% growth in revenue at between Rs 7237.70 crore to Rs 7478.40 crore in Q2 September 2009 over Q1 June 2009. TCS unveils Q2 results on Friday, 16 October 2009.

India's third largest software services exporter Wipro fell 1.06% even as its ADR rose 3.64% on Wednesday.

Metal stocks rose after a gauge of six metals traded on the London Metal Exchange rose 0.9% on Wednesday, 14 October 2009. India's largest private sector steel maker by sales Tata Steel rose 0.56%. The company's domestic steel sales rose 19% in July-September 2009 quarter to 1.46 million tonnes from a year earlier. Domestic operations account for about a quarter of the group's total annual global capacity of 30 million tonnes, which includes unit Corus, Europe's second-largest steelmaker.

Among other metal stocks, Hindustan Zinc, Jindal Steel & Power, Sterlite Industries rose by between 1.84% to 5.75%.

Steel Authority of India rose 2.39% on recent reports the company is considering buying coking coal mines in Australia, Indonesia and Mozambique with an Indian government joint venture.

Bank stocks rose on better than expected result by J P Morgan. India's largest bank by net profit and branch network State Bank of India rose 2.69%. Among other PSU banks, Bank of India, Punjab National Bank, Union Bank of India, Bank of India and Bank of Baroda, rose by between 0.55% to 6.43%.

India's largest private sector bank by net profit ICICI Bank rose 1.66% after its ADR rose 2.96% on Wednesday. The bank last week reduced auto loan rates by 50 basis points.

India's second largest private sector bank by net profit HDFC Bank rose 1.32%. 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 during trading hours on Wednesday, were more or less in line with market expectations.

The central bank will reportedly hike the ceiling on the portion of government securities that banks can park in held-to-maturity (HTM) category. 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, possibly at a quarterly monetary policy review on 27 October 2009.

India's largest dedicated housing finance firm HDFC fell 1.01%. HDFC, after market hours on Monday said net profit rose 24.27% to Rs 663.94 crore in Q2 September 2009 over Q2 September 2008. The results beat market expectations.

Telecom stocks fell on worries falling tariffs and increasing competition will hurt the sector's profitability. India's second largest mobile telecom services provider by sales Reliance Communications (RCom) fell 1.04% in volatile trade. The stock had lost nearly 7% on Wednesday.

As per reports, the Securities and Exchange Board of India (Sebi) has asked for details of the special audit ordered by the Department of Telecommunications ahead of launching an independent investigation on the issue. The audit report by special auditors Parakh & Company had found that RCom, which offers CDMA mobile services and recently launched GSM services, had under-reported revenues for the financial years 2006-07 and 2007-08 that, in turn, impacted licence and spectrum fees it pays the government.

India's largest cellular services provider by sales Bharti Airtel fell 4.21%. Bharti Airtel recently reported 10.32% decline in mobile user addition to 2.52 million mobile users in September 2009 over August 2009. For Bharti, this is the biggest month on month decline since the 22% drop the company saw in March 2005.

Chief Executive Manoj Kohli last week that the company is considering a bid for Millicom's assets in Sri Lanka. Sweden's Millicom has put its mobile operations in Sri Lanka up for sale.

India's largest power equipment maker by sales Bharat Heavy Electricals fell 0.16% on profit taking after a recent strong rally. The company's chairman B.P. Rao today said the company's order book is at Rs 1.3 lakh crore.

India's largest engineering and construction firm by sales Larsen & Toubro rose 0.13% to Rs 1691.50. The stock came off the day's low of Rs 1,666.20. The company on Wednesday announced bagging orders worth Rs 966 crore.

FMCG stocks fell on profit taking. Hindustan Unilever, ITC, Marico and Nestle India fell by between 1.04% to 1.4%.

United Spirits surged 7.13% on reports the company has raised $350 million through a share sale to institutional investors.

Some construction shares fell on profit taking. Valecha Engineering, Jaiprakash Associates, Nagarjuna Construction Company, Gammon India, Valecha Engineering fell by between 0.11% to 3.41%.

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

UltraTech Cement jumped 4.16% ahead of its Q2 results on Friday, 16 October 2009. A total of six brokerages expect a between 53% to 93% growth in UltraTech Cement's net profit at between Rs 251.20 crore to Rs 317 crore in Q2 September 2009 over Q2 September 2008. Higher realizations and increase in volumes will aid growth

But the key near term trigger for the UltraTech Cement counter is the swap ratio for merger of Aditya Birla group firm Samruddhi Cement with the company. The cement maker at its board meet held on 6 October 2009 gave in principle approval to a proposal to absorb group firm Samruddhi Cement. Earlier, on 3 October 2009, Grasim said it will transfer its cement business to its unlisted unit Samruddhi Cement as a part of a plan to bring the cement business of the Aditya Birla group under one roof.

Market expectations peg the merger ratio at one share of UltraTech for every two shares held in Samruddhi.

Among other cement stocks, ACC and Ambuja Cements rose by between 0.05% to 1.05%.

Power stocks rose on strong response to Indiabulls Power's IPO. Reliance Power, Torrent Power and CESC, rose by between 0.37% to 3.67%.

India's largest thermal power generator by sale NTPC rose 1.31%. The company said on Wednesday it has signed a joint venture agreement with state-run Coal India to develop the Brahmini and Chichro Patsimal coal mining blocks in eastern India. The mines will supply coal to NTPC's projects at Farakka and Kahalgaon.

After meeting the coal requirements of NTPC's projects, the JV may also consider setting up an integrated thermal power plant, NTPC said in a statement.

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. DLF, Indiabulls Real Estate, Akruti City rose by between 0.22% to 5.21%.

Auto stocks were mixed. India's top small car maker by sales Maruti Suzuki India rose 0.4%. 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 was fat at Rs 572.55. Tata Motors is planning to ramp up production of its Nano, billed as the world's cheapest car, by a fifth this month, Rajiv Dube, head of the company's passenger car business said on Wednesday. The company said during market hours on Friday it has raised $750 million through an issue of global depositary receipts (GDRs) and convertible bonds. The company said it will use the funds to repay debt taken for acquisition of Jaguar Land Rover (JLR).

Tata Motors said the GDRs were issued at $12.54 each -- a 1.5% discount to Thursday's closing price of Rs 589.25 on NSE. The convertible notes were issued at a 7.5% conversion premium over the GDR price with a yield to maturity of 5.5%.

India's largest tractor maker by sales Mahindra & Mahindra fell 0.96% on profit taking after a recent strong surge. 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.

Bajaj Auto dropped 3.37% on profit booking after the company reported robust Q2 results during trading hours today, 15 October 2009. Bajaj Auto's net profit jumped 117.85% to Rs 402.83 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.

Euro Multivision settled at Rs 53.20, a discount of 29.07% over the initial public offer price of Rs 75 per share. The stock debuted at at Rs 70, a 6.66% discount over the issue price.

Sugar stocks surged on reports India's sugar output fell sharply in the year ended September 2009 on lower area under cultivation. Bajaj Hindustan, Shree Renuka Sugars, Dhampur Sugars rose by between 1.24% to 3.62%.

With a high demand-supply gap, the country was forced to import 5 million tonnes of raw sugar - the same amount it exported a year ago - sparking a price rally in the global market.

Print media stocks rose as a recent steep slide in prices of newsprint, a key input, will boost profitability. HT Media, Sandesh and Jagran Prakashan rose by between 1.18% to 2.38%.

Newsprint prices have slumped over the past few months. Current newsprint prices of $435 a tonne are down 44% from their most recent peak in November 2008 of around $775 a tonne. The recent rally of the rupee against the dollar also bodes well for print media firms as it will bring down the import bill. Print media firms spend a large sum of money on import of newsprint.

Tyre shares rallied on strong replacement demand. Apollo Tyres, CEAT and JK Tyres & Industries rose by between 0.67% to 7.67%.

Cals Refineries clocked highest volume of 9.83 crore shares on BSE. Euro Multivision (2.07 crore shares), Suzlon Energy (1.45 crore shares), Ispat Industries (1.32 crore shares), Mahindra Satyam (1.2 crore shares) were the other volume toppers in that order.

State Bank of India clocked highest turnover of Rs 221.70 crore on BSE. Reliance Industries (Rs 179.30 crore), Bharti Airtel (Rs 171.45 crore), Jindal Steel & Power (Rs 154.36 crore) and Reliance Communications (Rs 152.95 crore) were the other turnover toppers in that order.