Auto, banking stocks lead decline lead

The key benchmark indices lost ground as weak US services sector data fueled worries of a weaker-than-expected jobs report in the US, due later in the global session. Stocks fell in Europe after mixed performance of Asian stocks. Index heavyweight Reliance Industries (RIL) cut losses in a volatile trade after one of its units signed a deal with Colombian state oil firm Ecopetrol for two deepwater blocks in Colombia.

As per provisional data, foreign funds today, 4 December 2009, bought equities worth a net Rs 198.14 crore. Domestic funds sold stocks worth a net Rs 56.64 crore

The BSE 30-share Sensex fell 84.14 points or 0.49%, off close to 190 points from the day's high and up close to 65 points from the day's low. Banking, auto and realty stocks fell. The market breadth was negative.

Intraday volatility was immense. The market recovered from lower level from an initial slide triggered by weak Asian stocks. The Sensex moved into positive zone. It fell once again into the red in mid-morning trade. The market surged in early afternoon trade as stocks rose in China and Japan. The market pared gains later. The market slumped in the mid-afternoon trade as European stocks slipped. The market cut losses in late trade.

The slowdown in the Indian economy is showing signs of moderation, Prime Minister Manmohan Singh said on Friday. Finance Minister Pranab Mukherjee said on Friday, the Indian economy is expected to show strong growth in the October 2009-March 2010 period.

Foreign institutional investment into India between April and October was in excess of $18 billion, Trade Minister Anand Sharma said on Friday.

The government has no intention of using the proceeds of stake sales in state-run firms to cut its fiscal deficit, but would use them to fund social support programs, Mukherjee told the parliament on Friday. Last month, the cabinet approved a rule change to use precedes from divestment up to the end of 2011/12 to fund social schemes, in contrast to the previous practice of putting them in a National Investment Fund. It was aimed at easing the pressure off the government as it struggles to manage a bloated fiscal deficit that is estimated to touch 6.8% of gross domestic product by March 2010.

India could return to a higher growth trajectory of 8-9 % in two years, but it needs to invest more in infrastructure for sustaining such growth, World Bank president Robert Zoellick said on Friday.

Excess liquidity in global markets is driving up prices of farm commodities, which could be potentially dangerous in the near term, World Bank President Robert Zoellick said on Friday.

The Reserve Bank of India (RBI) is likely to revise upwards growth forecasts for 2009/10 when it reviews policy in January 2010 and monetary action may be needed if inflation accelerates, Usha Thorat, a Reserve Bank of India (RBI) deputy governor said on Thursday. Thorat, said India's exit from its loose policy would be a challenge and managing the crisis was easier than managing the recovery now.

Managing capital inflows is again an important issue because large capital inflows and asset prices could feed on each other and this could be destabilising, Thorat said. Thorat also said that money supply growth, which was very low this year compared with in the previous two years, have implications for monetary policy.

On Monday, government data showed the economy grew at its fastest pace in 18 months expanding an annual 7.9 % in the September quarter. C. Rangarajan, who heads the prime minister's Economic Advisory Council, said he expected 2009/10 growth close to 7 %.The central bank is scheduled to review policy on 29 January 2009.

Rangarajan said the surge in food prices were a concern as it could boost manufactured prices. "That will require monetary action specially on the supply management side," he said. Data showed on Thursday, food inflation rose 17.47% in the 12 months to 21 November 2009, accelerating from previous week's level of 15.6 %.

Wholesale price inflation is expected to average 5.8 % in the 2010/11 fiscal year, according to a survey of professional forecasters, Thorat said on Thursday. India's gross fiscal deficit would reach 10.2% of gross domestic product in the 2009/10 fiscal year, based on government budget estimates she said.

Meanwhile, the UPA government on Thursday cleared the introduction of State Bank of India (Amendment) Bill in the current session of Parliament. The Bill seeks to bring the government's holding in the country's largest public sector bank on a par with other public sector banks at 51 %. Currently, the Union government holds 59% stake in SBI. At present, the stake of the promoter, that is Government of India, cannot fall below 55 %.

However, the Cabinet has deferred a decision on the controversial Pension Fund Regulatory and Development Authority Bill (PFRDA). Although the Bill was listed in the agenda paper of the meeting, it was not discussed and is likely to be taken up in the next Cabinet meeting. The Pension Fund Regulatory & Development Authority Bill seeks to bring foreign direct investment (FDI) into the sector. The Bill proposes to allow foreign players to hold up to 26% stake in Indian pension fund companies. It would also permit pension funds to deploy part of their corpus abroad in approved instruments.

European shares fell on Friday, tracking a late slide overnight in the United States, with banks among the biggest losers. The key benchmark indices in France, Germany and UK fell by between 0.46% to 0.67%.

Chinese stocks surged in choppy trade and in Japan the Nikkei 225 average settled above the psychological 10,000 level for the first time in 5 weeks. But some other Asian markets sagged before monthly US jobs data on Friday, with property and resource shares weighing after soft US data on Thursday raised concerns about the pace of economic recovery. Key benchmark indices in Singapore, Hong Kong and Taiwan fell by between 0.25% to 0.61%. The key benchmark indices in China, Indonesia, Japan and South Korea rose by between 0.45% to 1.61%.

China shares saw some support from hopes that the coming annual economic-planning conference could generate some positive news. Japan's Nikkei stock average closed above 10,000 on Friday for the first time in five weeks and rose 10.4% on the week, its biggest weekly gain in over a year, thanks to a wave of short-covering supported by foreign investors.

Trading in US index futures indicated the Dow could gain 7 points at the opening bell on Friday, 4 December 2009.

US markets dropped on Thursday, 3 December 2009 led by a sell-off in financial shares. Investors were concerned about the implication of Bank of America selling over $19 billion worth of common equivalent securities. The Dow Jones Industrial Average closed down 86.53 points or 0.83% at 10,366.15. The Nasdaq Composite ended down 11.89 points or 0.54% at 2,173.14 and S&P 500 Index down 9.32 points or 0.84% at 1,099.92.

Disappointing economic data was another trigger for the losses on Wall Street. The Institute for Supply Management's reading on the services index came in at 47.1, indicating a degree of contraction. Jobless claims dipped more-than-expected to 4,57,000. Retailer stocks struggled on disappointing batch of monthly same-store sales results.

US President Barack Obama urged corporate America on Thursday to help tackle the nation's highest unemployment in 26 years but also hinted at federal tax credits and aid to states to ease jobless woes.

Federal Reserve Chairman Ben Bernanke, making his case for a second term, defended his record on Thursday before a skeptical Senate that criticized the central bank for failing to prevent the financial crisis. The soft-spoken Fed chief, who is widely expected to win Senate backing, argued that the U.S. central bank's aggressive actions to combat the financial crisis had been crucial to thwarting an even more severe economic slump.

The Fed chairman, whose four-year term expires at the end of January 2010, admitted to some lapses by the central bank, but said a hands-on supervisory function was crucial to its ability to safeguard financial stability.

The BSE 30-share Sensex fell 84.14 points or 0.49% to 17,101.54. The Sensex rose 106.15 points at the day's high of 17,291.83 in early afternoon trade. The Sensex lost 152.87 points at the day's low of 17,032.81 in mid-afternoon trade.

The S&P CNX Nifty fell 22.80 points or 0.44% to 5108.90. Nifty December 2009 futures were at 5,130, at a premium of 21.10 points as compared to the spot closing of 5,108.90. Turnover in NSE's futures & options (F&O) jumped to Rs 71,530.98 crore from Rs 60,660.28 crore on Thursday, 3 December 2009.

The market breadth, indicating the overall health of the market turned negative in contrast to a strong breadth earlier in the day. On BSE, 1364 shares advanced as compared with 1441 that declined. A total of 60 shares remained unchanged.

Among the 30-member Sensex pack, 19 fell while the rest rose.

BSE clocked a turnover of Rs 4874 crore, lower than Rs 5227.82 crore on Thursday, 3 December 2009.

A deluge of global liquidity has boosted stocks across the globe this year. Governments and central banks around the world have injected trillions of dollars in the past one year to pull the world out of a most severe recession since the 1930s Great Depression. The Sensex is up 7454.23 points or 77.26% in calendar year 2009, as on 4 December 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 8941.14 points or 109.56% as on 4 December 2009.

Coming back to today's trade, the BSE Mid-Cap index fell 0.19%. The BSE Small-cap index gained 0.38%. Both these indices outperformed the Sensex.

Sectoral indices on BSE displayed mixed trend. The BSE Healthcare index (up 1.24%), the BSE Teck index (up 0.37%), the BSE FMCG index (up 0.36%), the BSE IT index (up 0.34%), the BSE Metal index (up 0.29%), the BSE Power index (up 0.04%), the BSE Capital Goods index (down 0.27%), the BSE PSU index (down 0.29%), outperformed the Sensex.

The BSE Consumer Durables index fell 0.49% and matched the performance of BSE Sensex.

The BSE Auto index (down 1.47%), the BSE Bankex (down 1.18%), the BSE Oil & Gas index (down 0.97%), the BSE Realty index (down 0.71%), underperformed the Sensex.

India's largest private sector firm by market capitalisation Reliance Industries (RIL) fell 1.13% to Rs 1,089.05. The stock was volatile. It hit a high of Rs 1106.40 and a low of Rs 1082.05. Reliance Industries said on Friday one of its units signed a deal with Colombian state oil firm Ecopetrol for two deepwater blocks in Colombia. Under the deal, Ecopetrol will take a 20% stake in the Borojo North Block 42 and the Borojo South Block 43, which together cover an area of about 8,000 square kilometres in water depths ranging from 60-1,500 metres. Reliance's unit will hold the rest of the stake in the blocks and will be the operator. The deal is subject to approval from Colombia's upstream regulator.

Meanwhile, lawyers representing Anil Ambani's Reliance Natural Resources (RNRL) and the government reportedly clashed on Thursday in the Supreme Court over an affidavit filed by the oil ministry, which spelt out the state's stance on the right of power utility National Thermal Power Corporation (NTPC).

The government-owned power company is fighting a legal battle with RIL over a disputed contract, under which the Mukesh Ambani-led firm is supposed to supply gas from Krishna-Godavari basin at $2.34 per million British thermal units (mmBtu). RIL says the contract was never concluded, while NTPC says it was. In the affidavit, the Centre had said the price of $2.34 per mmBtu needed its approval though it also said it would protect NTPC's interests.

Oil exploration fell as US crude futures ended lower in seesaw trading on Thursday amid economic worries, after a report showed that the US services sector weakened in November 2009. On the New York Mercantile Exchange, January 2010 crude settled down 14 cents, or 0.18 percent, at $76.46 a barrel, trading from $75.54 to $77.50. Fall in crude oil prices would result in lower realizations from crude sales for oil exploration firms.

Cairn India fell 1.96%. India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) fell 1.39%. India's second biggest state-run oil exploration firm by revenue Oil India fell 1.86%.

Shares of public sector oil marketing companies rose as lower crude oil prices will reduce under-recoveries on domestic sale of petrol, diesel, kerosene and LPG at controlled prices. Indian Oil Corporation, BPCL and HPCL rose by between 2.29% to 4.49%.

Auto stocks fell on profit taking after a sharp rally in recent trading sessions triggered by strong monthly sales figures for November 2009.

India's top tractor marker by sales Mahindra & Mahindra (M&M) fell 2.17%. The company's domestic auto sales soared 105.1% to 21,387 units in November 2009 over November 2008. M&M sold a total of 22,587 vehicles (domestic plus exports) in November 2009 as against 11,515 vehicles sold in November 2008.

India's largest small car maker by sales Maruti Suzuki India fell 2.44%. Maruti Suzuki, reportedly plans to raise production by up to 75% over the next five years in a bid to hold on to its 50% market share. The company's total vehicle sales spurted 66.60% to 87,807 units in November 2009 over November 2008. The announcement was made during trading hours on Tuesday. Domestic sales spurted 60.10% to 76,359 units, while exports surged 128.60% to 11,448 units in November 2009 over November 2008.

India's second largest bike maker by sales Bajaj Auto fell 1.94%. The company's total vehicle sales rose 73% to 2.76 lakh units in November 2009 over November 2008. Motorcycles sales jumped 84% to 2.42 lakh units.

India's largest motorcycle maker by sales Hero Honda Motors fell 1.61%. The company's total vehicle sales jumped 32% to 3.81 lakh units in November 2009 over November 2008.

But, India's top truck maker by sales Tata Motors rose 0.6%. The company's total sales zoomed 65.49% to 54,108 units in November 2009 over November 2008.

Tata Motors' total passenger vehicle sales in the domestic market grew by 44.52% at 20,706 units last month, against 14,327 units in the same month last year, the company said in a statement released after market hours on Tuesday. Exports jumped by 86.64% at 3,994 units, compared with 2,140 units in the same month last year, it added.

Banking shares fell on weak American depository receipts. India's largest private sector bank by net profit ICICI Bank fell 1.42% as its ADR fell 2.32% on Thursday.

India's second largest private sector bank by net profit HDFC Bank fell 1.21% as its ADR fell 1.38% on Thursday.

India's largest bank by net profit and branch network State Bank of India fell 1.12% after the government cleared the State Bank of India amendment bill.

India's largest mortgage lender by total income Housing Development Finance Corporation (HDFC) fell 0.19%, declining for the third day in a row on investor worry a dual interest rate scheme on home loans introduced by the company would hit margins. After market hours on Tuesday, 1 December 2009 the firm announced a dual-rate loan scheme under which a borrower will be charged a fixed rate up to March 2012 and a floating rate thereafter. For a 20-year loan of Rs 30 lakh, a borrower will pay a fixed rate of 8.25% up to March 2012 and then a floating rate that's 500 basis points below the prime lending rate (PLR) - the institution's benchmark rate. Currently, the PLR is 13.75%.

Realty shares fell on profit taking. DLF, Unitech and Sobha Developers fell by between 0.63% to 1.94%.

Cement stocks fell on profit taking. Recent reports suggested a second wave of cement price hike is likely within a fortnight. There have already been two prices hikes within a week. After prices were up by Rs 5-10 for a 50 kg bag in the last week of November in western and southern India, prices rose by Rs 8-11 a bag in the Mumbai region on Wednesday, 2 December 2009. The next set of price rises would happen in the north which is enjoying comparatively stable prices till now vis-a-vis the south and the west, reports suggest.

India's largest cement producer by capacity ACC fell 0.41%. The company's cement shipments fell 4.04% to 1.66 million tonnes in November 2009 from 1.73 tonnes in November 2008.

Aditya Birla Group's cement shipments rose 15.3% to 2.93 million tonnes in November 2009 over November 2008. Aditya Birla Group last month said it was combining its cement operations under group firm UltraTech Cement to make India's largest cement firm. UltraTech Cement fell 0.64%.

But, India's largest dam builder Jaiprakash Associates rose 0.26% The company posted 48.77% jump in its cement sales to 1.03 million tonnes in November 2008 over November 2008.

IT stocks rose on a weaker rupee. India's second largest software services exporter Infosys Technologies rose 0.25%. US retailer Wal-Mart has reportedly selected three IT vendors in India - Infosys Technologies, and unlisted Cognizant Technology Solutions and UST Global - for multi-year contracts worth over $600 million.

India's largest software services exporter Tata Consultancy Services (TCS) rose 0.77%. But, India's third largest software services exporter Wipro fell 0.3%.

The rupee fell on Friday, pulling back more than two-week high in the previous session. The partially convertible rupee was at 46.29/30 per dollar, weaker than its Thursday's close of 46.07/08. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.

FMCG shares rose on renewed buying. TataTea, ITC, Hindustan Unilever, Marico, Nestle India, Dabur India and United Spirits rose by between 0.39% to 3.31%.

Metal stocks were mixed. Hindalco Industries gained 0.68%. The company hiked product prices by Rs 3000 a tonnes, with effective from 1 December 2009. Steel Authority of India and National Aluminum Company rose by between 0.95% to 2.21%. But, Sterlite Industries, Tata Steel and Hindustan Zinc fell by between 0.06% to 1.3%.

Capital goods stocks fell on profit taking. India's largest engineering and construction firm by sales Larsen & Toubro fell 0.14%

Among other capital goods stocks, Siemens, ABB and Thermax fell by between 0.21% to 1.7%.

Cals Refineries clocked highest volume of 2.57 crore shares on BSE. Unitech (1.11 crore shares), Mahindra Satyam (0.93 crore shares) and Karuturi Global (0.88 crore shares) were the other volume toppers in that order.

State Bank of India clocked highest turnover of Rs 147.04 crore on BSE. Housing Development & Infrastructure (Rs 126.63 crore), Tata Steel (Rs 121.36 crore), Unitech (Rs 98.17 crore) and DLF (Rs 95.45 crore) were the other turnover toppers in that order.