A broad-based decline

The key benchmark indices slumped, reversing an initial rally, as the dollar index, which tracks the greenback against a trade-weighted basket of six major counterparts, climbed roughly half a percent to a six-week high of 76.741. The dollar's strength sparked fears of unwinding of dollar carry trade in which investors borrow in US dollars and invest it in high-yielding currencies and assets elsewhere. The dollar has been under pressure this year on speculation the US Federal Reserve will keep interest rates low for a prolonged period of time to aid recovery in the US economy. European shares and US index futures reversed initial gains.

The Bombay Stock Exchange (BSE) on Tuesday said it will advance trading hours by 10 minutes from 18 December 2009. Trading in the equity and equity derivatives segment will commence from 9:45 IST onwards, instead of the present timing of 9:55 IST, the BSE said.

The BSE Sensex fell 220.39 points or 1.29%, off close to 320 points from the day's high. The Sensex fell below the psychological 17000 mark.

Bank stocks extended Monday's (14 December 2009)'s losses on fears of monetary tightening by the central bank. Auto and capital goods stocks also fell. Index heavyweight Reliance Industries reversed initial gains. The market breadth was weak.

Intraday volatility was high. The market pared gains after an early surge triggered by higher advance tax numbers by some Indian firms for the third installment. The market regained strength in morning trade. But the intraday rebound was short-lived. The market once again pared gains in mid-morning trade. The market slipped into the red later. The market weakened once again after recovering from lower level in early afternoon trade. The market slumped in mid-afternoon trade as the dollar strengthened. The market tumbled to a fresh intraday low in late trade.

India VIX, a volatility index based on the S&P CNX Nifty index option prices, rose 1.54% at 28.32. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days

The government will bring down its fiscal deficit to 3 of gross domestic product after fiscal year 2011/12, Finance Minister Pranab Mukherjee told parliament on Tuesday. The deficit is set to widen to 6.8% in the current fiscal year to March 2010, after tax cuts and stimulus spending. Mukherjee said this level of deficit was "unsustainable" and it would be reduced to 5.5% in fiscal year 2010/11 and to 4% in 2011/12.

Foreign direct investment (FDI) into India in the April-October period was $17.65 billion, down 5.7% from $18.71 billion in the same period in 2008, government data said on Tuesday. FDI flows in October were $2.332 billion, up from $1.497 billion in the same month last year, the data showed.

The government's total spending will remain at Rs 1020000 crore ($218 billion) for the fiscal year to March 2010, same as the budget estimate made in July 2009, finance minister told parliament on Monday. Pranab Mukherjee also said the federal fiscal deficit in 2009/10 would remain within the targeted 6.8% of gross domestic product.

In foreign exchange markets, the euro hit a 2 1/2-month low against the dollar on Tuesday as traders dumped the single European currency on the back of reports that Austria had put one of its major banks on a watchlist. The euro fell more than half a percent on the day to $1.4565, plumbing its weakest since early October 2009. Losses in the euro helped to push the dollar up against a currency bask.

Closer home, many Indian firms have reportedly paid higher advance tax in the third installment. As per media reports, Tata Motors has paid Rs 100 crore in third quarter versus Nil payment in the same period last year. Mahindra & Mahindra paid Rs 195 crore versus Rs 4.5 crore. Tata Steel paid Rs 650 crore versus Rs 260 crore. Hindalco Industries paid Rs 100 crore versus Rs 40 crore. Hindustan Unilever paid Rs 200 crore versus Rs 155 crore, Larsen & Toubro paid Rs 270 crore versus Rs 210 crore, Grasim Industries Q3 advance tax at Rs 150 crore versus Rs 75 crore, UltraTech Cement paid Rs 90 crore versus Rs 65 crore, HDFC's Q3 advance tax was at Rs 320 crore versus Rs 280 crore.

Bajaj Auto paid Rs 320 crore versus Rs 105 crore. The country's largest private sector company Reliance Industries paid Rs 850 crore, versus 450 crore year-ago period. Tata Consultancy Services' Q3 advance tax was at Rs 177 crore versus Rs 129 crore. ACC's Q3 advance tax was at Rs 110 crore versus Rs 125 crore. HDFC Bank's Q3 advance tax jumped to Rs 400 crore from Rs 300 crore. State Bank of India Q3 advance tax was at Rs 1795 crore versus Rs 1700 crore. ICICI Bank's Q3 advance tax fell to Rs 301 crore versus Rs 625 crore.

Advance tax is paid in four installments in June, September, December and March, and is based on taxpayers' projected income, giving an indication of industry's performance in coming months.

Meanwhile, Moody's Investors Services on Tuesday raised its outlook on rupee rating to positive from stable, citing the country's strong external position and resilience to the global credit crisis. Moody's current local currency rating for the country is Ba2, two notches below investment grade. The change in the outlook on the local currency government bond rating was prompted by increasing evidence that the Indian economy has demonstrated its resilience to the global crisis and is expected to resume a high growth path with its underlying credit metrics relatively intact, Moody's said.

Moody's also raised the ceiling on Indian banks' foreign currency deposits to Ba1 from Ba2 to better reflect the robust external position of the country. It said the latest rating action does not affect its outlook on the government's foreign currency bond ratings, which remain stable at Baa3.

The wholesale price index rose an annual 4.78% in November, higher than estimates and October's 1.34% rise, as food prices surged after the worst monsoon rains since 1972 and then flooding hurt crops. However, Finance Secretary Ashok Chawla said inflation was still below the central bank's forecast of 6.5% for the end of the fiscal year next March.

While rising inflation has been mainly driven by a surge in food prices -- they were up an annual 16.71% in November -- the index for manufacturing products, which accounts for almost two-thirds of WPI basket, rose 3.99 % in November from previous month's annual rise of 1.36%.

Industrial output grew 10.3% in October from a year earlier, on robust consumer demand and government stimulus spending, and annual economic growth of 7.9% in the September quarter was the fastest in 18 months.

The central bank, which slashed banks' reserve requirements and cut its key lending rate by 425 basis points during the worst of the global crisis, began scaling back stimulus at its October policy review by removing some liquidity support measures. It left rates steady at October's review. The next review is in late January, but it can adjust monetary policy at any time.

The Asian Development Bank (ADB) hiked growth forecasts for developing economies in Asia on Tuesday, just three months after its previous forecast, but warned against any hasty withdrawal of stimulus packages. The Manila-based multilateral bank said that regional economies should grow 4.5% on average in 2009 and 6.6% in 2010.

In September 2009, the bank had forecast 2009 growth at 3.9% and 2010 expansion at 6.4%. However, the ADB warned that care must be taken in withdrawing economic stimulus packages. ADB said that inflation remained muted for the moment and was likely to remain so, even while the recovery was taking hold. This had allowed authorities to maintain fiscal and monetary stimulus packages. Risks to Asia's expansion included a short-lived recovery in developed economies and destabilising capital flows, it said.

Meanwhile, the initial public offer of DB Corp, India's second largest regional newspaper, was subscribed a massive 39.38 times by 17:00 IST on the last day of issue today, 15 December 2009. The company has set a price band of Rs 185-212 a share.

European shares reversed initial gains as investors turned cautious ahead of a meeting of the US Federal Reserve and a slew of economic data in the US this week. The benchmark indices in France, UK and Germany were down by between 0.17% to 0.67%.

Most Asian stocks fell on Tuesday, as Chinese developers fell on speculation China's government will take more steps to curb property speculation. The key benchmark indices in China, Hong Kong, Japan, Singapore and Indonesia fell by between 0.03% to 1.23%.

US index futures reversed early gains. Trading in US index futures indicated Dow could fall 26 points at the opening bell on Tuesday, 15 December 2009.

US stocks closed at 14-month highs on Monday as news of the Exxon Energy deal and a lifeline for Dubai helped buoy investors' appetite for risk. The Dow rose 29.55 points, or 0.3%, to 10,501.05, its highest close since 1 October, 2008. The S&P 500 index added 7.70 points, or 0.7%, to 1,114.11, its highest finish since 2 October, 2008 and the Nasdaq composite index gained 21.79 points, or 1%, to 2,212.10.

Exxon Mobil gave a boost to the energy sector with its plans to buy natural-gas developer XTO Energy in an all-stock deal valued at $ 31 billion.

Citigroup Inc and Wells Fargo & Co said they were paying back funds to the US government, in transactions that will end taxpayers' capital support of the biggest US banks much sooner than had been expected just weeks ago.

A key event this week is a regular two-day meeting of the US Federal Reserve Meeting which begins on Tuesday, 15 December 2009. The Fed is expected to maintain its pledge to keep US interest rates close to zero for "an extended period" after Chairman Ben Bernanke warned that US economic recovery still faced "formidable headwinds", such as tight credit conditions and rising unemployment. Bernanke's re-appointment as chairman of the Federal Reserve by the Senate banking committee is expected on Thursday.

Investors, meanwhile, are increasingly wondering when Bernanke will signal any changes to the exceptionally loose US monetary policies and liquidity conditions that have propelled asset markets higher this year. US industrial production during November, the figures for which are due on Tuesday, is expected to rise 0.5%. This would slow the year-on-year decline from minus 7.1% in October to minus 5.4%.

US producer prices are expected to show the headline measure returning to positive territory for the first time in a year, with the year-on-year rate rising from minus 1.9% in October to a rise of 1.6%. US consumer price inflation is also likely to move into positive territory for the first time since February 2009, with the headline measure expected to rise from minus 0.2% in October to a rise of 1.8%. Core inflation, though, remains low and could sink below 1% next year following a sharp slowdown in labour costs.

The BSE Sensex fell 220.39 points or 1.29% to 16877.16. The Sensex rose 102.92 points at the day's high of 17200.47 in early trade. The Sensex fell 261.77 points at the day's low of 16835.78 at the fag end of the trading session.

The S&P CNX Nifty fell 72.65 points or 1.42% to 5,033.05. Nifty December 2009 futures were at 5,021, at a discount of 12.05 points as compared to the spot closing of 5,033.05. Turnover in NSE's futures & options (F&O) was Rs 69,721.45 crore, lower than Rs 73,694.26 crore on Monday, 14 December 2009.

BSE clocked a turnover of Rs 4359 crore, higher than Rs 4130.02 crore on Monday, 14 December 2009.

The market breadth, indicating the overall health of the market was weak. On BSE, 804 shares advanced as compared with 2035 that declined. A total of 68 shares remained unchanged. The breadth was positive in early trade.

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

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 7229.85 points or 74.94% in calendar year 2009, as on 15 December 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 8716.76 points or 106.81% as on 15 December 2009.

Coming back to today's trade, the BSE Mid-Cap index fell 1.56% and the BSE Small-cap index fell 1.42% Both the indices underperformed the Sensex.

The sectoral indices on BSE showed a mixed trend. The BSE Healthcare index (up 0.11%), the BSE IT index (down 0.08%), the BSE FMCG index (down 0.19%), the BSE Metal index (down 0.55%), the BSE Teck index (down 0.57%), the BSE Realty index (down 1.2%), outperformed the Sensex.

The BSE Consumer Durables index fell 1.29% and matched the decline in the Sensex. The BSE Bankex (down 2.95%), the BSE Auto index (down 1.93%), the BSE PSU index (don 1.79 %), the BSE Oil & Gas index (down 1.57%), the BSE Capital Goods index (down 1.56%), the BSE Power index (down 1.51%) underperformed the Sensex.

India's largest private sector firm by market capitalisation Reliance Industries (RIL) fell 1.41% to Rs 1051.35. The stock came off the day's high of Rs 1079. Reliance Industries paid Rs 850 crore advance tax in third installment, versus Rs 450 crore over the year-ago period.

RIL would decide on submitting a financial bid for bankrupt LyondellBasell on Tuesday, after the outcome of a US court hearing on a revised rescue plan. LyondellBasell filed an amended reorganisation plan with a US court proposing a $2.8 billion rights issue as it awaits a possible bid from RIL.

Auto stocks fell on profit taking. India's largest small car maker by sales Maruti Suzuki India fell 1.55%. Germany's Volkswagen and Suzuki Motor, Maruti Suzuki's parent, reportedly plan to develop a new small car for the Indian market. Japan's Suzuki Motor said on Wednesday 9 December 2009 it will sell a 19.9% stake to Volkswagen (VW) for $2.5 billion and use half the proceeds to buy shares in the German automaker, as the two firms form a formidable force in the auto industry. Japan's Suzuki has a 54.2% stake in Maruti Suzuki India

Suzuki's chief told the media recently that the company will cooperate with VW in India by sharing common components. VW's chief Winterkorn said the firm will pursue synergies in India between Suzuki, Volkswagen, Skoda brands.

Maruti's total vehicle sales spurted 66.60% to 87,807 units in November 2009 over November 2008. 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 largest motorcycle maker by sales Hero Honda Motors fell 1.14%. The company's total vehicle sales jumped 32% to 3.81 lakh units in November 2009 over November 2008.

India's second largest bike maker by sales Bajaj Auto fell 2.33%. Bajaj Auto will reportedly stop producing scooters by March 2010 to focus on motorcycles.

Bajaj Auto on 9 December 2009 launched a 135 cc Pulsar, pushing the Pulsar brand into the mass segment. Bajaj expects a sell a minimum 30,000 units per month of the new Pulsar model. The automaker had recently refreshed the entire Pulsar lineup and expects total Pulsar sales to cross 80,000 units per month.

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 top truck maker by sales Tata Motors fell 3.18% even as company paid Rs 100 crore as advance tax in third quarter versus Nil same quarter last year

India's top tractor marker by sales Mahindra & Mahindra (M&M) fell 1.91% even after company paid Rs 195 crore as advance tax in third quarter versus Rs 4.5 crore same quarter last year. M&M said during trading hours today theat it bought majority stakes in two Australian firms. 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.

Car sales in India rose an annual 61% to 1,33,687 in November 2009 over November 2008, boosted by improved consumer sentiment, easier availability of loans and a low sales base a year earlier, an industry body said on Tuesday. Sales of trucks and buses, a gauge of economic activity, doubled to 40,847 units in November from 20,631 a year earlier, data from the Society of Indian Automobile Manufacturers showed.

India's largest engineering and construction firm by sales Larsen & Toubro fell 1.16% even after the company paid Rs 270 crore as advance tax in third quarter versus Rs 210 crore same quarter last year.

Among other capital goods stocks, Praj Industries, Bharat Heavy Electricals, ABB, BEML, fell by between 0.55% to 4.61%.

Banking shares fell on a likely monetary tightening by the RBI. India's second largest private sector bank by net profit HDFC Bank fell 3.27% even as bank's Q3 advance tax jumped to Rs 400 crore versus Rs 300 crore. Its ADR rose 0.74% on Monday.

India's largest bank by net profit and branch network State Bank of India fell 3.18%. The state-run bank paid advance tax of Rs 1795 crore versus Rs 1700 crore.

India's largest private sector bank by net profit ICICI Bank fell 2.95% as bank's Q3 advance tax fell to Rs 301 crore from Rs 625 crore. Its ADR fell 0.12% on Monday. ICICI Bank has launched a home-loan scheme under which 8.25% interest rate will be fixed for the first two years. The floating rates will apply after 2 years. These rates will be applicable to loans sanctioned between December 2009 and January 2010.

India's largest mortgage lender by total income Housing Development Finance Corporation (HDFC) fell 2.42% even as company's Q3 advance tax surged to Rs 320 crore from Rs 280 crore. The stock extended a recent fall triggered by investor worry a dual interest rate scheme on home loans introduced by the company would hit margins.

HDFC, recently 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%.

India's largest cement maker by sales ACC fell 0.86% as company's Q3 advance tax was at Rs 110 crore, lower than Rs 125 crore in the same period last year.

Among other cement stocks, UltraTech Cement, Ambuja Cements and Birla Corporation fell by between 0.25% to 2.11%.

Cement prices are reportedly seen hardening in the January-March 2010 quarter as demand from state projects picks up and rural housing drives volume growth. Prices went up by Rs 8-10 for a 50 kg bag southern India late November to Rs 155-175, while a similar hike in Mumbai on 2 December 2009 raised prices to Rs 240-245 per bag.

IT stocks rose for the second straight day after stronger-than-expected retail sales and consumer sentiment data in the US reinforced investor confidence in a steady economic recovery. US is the biggest market for Indian IT companies. India's second largest software services exporter Infosys Technologies rose 0.34% as its ADR rose 1.75% on Monday. India's third largest software services exporter Wipro rose 0.04% as its ADR rose 0.85% on Monday. But, India's largest IT exporter by sales Tata Consultancy Services fell 0.69% even as company's Q3 advance tax surged to Rs 177 crore from Rs 129 crore.

Telecom stocks fell on profit taking. Telecom minister A Raja said on Friday 11 December 2009 there is no change in 3G auction schedule. Meanwhile, the central bank, last week, allowed telecom firms to access oversees markets to fund their bids for 3G spectrum. India's largest mobile services provider by sales Bharti Airtel fell 0.95%. Bharti Airtel sees revenue pressured in the short term amid an intense price war in the country's wireless sector, director Akhil Gupta said on 7 December 2009.

India's second largest mobile services provider by sales Reliance Communications fell 3.73%. The company has reportedly won mgovernance contracts worth over Rs 500 crore. The government may impose a penalty on Reliance Communications after examining a state audit report that found the No. 2 telecoms firm under-reported revenue for two years, the telecoms minister A Raja said last week.

Mobile operators including Bharti Airtel, Vodafone Essar and Reliance Communications are locked in a tariff war, raising concerns about telecom firms' profitability. The price war is aimed at grabbing new users as new firms enter the market.

India's largest thermal power generator by sales NTPC rose 0.12%, As per reports the government plans to mop up around Rs 11,000 crore from the disinvestment of 5% stake in the utility giant.

Among other power stocks, Reliance Power, Reliance Infrastructure and Torrent Power fell by between 1.4% to 3.09%.

India's largest FMCG maker by sales Hindustan Unilever fell 0.8% even after company paid Rs 200 crore as advance tax in third quarter versus Rs 155 crore same quarter last year.

Among other FMCG stocks, Nestle India, Dabur India and Tata Tea fell by between 0.45% to 1.31%.

India's largest steel maker by sales Tata Steel rose 0.23% after company paid Rs 650 crore as advance tax in third quarter versus Rs 260 crore same quarter last year.

India's largest aluminum maker by sales Hindalco Industries rose 1.07% after company paid Rs 100 crore as advance tax in third quarter versus Rs 40 crore same quarter last year.

But, Hindustan Zinc, National Aluminum Company, Sterlite Industries fell by between 0.38% to 0.97%.

Realty stocks fell on profit taking. India's largest realty player by market capitalization DLF fell 0.43%. DLF, is reportedly kicking off an integration plan with DLF Assets (DAL), a separate company set up by billionaire K P Singh, by buying out promoters' stake in the latter. DLF promoters had invested in DAL through Caraf Builders & Constructions and DAL has been set up to buy commercial properties of DLF. A board meeting of DLF will be held today to consider integration of Caraf Builders & Constructions, which is a promoter group company, with its wholly-owned subsidiary DLF Cyber City Developers.

Cals Refineries clocked the highest volume of 1.2 crore shares on BSE. Unitech (1.04 crore shares), Suzlon Energy (0.86 crore shares), IFCI (0.78 crore shares), Cox & Kings (0.65 crore shares) were the other volume toppers in that order.

Cox & Kings clocked the highest turnover of Rs 279.29 crore on BSE. State Bank of India (Rs 190.48 crore), Tata Steel (Rs 116.60 crore), DLF (Rs 103.15 crore) and ICICI Bank (Rs 99.03 crore) were the other turnover toppers in that order.