Bulls throng small-cap, mid-cap stocks

Investors have thrown caution to the wind. A host of small-cap and mid-cap stocks rose sharply today, 17 December 2009, even as the key benchmark indices viz. the BSE Sensex and the S&P CNX Nifty witnessed wild intraday swings. The key benchmark indices ended a choppy trading session lower as world stocks fell after the Federal Reserve at the end of a two-day policy meeting on Wednesday, 16 December 2009, detailed its plans to remove excess liquidity from the financial system, as previously planned. The BSE Sensex fell 18.52 points or 0.11%, off close to 85 points from the day's high and up close to 70 points from the day's low.

Realty and capital goods stocks fell. But, IT stocks rose on a weak rupee. Index heavyweight Reliance Industries (RIL) slumped in late trade. The market breadth was strong.

The market was volatile. Stocks cut losses after an early slide. The market pared gains after hitting fresh intraday high in mid-morning trade. The market slipped into the red after moving between the positive and negative zones in early afternoon trade. The market cut losses after hitting a fresh intraday low in afternoon trade. The market staged a strong intraday rebound with the Sensex hitting a fresh intraday high in mid-afternoon trade. The market once again slipped into the red later.

India VIX, a volatility index based on the S&P CNX Nifty index option prices, declined 0.4% to 27.25. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days

Moody's Investors Service on Thursday upgraded the long-term foreign currency (FC) deposit ratings of 14 Indian banks to Ba1 from Ba2, following the rating agency's recent upgrade of India's FC deposit ceiling.

The food price index rose 19.95% in the year to 5 December 2009, government data released at 12:00 IST today, showed. The fuel price index rose 3.95% and primary articles index rose 14.98%.

Finance Minister Pranab Mukherjee said on Thursday that rising food prices was an area of concern and the government would consider imports to augment food supply. Mukherjee had said on Tuesday that the government will take steps to tame rising prices and enable the economy to recover faster.

Inflation and high fiscal deficit are major risks to the government's ambitious plan to ratchet up economic growth back to 9% level seen between 2005/06 and 2007/08. Latest government data shows food inflation at 16.7% in November 2009, which have pushed the headline inflation to 4.78%.

Trade Minister Anand Sharma said on Wednesday exports growth is sustainable in the coming months. The exports broke their fall in November 2009 after 13 months of decline, adding to the flurry of positive economic data, but the news was greeted with caution by policymakers and exporters. Helped by Christmas buying, exports grew 18.3% to $13.2 billion in November from a small base last year.

Advance tax payments by several automobile, power, cement and banking majors in the third quarter have been stronger compared to the year-ago pay-outs indicating better third quarter results of these companies.

Meanwhile, the two main bourses the Bombay Stock Exchange and the National Stock Exchange have postponed by more than two weeks their move to bring forward the start of trading by 55 minutes, after strong protests from brokers. Extended trading on the two premier stock exchanges in the country will now begin on 4 January 2010, instead of the earlier planned 18 December 2009.

The two exchanges had late on Wednesday, 16 December 2009, announced extension of trade timing in equity and derivative segments by almost an one hour to 9:00 IST effective from Friday, 18 December 2009. The move was to align the timings with that in major Asian markets.

Meanwhile, the Basel Committee on Banking Supervision on Thursday published their proposals on bank capital and liquidity rules. The fully calibrated set of standards will be developed by the end of 2010 to be phased in as financial conditions improve and the economic recovery is assured, with the aim of implementation by end-2012. It stressed that it's still considered different proposals. Requirements for the trading book, resecuritizations and exposures to off-balance sheet conduits are to be implemented by the end of 2010.

European shares fell back from a one-month closing high on Thursday, after the US Federal Reserve reiterated that its special liquidity measures would expire early next year. The key benchmark indices in France, Germany and UK fell by between 0.56% to 0.93%.

UK retail sales slipped 0.3% in November from October, or rose 3.1% compared to November 2008, according to data from the Office for National Statistics. Food store sales rose by 0.4% while non-food store sales fell 0.9%.

Most Asian shares fell on Thursday even as the Federal Reserve said the US economy is improving. The key benchmark indices in China, Japan, Indonesia, Singapore, Hong Kong and South Korea fell by between 0.02% to 2.34%.

The dollar rose broadly on year-end position unwinding, adding to its gains for the month. The dollar rose to a three-month-high against the euro in Asia Thursday due to concerns over European bond markets and the US Federal Open Market Committee's slightly hawkish statement overnight. The Dollar Index, which tracks the dollar's value against a trade-weighted basket of six currencies, was at 77.532 from 76.934 late Wednesday.

The euro fell below $1.4400 for the first time since 8 September 2009. The US currency could post further gains if December's Philadelphia Fed Manufacturing Index due later in the global day beats market forecasts, highlighting the recovery in the American economy. Economists expect the index to come to 16.40, a slight deterioration from the index's previous result of 16.70.

Also adding pressure to the euro was Standard & Poor's announcement on Wednesday that it had cut Greece's credit rating on concerns the country will struggle to bring lower a deficit that is over 12% of GDP. Greece has the widest budget deficit among the European Union nations. Greek Prime Minister George Papandreou pledged two days ago to provide 'radical' measures to fix the budget.

Making the market more bearish about the euro was a Standard & Poor's Ratings Services announcement that it has revised its ratings criteria for covered bond programs, placed euro 1.46 trillion worth of such programs on CreditWatch, and signaled these programs may be downgraded in the next few months. European banks often raise funds using covered bonds because of the low cost. A ratings cut possibility in bonds means European financial institutions may face difficulty raising funds in the near future, which may spur risk aversion.

Trading in US index futures indicated Dow could fall 57 points at the opening bell on Thursday, 17 December 2009.

US markets erased most its intraday gains on Wednesday after the Fed offered no surprises in its latest statement, keeping interest rates steady, as expected. The Fed also backed its pledge to keep rates low for an extended period. The Dow Jones Industrial Average was down 10.88 points, or 0.1%, to 10,441.12. The broader Standard & Poor's 500 index added 1.25 points, or 0.1%, 1,109.18. The Nasdaq Composite Index was up 5.86 points, or 0.3%, to 2,206.91.

The Federal Reserve, the Fed kept its target range for its bank lending rate at zero to 0.25%, where it's stood since last December 2008. And it repeated its pledge to keep rates at exceptionally low levels for an extended period. In a more upbeat assessment, the Fed said the economy has continued to pick up and that deterioration in the labour market is abating. Still, the Fed predicts unemployment will remain high. The Fed statement said the household spending appears to be expanding at a moderate pace.

Economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period, the central bank said.

The Fed took note of improving conditions for banks and said it would shutter most of its emergency lending facilities on 1 February 2010, the clearest sign yet it was ready to pull back from extraordinary efforts to fight the global financial crisis.

The BSE Sensex fell 18.52 points or 0.11% to 16894.25. The Sensex rose 66.75 points at the day's high of 16,979.52 in mid-afternoon trade. The Sensex fell 86.77 points at the day's low of 16,826 in afternoon trade.

The S&P CNX Nifty fell 0.30 points or 0.01% to 5041.75. Nifty December 2009 futures were at 5,030, at a discount of 11.75 points as compared to the spot closing of 5,041.75. Turnover in NSE's futures & options (F&O) segment was Rs 73,698.14 crore, lower than Rs 76,131.29 crore on Wednesday, 16 December 2009.

The market breadth, indicating the overall health of the market was strong. On BSE, 1619 shares advanced as compared with 1181 that declined. A total of 82 shares remained unchanged.

Among the 30-member Sensex pack, 16 rose while rest fell.

BSE clocked a turnover of Rs 4497 crore, higher than Rs 4277.07 crore on Wednesday, 17 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 7246.94 points or 75.11% in calendar year 2009, as on 17 December 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 8733.85 points or 107.02% as on 17 December 2009.

Coming back to today's trade, the BSE Mid-Cap index rose 1.09% and the BSE Small-cap index rose 0.88% Both the indices outperformed the Sensex.

The sectoral indices on BSE showed a mixed trend. The BSE Consumer Durables index (up 1.72%), the BSE Healthcare index (up 1.44%), the BSE IT index (up 0.87%), the BSE Teck index (up 0.66%), the BSE Metal index (up 0.35%), the BSE PSU index (up 0.32 %), the BSE Auto index (up 0.29%), the BSE Bankex (up 0.19%), the BSE Power index (up 0.14%), outperformed the Sensex.

The BSE Realty index (down 1.11%), the BSE Oil & Gas index (down 0.59%), the BSE Capital Goods index (down 0.31%), the BSE FMCG index (down 0.02%) underperformed the Sensex.

India's largest private sector firm by market capitalisation Reliance Industries (RIL) fell 1.23%. Reliance Industries' efforts to buy a controlling stake in bankrupt petrochemical maker LyondellBasell has reportedly got a bit complicated, as the Netherlands-based company submitted a new reorganisation plan to a court in the US, even as the Indian company evaluates a binding bid.

The new plan of Lyondell to emerge from bankruptcy through a rights issue and payment of its huge debt does not preclude Reliance from proceeding with its plans.

IT stocks rose on a weaker rupee. India's third largest software services exporter Wipro rose 0.19% as its ADR rose 6.45% on Wednesday. India's largest IT exporter by sales Tata Consultancy Services rose 1.29%. The company's Q3 advance tax surged to Rs 177 crore from Rs 129 crore.

India's second largest software services exporter Infosys Technologies rose 0.65% as its ADR rose 2.1% on Wednesday. Infosys Technologies expects revenue growth in the fiscal year starting in April to be better than 2009/10 as a recovery in the global economy spurs investments by its clients, Subhash Dhar, senior vice-president and head of global sales and marketing said.

The Indian rupee weakened on Thursday as the dollar strengthened on the back of the Federal Reserve's confidence about the US economy. The partially convertible rupee was at 46.88/89 per dollar, weaker than Wednesday's close of 46.655/665. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.

India's largest engineering and construction firm by sales Larsen & Toubro fell 1.33% even as 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, Bharat Heavy Electricals, Siemens, Praj Industries fell by between 0.1% to 0.87%.

Realty stocks fell on profit taking. India's largest realty player by market capitalization DLF fell 3.7%. DLF's overall debt will reportedly go up by Rs 2200 crore as a result of integration of its wholly-owned subsidiary DLF Cyber City Developers with Caraf Builders & Constructions (a KP Singh company that owns DLF Assets). DLF board has in-principle approved the integration, that will see DLF holding 60% interest in the entity formed by consolidation of its own commercial property subsidiary and the property trust.

The remaining 40% will be held by promoter Mr K P Singh and family. In effect, DAL will now be brought into DLF's fold through this integration. DLF plans to list the property trust in Singapore in 2010. DLF said that the integration will be a 'net cashless transaction' but did not reveal either the enterprise valuation of the two entities involved or the modalities of the deal.

Among other realty stocks, Phoenix Mills, Unitech and Omaxe fell by between 1.48% to 2.19%.

Metal stocks rose after LMEX, a gauge of six metals traded on the London Metal Exchange, rose 2.25% on Wednesday, 16 December 2009. Steel Authority of India, Hindustan Zinc, National Aluminum Company rose by between 0.76% to 1.82%.

India's largest aluminum maker by sales Hindalco Industries rose 1.4% gaining for the third straight day. The company paid Rs 100 crore as advance tax in third quarter versus Rs 40 crore same quarter last year.

India's largest steel maker by sales Tata Steel rose 1.16%. The company's European unit Corus secured a 350 million euro contract to supply rails tracks to French railway operator SNCF. Meanwhile, Tata Steel paid Rs 650 crore as advance tax in third quarter versus Rs 260 crore same quarter last year.

Print media stocks rose after a strong response to the IPO of DB Corp which was subscribed close to 40 times. Jagran Prakashan, HT Media, Deccan Chronicle Holdings, Sandesh rose by between 0.63% to 5.81%.

India's largest thermal power generator by sales NTPC fell 0.14%. 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, Tata Power Company and Reliance Infrastructure fell by between 0.21% to 0.56%.

Shares of state-run oil-marketing companies declined as oil rose above $71 a barrel on Wednesday, extending its gains after snapping a nine-day losing streak a day earlier, as industry data showing a sharp drop in US distillate stockpiles overshadowed signs of weak demand. Bharat Petroleum Corporation (BPCL) (down 1.93%), Hindustan Petroleum Corporation (HPCL) (down 1.17%) and Indian Oil Corporation (IOC) (down 1.42%) edged lower. Rise in crude oil prices will increase under-recoveries of state-run oil firms on domestic sale of petrol, diesel, LPG and kerosene at a controlled price.

India's largest cement maker by sales ACC rose 0.67% even 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, Birla Corporation Ambuja Cements rose by between 0.02% to 0.92%.

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.

Construction shares rose on government's thrust on infrastructure.. Hindustan Construction Company, Gammon India, Jaiprakash Associates, Gayatri Projects rose by between 1.04% to 10.44%. The government has set a target of spending $20 billion a year on road construction.

Auto stocks were mixed. India's largest motorcycle maker by sales Hero Honda Motors rose 0.39%. 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 0.1%. 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 largest small car maker by sales Maruti Suzuki India fell 1.16%. Suzuki Motor Corp and Volkswagen AG will start detailed discussions over joint projects after 10 January 2010, Suzuki CEO Osamu Suzuki said on Wednesday. Japan's Suzuki Motor said on 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.

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 top truck maker by sales Tata Motors rose 0.18% as company paid Rs 100 crore as advance tax in third quarter versus Nil same quarter last year. Egypt has reportedly invited Tata Motors to build a factory to make the Nano, the world's cheapest car, in the African country for the local market and sales elsewhere.

India's top tractor marker by sales Mahindra & Mahindra (M&M) rose 0.96% after company paid Rs 195 crore as advance tax in third quarter versus Rs 4.5 crore same quarter last year. M&M has forayed into the aerospace business by acquiring majority stakes in two Australian companies, Aerostaff Australia and Gippsland Aeronautics. Mahindra Aerospace (MAPL), in which Kotak Private Equity has also invested Rs 150 crore, will hold 75% stake in each of the two Aussie companies. The remaining will be held by the existing managements. The payments will be made in installments.

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 FMCG maker by sales Hindustan Unilever rose 1.63% The company paid Rs 200 crore as advance tax in third quarter versus Rs 155 crore same quarter last year.

Among other FMCG stocks ITC, Dabur India and United Breweries rose by between 0.08% to 0.59%.

Telecom shares fell after new entrant Sistema Shyam Teleservices extended the tariff war in the telecom segment. Idea Cellular (down 1.28%), Bharti Airtel (down 0.78%), and Reliance Communication (down 0.63%), declined. Sistema Shyam Teleservices (SSTL), which operates under the MTS brand, on Wednesday, 16 December 2009, launched mobile telephony services in Mumbai.

Telecom stocks have taken a severe pounding recently following concerns that the ongoing tariff war will further shrink revenues and margins of telecom companies.

Cals Refineries clocked the highest volume of 2.08 crore shares on BSE. Unitech (1.44 crore shares), Suzlon Energy (1.21 crore shares), IFCI (1.15 crore shares) and Asahi Infrastructure (0.65 crore shares) were the other volume toppers in that order.

State Bank of India clocked the highest turnover of Rs 198.94 crore on BSE. DLF (Rs 182.19 crore), Housing Development & Infrastructure (Rs 171.38 crore), Tata Steel (Rs 131.68 crore), Unitech (Rs 119.14 crore) were the other turnover toppers in that order.