IT stocks lead intraday rebound

The key benchmark indices ended a volatile trading session on a firm note as European stocks and US index futures rose. Heavy bidding by foreign funds to the initial public offer of print media firm DB Corp also underpinned sentiment. The BSE Sensex rose 35.61 points or 0.21%, up close to 135 points from the day's low and off close to 85 points from the day's high.

Index heavyweight Reliance Industries cut intraday losses. IT and metal stocks rose. But, banking and realty stocks fell. The market breadth was positive

Intraday volatility was immense. After an initial slide, the market soon moved into positive zone following heavy bidding by foreign funds to the initial public offer of print media firm DB Corp. However, the intraday rebound proved short-lived. The market once again slipped into the red later. The market cut losses after hitting a fresh intraday low in morning trade. The market once again regained positive territory in early afternoon trade. The market slipped into the red after hitting fresh intraday high in early afternoon trade. The market surged in mid-afternoon trade. The market regained strength after falling into the red for a brief period in late trade.

India VIX, a volatility index based on the S&P CNX Nifty index option prices, declined 3.39% at 27.36. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days

The initial public offer (IPO) of DB Corp, India's second largest regional newspaper, was subscribed a massive 39.54 times. The issue closed on Tuesday, 15 December 2009. The institutional investors category was bid 68.5 times with foreign institutional investors (FIIs) making a beeline for the IPO. FIIs bid for 30.67 crore shares, as compared to 76.33 lakh shares reserved for the institutional investors category as a whole. The strong response by foreign funds indicates that global liquidity remains ample.

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.

On Tuesday, Moody's Investors Services raised its rating outlook on India's local currency to positive from stable, saying the move 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.

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.

The Reserve Bank of India (RBI) may tighten monetary policy in this month as inflation could rise to near 7% in March 2010, the prime minister's economic adviser, C. Rangarajan, was quoted as saying by an internet portal. "By the end of December, they can review the situation and take action... it could come by end of December depending how the prices have behaved in December," Rangarajan was quoted as saying. "By the end of March 2010, it (inflation) could be close to seven per cent," he said. "Usually there is a seasonal decline... but certainly it appears that inflation by end of March will be higher than what has been projected earlier by the RBI," he said.

The government will take steps to tame rising prices and enable the economy to recover faster, Finance Minister Pranab Mukherjee said on Tuesday, as concerns about inflationary pressures spilling over to the broader economy mount. Mukherjee also said the government intends to push tax reforms and cut its already-bloated fiscal deficit to 3% of gross domestic product after 2011/12 fiscal year, from 6.8% estimated for the current financial year ending March 2010.

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%.

Meanwhile, 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.

Abu Dhabi's $10 billion financial aid to fellow United Arab Emirates member Dubai to meet debt obligations was in the form of bonds, the UAE foreign minister Sheikh Abdullah bin Zayed al-Nahayan said in remarks to the Jordanian state news agency. "They are debt instruments that would be paid back and carry interest just like loans."

European shares rose on Wednesday, with banks among the strongest performers, ahead of the Federal Reserve's interest rate decision and statement. The key benchmark indices in France, Germany and UK rose by between 0.5% to 1.2%.

The Markit flash euro-zone manufacturing purchasing managers index rose to a 21-month high of 51.6 in December 2009, up from 51.2 in November, while the services purchasing managers index rose to a 25-month high of 53.7 in December from 53 in November 2009.

Euro-area annual inflation was 0.5% in November, compared to the 0.1% drop in consumer prices in October, according to data released by Eurostat on Wednesday. The 0.1% monthly rise was smaller than the 0.2% advance economists expected. Rising alcohol and tobacco prices offset declines from food and housing.

Asian shares were mostly lower on Wednesday after negative cues from Wall Street and due to some caution ahead of the Federal Reserve's meeting outcome. The key benchmark indices in China, Hong Kong Singapore and South Korea were down by between 0.1% to 0.93%. But, the key benchmark indices in Indonesia and Japan were up by between 0.54% to 1.11%.

New global capital-adequacy rules for large banks may be delayed by at least a decade during a transition period, according to a Japanese news report Wednesday. The Nikkei business daily said in an unsourced report that the Swiss-based Basel Committee on Banking Supervision will stick to its plan to gradually introduce the new, stricter capital standards starting in 2012, but will establish a transition period of 10-20 years. The proposed changes include raising the current 8% minimum capital ratio and focusing on a narrower definition of core capital, the report said.

Trading in US index futures indicated Dow could gain 50 points at the opening bell on Wednesday, 16 December 2009.

US markets snapped a four-day winning streak on Tuesday as an inflation report stoked interest rate fears. General Electric delivered a weak outlook. GE told investors that it expects revenue to be flat next year. The Dow was down 49.05 points, or 0.5%, to 10,452. The S&P 500 index was down 6.18 points, or 0.6%, to 1,107.93, and the Nasdaq Composite Index was down 11.05 points, or 0.5%, to 2,201.05.

In important macro data from the US, inflation at the wholesale level surged 1.8% in November 2009, reflecting price jumps in energy and other products. The jump in inflation comes as the Federal Reserve kicked off a two-day monetary-policy meeting. Production climbed 0.8% in November 2009 in the US, the fourth gain in the past five months, the Federal Reserve said yesterday in Washington.

Federal Reserve Chairman Ben Bernanke, in a response to a lawmaker's questions made public on Tuesday, said the US economy currently has a high degree of slack, which should help keep inflation contained. The bulk of the evidence indicates that resource slack is now substantial, Bernanke said in written responses to questions from Senator Jim Bunning of Kentucky that were posted on the senator's website. "I continue to expect slack resources, together with the stability of inflation expectations, to contribute to the maintenance of low inflation in the period ahead," Bernanke said

Investors 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. Meanwhile, Bernanke's re-appointment as chairman of the Federal Reserve by the Senate banking committee is expected on Thursday.

The BSE Sensex rose 35.61 points or 0.21% to 16912.77. The Sensex rose 118.96 points at the day's high of 16996.12 in mid-afternoon trade. The Sensex fell 99.22 points at the day's low of 16774.94 in morning trade.

The S&P CNX Nifty rose 9 points or 0.18% to 5,042.05. Nifty December 2009 futures were at 5,057.80, at a premium of 15.75 points as compared to the spot closing of 5,042.05. Turnover in NSE's futures & options (F&O) segment surged to Rs 76,131.29 crore from Rs 69,721.45 crore on Tuesday, 15 December 2009.

The market breadth, indicating the overall health of the market was positive. On BSE, 1410 shares advanced as compared with 1390 that declined. A total of 90 shares remained unchanged. The breadth was weak in early trade.

Among the 30-member Sensex pack, 16 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 7265.46 points or 75.31% in calendar year 2009, as on 16 December 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 8752.37 points or 107.25% as on 16 December 2009.

Coming back to today's trade, the BSE Mid-Cap index rose 0.22% and the BSE Small-cap index rose 0.34% Both the indices outperformed the Sensex.

The sectoral indices on BSE showed a mixed trend. The BSE IT index (up 1.64%), the BSE Teck index (up 1.59%), the BSE Metal index (up 0.84%), the BSE Auto index (up 0.83%), the BSE Healthcare index (up 0.66%) outperformed the Sensex.

The BSE Realty index (down 1.21%), the BSE Bankex (down 0.56%), the BSE PSU index (down 0.54 %), the BSE FMCG index (down 0.42%), the BSE Oil & Gas index (down 0.3%), the BSE Consumer Durables index (down 0.28%), the BSE Power index (down 0.08%), the BSE Capital Goods index (up 0.17%), underperformed the Sensex.

India's largest private sector firm by market capitalisation Reliance Industries (RIL) fell 0.42% to Rs 1046.95. The stock came off the day's low of Rs 1038.10. 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.

Metal stocks rose, reversing intraday losses. JSW Steel, National Aluminum Company, Sterlite Industries, rose by between 0.41% to 2.81%.

India's largest aluminum maker by sales Hindalco Industries rose 1.02% after gaining 1.07% on Tuesday. 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 2.13% as the company's European unit Corus secured a 350 million euro contract to supply rails tracks to French railway operator SNCF. The company paid Rs 650 crore as advance tax in third quarter versus Rs 260 crore same quarter last year.

IT stocks rose for the third 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 third largest software services exporter Wipro rose 1.96%. Its ADR rose 0.25% on Tuesday. India's largest IT exporter by sales Tata Consultancy Services rose 1.84% as company's Q3 advance tax surged to Rs 177 crore from Rs 129 crore.

India's second largest software services exporter Infosys Technologies rose 1.53% 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. Its ADR fell 0.17% on Tuesday.

India's top truck maker by sales Tata Motors rose 3.08% 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) rose 2.86% after company paid Rs 195 crore as advance tax in third quarter versus Rs 4.5 crore same quarter last year. M&M said. 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.

Realty stocks fell on profit taking. India's largest realty player by market capitalization DLF fell 0.42%. The DLF board on Tuesday approved the integration of DLF Cyber City, DLF's subsidiary engaged in rental businesses, with Caraf Builders & Constructions. DLF will own 60% of the integrated entity while promoters will hold the remaining 40%. Caraf is the holding company of DLF Assets (DAL) and has 96% economic interest in the company. DLF Assets owns 4 SEZ properties with total leased area of 6.4 million square feet.

Among other realty stocks, Indiabulls Real Estate, Unitech and Ackruti City fell by between 0.5% to 3.64%.

Banking shares fell on a likely monetary tightening by the RBI. India's second largest private sector bank by net profit HDFC Bank was down 0.36%. The bank's Q3 advance tax jumped to Rs 400 crore versus Rs 300 crore.

India's largest bank by net profit and branch network State Bank of India was down 1.29%. 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 0.25% as bank's Q3 advance tax fell to Rs 301 crore from Rs 625 crore. Its ADR fell 4.13% on Tuesday. 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 FMCG maker by sales Hindustan Unilever fell 0.66% 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 ITC fell by between 0.12% to 1.53%.

India's largest mobile services provider by sales Bharti Airtel gained 2.83% on reports the company is set to buy a 70% stake for $900 million in Bangladesh's fourth-biggest telecom company Warid Telecom. The stock was the major gainer from the Sensex pack.

Among other telecom stocks, Reliance Communications, Idea Cellular and Spice Communications rose by between 0.14% to 3.17%.

India's largest thermal power generator by sales NTPC fell 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 0.14% to 0.89%.

Shares of state-run oil-marketing companies declined, after crude oil prices rose nearly 2% on the New York Mercantile Exchange on Tuesday, 15 December 2009. Bharat Petroleum Corporation (BPCL) (down 0.95%), Hindustan Petroleum Corporation (HPCL) (down 1.45%) and Indian Oil Corporation (IOC) (down 2.05%) edged lower. Light, sweet crude oil rose $1.18, or 1.7%, to $70.69 a barrel on the New York Mercantile Exchange, on Tuesday, 15 December 2009 after the Organization of the Petroleum Exporting Countries (OPEC) raised its forecast for global oil demand for next year. 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.

Auto stocks were trading mixed. India's largest small car maker by sales Maruti Suzuki India fell 0.53%. 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 largest motorcycle maker by sales Hero Honda Motors fell 0.45%. 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 0.74%. 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.

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 0.1% extending Tuesday's fall 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, SKF India, BEML fell by between 0.12% to 0.81%.

India's largest cement maker by sales ACC rose 1.16% 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, Ambuja Cements rose by between 0.98% to 2.06%.

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.

Airline stocks rose on reports domestic carriers have reported a 29.8% increase in traffic for the month of November, compared to the same period last year. King Fisher Airline, SpiceJet and Jet Airways rose by between 0.82% to 7.2%.

Cals Refineries clocked highest volume of 1.2 crore shares on BSE. Suzlon Energy (1.1 crore shares), IFCI (1.1 crore shares), Orchid Chemicals & Fertilisers (0.95 crore shares) and Austral Coke & Projects (0.81 crore shares) were the other volume toppers in that order.

Orchid Chemicals & Fertilisers clocked the highest turnover of Rs 188.46 crore on BSE. Tata Steel (Rs 180.28 crore), State Bank of India (Rs 147.04 crore), ICICI Bank (Rs 117.80 crore) and Suzlon Energy (Rs 89.58 crore) were the other turnover toppers in that order.