Small-cap, mid-cap indices nudge higher

Profit booking in index pivotals following four straight days of gains pulled the key benchmark indices lower in what was a volatile trading session. Lower US index futures and a subdued trend in European markets, triggered profit taking in the second half of the day's trading session even as most Asian stocks rose. The BSE 30-share Sensex lost 57.74 points or 0.33%, off 96.23 points from the day's high and up 21.02 points from the day's low.

The market breadth was strong with small and mid-cap stocks attracting fancy. Auto stocks extended recent gains with Tata Motors striking a 52-week high. Power generation shares gained for the second running day on follow-up buying. However IT pivotals reversed early gains on profit booking. Pharma pivotals, too, were under selling pressure. Two index heavyweights saw divergent trend with Reliance Industries sliding and ICICI Bank nudging higher.

The market was volatile. After initial gains, the market lost ground in mid-morning trade. A strong intraday rebound pushed the market in positive zone in afternoon trade. The Sensex moved between positive and negative zone later. The market weakened in late trade as US index futures nudged lower.

As per reports, rollover of Nifty positions from December 2009 series to January 2010 was 50% while the marketwide rollover stood at 49%, as on Tuesday, 29 December 2009.

High rollover was seen in power stocks and auto stocks. Reliance Power saw a rollover of 73% while 72% positions were rolled over in Mahindra & Mahindra. Among sectors, high rollover was seen in telecom, banking and FMCG stocks while pharma and IT stocks have seen low rollover. Real estate stocks clocked least rollover.

The market remains closed on Friday, 1 January 2010, for the New Year holiday.

Finance Minister Pranab Mukherjee today said that the government needs to strike a balance between economic growth and cutting fiscal deficit. India's fiscal deficit is estimated at 6.8% of gross domestic product for 2009/10 (April-March), higher than 6.2% in the previous year as the government cut tax rates and boosted spending.

C. Rangarajan, Chairman of the Economic Advisory Council to the Prime Minister, on Tuesday forecast the GDP to grow at 7 to 7.5% this fiscal, signalling an improvement in the domestic economic climate. Speaking at a meet on 'Challenges before the Indian Economy' in Hyderabad on Tuesday, he cautioned that agriculture could show a negative growth of 1-2%, while the industrial and services sectors are projected to grow at 8.6% and 8.7% respectively.

Rangarajan also noted with concern the rising food inflation, which is at an 11-month high now, stating that the task ahead was to check food inflation. He indicated that the Reserve Bank of India could look at raising the cash reserve ratio (CRR) to suck out excess liquidity from the system, even though the central bank may watch the price movements for some more time before taking any decision on rate hike.

The focus of India's monetary policy is shifting to managing recovery and containing inflation from one concentrated on fostering growth after the global downturn, Reserve Bank of India deputy governor Shyamala Gopinath said early this week. She said rising food prices were fuelling concerns of broader price pressures in India and the policy challenge was to address the supply-side constraints.

She said effective assessment of the inflation process and using monetary policy actions at the right time would be critical. Gopinath's comments follow those from fellow Deputy Governor Subir Gokarn on Thursday, 24 December 2009, who said the January 2010 policy review would focus both on growth and inflation, instead of the previous policy focus on growth.

Meanwhile, reacting to media report, petroleum secretary R S Pandey on Tuesday said the government has no immediate plans to raise fuel prices. A recent media report had indicated that auto fuel prices could increase anytime early next year.

Prime Minister Manmohan Singh said on 28 December 2009 that the economy will grow at 7% or a little more in 2009-10. Inaugurating the 92nd annual conference of Indian Economic Association (IEA), Manmohan Singh put a strong defence saying in post-liberalisation the economy all along looked up till the global meltdown hit the growth pace.

India's infrastructure sector grew an annual 5.3% in November 2009, Trade Minister Anand Sharma said last week. Infrastructure sector output grew 3.5% in October 2009 from a year earlier. The sector accounts for 26.7% of the country's industrial output.

Food price index rose 18.65% in the 12 months to 12 December 2009, data released by the government on 24 December 2009, showed. The primary article index jumped 14.66% and the fuel price index rose 3.95%. The worst monsoon in nearly four decades and flooding in some parts of the country have pushed up food prices.

Finance Minister Pranab Mukherjee said last week that containing inflation and cutting fiscal deficit are the major challenges for the government in the short-to-medium term. Mukherjee added that the government is open to altering the proposed draft direct tax code further informing that sustaining high economic growth remains a priority for the government. The draft code has proposed various reform measures, including cutting in corporate tax rate to 25% and streamlining tax laws.

The Indian economy can grow at 7.75% in the fiscal year ending March 2010, the Finance Minister said. He also told an industry conference in New Delhi that agriculture output must grow 4% for the economy to expand 9-10% annually. The government will wait until the February 2010 budget to consider withdrawing some of the fiscal stimulus measures, the Finance Minister said.

The latest data showed that corporate advance tax payments for the October-December 2009 quarter shot up sharply, suggesting a higher profit growth in corporate sector in the third quarter (October-December) of the current fiscal. Corporate advance tax payments for the quarter were up 44% to Rs 48,300 crore against a 3.7% decline in April-June quarter and a 14.7% increase in July-September quarter. The company-wise break-up of advance tax collection suggests a broad-based recovery with automobiles, cement, metals and consumer goods, doing well.

Meanwhile, the cabinet committee on security on Tuesday reportedly put on hold a new ground handling policy in airports that was to be brought in from the New Year as it feared job losses. It also decided to tweak the policy, which will now take effect from 2011, by allowing airlines to handle baggage within a terminal building.

Under the new rules, airlines will handle cargo on the terminal side, but on the tarmac there will only be three ground handling agencies.

The Congress-led government had earlier decided to limit the number of ground handling agencies to three per airport. The decision to limit ground handlers, taken at the insistence of the home ministry, was meant to limit the number of people in the tarmac side of an airport, which is the area where planes land and park.

Coming back to stocks, a likely record fund raising by Indian firms in 2010 could suck liquidity from the secondary market. As per one report, Indian companies have lined up equity raising plans of Rs 150000 crore in calendar 2010, close to two-and-a-half times of what they raised through share sales in calendar 2009 so far.

Emerging-market equity funds inflows tripled last week as the outlook improved for developing-nation exporters, EPFR Global said on Monday. The funds attracted $1.7 billion in the week ended 23 December 2009 from $571.4 million in the previous week, EPFR said in a statement. That added to a record $80.3 billion of investments in emerging-market stock funds so far this year, compared with outflows of $48 billion in the same period in 2008, EPFR said.

Asia ex-Japan Equity Funds also posted modest inflows of $179 million for the week, with investors in this region rotating some exposure from smaller markets like Taiwan and Singapore to bigger ones such as China. China Equity Funds took in another $153 million, maintaining their record-setting pace, and dedicated BRIC Equity Funds also remain on track for a record setting year after absorbing another $451 million.

European markets declined led by oil stocks. Key benchmark indices in UK, Germany and France were down by between 0.36% to 0.79%

Asian markets were trading higher today, 30 December 2009, staging a reversal from early fall. Key benchmark indices in South Korea, Singapore, China, and Taiwan were up by between 0.35% to 1.58%. However the Japanese Nikkei 225 index fell 0.86% while Hong Kong's Hang Seng index was down marginally by 0.01%.

Japan's government set an economic growth target of more than 2% for the coming decade, a pace that's about four times the central bank's estimate of the nation's current speed limit.

The target was released in a statement after a meeting of Prime Minister Yukio Hatoyama's cabinet in Tokyo today on its long-run economic strategy. The government said it's aiming for 1.4 million additional jobs in the environmental industry, 2.8 million posts in health care, and 560,000 positions in tourism by 2020, along with expanded Asian trade, to bolster growth.

Meanwhile, South Korean manufacturers' confidence rose for the first time in three months after the government raised its economic-growth forecast for Asia's fourth-biggest economy.

An index measuring expectations for January climbed to 90 from 85 a month earlier, according to a survey of 1,488 manufacturers released by the Bank of Korea today in Seoul. A measure of non-manufacturing companies' expectations was unchanged at 84 for the third straight month.

Moody's Investors Service on Tuesday downgraded its ratings on Abu Dhabi Commercial Bank, saying its standalone financial strength has weakened from increasing loan delinquencies and impairments of investments. The rating firm also said it expects the weakening operating environment in Dubai and the recent restructuring of Dubai World will continue to weigh on the bank's loan quality and likely profitability in the foreseeable future.

Dubai World shocked investors last month by seeking a six-month moratorium on its $26 billion debt payments although Abu Dhabi later offered a bailout of the company. Abu Dhabi, the oil-rich capital of the seven-member United Arab Emirates, pumped $10 billion into Dubai's financial-support fund two weeks ago by buying its bonds

Trading in US index futures indicated the Dow could fall 46 points at the opening bell on Wednesday, 30 December 2009.

Wall Street ended with marginal losses on Tuesday, 29 December 2009 following the dollar's rebound. The Dow Jones industrial average slipped 1.67 points, or less than 0.1%, to 10,545.41. The Standard & Poor's 500 index was down 1.58 points, or 0.1%, to 1,126.20, while the Nasdaq Composite Index was down 2.68 points, or 0.1%, to 2,288.40.

In economic data, US consumer confidence rose to a three-month high in December, while prices in the hard-hit housing sector stalled in October, breaking a five-month string of gains.

The consumer confidence reading released on Tuesday reinforced views that the economy is gradually recovering, and the October housing data from the widely watched Standard & Poor's/Case-Shiller indexes was seen as indicating the market is stabilizing.

The Conference Board, an industry group, said its index of consumer attitudes rose to a reading of 52.9 in December from a revised 50.6 in November as job market pessimism eased and consumers' expectations reached a two-year high.

In housing, the S&P composite index of home prices in 20 metropolitan areas was flat in October, falling short of expectations for a 0.2% rise. September's index was revised upward to a gain of 0.4%, from a previously reported 0.3%. Only seven of the 20 cities in the composite index had month-over-month gains in prices in October, S&P said.

Traders of short-term US interest rate futures found no reason on Tuesday to alter sentiment that yields, including the benchmark federal-funds rate, will move higher about the middle of next year. Prices have plunged during the past 1 1/2 weeks, reflecting expectations that the battered economy will rebound strong enough for the Federal Reserve to begin a regime of inflation-fighting rate increases.

Traders in fed-funds futures have substantially raised their bets in recent days that the Federal Open Market Committee (FOMC) will lift the funds rate about the middle of 2010. The July 2010 fed-funds contract, at Tuesday's settlement, priced in a 78% chance for the FOMC to raise the Fed funds rate 0.5% at its late June 2010 policy meeting. That's up from a 76% chance at Monday's settlement, a 50% chance at last Wednesday's settlement, and a 38% chance on 18 December 2009.

Closer home, the BSE 30-share Sensex was down 57.74 points or 0.33% to 17,343.82. The Sensex opened marginally higher by 0.68 points at 17,402.24. It gained 38.49 points at the day's high of 17,440.05 in early trade. Sensex fell 78.76 points at the day's low of 17,322.80 in mid-morning trade

The S&P CNX Nifty settled 18.50 points or 0.36% lower at 5169.45 after moving in a band of 5160.10 and 5197.05 during the day. Nifty December 2009 futures were at 5,169, near the spot price.

The Sensex had jumped 800.36 points or 4.82% in four trading sessions from to 17,401.56 on Tuesday, 29 December 2009, from a recent low of 16,601.20 on 21 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 7696.51 points or 79.77% in calendar year 2009, as on 30 December 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 9183.42 points or 111.25% as on 30 December 2009.

Coming back to today's trade, the BSE Mid-Cap index rose 0.33% to 6,696.75 and the BSE Small-Cap index rose 1.13% to 8,307.90. Both these indices outperformed the Sensex.

Sectoral indices on BSE showed mixed trend. The BSE Power index (down 0.06%), the BSE PSU index (down 0.27%), the BSE Bankex (up 0.07%), the BSE Consumer Durables index (up 1.45%), the BSE Realty index (up 0.55%), the BSE Teck index (up 0.06%), the BSE Auto index (up 0.10%), the BSE Healthcare index (down 0.28%), the BSE IT index (up 0.14%), outperformed the Sensex.

The BSE Capital Goods index (down 0.69%), the BSE Metal index (down 0.77%), BSE Oil & Gas index (down 0.50%), the BSE FMCG index (down 1.12%), underperformed the Sensex.

The market breadth, indicating the overall health of the market was strong. On BSE, 1794 shares advanced as compared with 1095 that declined. A total of 80 shares remained unchanged.

BSE clocked a turnover of Rs 4304 crore, higher than Rs 3945 crore on Tuesday, 29 December 2009. Turnover in NSE's futures & options (F&O) segment surged to Rs 79,691.40 crore from Rs 74,334.74 crore on Tuesday, 29 December 2009.

Among the 30-member Sensex pack, 18 declined while the rest gained. Jaiprakash Associates (down 0.80%), Reliance Communications (down 0.80%), and Larsen & Toubro (down 1.13%), edged lower from the Sensex pack

Auto stocks extended recent gains on the back of strong sales in the month of November 2009 and higher advance tax payment in the third quarter.

India's top truck maker by sales Tata Motors advanced 0.34% to Rs 789. The stock hit a 52-week high of Rs 797 in intra-day trade. The company has reportedly commenced trial production of the first batch of the Nano at the new mother plant at the Sanand facility last week. The company will start commercial production of the 'People's Car' from March 2010 onwards.

Tata Motors had shifted its mother plant to Gujarat last year after facing local protests in West Bengal spearheaded by Trinamool Congress leader Mamata Banerjee.

India's largest tractor marker by sales Mahindra & Mahindra (M&M) advanced 0.21%. As per reports the Mahindra Renault joint venture will launch a new variant of its sedan Logan at the upcoming Auto Expo.

India's top small car marker by sales Maruti Suzuki India rose 0.24%.

Power generation stocks extended Tuesday's gains on follow-up buying. India's second largest private sector power generation firm by net profit Reliance Infrastructure jumped 1.50%. The stock extended Tuesday's 2.85% advance on reports its subsidiary Reliance Power Transmission has bagged two transmission projects worth Rs 4100 crore.

Reliance Power rose 0.84% extending Tuesday's 4.94% surge on reports the first unit of the firm's 1,200 megawatt Rosa power plant in Uttar Pradesh started supplying electricity to UP Power Corporation, ahead of schedule.

Tata Power (up 0.42%), Adani Power (up 0.25%), and NHPC (up 0.59%), gained.

India's largest private sector firm by market capitalisation Reliance Industries (RIL) fell 0.44% to Rs 1073. The stock moved in a narrow range of Rs 1083-Rs 1069.85 so far during the day.

RIL has successfully tested the design capacity of its massive eastern offshore Krishna-Godavari basin D6 field production facilities. A flow rate of 80 million standard cubic meters was achieved through the KG-D6 facilities and delivered to the pipeline, the company said in a statement released before market hours on Tuesday.

India's largest oil exploration firm by market capitalisation ONGC slipped 0.96%. The company has reportedly struck a new gas well at Sundaribari in South Tripura district, about 125 km from Agartala.

India's largest private sector bank by net profit ICICI Bank rose 0.52% to Rs 882.25 after sliding to day's low of Rs 865 in intra-day trade. Reportedly the lender is raising up to Rs 1200 crore by selling bonds.

Rate sensitive realty shares gained on fresh buying boosted by a Cushman & Wakefield report that the real estate sector, particularly the retail space, will perform better in the year 2010 as a number of mall projects are getting back on track.

India's largest realty player by market capitalization DLF rose 0.10%. On 16 December 2009, the company's board approved a merger of its commercial realty arm DLF Assets (DAL) with itself, a move aimed at repaying some of DAL's debt.

HDIL (up 0.47%), Unitech (up 0.98%), Indiabulls Real Estate (up 1.49%), Orbit Corporation (up 1.96%) edged higher.

Cement shares gained on speculation cement prices will increase in the first quarter of calendar year 2010 on rise in infrastructure activity.

Ambuja Cement (up 0.74%), UltraTech Cement (up 0.59%), Birla Corporation (up 0.69%) ACC (up 1.17%), Shree Cements (up 2.46%), and JK Lakshmi Cements (up 0.51%), edged higher.

Software pivotals pared early gains on profit booking after a recent strong upmove. The fall came despite encouraging US consumer confidence data and a weak rupee. India's second largest software services exporter Infosys fell 0.18% to Rs 2572.80 after striking a lifetime high of Rs 2609.90 in intra-day trade today.

India's largest software services exporter TCS slipped 0.08% to Rs 741.50, off day's low of Rs 749. India's third largest software services exporter Wipro shed 0.21% to Rs 679.75 after striking day's high of Rs 689.85

Four Soft jumped 4.83% after the company secured an overseas order for one of its software products for undisclosed sum. The company announced the export order win during trading hours today, 30 December 2009.

HCL Infosystems gained 2.07% after the company secured a contract worth Rs 110 crore. The company announced the new order win after market hours on Tuesday, 29 December 2009.

The rupee was trading at 46.72/73 against the dollar, weaker than 45.66/67 on Tuesday, 29 December 2009. A weak rupee boosts revenues of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.

Metal stocks slipped on profit after the recent gains. This was despite a 2.39% surge in LMEX, a gauge of six metals traded on the London Metal Exchange, on Tuesday.

Steel Authority of India (down 0.42%), Hindalco Industries (down 1.42%), Tata Steel (down 0.97%), Sterlite Industries (down 0.54%), JSW Steel (down 1.35%), edged lower.

Man Industries (India) rose 3.06% after the company said it has bought back foreign currency convertible bonds worth $0.50 million. The company made this announcement after trading hours on Tuesday, 29 December 2009.

India's largest pharma firm by market capitalisation Sun Pharmaceuticals lost 1.04%, extending Tuesday's over 2% fall, on continued selling pressure.

Dr Reddy's Laboratories declined 0.95% after its American depository receipt lost 3.49% on Tuesday

India's largest power equipment maker by sales Bharat Heavy Electricals slipped 0.43%. As per reports, the company is in talks with China's Tebian Electric Apparatus Stock Company to jointly manufacture equipment in India.

Select FMCG shares underwent correction on selling pressure. India's largest cigarette maker by sales ITC lost 2.28% to Rs 250.45 and was the top loser from the Sensex pack.

Dabur India (down 1.75%), United Spirits (down 0.90%), Procter & Gamble India (down 0.48%), Tata Tea (down 0.43%), Nestle India (down 0.40%), and Marico (down 1.15%), declined.

Radico Khaitan jumped 2.75% after the government approved Britain's Diageo proposal to raise its stake to 100% in the Indian joint venture Diageo Radico Distilleries.

Consumer durables stocks gained on hopes higher sales in the ongoing festive season will boost profitability. Titan Industries (up 2.17%), Lloyd Electric (up 4.41%), Rajesh Exports (up 0.50%), Videocon Industries (up 0.87%), and Gitanjali Gems (up 0.98%), gained

Sugar stocks gained after the government extended by 15 months a deadline for an obligation to export refined sugar against prior raw sugar imports until the end of March 2011. Bajaj Hindusthan (up 0.41%), Triveni Engineering & Industries (up 1.02%), Shree Renuka Sugars (up 0.27%), Balrampur Chini Mills (up 1.24%), and Sakthi Sugars (up 1%), rose.

On Tuesday, 29 December 2009, the government said the extension of the deadline is applicable to mills that had imported raw sugar between 21 September 2004 and 15 April 2008.

The move is meant to increase local supplies and rein in prices of the sweetener which rose more than 50% in November 2009 from a year ago due to tight supplies.

Apollo Hospitals Enterprise fell 2.80% after the company's chief told the media that the firm has no plans to hive off 'Apollo Reach' into a separate company.

Cals Refineries clocked the highest volume of 2.76 crore shares on BSE followed by Ispat Industries (1.52 crore shares), Tinplate Company (1.11 crore shares), Asahi Infrastructure (1.01 crore shares) and Gammon Infrastructure (92.54 lakh shares).

Tata Steel clocked the highest turnover of Rs 140.35 crore on BSE followed by Sesa Goa (Rs 106.37 crore), HDIL (Rs 91.55 crore), Tinplate Company (Rs 91.26 crore), and Kalindee Rail Nirman Engineers (Rs 79.80 crore)