Broad market continues to show strength

The key benchmark indices ended flat as profit booking in frontline stocks eroded early gains. Nevertheless, the broad market showed strength. Barring the Oil & Gas index, all the other sectoral indices on BSE were in green. The BSE 30-share Sensex fell 13.58 points or 0.08%, off close to 249.86 points from the day's high and up close to 25.92 points from the day's low.

The market pared gains soon after an early surge triggered by firm Asian stocks and strong trade data from China for December 2009. The market pared gains in mid-morning trade after moving in a narrow range in morning trade. The market further trimmed gains to hit fresh intrday low in early afternoon trade. The market lost further ground in afternoon trade. The market slipped into the red in mid-afternoon trade. The market cut losses in late trade

The government will announce industrial output data for the month of November 2009 tomorrow, 12 January 2010. Industrial production recorded a robust 10.3% growth in October 2009.

India's December 2009 export figures will be positive, trade minister Anand Sharma said on Monday. Sharma told a banking summit that higher December 2009 exports are due to a low base. India's exports rose an annual 18.2 % in November 2009 to $13.2 billion, the first rise after 13 months of annual decline. Sharma also said that the government would spend $1.5 trillion on infrastructure over the next 10 years. Food prices are likely to come down due to good winter crop prospects and there was no need to import wheat and rice, Sharma said on Monday.

The finance ministry backs administrative steps to tame inflation and wants hike in policy rates only if food inflation escalates into general inflation, a media report said on Monday quoting Finance Secretary Ashok Chawla. The comments were in a proposal submitted to the Cabinet Committee on Prices, which is likely to meet this week, the report said. In order to augment supplies, all import duties may be suspended for the time being, may be till the end of the current financial year, the report quoted Chawla as saying. The finance secretary identified rice, wheat, pulses, potatoes, onion, fruits, milk, mineral oils, sugar and oil cakes as the "commodities of concern," the report added.

The government will present its annual budget in Parliament on 26 February 2010 and was aiming at enacting legislation in the second half of this year for introducing a new Goods and Services Tax (GST), finance minister Pranab Mukherjee said on Saturday 9 January 2010.

Mukherjee also said he is hopeful growth rate of Asia's third largest economy could touch 8% in the fiscal year to March 2010, faster than 6.7% in the previous year. With faster growth in output in recent months and rise in inflation, the government is widely expected to withdraw some of its fiscal stimulus in the forthcoming budget.

The economy is likely to return to an annual growth rate of 9% by the fiscal year ending in March 2012, Montek Singh Ahluwalia, deputy chairman of the Planning Commission said on Saturday. Prime Minister Manmohan Singh on Friday 8 January 2010 said he was optimistic that India, which along with China is leading the drive out of a global recession, could return to annual growth of 9-10% in a few years time.

Industry bodies have urged the government to extend fiscal stimulus by six months this year, but a 16-year high fiscal deficit of 6.8% of gross domestic product estimated for 2009/10, has left little room for extending tax concessions. Mukherjee said it would take 7-8 months for the government to bring in legislations for introducing GST, which was earlier scheduled on April 2010.

The government expects the proposed tax reform along with higher growth in the economy leading to more revenues and stake sales in state-run firms, could help lower the fiscal deficit in 2010/11 to an estimated at 5.5%. The government aims to sell shares of about 60 state-run firms in the coming years, with offers for power utility NTPC, miner NMDC, Rural Electrification Corp and Satluj Jal Vidyut expected by end-March 2010.

European shares rose on Monday, with energy companies and miners among the top performers, after strong trading data from China boosted sentiment. The key benchmark indices in France, Germany and UK rose by between 0.81% to 0.97%.

Asian stocks rose to a 17-month high on Monday as a strong rebound in China's exports raised optimism about the region's economic outlook as the dollar suffered following weak US jobs data. The key benchmark indices in Hong Kong, Indonesia, Singapore and Taiwan rose by between 0.37% to 0.68%. But, South Korea's KOSPI reversed early gains, falling 0.07%. Japanese markets were closed for Coming of Age Day.

In China, the Shanghai Composite index rose 0.52%, led by brokerages and banks, after the government approved index futures, fanning speculation the new derivatives will boost trading volumes. China's exports climbed 17.7% in December 2009 from a year earlier, the first increase in 14 months, and imports jumped 55.9 %, the customs bureau said over the weekend.

Trading in US index futures indicated Dow could gain 48 points at the opening bell on Monday, 11 January 2010.

US stocks closed higher on Friday as December's unemployment report, despite showing job losses, was seen supportive of a slow recovery. The Dow Jones Industrial Average was up 11.33 points, or 0.11%, to 10,618.19. The Nasdaq was up 17.12 points, or 0.74%, to 2317.17 and the S&P 500 was up 3.29 points, or 0.29% to 1144.98.

St. Louis Federal Reserve President James Bullard said at a conference in Shanghai on Monday that US interest rates may remain low for "quite some time," easing concerns that the central bank could hike interest rates sooner than expected.

US interest rate futures, after a one-day hiatus, continued their trek toward very low short-term rates Friday as data showed that an anemic jobs market stands in the way of a robust economic recovery. The data revealed 85,000 jobs were lost during December 2009, much larger than an expected decline of 10,000. The government, meanwhile, revised figures to show that 4,000 jobs were created in November 2009, having initially estimated a loss of 11,000 payrolls during that month. The unemployment rate remained persistently high, at 10.0% in December 2009 versus economists' estimate of a 10.1% rate.

At Friday's settlement, the July 2010 fed-funds futures contract priced in only a 20% chance for the Federal Open Market Committee (FOMC) to lift the Fed funds rate to 0.5% at its late June 2010 policy meeting. That's down from a 30% chance just before the jobs data came in. On 31 December 2009, the final trading day of 2009, July 2010 fed-funds had priced in a 78% chance for a 0.5% rate. At the time, there was more optimism about an economic recovery, and increased expectations that the FOMC would shift away from its easy money policies to curb inflation.

The Fed enacted a series of emergency measures to rescue the economy, including a move to reduce the funds rate to a lowest-ever range of 0% to 0.25%. The Fed has held the rate in that range since December 2008.

Closer home, the BSE 30-share Sensex fell 13.58 points or 0.08% at 17,526.71. The barometer index lost 39.50 points at the day's low of 17500.79 in mid-afternoon trade. It gained 236.28 points at the day's high of 17,776.57 in early trade. The barometer index opened with an upward gap of 184.30 points at 17,724.59.

The S&P CNX Nifty rose 4.65 points or 0.09% at 5249.40.

The BSE Mid-Cap index rose 0.90% and the BSE Small-Cap index rose 1.80%. Both the indices outperformed the Sensex.

The market breadth, indicating the overall health of the market was strong. On BSE, 2116 shares advanced as compared with 832 that declined. A total of 49 shares remained unchanged.

BSE clocked a turnover of Rs 5981 crore, lower than Rs 6322.38 crore on Friday 8 January 2010.

The BSE Realty index (up 2.57%), the BSE Auto index (up 0.92%), the BSE IT index (up 0.88%), the BSE PSU index (up 0.83%), the BSE Metal index (up 0.65%), the BSE Power index (up 0.35%), the BSE Capital Goods index (up 0.32%), the BSE Consumer Durables index (up 0.16%), the banking sector index the Bankex (up 0.15%), the BSE FMCG Index (up 0.10%), and the BSE Health Care index (up 0.01%), outperformed the Sensex.

The BSE Oil & Gas index was the only sectoral index that underperformed the Sensex, falling 1.10%.

Among the 30-member Sensex pack, 13 rose while rest fell.

Index heavyweight Reliance Industries (RIL) fell 1.85% after the firm raised $763 million through a block sale of 3.3 crore shares on Monday. RIL raised $763 million through a block sale of 3.3 crore shares on Monday, the country head of UBS Manisha Girotra said on Monday. Girotra also said the share sale at Rs 1050 each would be the last of block trades by the company for a while. UBS was the sole arranger for the trade.

Reliance, which is bidding for bankrupt LyondellBasell Industries, had previously sold treasury shares to state-owned insurer Life Insurance Corp of India raising $577 million last week. As per reports last week, Reliance had sweetened its offer to buy a controlling stake that valued LyondellBasell at $13.5 billion.

Banking stocks fell on profit taking. India's largest private sector bank by net profit ICICI Bank fell 0.55% as its ADR fell 2.07% on Friday.

India's largest bank by net profit and branch network State Bank of India fell 0.85%. Non-performing loans (NPAs) in the small and medium enterprise sector (SME) are on the rise, chairman O.P Bhatt said on Monday. The state-run bank paid advance tax of Rs 1795 crore versus Rs 1700 crore.

India's second largest private sector bank by net profit HDFC Bank fell 0.38% even after its ADR rose 0.3% on Friday.

Software pivotals rose ahead of Infosys' Q3 December 2009 results on Tuesday, 12 January 2010. Infosys rose 0.98%. Its ADR rose 0.26% on Friday

Analysts expect weak performance from Infosys in Q3 December 2009 due to a firm rupee and hike in employee salaries. A firm rupee adversely affects operating profit margin of IT firms as the sector derives a lion's share of revenue from exports. Nevertheless, a favourable cross-currency movement will to some extent offset the impact of firm rupee and hike in salary bill. A number of analysts expect Infosys to revise upwards its guidance for the year ending March 2010 amid an improved global business environment. However, a section of the market feels that an adverse cross-currency movement will mean a muted guidance from Infosys for Q4 March 2010.

A total of seven brokerages expect a between 0.79% to 8.65% fall in Infosys' Q3 consolidated net profit as per Indian accounting standards at between Rs 1406.80 crore to Rs 1527.70 crore in Q3 December 2009 over Q2 September 2009. They expect a between 1.29% fall to a rise of 0.37% in revenue at between Rs 5512.90 crore to Rs 5606.10 crore in Q3 December 2009 over Q2 September 2009. It may be recalled that Infosys had raised salaries in October 2009.

India's largest software services exporter TCS rose 1.96%. But India's third largest software services exporter Wipro fell 1.03% even as its ADR rose 0.86% on Friday.

The rupee rose to its highest level in more than 15 months on Monday boosted by the dollar's fall against major currencies and tracking gains in local shares which raised hopes for capital inflows. The partially convertible rupee was at 45.32/33 per dollar, off the day's high of 45.2850, its strongest since 22 September 2008 and above its Friday's close of 45.75/76.

Rate sensitive realty stocks rose for the second day in a row after a foreign brokerage house raised its outlook on the realty sector citing a potential recovery in the office property market and a steady growth in key residential markets. India's largest realty player by market capitalization DLF rose 2.18% after gaining 4.26% on Friday. On 16 December 2009, the company's board approved merger of its commercial realty arm DLF Assets (DAL) with itself, a move aimed at repaying some of DAL's debt.

Among other realty stocks, Omaxe, and Indiabulls Real Estate rose 1.56% and 3.01%, respectively.

Delhi-based real estate developer Unitech rose 4.39% after the company said it booked sales worth Rs 5550 crore between 25 March and the end of 2009.

Metal stocks rose as metals prices rose on stronger-than-expected Chinese imports data released on Sunday. National Aluminium Company, JSW Steel, Jindal Saw, Steel Authority of India, Hindustan Zinc, rose by between 0.91% to 7.86%.

Tata Steel, the world's eighth-largest steelmaker fell 0.28%. The company said on 5 January 2010 sales from its Indian operations rose 73% in December 2009 to 636,000 tonnes from a year earlier. The Indian operations account for about a quarter of the group's total annual global capacity of 30 million tonnes, which includes unit Corus, Europe's second-largest steelmaker.

Auto stocks rose on expectations of strong Q3 December 2009 results. India's largest car maker by sales Maruti Suzuki rose 1.49%. Maruti Suzuki reportedly plans to bring out refreshed variants of its best-selling cars Alto, WagonR and Swift that may be cheaper than the existing models. The company said on Thursday, 7 January 2010 it had priced newly launched five-seater multipurpose car Eeco at Rs 2,59,000 as competition for low-cost vehicles heats up. Maruti Suzuki's managing director and chief executive officer, Shinzo Nakanishi was quoted by the media as saying on 5 January 2010 that the company will see flat to lower exports next year because of the scrappage of incentives by Europe. He also said there would be lower offtake from Nissan for exports as a result of the removal of incentives.

Nakanishi said the company aims to keep operating margins at 10% in fiscal year 2009/10 but profitability will be impacted by a rise in raw material prices and a rise in the yen.

Maruti Suzuki India reported 50.6% increase in total vehicle sales to 84,804 units in December 2009 over December 2008. Domestic sales rose 36.5% to 71,000 units, while exports surged 223.7% to 13,804 units.

India's largest motorcycle maker by sales Hero Honda Motors rose 1.69%. Hero Honda will comfortably exceed its fiscal 2009/10 sales target of 40 lakh units, its managing director Pawan Munjal said to media on 7 January 2010. Sales jumped 74% to 375,838 units in December 2009 over December 2008.

India's largest tractor marker by sales Mahindra & Mahindra (M&M) rose 0.60% on bargain hunting after last two days fall. M&M marked its entry into the heavy commercial vehicle (HCV) segment with its unveiling of 25 and 31 tonne trucks with its US-based joint venture partner Navistar Inc.

Mahindra & Mahindra, reported 122% rise in its domestic sales to 22,754 units in December 2009 over December 2008. The company sold a total of 24,001 vehicles (domestic plus exports) in December 2009 as against 11,172 vehicles sold in December 2008.

TVS Motors rose 11.31% extending Friday's gains. Sales rose 34% to 119,701 units in December 2009 over December 2008.

Bajaj Auto rose 0.84% in volatile trade ahead of its Q3 December 2009 result on Tuesday, 12 January 2010. Bajaj Auto is seen reporting strong Q3 December 2009 results due to low base effect as sales in the year-ago period i.e. December 2008 were adversely affected by the global financial crisis. Increase in input costs will offset operating leverage arising from higher volumes, according to analysts.

A total of four brokerages expect a between 160.9% to 191% growth in Bajaj Auto's net profit at between Rs 428.60 crore to Rs 477.90 crore in Q3 December 2009 over Q3 December 2008.

India's top truck maker by sales Tata Motors fell 0.10% reversing early gains. Tata Motors has raised prices of some truck and bus models in January 2010 by about 1%. The company expects commercial vehicle sales to remain strong in the next 12 months. The company's chairman Ratan Tata said on 5 January 2010 that the company may consider launching its ultra-cheap Nano car in the United States in three years, following possible sales in Europe by the end of 2011.

Tata Motors registered 105% growth in sales to 51,627 units in December 2009 over December 2008.

Bihar Tubes advanced 4.53%, after the company reported net profit of Rs 8.41 crore in Q3 December 2009 as compared to net loss of Rs 7.44 crore in Q3 December 2008 on consolidated basis.

JK Tyre & Industries advanced 3.07% on reports the company plans to invest Rs 1200 crore over the next three-four years for capacity expansion.

Novartis India surged 4.05% after its parent firm reportedly secured patent for cancer drug.

Punjab Chemicals & Crop Protection jumped 4.27%, after the company said its board will meet on 13 January 2010 to consider raising funds through various modes.

Cals Refineries registered highest volume of 10.88 crore shares on the BSE. Karuturi Global (1.66 crore shares), JCT Electronics (1.58 crore shares), Unitech (1.27 crore shares), and G V Films (1.25 crore shares), were the other volume topped on the BSE.

Reliance Industries clocked the highest turnover of Rs 233.32 crore on the BSE. Thinksoft Global Services (Rs 176.55 crore), DLF (Rs 122.34 crore), Unitech (Rs 113.83 crore), and MBL Infrastructures (Rs 109.54 crore), were the other turnover topped on the BSE.