RIL leads decline in late trade

The key benchmark indices ended a choppy trading session lower, defying mostly higher global stocks. The BSE 30-share Sensex was provisionally down 32.88 points or 0.19%, off close to 90 points from the day's high and up close to 20 points from the day's low. Metal and capital goods stocks fell. Index heavyweight Reliance Industries extended early fall. But, realty stocks rose. The market breadth turned negative in late trade in contrast to a strong breadth earlier in the day.

The market edged higher in early trade tracking higher Asian stocks. The market lost ground later. The market came off the day's lows in morning trade. The market hit a fresh intraday low in morning trade. It soon cut losses. The market moved between positive and negative terrain in mid-afternoon trade. The market recovered from lower level after hitting a fresh intraday low in late trade.

The world economy is still fragile but the recovery from the financial crisis has been significantly faster than the International Monetary Fund (IMF) expected, the head of the institution Dominique Strauss-Kahn said on Thursday. In his first news conference of the year in Washington, the IMF Managing Director said the IMF would unveil more upbeat growth forecasts in an update of the fund's World Economic Outlook later this month.

Meanwhile, money continues to pour into emerging market and bond funds and out of money markets, as well as commodities, fund tracker EPFR Global said on Friday, 15 January 2010. Renewed interest in Japanese equities, and outflows from commodity sector funds and global equity funds, have been the only real departure from fund flow patterns seen during 2009, EPFR said.

Asia ex-Japan equity funds absorbed $481 million during the week ended 13 January 2010, their best showing since early December 2009. However, China funds saw outflows for a third straight week -- the longest period of outflows since February 2009 -- totalling $287 million as Beijing's move to tighten monetary policy offset strong Chinese trade data.

Closer home, the headline inflation jumped to a one-year high in December 2009, reinforcing views the Reserve Bank of India (RBI) will start increasing reserve requirements later this month to contain price pressures as the economic recovery strengthens. Financial markets have mostly factored in a 50-basis point rise in the cash reserve ratio (CRR), the level of cash banks must keep with the central bank, on 29 January 2010 but recent strong data has raised expectations that policy rates might also be raised.

The wholesale price index rose 7.3% in December 2009 from a year earlier, its highest since November 2008 and accelerating from a 4.8% gain in November 2009, data showed on Thursday. The rise was driven by near 20% jump in food prices, which rose on weak monsoon rains and flooding in parts of the country. Inflation in manufacturing products picked up to 5.2% from 4% in November, a sign that inflationary pressures were spreading to other sectors of the economy.

Data also showed on Tuesday industrial output grew at faster-than-expected 11.7% in November from a year earlier. The purchasing managers' index rose to its highest since May in December while car sales rose an annual 40.3% last month.

The government, which is pressing the RBI to hold rates to ensure the $1.2 trillion economy's recovery, ordered this week the sale of stocked grain and extended duty-free sugar imports by another nine months, hoping to rein in high food inflation.

Meanwhile, a panel of experts will review over the next three months how to encourage foreign investment in the financial sector such as the bonds and the stock markets, the government said on Thursday. The panel, which has experts from both the private and the government sectors, will identify challenges in meeting the financing needs of the Indian economy through foreign investment, according to a government statement. The panel will take views on foreign investments till 10 February 2010, the statement said, and will submit its report by mid-March.

Government policy makers, including deputy chairman of Planning Commission Montek Singh Ahluwalia have said that India needs more capital flows especially for infrastructure sector.

Banks on Thursday urged the Reserve Bank of India (RBI) to keep interest rates stable at its policy review later this month, saying any increase could further dent sluggish demand for loans.

European shares rose on Friday, extending a winning run to three sessions, after results at US chipmaker Intel boosted hopes of a strong earnings season. The key benchmark indices in France, Germany and UK were up by between 0.31% to 0.37%.

The European Central Bank (ECB) on Thursday kept interest rates at a record low of 1% and the central bank President Jean-Claude Trichet made dovish comments. Trichet told a press conference that recent data suggest the euro-zone economy continued to grow in the fourth quarter of last year, but said many of the factors that have supported growth are temporary, and that future growth will continue to be constrained by the need of banks, households and governments to repair their balance sheets.

Trichet said Greece, which is suffering from fiscal crisis, would receive no special treatment from the central bank

Asian stocks reversed early losses. Most of the indices had fallen earlier in the day as weak US retail sales and a rise in US jobless claims made investors wary about the strength of its economic recovery, offsetting better-than-expected earnings from technology bellwether Intel. The key benchmark indices in China, Singapore, Taiwan, Japan and Indonesia rose by between 0.07% to 0.95%. But Hong Kong and South Korea fell by between 0.04% to 0.29%.

Data out from China on Friday showed that Chinese banks extended 379.8 billion yuan ($55.6 billion) in loans in December, bringing banking lending for the full year to 9.6 trillion yuan, a rise of 95.3% from the year earlier, according to data released Friday by the People's Bank of China. Money supply as measured by M2 was up 27.7% in December, easing slightly from November's 29.7% rise, the PBOC's data showed.

Trading in US index futures indicated a flat opening of US stocks on Friday, 15 January 2010.

Technology shares drove Wall Street higher on Thursday on bets ahead of Intel's quarterly results that business spending will bolster profits in the sector. Bank stocks gained after President Obama announced a tax that would amount to 90 billion dollars over 10 years against banks that received federal bailout funds. The Dow gained 29.78 points, or 0.3%, to 10,710.55. The broader Standard & Poor's 500 index rose 2.78 points, or 0.2%, to 1,148.46, and the Nasdaq Composite Index rose 8.84 points, or 0.4%, to 2,316.74.

In economic data, the latest initial jobless claims increased 11,000 from the previous week to 444,000. But continuing claims dropped larger than expected to 4.60 million. In other data, advance retail sales for December 2009 decreased 0.3%, which was weaker than the 0.5% increase that had been expected.

Closer home, as per provisional figures, the BSE 30-share Sensex was down 32.88 points or 0.19% at 17,551.99. The Sensex fell 55.76 points at the day's low of 17529.11 in late trade. At the day's high of 17,639.85, the Sensex rose 54.98 points in early trade.

The S&P CNX Nifty was down 9 points, or 0.17% to 5250.90 as per provisional figures.

The BSE Mid-Cap index rose 0.3% and the BSE Small-Cap index rose 0.4%. Both the indices outperformed the Sensex.

The market breadth, indicating the overall health of the market turned negative. Breadth was strong earlier in the day. On BSE, 1416 shares advanced compared with 1,530 that declined. A total of 76 shares remained unchanged.

Among the 30-member Sensex pack, 19 fell while the rest rose.

BSE clocked a turnover of Rs 6060 crore, lower than Rs 6216.58 crore on Wednesday, 14 January 2010.

Index heavyweight Reliance Industries (RIL) fell 1.17%, snapping last three days' gains. RIL early this week raised $763 million through a block sale of 3.3 crore shares. RIL raised $763 million through a block sale of 3.3 crore shares on Monday. 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. As per reports last week, Reliance had sweetened its offer to buy a controlling stake that valued LyondellBasell at $13.5 billion.

Capital goods stocks fell on profit taking. ABB, Thermax, Crompton Greaves and Praj Industries, fell by between 0.46% to 1.65%.

India's largest power equipment maker by sales Bharat Heavy Electricals (BHEL) fell 0.26%. Bhel on Thursday said it has bagged a Rs 200-crore order from PowerGrid Corporation of India for supplying insulators for setting up transmission lines.

India's largest engineering & construction firm by sales Larsen & Toubro fell 0.74% extending Thursday's fall. The company said recently it has received contracts worth Rs 2,325 crore for commercial and residential construction in Maharashtra, Gujarat, West Bengal and Chandigarh

Metal stocks also fell on profit taking. Steel Authority of India, Hiindalco Industries, JSW Steel and Sterlite Industries fell by between 0.03% to 2.37%.

Tata Steel, the world's eighth-largest steelmaker fell 0.37%. 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

Rate sensitive realty stocks rose on bargain hunting after last three days' losses. India's largest realty player by market capitalization DLF rose 0.52%. 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, Ackruti City, Unitech and Phoenix Mills rose by between 0.51% to 5.69%.

Automotive Axles jumped 9.18%, after net profit soared 9100% to Rs 6.44 crore in Q1 December 2009 over Q1 December 2008.