Small-cap, mid-cap stocks hog limelight at the onset of the New Year

The market closed the first week of 2010 on a positive note. The key benchmark indices touched 22-month highs as investors bet on strong Q3 December 2009 results. The gains were, however, unable to sustain at higher level and weak global markets encouraged investors to lock in profits in the last two trading sessions of the week.

The selling was confined to some frontline counters, while undertone in the market was still bullish following positive comments from the Finance Minister and the Prime Minister.

Finance Minister Pranab Mukherjee said on Friday, 8 January 2010 that the economy could grow 7.75% in the current fiscal year to end-March. Earlier in the day Prime Minister Manmohan Singh said at a conference of non-resident Indians that the economy is expected to grow at 7% this year and may soon return to sustained high growth path of 9-10%. Singh pledged that his administration would work to address key constraints in the infrastructure and the agriculture sectors as these were key priorities of the Congress-led government which swept to power last year.

The BSE 30-share Sensex rose 75.48 points or 0.43% to 17,540.29 in the week ended Friday, 8 January 2010. The S&P CNX Nifty rose 43.7 points or 0.84% to 5244.75 in the week

The BSE Mid-Cap index outperformed the Sensex, rising 3.40% to 6,946. The BSE Small-cap index, too, outperformed the Sensex, rising 4.07% to 8,697.64 in the week.

Trading began at 9:00 IST from Monday, 4 January 2010 as the stock exchanges decided to extend trading hours by 55 minutes.

Indian stocks kicked off 2010 on an upbeat note on Monday, 4 January 2010, with key benchmark indices hitting multi-months high as strong auto sales, a jump in manufacturing activity in December 2009, and the latest data showing a surge in exports in November 2009, underpinned sentiment. The BSE 30-share Sensex rose 93.92 points or 0.54% to 17,558.73. The S&P CNX Nifty rose 31.15 points or 0.6% at 5232.20.

The key benchmark indices rose for the second straight day on Tuesday, 5 January 2010, tracking firm Asian stocks. Fears of an immediate hike in interest rates by the central bank receded following comments from government officials. The BSE 30-share Sensex rose 127.51 points or 0.73% to 17,686.24. The S&P CNX Nifty rose 45.70 points or 0.87% at 5277.90.

The key benchmark ended slightly higher to hit 22-month closing highs on Wednesday, 6 January 2010, as firm Asian stocks and expectations of strong Q3 December 2009 results, underpinned sentiment. The BSE 30-share Sensex rose 14.89 points or 0.08% at 17,701.13. The S&P CNX Nifty rose 3.90 points or 0.07% at 5281.80.

The key indices snapped four-day winning streak on Thursday, 7 January 2010, on profit booking in frontline stocks. Weak global markets also dampened sentiment. Auto, IT and realty stocks led the fall. The BSE 30-share Sensex fell 85.41 points or 0.48% to settle 17,615.72. The S&P CNX Nifty declined 18.70 points or 0.35% at 5263.10.

Key benchmark indices edged lower on Friday, 8 January 2010, defying gains in the global indices. The BSE 30-share Sensex fell 75.43 points or 0.43% to settle 17,540.29. The S&P CNX Nifty declined 18.35 points or 0.35% at 5244.75.

Index heavyweight Reliance Industries (RIL) rose 1.15% in the week. As per reports, the company has sweetened its offer to buy a controlling stake in bankrupt LyondellBasell Industries. Reliance's new offer has pushed its valuation of Lyondell to about $13.5 billion, up from $12 billion in an initial bid made in November 2009.

The RIL stock rose 1.51% on Thursday in a weak market on talks of more fund raising by the company through sale of treasury shares. RIL, which raised Rs 2,675 crore through the sale of treasury shares on Monday, 4 January 2010, is reportedly looking to generate a similar amount over the next few weeks by selling more stock to institutional investors.

The stake is likely to be offered at a discount of 2% to 4% as part of a strategy to beef up its cash reserve. The funds would be used for its immediate requirement in exploration and production (E&P), debt repayments and acquisition of bankrupt chemical giant LyondellBasell.

Software pivotals fell on expectations the Indian rupee may rise further this year. The Indian unit is seen picking up where it left off in 2009, rising another 4% on top of its 4.7% increase last year, its appreciation driven mainly by inbound portfolio investment. India's second largest software services exporter Infosys fell 5.40%. India's third largest software services exporter Wipro fell 1.52%. India's largest software services exporter TCS fell 6.57%.

The partially convertible rupee rose to a high of 45.55 per dollar on Thursday, 7 January 2010, its strongest level since 23 September 2008. A firm rupee adversely affects operating profit margin of IT firms as the sector derives a lion's share of revenue from exports.

Metal stocks rose on higher metal prices on the London Metal Exchange. Among non-ferrous stocks, National Aluminium Company (up 12.71%), Sterlite Industries (up 5.29%), Hindalco Industries (up 7.78%), Hindustan Zinc (up 4.14%), rose.

Tata Steel, the world's eighth-largest steelmaker rose 5.29%. 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. India sales for the December 2009 quarter rose 49% to 16 lakh tonnes, the company said in a statement. 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.

Sales of flat products, used in automobiles and consumer durables, surged 90% in December, while sales of long products, primarily used in construction, rose 56%, Tata Steel said. The company's crude steel production in India rose 21%.

Steel companies are reportedly eyeing higher prices in 2010 as stronger economic growth worldwide drives up demand for the critical building material.

Recently, Tata Steel raised prices by Rs 2,000 a tonne, while state-owned Steel Authority of India (SAIL) withdrew the Rs 750-1,500 per tonne rebate it had started offering in November 2009, following the increase in raw material cost. Other secondary steel makers such as Bhushan Steel and Uttam Galva also raised the prices of their products on 5 January 2010.

Banking stocks mostly gained. India's largest bank by net profit and branch network State Bank of India rose 0.77%. 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 rose 0.77%. But, India's largest private sector bank by net profit ICICI Bank fell 0.22%.

As per recent reports credit offtake has picked up. According to the latest Reserve Bank of India (RBI) figures, total loans, including food credit loans to Food Corporation of India for foodgrain procurement and non-food credit (all other loans) amounted to Rs 29,41,293.07 crore as on 19 December 2009. This represents a sequential growth of Rs 34,028 crore since 27 November 2009 compared to a growth of Rs 7,698 crore in the whole of November 2009.

Rate sensitive realty stocks rose after a foreign brokerage house raised its outlook on the realty sector citing a potential for a recovery in the office property market and a steady growth in key residential markets. India's largest realty player by market capitalization DLF jumped 8.04%. 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 (up 11.05%), Unitech (up 5.22%), Indiabulls Real Estate (up 0.22%), rose.