Tech stocks drag Sensex by 155 points

The key benchmark indices lost ground in choppy trade as weakness in world stocks weighed on investor sentiment. Global stocks fell as investors awaited key earnings reports from the US. The BSE 30-share Sensex lost 155.02 points or 0.88%, off close to 180 points from the day's high and up close to 20 points from the day's low. Index heavyweight Reliance Industries (RIL) edged lower in volatile trade. IT, realty, auto and healthcare stocks fell. But banking stocks rose. The market breadth was weak. The breadth was strong earlier in the day.

Volatility was high. The market moved between positive and negative zone earlier in the trading session. After hitting a fresh intraday low, the Sensex recovered in morning trade as US index futures rose. But the intraday recovery proved short lived. The market weakened in mid-morning trade. It trimmed losses in early afternoon trade. The intraday recovery gathered further steam in afternoon trade. A sell-off was witnessed later. The market extended losses in late trade tracking weak European stocks.

India VIX, a volatility index based on the S&P CNX Nifty index option prices rose 3.67% at 22.34. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days

The Reserve Bank of India said on Tuesday it was permitting the introduction of currency futures in euro, yen, and pound sterling with immediate effect. Prior to this, the Reserve Bank of India had only allowed currency futures trading in dollar-rupee contracts.

The monthly inflation may touch double digits by March 2010, Chief Statistician Pronab Sen told a television media on Tuesday.

Wholesale price inflation jumped to its fastest in a year in December 2009, even as statements from the central bank and government officials provide contrasting signals on rates. The wholesale price index (WPI) rose 7.3% in December 2009 from a year earlier, driven by a near 20% jump in food prices after severe weather hit crops across the country. While central bank officials have been sounding concerned on the inflation front, government officials have been sounding wary of monetary tightening and its impact on economic growth.

As per recent media reports, commercial banks are unlikely to raise lending rates in the near term even if the central bank signals a tightening of the monetary policy by hiking the cash reserve ratio (CRR). Bankers, economists and bond markets expect a hike in CRR by the central bank at a quarterly policy review on 29 January 2010. CRR is a slice of deposits that banks have to mandatorily park with the central bank. However, commercial banks do not want to tweak rates in the near term now, given the surplus liquidity in the system and poor demand for loans.

On 8 January 2010, State Bank of India chairman OP Bhatt had indicated to the media that interest rates will remain stable until June 2010 even if the CRR was raised by 50 basis points. The timing and sequence of exit from an easy policy is still a challenge, Reserve Bank of India Governor D Subbarao said on Monday, 18 January 2010. Subbarao, who was speaking at a conference in Goa, also said the challenge was to support growth without compromising price stability.

The gross domestic product growth is expected to accelerate in 2010 from 2009, Minister of Commerce and Industry, Anand Sharma, said on Tuesday. Speaking at a forum in Beijing, Sharma asserted that the country's exports recovery is sustainable, but he called for greater access for Indian goods in China in the face of a widening bilateral trade gap. Bilateral trade between the two giants has grown rapidly, making China India's second-largest trading partner. He called for more Chinese direct investment in India, especially in infrastructure, while noting that Indian firms are already present in China.

The government may reportedly take the first step towards fiscal consolidation in Budget 2010-11 by partially rolling back tax cuts given to the industry last year. The service tax rate may be restored to 12%, while excise duty could be increased marginally. The finance ministry is considering a phased exit of the stimulus measures as the economy posted a robust 7.9% growth in Q2 September 2009. To begin with, the government wants to withdraw measures that are not likely to impact the industry significantly, such as the 2% service tax cut.

In the case of excise duty, the increase may not be equivalent to 6% reduction that the industry got from the government as part of the stimulus measures. The Budget changes would also be used as an opportunity to rationalise indirect taxes ahead of introduction of the goods and services tax (GST).

Meanwhile, the initial public offer (IPO) of fast-food chain Jubilant Foodworks was subscribed 3.46 times by 16:00 IST on day two of IPO on Tuesday. The company has fixed IPO price band of Rs 135-Rs 145 per share.

Ahead of the opening of the issue, Jubilant had raised about Rs 44 crore from anchor investors. The company received bids for 30.6 lakh shares at Rs 145 per share (the upper end of the price band) towards the anchor investor portion of the offer. The anchor investors to whom equity shares have been allocated pursuant to the offer include Arisaig Partners, Blackrock, Canara Robeco Mutual Fund, Fidelity, Franklin Templeton, HSBC, Reliance Mutual Fund, SBI Mutual Fund, T Rowe Price and Ward Ferry.

France raised its economic growth forecast for 2010 on Monday but the central banks of Germany and Italy offered more sobering readouts on the probable strength of the recovery from recession in Europe.

The predictions on growth came alongside warnings from International Monetary Fund officials of the risks that developed economies may relapse if too rapidly deprived of the huge fiscal and monetary stimulus deployed to combat the aftermath of the financial crisis.

European shares retreated on Tuesday as banks slipped ahead of key earnings results, but Cadbury hit record highs after the British confectioner accepted a $19.2 billion takeover offer from Kraft . The key benchmark indices in France, Garmany and UK were down by between 0.81% to 0.93%.

A closely-watched indicator of investor sentiment in Germany took a bigger-than-expected fall in January. The Center for European Economic Research, or ZEW, said its expectations index declined to 47.2 from 50.4 in December. Economists had forecast a smaller decline to 49.8.

Asian stocks were mixed on Tuesday. The key benchmark indices in Japan, South Korea, and Taiwan fell by between 0.09% to 1.07%. The key benchmark indices in Singapore, Hong Kong, Indonesia and China rose by between 0.03% to 1.02%.

The central banks of China and Taiwan tightened policy on Tuesday to drain money from the banking system, marking intensified efforts in the region to head off inflation and cool asset bubbles. A week after raising bank reserve ratio requirements, the People's Bank of China (PBOC) lifted the auction yield on one-year bills in its regular open market operation for a second week in a row, and by more than expected.

Taiwan also nudged up its overnight lending rate, the rate at which banks borrow and lend to each other, by one basis point to an eight-month high.

Trading in US index index futures indicated Dow could fall 20 points at the opening bell on Tuesday, 19 January 2010. US index futures reversed early gains.

Some 57 S&P 500 companies report this week including Citigroup and IBM on Tuesday. Bank of America Corp. unveils results on Wednesday, 20 January 2010.

Closer home, the BSE 30-share Sensex fell 155.02 points or 0.88% to 17,486.06. The Sensex fell 177.30 points at the day's low of 17,463.78 in late trade. At the day's high of 17,664.86, the Sensex rose 23.78 points in early trade.

The S&P CNX Nifty fell 49.20 points or 0.93% to 5225.65.

The BSE Mid-Cap index fell 0.63% and the BSE Small-Cap index fell 0.56%. Both the indices outperformed the Sensex.

Most sectoral indices on BSE fell. BSE Realty index (down 1.75%), BSE IT index (down 1.68%), BSE Healthcare index (down 1.54%), and BSE Oil & Gas index (down 1.47%) underperformed the Sensex. BSE Consumer Durables index (up 0.74), banking sector index Bankex (up 0.44%), BSE Metal index (down 0.22%), BSE Capital Goods index (down 0.4%), BSE FMCG index (down 0.42%), and BSE Auto index (down 0.7%), outperformed the Sensex. The BSE Power index fell 0.88%, matching the fall in the Sensex.

The market breadth, indicating the overall health of the market was weak. On BSE, 1105 shares advanced compared with 1829 that declined. A total of 52 shares remained unchanged. The breadth was strong earlier in the day.

Among the 30-member Sensex pack, 23 fell while the rest rose.

BSE clocked a turnover of Rs 6344 crore, higher than Rs 5980 crore on Monday, 18 January 2010.

Index heavyweight Reliance Industries (RIL) fell 1.31%. RIL last week raised $763 million through a block sale of 3.3 crore shares. 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. RIL will announce its Q3 result on Friday, 22 January 2010.

Tata Power Company fell 1.43% even as net profit jumped 40.37% to Rs 141.89 crore in Q3 December 2009 over Q3 December 2008. The company announced the result during market hours today.

NTPC, India's largest utility by sales, fell 1.6% falling for the second straight day. The company said last week its follow-on public offer of 41.22 crore shares, or 5% in the company, will open on 3 February 2010 and close on 5 February 2010. The government holds an 89.5% stake in NTPC.

Among other power stocks, Torrent Power, Reliance Power and Power Grid Corporation of India fell by between 0.02% to 1.72%.

IT stocks fell on profit taking after recent solid rally triggered by strong Q3 numbers from Tata Consultancy Services and Infosys. India's largest IT exporter by sales Tata Consultancy Services fell 2.38%. Consolidated net profit as per US accounting standard rose 11% to Rs 1822.20 basis crore on 3% growth in sales to Rs 7650.30 crore in Q3 December 2009 over Q2 September 2009. The third quarter earnings surpassed market estimates as demand for outsourcing surged and prices stabilised, fuelling hopes of recovery in the showpiece sector.

India's third largest software services exporter Wipro fell 1.34%. The company will announce its Q3 result on Wednesday, 20 January 2010. The company is reportedly set to launch a $1 billion sponsored American Depository Receipts (ADR) offering that could possibly see the promoters and promoter group led by Azim Premji offloading some of their stake in the company.

IT bellwether Infosys fell 1.6%. Infosys, last week, raised its full-year revenue and profit outlook after strong Q3 results and on improving trend for outsourcing orders. The company's consolidated net profit as per Indian accounting standards rose 2.72% to Rs 1582 crore on 2.8% rise in consolidated revenue to Rs 5741 crore in Q3 December 2009 over Q2 September 2009. The company announced result on Tuesday 12 January 2010.

Infosys has raised earnings and revenue guidance for the year ending March 2010 (FY 2010) both in rupee and dollar terms. Infosys has forecast a 1.8% to 2% growth in consolidated dollar revenue for FY 2010 compared from a drop it had projected at the time of announcing Q2 September 2009 results. Infosys said FY 2010 consolidated revenue in dollar terms could rise to $4.75 billion to $4.76 billion, from $4.6 billion to $4.62 billion forecast earlier. The consolidated earnings per American depository share for the full year is seen rising 0.4% to $2.26, the company said in a statement.

Rate sensitive realty stocks fell on reports the finance ministry has rejected a proposal by the Department of Industrial Policy and Promotion (DIPP) that had suggested dropping the mandatory three-year lock-in for foreign direct investment in the real estate sector, affecting the prospects of the sector raising funds from overseas. Unitech, Omaxe, Indiabulls Real Estate, Anant Raj Industries fell by between 0.22% to 2.9%.

India's largest realty player by market capitalization DLF fell 1.82%. DLF has reportedly decided to exit from its mutual fund venture, DLF Pramerica Mutual Fund, by selling its entire stake to the overseas partner in the venture, the US-based Prudential Financial, as the company seeks to focus on its core business. Prudential Financial (PFI) is expected to buy DLF's 39% stake in the asset management company that is yet to start operations.

Healthcare stocks fell on profit taking. Lupin, Cipla, Ranbaxy Laboratories, Sun Pharmaceutical Industries, Dr Reddy'd Laboratories fell by between 0.58% to 3.44%.

Most of the Auto stocks fell on profit taking. India's top truck maker by sales India's largest tractor marker by sales Mahindra & Mahindra (M&M) fell 1.52%. 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.

India's largest motorcycle maker by sales Hero Honda Motors fell 1.63%. 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 car maker by sales Maruti Suzuki fell 0.99%. The company said on Saturday 16 January 2010 it has raised the prices of some of its models to recover the rise in input costs. It said the price increases, effective immediately, varied from 0.12% to 1.9% with an average price rise of 0.6%. There was no increase in prices of its recently launched five-seater multipurpose vehicle Eeco, the petrol version of its Swift hatchback and its Gypsy utility vehicles, it said in its statemen. "For some models the increase in the costs are being absorbed by the company, in the light of market situation," it said. Maruti, in which Japan's Suzuki Corp has a 54.2 % stake, sells one of every two cars in India.

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.

Tata Motors, India's largest commercial vehicle maker by sales, fell 0.61%. The company said on Friday it sold 74,707 vehicles globally in December 2009, a rise of 84 % from a year earlier. This included sales of Jaguar and Land Rover, which rose 33% from a year earlier to 21,134 vehicles, it said in a statement.

But, Bajaj Auto rose 2.38% extending gains for the third day in a row. Net profit surged 189.20% to Rs 507.29 crore on 57.9% spurt in net sales to Rs 3165.84 crore in Q3 December 2009 over Q3 December 2008. The company announced the result after market hours on Tuesday, 12 January 2010.

Banking stocks gained on signs of improvement in credit growth. India's largest private sector bank by net profit ICICI Bank rose 0.1% extending Monday's 2.64% gains. The bank will announce its Q3 result on Thursday, 21 January 2010.

India's largest private sector bank by operating income HDFC Bank rose 0.61% extending recent gains after bank's net profit jumped 31.6% to Rs 818.50 crore on 5.4% growth in net total income to Rs 3076.90 crore in Q3 December 2009 over Q3 December 2008. The result exceeded market expectations. Its ADR fell 0.94% on Friday. The bank announced the result during market hours on Friday, 15 January 2010.

India's largest bank by net profit and branch network State Bank of India rose 0.76%, extending Monday's 0.59% gains. Non-performing loans (NPAs) in the small and medium enterprise sector (SME) are on the rise, chairman O.P Bhatt said recently. The state-run bank paid advance tax of Rs 1795 crore versus Rs 1700 crore.

After a significant moderation in systems loan growth during the period October-December 2009, the banking system credit growth has gradually started gaining momentum, as per the latest RBI data

India's largest dedicated housing finance firm by revenue HDFC fell 1.86%. The lender will announce its Q3 result on Wednesday, 20 January 2010.

Shares of consumer durable companies were in demand on hopes higher consumer spending may reflect in their third quarter earnings. Gitanjali Gems, Titan Industries (up 3.04%), Rajesh Exports and Asian Star Company rose by between 0.1% to 2.66% .

UltraTech Cement fell 0.66%. The company's net profit declined 17.8% to Rs 196.03 crore in Q3 December 2009 over Q3 December 2008. The company announced the result on Saturday, 16 January 2010.

Among other cement stocks, Birla Corporation, ACC and Ambuja Cements fell by between 1.49% to 3.09%.

Jaiprakash Associates fell 1.87%. The company's net profit fell 38.9% to Rs 103.02 crore in Q3 December 2009 over Q3 December 2008. The company said the latest quarter profit was after a one-time expense of Rs 212 crore towards employee compensation. The company announced the result during market hours on Monday.

India's largest power equipment maker by sales Bharat Heavy Electricals (BHEL) rose 0.86%, extending gains for the second straight day. Analysts expect strong Q3 December 2009 results from Bhel, helped by large order book and stable execution. The profitability is likely to surge on the back of increased volumes and lower-cost inventory being used.

A total of seven brokerages expect a between 29% to 47.7% growth in Bhel's net profit at between Rs 1016.90 crore to Rs 1167.60 crore in Q3 December 2009 over Q3 December 2008. Bhel had reported net profit of Rs 790.60 crore in Q3 December 2008. Bhel announces Q3 results on Thursday, 21 January 2010.

India's largest engineering & construction firm by sales Larsen & Toubro (L&T) fell 0.67%. L&T will reportedly invest around Rs 25000 crore to build its thermal power business in the next five years. L&T Power, the wholly-owned subsidiary of L&T, will have a generation capacity of 5,500 megawatts (MW), including hydro power, by 2015. The company will announce its Q3 result on Thursday, 21 January 2010.

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

FMCG stocks fell on profit taking. Dabur India, ITC, Hindustan Unilever, United Spirits fell by between 0.4% to 1.89%.

Metal stocks also fell on profit taking Steel Authority of India, Hindalco Industries, National Aluminum Company, Hindustan Zinc, Jindal Steel & Power, JSW Steel fell by between 0.7% to 2.8%.

Tata Steel, the world's eighth-largest steelmaker was flat. 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

Cals Refineries clocked the highest volume of 2.75 crore shares on BSE. Rashtriya Chemicals and Fertilisers (2.16 crore shares), Birla Cotsyn (2.11 crore shares), Mahindra Satyam (1.27 crore shares) and ITI (.01 crore shares) were the other volume toppers in that order.

Hindustan Copper clocked the highest turnover of Rs 312.09 crore on BSE. Rashtriya Chemicals and Fertilisers (Rs 242.92 crore), NMDC (Rs 171.38 crore), Mahindra Satyam (Rs 140.38 crore) and State Trading and Corporation (Rs 135.35 crore) were the other turnover toppers in that order.