Market clocks small gains in a choppy trade

Key benchmark indices logged marginal gains after swinging sharply either ways in what was a highly volatile trading session. The BSE 30-share Sensex rose 19.96 points or 0.13%, up close to 285 points from the day's low and off close to 125 points from the day's high. The barometer index BSE Sensex had raced above the psychological 16,000 mark in mid-afternoon trade boosted by upbeat start from European markets but ultimately settled below that level.

Metal pivotals remained subdued as metal prices fell on the London Metal Exchange on Friday, 5 February 2010. Telecom stocks advanced on bargain hunting. Auto stocks were mixed. Index heavyweight Reliance Industries staged a sharp recovery on bargain hunting. The market breadth was negative. Fast food chain operator Jubilant FoodWorks surged on its debut. The stock settled at Rs 229, a 57.93% premium over an issue price of Rs 145 a piece.

Rising fears of possibility that the government may start to unwind its fiscal stimulus in the forthcoming budget triggered a sell-off on the bourses earlier in the day. Moreover, the recent European fiscal woes, rising US jobless claims and China holding back the bank lending also played the spoilsport.

While fears over possible sovereign defaults in Greece, Portugal and Spain gripped global markets, the possibility of a contagion to other European economies causing a double-dip recession worsened the mood. Credit default swaps in several European countries are on the rise, indicating a certain lack of reliability on government debt.

Back home, equities have been in a tailspin recently following unwinding of dollar carry trade, muted expectations in the run-up to the Union budget 2010-11 and concerns over valuations.

Government today forecast its economic growth for the fiscal year ended March 2010 at 7.2%, as against 6.7% achieved in the previous fiscal, raising fears of possibility that the government may start to unwind its fiscal stimulus in the forthcoming budget. The advance estimates of the country's gross domestic product released by the Central Statistical Organisation (CSO) today forecasts a growth of 9.9% in services and 8.9% in manufacturing, the highest among the eight broader economic activities.

Mining and quarrying comes next with an 8.7% expansion followed by 8.3% for trade, hotels, transport and communications, and 8.2% each for energy and water, and social and community services.

Earlier, Reserve Bank of India Governor Duvvuri Subbarao on 29 January 2010 raised India's growth forecast to 7.5% in the year ending March 2010 and said the central bank will target inflation in the next few months. He estimated inflation to accelerate to 8.5% from 6.5% forecast earlier.

The government will announce the industrial output data for the month of December 2009 on Friday, 12 February 2010. The industrial output rose 11.7% in November 2009. Also inflation numbers in the week ended 30 January 2010 will be out on Thursday. Stock markets remains shut on Friday on account of Mahashivratri.

Chairman of the prime minister's economic advisory council C. Rangarajan on Friday said the government is no hurry to roll back economic stimulus measures in one go. He also said that efforts will be made in the budget later this month to lower the fiscal deficit. It has been pointed out repeatedly that the process of exit must be gradual, coordinated and must not be sudden, should not disrupt the economy and efforts will be made to bring down the fiscal deficit in the coming budget, Rangarajan said.

India can gradually start raising interest rates as Asia's third-largest economy is among the first to recover after the global financial crisis, the International Monetary Fund (IMF) said in a report published on 4 February 2010 on its website. India's economy is one of the first in the world to recover and the central bank should take a gradual approach to ensure the recovery reaches its full potential, the IMF report said.

Following rising prices of potato and pulses, food inflation rose to 17.56% in the week ended 23 January 2010 from 17.40% in the previous week, government data released on Thursday showed. The inflation for primary articles, which include food and non-food items, marginally eased to 14.56% in the reporting week from 14.66% in the previous week. The fuel price index rose 5.88%.

The farm output in the year to March 2010 will be better-than-expected and could lead to a softening of food prices, Montek Singh Ahluwalia, deputy chairman of the Planning Commission, said today. Ahluwalia also said India's economy was expected to grow at over 8 percent in the 2010/11 financial year.

Pronab Sen, the country's chief statistician, said last week the government should wait till May to roll back stimulus, as the strength of the demand recovery visible in available data may not be for real, pulling the finance minister, Pranab Mukherjee, away from a policy direction which the Reserve Bank of India (RBI) desires.

European equities rebounded on Monday from three-month lows in the previous session, with stronger commodity prices boosting energy and mining shares. Key benchmark indices in Germany , France, UK were up by between 0.07% and 0.38%.

Asian stocks declined in volatile trade today, 8 February 2010, with Japanese Nikkei hitting a 2-month low weighed by exporters. The key benchmark indices in China, Japan, Indonesia, Hong Kong, and South Korea were down by between 0.14% to 1.72%. Indices in Taiwan and Singapore rose 0.04% and 0.37% respectively

US markets had closed slightly higher on Friday, 5 February 2010 as US unemployment rate surprisingly fell to a five-month low. The Dow Jones Industrial Average staged a sharp pullback in late trade to erase a 167-point drop in the final hour of trading on speculation the European Union may propose a solution for Greece's budget deficit. The Dow Jones Industrial Average gained 10.05 points, or 0.1%, to 10012.23. The Nasdaq Composite Index was up 15.69 points, or 0.74%, to 2141.12. The Standard & Poor's 500 Index was up 3.08 points, or 0.29%, to 1066.19.

The US unemployment rate surprisingly fell to a five-month low of 9.7% in January 2010 and factory payrolls grew for the first time since 2007, hinting at a labour market recovery even though the economy lost 20,000 jobs.

According to EPFR Global, that tracks foreign inflows, emerging market equity funds lost $1.6 billion in weekly withdrawals, the biggest outflows in 24 weeks. The report further added that investors pulled out almost $1 billion from global emerging market stock funds in the week ended 3 February 2010, the most in more than a year.

Trading in US index indicated the Dow could rise 44 points at the opening bell on Monday, 8 February 2010. Dow futures regained strength after turning negative earlier during the day.

The Group of Seven (G-7) leading industrial nations will continue their economic stimulus policies, G-7 ministers said after wrapping up two days of talks in northern Canada on 7 February 2010.

Finance ministers and central bankers from leading industrial nations held two days of talks as fresh market turmoil cast doubt on a fragile global economic recovery.

Back home, as regards government's divestment plan, Rural Electrification Corporation (REC) will be the next Government- owned entity to come out with a follow-on public offer (FPO). Its 17.1-crore share FPO will open on 19 February 2010 and will close on 23 February 2010. This will be followed by NMDC's FPO.

As per reports, in the next fiscal, the Government is likely to divest its stake in state-run firms such as Engineers India, Coal India through initial public offers (IPOs) and Power Grid and Sail through FPOs.

The BSE 30-share Sensex rose 19.96 points or 0.13% to 15,935.61. The Sensex lost 263.66 points at the day's low of 15,651.99 in mid-morning trade. The index rose 145.76 points at day's high of 16,061.41 in mid-afternoon trade.

The S&P CNX Nifty rose 3.15 points or 0.07% to 4760.40. Nifty February 2010 futures were at 4,766.90, at a premium of 6.50 points as compared to the spot closing of 4,760.40. Turnover in NSE's futures & options (F&O) segment increased to Rs 93,132.53 crore from Rs 90,464.62 crore on Friday, 5 February 2010.

The market breadth, indicating the overall health of the market, turned negative. Breadth gyrated between positive and negative for multiple instances during the day. On BSE, 1447 shares declined as compared with 1325 that declined. A total of 82 shares remained unchanged.

From the 30-member Sensex pack, 16 gained while the rest declined.

The total turnover on BSE amounted to Rs 4018 crore

The BSE Mid-Cap index fell 0.09% and the BSE Small-Cap index fell 0.08%. Both the indices underperformed Sensex.

Telecom stocks advanced on bargain hunting after the recent fall which was materialized following reports which indicated that the 3G spectrum auction will be delayed till the next fiscal.

India's largest cellular services provider by sales Bharti Airtel gained 2.7%. India's second largest cellular services provider by sales Reliance Communications rose 2.21%.

India's largest FMCG company by sales Hindustan Unilever advanced 1.75% on reports the company may make a modest product price hike rise in the second half of year 2010.

Among other FMCG stocks, Dabur India, Nestle India and United Spirits rose by between 0.49% to 4.27%.

IT stocks fell on mixed economic data. US is the biggest market for Indian IT firms. India's third largest software services exporter Wipro shed 1.74%. As per recent reports, Wipro Consumer Care and Lighting, the FMCG arm of Wipro, is in advanced talks to buy Nigeria-based skincare company, Tura International.

India's largest IT exporter by sales Tata Consultancy Services fell 0.74%. Reportedly TCS' Passport Seva Project, which aims to issue passports in flat three days, is all set to be launched in a week or two.

But, India's second largest IT exporter by sales Infosys rose 0.87%.

The National Association of Software and Service Companies (Nasscom) last week has projected export revenue to grow 13% to 15% to $56-$57 billion in the year to March 2011, below the previous outlook for $60-$62 billion.

Index heavyweight Reliance Industries (RIL) rose 0.27% to Rs 996.35, recovering from day's low of Rs 976. As per reports, RIL has submitted a $2 billion expression of interest for Value Creation Inc, a Canada-based private firm which holds oil sands assets.

India's largest power utility firm by sales NTPC fell 1.29%. The company's follow on public offer managed to scrape through with the issue getting subscribed 1.2 times. The issue, through which the government is divesting 5% of its stake, at a floor price of Rs 201 a share, opened on 3 February 2010 and closed on 5 February 2010. At the floor price, the follow-on-public offer (FPO) is valued at Rs 8,286 crore.

Among other power stocks, Torrent Power, Tata Power Company and Reliance Power fell by between 1.19% to 1.46%.

India's top power equipment maker by sales Bharat Heavy Electricals rose 0.73% after winning a contract worth Rs 1016 crore to build a 1,200 megawatts hydro power plant in Bhutan. The announcement was made during trading hours today, 8 February 2010.

Among other capital goods stocks, Larsen & Toubro, ABB, BEML and Greaves Cotton rose by between 0.73% to 2.47%.

Auto stocks were mixed. India's top two-wheeler maker by sales Hero Honda Motors rose 1.48%. India's largest tractor maker by sales Mahindra and Mahindra (M&M) moved up 1.83%. While India's top small car maker by sales Maruti Suzuki India remained unchanged at Rs 1370

But, India's top truck maker by sales Tata Motors declined 1.01%. India's largest car maker by sales Maruti Suzuki India fell 0.21%.

Banking stocks rose on bargain hunting after recent fall. India's largest private sector bank by net profit ICICI Bank rose 0.38%. The bank's American depository receipt, or ADR fell 3.54% to $33.54 on the New York Stock Exchange on Friday, 5 February 2010. India's largest bank by net profit and branch network State Bank of India rose 1.14%.

But, India's largest private sector bank by net profit HDFC Bank lost 0.44%.

Metal stocks declined after LMEX, a gauge of six metals traded on the London Metal Exchange, lost 2.53% on Friday, 5 February 2010. India's largest private sector aluminium maker by sales Hindalco Industries slumped 3.75%.

India's largest private sector steel maker by sales Tata Steel lost 4.46%. The company's steel sales from its Indian operations rose 9% to 5.56 lakh tonnes in January 2010 over January 2009. The announcement was made after market hours on Friday, 5 February 2010.

The Indian operations account for about a quarter of the group's total annual capacity of 3 crore tonnes, which includes unit Corus, Europe's second-largest steelmaker.

JSW Steel, Steel Authority of India, National Aluminium Company and Jindal Steel & Power fell by between 0.16% to 0.92%.

Realty stocks also rose on bargain hunting after a recent sharp fall. Unitech, Omaxe, Indiabulls Real Estate and Parsvanath Developers rose by between 0.38% to 4.06%.

Fast food chain operator Jubilant FoodWorks surged on its debut. The stock settled at Rs 229, a 57.93% premium over an issue price of Rs 145 a piece. The stock debuted at Rs 161.60 on BSE. It had raised Rs 329 crore through initial share sale last month.

Jubilant FoodWorks clocked highest volume of 3.17 crore shares on BSE. Cals Refineries (2.55 crore shares), IFCI (0.87 crore shares), Hindalco Industries (0.77 crore shares) and Suzlo Energy (0.72 crore shares) were the other volume toppers in that order.

Jubilant FoodWorks clocked the highest turnover of Rs 727.16 crore on BSE. Tata Steel (Rs 234.75 crore), Reliance Industries (Rs 130.07 crore), State Bank of India (Rs 116.25 crore) and Hindalco Industries (Rs 105.69 crore) were the other turnover toppers in that order.