Market snaps three-day winning streak as FIIs continue selling

A day after regaining the psychological 16,000 mark, the barometer index BSE Sensex fell below that level today, 10 February 2010, on waning risk appetite among foreign investors. Intraday volatility on the bourses was immense. The BSE 30-share Sensex fell 120.01 points or 0.75%, up close to 30 poinrts from the day's low and off close to 220 points from the day's high. Banking, capital goods, FMCG, healthcare and power stocks fell. The market breadth turned negative in contrast to a strong breadth earlier in the day.

Foreign funds have pressed heavy sales of Indian stocks in early 2010. As per data from the stock exchanges, foreign institutional investors (FIIs) sold stocks worth a net Rs 11141.63 crore in calendar 2010 so far (till Tuesday, 9 February 2010). In contrast, domestic institutional investors (DIIs) have bought equities worth a net Rs 14687.43 crore this year so far.

Coming back to today's trade and the market was volatile. The market pared gains soon after a firm start triggered by higher Asian stocks. The market slipped into the red in early trade as US index futures fell. The market cut losses in morning trade. It moved between the positive and negative terrain after recovering sharply from the intraday lows in mid-morning trade. The market once again cut losses after weakening in early early afternoon trade. The market regained positive zone in afternoon trade. It reversed gains to hit fresh intraday low in late trade.

European shares advanced for a third straight session on Wednesday amid hopes that a rescue plan will be formulated for Greece. The key benchmark indices in France, Germany and UK rose by between 1.17% to 1.34%.

Most of the Asian stocks rose on Wednesday on signs that the European Union may rescue debt-strapped Greece, coaxing nervous investors back to riskier assets. The key benchmark indices in China, Japan, Hong Kong, and Taiwan rose by between 0.31% to 1.14%. But the key benchmark indices in Indonesia, Singapore and South Korea fell by 0.02% to 0.39%.

Chinese exports and imports rose strongly in January 2010 from a year earlier. Exports were up 21% in January after a 17.4% rise in December. Imports surged 85.5%.

US index futures reversed early losses. Trading in US index futures indicated Dow could gain 24 points at the opening bell on Wednesday, 10 February 2010.

US stocks surged on Tuesday, 9 February 2010 on optimism that help was on the way for Greece to deal with its heavy debt burden. The Dow Jones Industrial Average added 150.25 points, or 1.5%, to 10,058.64. The broader Standard & Poor's 500 Index gained 13.78 points, or 1.3%, to 1,070.52, the Nasdaq Composite Index gained 24.82 points, or 1.2%, to 2,150.87.

German Finance Minister Wolfgang Schaeuble plans to brief lawmakers today on steps he may take to support the Greek government before the European Union holds a summit tomorrow. Olli Rehn, who takes over as European Economic Affairs commissioner tomorrow, said Greece has to 'do the necessary measures' in exchange for European Union's support.

Closer home, Reserve Bank of India Deputy Governor Subir Gokarn said on Wednesday he is not in favour of targeting inflation and said domestic growth drivers would depend on significant increases in capital inflows. Last month, the RBI revised up its growth estimate for 2009/10 to 7.5% from 6% and lifted its forecast for wholesale price inflation to 8.5% from 6.5%.

Finance Minister Pranab Mukherjee said on Wednesday that the economy could grow at around 7.75% in the 2009/10 financial year ending in March. With latest GDP data on 2009/10 indicating 7.9% growth in the second quarter, the growth outlook for the next two quarters and for the whole year is expected to be in the upper bound range of more predictions for the Indian economy, he said in a speech.

The government said on Monday the economy would grow 7.2% this fiscal year, picking up from a six-year low the previous year and underlining expectations that the Reserve Bank will raise rates in coming months. The government may announce steps to unwind its stimulus measures in the annual 2010/11 budget presentation on 26 February 2010 as a recovery in Asia's third-biggest economy shows a more solid footing. The Central Statistical Organisation forecast said manufacturing, a key growth driver, would grow 8.9%, a sharp pick up from 2.4% in the previous year.

Farm output would contract 0.2% after the worst monsoon in 37 years, swinging from year-earlier growth of 1.6%. Still, the latest forecast is higher than a 2% contraction forecast by the prime minister's economic advisory commission in October 2009.

Earlier this moth, the International Monetary Fund forecast growth in 2009/10 of 6.75%.

The Reserve Bank of India (RBI) has already raised bank reserve requirements as it starts to withdraw its crisis measures and it has warned of mounting inflation pressures, setting the stage for rates to rise.

A day after commerce and industry minister Anand Sharma hinted at partial withdrawal of stimulus packages, the Prime Minister's economic advisory council (PMEAC) chairman, C Rangarajan, said on Tuesday the process of fiscal consolidation must start with the Budget. Rangarajan on Wednesday said the government could provide a roadmap for exiting from the fiscal stimulus when it presents its budget on 26 February 2010. He also the stimulus exit should be a gradual transition. The RBI will watch the price situation before taking any action on the monetary front, he said later in the day on Wednesday.

Industrial output data for the month of December 2009 which is due on Friday, 12 February 2010, is expected to rise 12% in December 2009 from a year earlier. A robust figure, ahead of the 26 February 2010 annual budget, would also allow the federal government, fighting a 16-year high fiscal deficit, to cut the deficit by phasing out fiscal stimulus. A strong rise would also help the central bank to focus better on containing inflation by raising interest rates in coming months. The industrial output rose 11.7% in November 2009.

Exports are reportedly likely to grow for the third consecutive month in January 2010, as per estimates of the commerce department, making the case for a possible withdrawal of the stimulus package for sectors that were doing well. The finance and commerce ministers are scheduled to meet later in the week to take a decision on the continuation of the stimulus package for exporters, commerce secretary Rahul Khullar has said. Exports grew 13% in January 2010 over a year ago he said.

Inflation numbers for the week ended 30 January 2010 will be out on Thursday 11 February 2010. Accelerating food inflation, largely because of a poor harvest and rising global commodity prices, has become a major concern for the government. Stock markets remains shut on Friday 12 February 2010 on account of Mahashivratri.

The BSE 30-share Sensex fell 120.01 points or 0.75% to 15,922.17. At the day's high of 16,141.13, the Sensex rose 98.95 points in early trade. The Sensex lost 150.17 points at the day's low of 15,892.01 in late trade.

The S&P CNX Nifty fell 35.45 points or 0.74% to 4757.20.

The market breadth, indicating the overall health of the market turned negative. The breadth was strong earlier in the day. On BSE, 1301 shares advanced as compared with 1470 that declined. A total of 89 shares remained unchanged.

From the 30-member Sensex pack, 21 fell while the rest rose.

The BSE Mid-Cap index rose 0.01% and the BSE Small-Cap index rose 0.1%. Both the indices outperformed the Sensex.

The BSE Consumer Durables index (up 0.92%), BSE Realty index (up 0.88%), BSE Teck index (down 0.22%), BSE IT index (down 0.23%), BSE Metal index (down 0.46%), BSE FMCG index (down 0.55%), BSE HealthCare index (down 0.64%), BSE Oil & Gas index (down 0.74%), outperformed the Sensex.

The BSE Capital Goods index (down 1.21%), BSE PSU index (down 1.07%), BSE Power index (down 1.04%), BSE Bankex (down 0.98%), BSE Auto index (down 0.76%) and underperformed the Sensex.

BSE clocked a turnover of Rs 5095 crore, higher than Rs 4508.11 crore on Tuesday, 9 February 2010.

Index heavyweight Reliance Industries (RIL) fell 0.92%. Reliance Industries has reportedly halted fuel sales to Iran from May 2009. Media reports on Tuesday, 9 February 2010, had quoted Iranian Ambassador to India Seyed Madhi Nabizadeh as saying that the Islamic nation was continuing to import fuel from Reliance Industries.

Meanwhile, RIL recently submitted a $2 billion expression of interest for Value Creation Inc, a Canada-based private firm which holds oil sands assets.

India's largest steel maker by sales Tata Steel fell 2.04% after shares of the world's largest steel maker ArcelorMittal fell sharply in Europe after Q4 results. ArcelorMittal shares fell after the firm's operating profit in the fourth quarter lagged estimates and the company's first-quarter outlook also was below guidance.

Steel Authority of India fell 2.25%, after Steel Secretary Atul Chaturvedi said there is no proposal for a bonus share issue.

Among other metal stocks, National Aluminum Company, Hindustan Zinc, JSW Steel, Jindal Steel & Power fell by between 0.21% to 3.42%.

Rate sensitive banking shares declined on fears a hike in interest rate following inflationary pressures in the domestic economy. India's largest private sector bank by net profit ICICI Bank fell 1.31%. Its ADR rose 4.38% on Tuesday. India's largest bank by net profit and branch network State Bank of India fell 2.14%. But, India's second largest private sector bank by net profit HDFC Bank rose 1.49%. Its ADR rose 2.35% on Tuesday.

India's largest power equipment maker by sales Bharat Heavy Electricals fell 1.27%. The company on Monday secured a contract for the electro-mechanical equipment package for a 1,200 megawatt hydroelectric project in Bhutan valued at Rs 1,016 crore.

India's largest engineering and construction firm by sales Larsen & Toubro fell 1.79%. The company said on Tuesday it won orders worth Rs 582 crore.

Among other capital goods stocks, Thermax, Praj Industries, SKF India fell by between 0.59% to 1.68%.

FMCG stocks fell on profit taking. ITC, Hindustan Unilever, Tata Tea and Nestle India fell by between 0.29% to 1.72%.

India's largest drug maker by sales Ranbaxy Laboratories rose 0.8% after Daiichi Sankyo said it will launch new innovative products in Mexico through the marketing division of Ranbaxy's Mexican subsidiary Ranbaxy Mexico.

But, the other healthcare stocks, Cipla, Dr Reddy's Laboratories, Sun Pharmaceutical Industries and Biocon fell by between 1.51% to 2.63%.

India's largest power utility firm by sales NTPC fell 1.6%. 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, Reliance Infrastructure, Reliance Power and Tata Power Company fell by between 0.95% to 1.72%.

Consumer durables stocks rose on hopes of higher consumer spending as disposable income increases. Rajesh Exports, Titan Industries, Videocon Industries, Blue Star rose by between 0.47% to 2.99%.

Rate sensitive auto stocks fell on rate hike worries by the Rserve Bank of India. India's largest commercial vehicle maker by sales Tata Motors fell 0.95%.

India's top small car manufacturer by sales Maruti Suzuki India fell 1.52%. As per reports the company expects a 20% growth in sales and hopes to double its exports to around 1.6 lakh units this fiscal ended March 2010.

India's biggest tractor maker by sales Mahindra & Mahindra (M&M) fell 3.42% extending Tuesday's 1.07% fall.

Two wheeler stocks rose. Hero Honda Motors, TVS Motor Company and Bajaj Auto rose by between 0.01% to 2.24%.

Rate sensitive realty shares rose on bargain hunting after a recent fall. Among other realty stocks, Indiabulls Real Estate, Unitech and Housing Development and Infrastructure rose by between 1.05% to 5.22%. But, India's largest realty firm by sales DLF fell 1.63%.

Infrastructure stocks rose on recent reports the government is considering new guidelines for private equity investment in infrastructure companies in an attempt to open new sources of equity funding for the sector. The move comes in the backdrop of the poor response from private companies and banks in financing projects, especially those in sectors like highways and urban transport and infrastructure. Gayatri Projects, Nagarjuna Construction Company, Valecha Engineering and Hindustan Construction Company rose by between 0.27% to 5.2%.

Telecom stocks were mixed on recent reports they will together save at least $1.5 billion this fiscal in capital expenditure thanks to their practice of sharing towers and accompanying infrastructure, giving them some respite from a brutal price war.

India's largest cellular services provider by sales Bharti Airtel rose 0.48%. But, India's second largest cellular services provider by sales Reliance Communications rose 0.09%.

Bharti Airtel and Reliance Communications, both reportedly plan to launch online mobile applications stores, opening up a new revenue stream from add-on services such as music and social networking. Bharti Airtel will provide more than 1,250 applications across 25 categories including games, books and social networking on its applications store. Reliance Communications said the first version of its applications store would go live for GSM customers by the end of February 2010, and by the end of March 2010 an expanded version would be available to its CDMA customers as well.

Cranes Software clocked the highest volume of 0.97 crore shares on BSE. Unitech (0.93 crore shares), Cals Refineries (0.91 crore shares), Sun TV Network (0.85 crore shares) and KRBL (0.77 crore shares) were the other volume toppers in that order.

Sun TV Network clocked the highest turnover of Rs 315.54 crore on BSE. AIA Engineering (189.02 crore), Jubilant FoodWorks (165.18 crore), Hindustan Copper (129.17 crore) and Tata Steel (Rs 120.26 crore) were the other turnover toppers in that order.