Small-cap, mid-cap indices underperform Sensex

The key benchmark indices surged as strong response to NTPC's follow-on public offer (FPO), robust services sector data for January 2010 and firm global stocks boosted investor sentiment. The BSE 30-share Sensex rose 332.61 points or 2.06%. Metal, consumer durables, realty, banking and capital goods stocks rose. Index heavyweight Reliance Industries (RIL) pared earlier gains. The market breadth was strong. All the sectoral indices on BSE were in the green.

The large follow-on public offer (FPO) of state-run power generation firm NTPC was subscribed 70% by 16:00 IST on the first day of bidding for the issue today, 3 February 2010, data on NSE showed. Majority of the bids were at Rs 209 per share. The government has fixed the benchmark price for the proposed divestment of government stake at Rs 201 per share.

NTPC kickstarts what is expected to be a large fund raising exercise by Indian firms in calendar 2010 from share sales. A section of the market is concerned that a glut in share sales will soak liquidity from the secondary market. As per reports, Indian firms may raise $30 billion from share sale in 2010, led by government stake sales and initial public offers from power and property firms. Indian companies raised about $20 billion from share sales in calendar 2009.

The government currently holds an 89.5% stake in NTPC and it plans to dilute 5% through the FPO. At the floor price, the government would mop up Rs 8286 crore. NTPC's FPO is the first public issue which is adopting the French Auction route to raise funds. Under the French Auction model, institutional buyers are free to bid above a certain floor price. The highest bidder gets preference during the allotment of shares

The government has targeted raising Rs 25000 crore in the fiscal year through March 2010 by selling stakes in state-run companies. So far, it has managed to net Rs 4259 crore. The Indian government is selling bits of state-run companies as part of efforts to bridge a budget deficit that is estimated to swell to a record 6.8% of gross domestic product in the year through March 2010

Besides NTPC, Rural Electrification Corporation plans to raise nearly $1 billion through a follow-on offering which will open on 19 February 2010 and close 23 February 2010. Mining company NMDC is scheduled to come to market in the second week of March 2010 to raise around $3 billion and Satluj Jal Vidyut Nigam is expected to mop up about $260 million in an initial public offering toward the end of March 2010.

The Reserve Bank of India (RBI) said on Wednesday it had decided to withdraw a short-term foreign currency funding facility provided to non-banking financial and home finance firms, with immediate effect. The decision has been taken after a review of the prevailing macro-economic conditions and improvements in the domestic credit and liquidity conditions, the Reserve Bank of India said in a statement. It had introduced this facility in October 2008, which allowed the firms to raise foreign currency borrowings from the central bank to refinance short-term liabilities.

India's chief statistician Pronab Sen today said that data suggests that industrial recovery in the country is on track, but the government would wait for the March 2010 quarter economic data before taking a call on exiting stimulus measures. Market men expect Finance Minister Pranab Mukherjee to announce stimulus exit measures when he presents the annual budget for 2010/11 on 26 February 2010.

A change in the base year used to calculate gross domestic product may help reduce fiscal deficit for 2009/10 to 6.41% of GDP, Pronab Sen said on Wednesday. The government in the budget had targetted India's fiscal deficit at 6.8% of GDP in 2009/10.

Business activity among Indian services companies expanded at its fastest pace in 16 months in January 2010, rising for a second straight month on sharp increase in new work orders, a survey showed. The HSBC Markit Business Activity Index, based on a survey of 400 Indian firms, rose to 58.96 in January 2010, its highest since September 2008, after rising to 57.41 in December 2009.

Earlier this month, another data showed that manufacturing activity grew at its fastest pace in almost 1-1/2 years in January 2010, driven by a sharp rise in new export orders that are supporting a recovery in the industrial sector. The HSBC Markit Purchasing Managers' Index (PMI), based on a survey of 500 Indian companies, rose to 57.7 in January 2010, its strongest reading since August 2008 and up from 55.6 in December 2009.

Exports continued to rebound, rising an annual 9.3% in December to $14.6 billion, their second consecutive monthly rise, although the pace of annual growth was slower than the 18.2% registered in November. Imports increased by 27.2% in December from a year earlier to $24.75 billion while the trade deficit shrunk by a little over 28 percent to $76.24 billion for the April- December 2009 period.

On Friday 29 January 2010, the Reserve Bank of India (RBI) raised the cash reserve ratio for banks by a higher-than-expected 75 basis points in an effort to soak up excess liquidity, and ramped up its forecast for GDP growth in the current fiscal year through March to 7.5% from its earlier forecast of 6%. It lifted its wholesale price index inflation forecast for the end of the fiscal year in March to 8.5% from 6.5%.

The RBI will target inflation in the coming months, RBI Governer D Subbarao said on Monday. Subbarao also said it is important for the government to withdraw the stimulus and that the government and central bank would have to coordinate in withdrawing stimulus. He reiterated that the economy is back to growth and added that the challenge is to accelerate momentum.

European shares advanced for a fourth consecutive session on Wednesday, with stronger miners on the back of firm metals prices outpacing a weaker pharma sector, which slipped after Roche's profit missed expectations. In Europe, the key benchmark indices in France, Germany and UK rose by between 0.27% to 0.73%.

Asian shares rose on Wednesday with resources stocks leading the way, as demand for riskier assets increased after Wall Street rallied on Tuesday on upbeat US corporate earnings and economic data. The key benchmark indices in China, Hong Kong, Indonesia, Japan, South Korea, Singapore and Taiwan rose by between 0.32% to 2.36%.

Trading in US index futures indicated Dow could gain 13 points at the opening bell on Wednesday, 3 February 2010.

In US market action on Tuesday after a shaky start, the Dow logged its second straight triple-digit gain and the S&P 500 jumped back to the 1100 mark. Some encouraging earnings report, positive pending home sales data and strong auto sales from Ford led the upmove. Ford's sales rose 35% in January 2010. The Dow Jones industrial average added 111.32 points, or 1.09%, at 10,296.85. The Standard & Poor's 500 Index rose 14.13 points, or 1.30%, to 1,103.32. The Nasdaq Composite Index added 18.86 points, or 0.87%, to 2,190.06.

Closer home, the BSE 30-share Sensex rose 332.61 points or 2.06% to 16496.05. The index rose 389.55 points at the day's high of 16,552.99 in afternoon trade. The Sensex rose 46.81 points at the day's low of 16,210.25 in early trade.

The S&P CNX Nifty rose 101.75 points or 2.11% to 4931.85. Nifty February 2010 futures were at 4,921.05, at a discount of 10.80 points as compared to the spot closing of 4,931.85. Turnover in NSE's futures & options (F&O) segment was Rs 78,755.97 crore, lower than Rs 79,683.06 crore on Tuesday, 2 February 2010.

The BSE Mid-Cap index rose 1.5% and the BSE Small-Cap index rose 1.06%. Both the indices underperformed Sensex.

All the sectoral indices on BSE rose. BSE Metal index (up 4.01%), BSE Realty index (up 2.81%), BSE Consumer Durables index (up 2.63%, BSE Capital Goods index (up 2.12%), and banking sector index Bankex (up 2.07%), outperformed the Sensex. BSE Healthcare index (up 0.6%), BSE Power index (up 0.98%), BSE Oil & Gas index (up 1.36%), BSE PSU index (up 1.43%), BSE IT index (up 1.72%), BSE Auto index (up 1.77%), and BSE FMCG index (up 2.01%), underperformed the Sensex.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1772 shares advanced as compared with 1048 that fell. A total of 100 shares remained unchanged.

From 30 shares Sensex pack, 29 rose and one fell.

BSE clocked turnover of Rs 4425 crore, lower than Rs 5187.21 crore on Tuesday, 2 February 2010.

Index heavyweight Reliance Industries (RIL) rose 0.7% to Rs 1033.75. It came off the day's high of Rs 1047.80. The company's net profit rose 15.77% to Rs 4008 crore on 89.77% surge in total income to Rs 57364 crore in Q3 December 2009 over Q3 December 2008. RIL said the results had been reworked and restated to include figures from Reliance Petroleum, which it absorbed last year. The company announced the Q3 result during market hours on 22 January 2010.

Consumer durables stocks rose on good Q3 result. Rajesh Exports, Videocon Industries, Blue Star, Titan Industries rose by between 0.136% to 6.46%.

India's largest power utility firm by sales NTPC rose 1.82% on strong response to its FPO. Among other power firms, CESC, Torrent Power, Tata Power Company, Reliance Power fell by between 0.01% to 2.14%.

Metal stocks rose after LMEX, a gauge of six metals traded on the London Metal Exchange, rose 0.97% on Tuesday, 2 February 2010. National Aluminium Company rose 2.92%. The company's net profit declined 29.3% to Rs 155.18 crore in Q3 December 2009 over Q3 December 2008.

India's largest non-ferrous metal firm by capacity Sterlite Industries India rose 5.97%. Sterlite Industries' bauxite mining project in the Niyamgiri hills in eastern Orissa may reportedly face a setback, with court documents revealing inconsistencies in the approval process. Sterlite Industries' net profit slumped 77.16% to Rs 46.59 crore on a 39.83% increase in sales to Rs 3611.99 crore in Q3 December 2009 over Q3 December 2008.

India's largest private sector aluminum maker by sales Hindalco Industries rose 3.27%. The company's net profit fell 21.60% to Rs 427.10 crore on a 29.56% increase in sales to Rs 5286.10 crore in Q3 December 2009 over Q3 December 2008.

Steel stocks rose on reports that top private steel makers including JSW Steel, Essar Steel and Ispat Industries have begun the year on a strong footing with up to 30% growth in sales volume in January 2010 over the year ago period boosted by robust demand from automobile and consumer durable sectors.

India's largest private sector steel maker by sales Tata Steel rose 4.91%. The company's net profit surged 155.6% to Rs 1191.75 crore in Q3 December 2009 over Q3 December 2008. The company announced the result during market hours on Thursday 28 January 2010.

Tata Steel will report consolidated third-quarter results, to include the Corus numbers this month. The Indian operations account for a quarter of the group's annual global capacity of about 30 million tonnes.

Steel Authority of India (Sail) rose 4.92%. Sail on Tuesday announced a new round of hike in steel prices of Rs 500 per tonne for flat products. Sail reported a 99% jump in its net profit at Rs 1,675.55 crore in Q3 December 2009 over Q3 December 2008.

JSW Steel rose 8.44%. The company said today crude steel output rose 66% in January 2010 over January 2009.

Tata Steel, Essar Steel, JSW Steel and Ispat Industries may reportedly also increase prices taking into consideration the rising input costs.

Rate sensitive realty shares rose after the Reserve Bank kept interest rates steady in its quarterly monetary policy late last month. Ackruti City, Indiabulls Real Estate, Housing Development & Infrastructure, Omaxe rose by between 0.7% to 4.49%.

India's largest realty player by sales DLF rose 2.94%. The company's net profit rose 26.04% to Rs 224.43 crore on 109.03% rise in sales to Rs 887.16 crore in Q3 December 2009 over Q3 December 2008. The company announced the Q3 result last week.

Unitech rose 2.61%. The company's net profit rose 576.6% to Rs 131.94 crore on 216.7% rise in sales to Rs 642.88 crore in Q3 December 2009 over Q3 December 2008.

Rate sensitive banking shares rose after Reserve Bank kept interest rates steady in its quarterly monetary policy review late last month. India's second largest private sector bank by net profit HDFC Bank rose 2.19% on bargain hunting after last two days' fall. Its ADR rose 0.61% on Tuesday. India's largest private sector bank by net profit ICICI Bank rose 2.56%. Its ADR fell 0.39% on Tuesday.

India's largest bank by net profit and branch network State Bank of India rose 1%. SBI chairman O P Bhatt recently said deposit rates may not go up immediately but there is no room for deposit rates to come down.

Commercial banks do not see any upward pressure on lending rates in the next six months, after the Reserve Bank raised banks' reserve requirements on Friday, 29 January 2010 top bankers said. The head of Indian Banks' Association (IBA), the apex industry body, said lending rates were expected to be stable till the first quarter of fiscal year starting 1 April 2010.

Banks' outstanding loans fell by Rs 11,900 crore in the two weeks to 15 January 2010 because companies repaid some loans as is typical at the beginning of a quarter, the central bank's data showed last week. The Reserve Bank of India data showed loans fell to Rs 30,08,000 crore in the two weeks to 15 January 2010 and deposits fell by around Rs 22,000 crore to Rs 42,43,000 crore. In the two weeks to 1 January 2010, outstanding loans rose by a massive Rs 78,192 crore and deposits also went up by Rs 82,769 crore.

India's largest engineering and construction firm by sales Larsen & Toubro rose 3.8%. The company announced today that it won orders worth Rs 1100 crore.

India's largest power equipment maker by sales Bharat Heavy Electricals rose 0.49% on bargain hunting after losses in the past two days. Bharat Heavy Electricals said last week it would sign an agreement with the Madhya Pradesh state utility to jointly set up a 1,600 megawatts thermal power plant in the central Indian state.

Among other capital goods stocks, Siemens, ABB, Thermax, BEML and Praj Industries rose by between 0.3% to 2.98%.

Shares of oil exploration firms rose after crude oil prices surged nearly 4% on the New York Mercantile Exchange, on Tuesday, 2 February 2010. Cairn India rose 1.51%. India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) advanced 2.65%. India's second biggest oil and gas exploration firm by revenue, Oil India, gained 3.14%. Rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms.

Light, sweet crude oil rose $2.80, or 3.76%, to $77.23 a barrel on the New York Mercantile Exchange on Tuesday, 2 February 2010 fuelled by encouraging economic data and weak dollar.

PSU OMCs rose. As per reports, a government panel on oil fuel pricing has recommended lifting government control over petrol prices at the refinery and retail level. It also recommended retail diesel prices be market driven. BPCL, HPCL and Indian Oil Corporation rose by between 0.02% to 2.48%.

Cement shares gained after most firms posted higher cement sales last month. UltraTech Cement rose 1.29% after gaining 3.03% on Tuesday. Aditya Birla Group's cement shipments rose 14% to 34.3 lakh tonnes in January 2010 over January 2009.

Ambuja Cements rose 0.93%. Ambuja Cements' January shipments rose to 17.5 lakh tonnes, up 7.5% from a year earlier. The company said production rose to 17.4 lakh tonnes from 16.1 lakh tonnes.

Shree Cement rose 0.7%. Shree Cement's January shipments rose 18% to 8.82 lakh tonnes, up from 7.49 lakh tonnes a year earlier. Total shipments during April-January period rose 24% to 76.5 lakh tonnes, up from 61.8 lakh tonnes a year ago.

ACC rose 1.3%. ACC's shipments in January rose 1.1% to 19.1 lakh tonnes from 18.9 lakh tonnes a year earlier. The company said production rose to 18.9 lakh tonnes from 18.7 lakh tonnes.

FMCG and healthcare stocks rose on strong Q3 result. Among FMCG stocks, Hindustan Unilever, Nestle India, Dabur India, Tata Tea, ITC, rose by between 0.06% to 3.33%.

Among healthcare stocks, Biocon, Cipla, Aurobindo Pharma rose by between 1.92% to 2.02%.

Stocks from interest rate sensitive auto sector rose on strong vehicle sales in January 2010. India's largest tractor maker by sales Mahindra and Mahindra (M&M) rose 3.08%. Mahindra & Mahindra total vehicle sales jumped 71.2% to 30,149 units in January 2010 over January 2009.

India's top truck marker by sales Tata Motors rose 1.94%. Tata Motors total sales rose 77% to 65,478 units in January 2010 over January 2009. Domestic sales rose 74% to 62,202 units in the same period. Commercial vehicles sales increased 107% to 35,957 units, while passenger vehicle sales rose 43% to 28,547 units in January 2010 over January 2009.

Bajaj Auto rose 1.23%. The company's total vehicle sales soared 101% to 2.66 lakh units in January 2010 over January 2009.

India's largest motorbike maker by sales Hero Honda Motors rose 2.05%. Hero Honda Motor's total sales rose 23.6% to 389,802 units in January 2010 over January 2009. After market hours on 25 January 2010, the company reported a 78.34% rise in net profit to Rs 535.77 crore on a 32.72% rise in sales to Rs 3814.42 crore in Q3 December 2009 over Q3 December 2008.

India's top small car maker by sales Maruti Suzuki India rose 0.67%. The company's vehicle sales rose 33.3% to 94649 units in January 2010 over January 2009.

But, TVS Motor Company fell 2.28%. The company's vehicle sales rose 34% in January 2010 over January 2009.

IT stocks rose on improved economic data in the US. US is the biggest market for the Indian IT firms. India's largest IT exporter by sales Tata Consultancy Services rose 2.09% after gaining 1.78% on Tuesday.

India's third largest software services exporter Wipro rose 2.65%. Its ADR fell 1.52% on Tuesday. Wipro Consumer Care and Lighting, the FMCG arm of Wipro, is reportedly in advanced talks to buy Nigeria-based skincare company, Tura International.

India's second largest IT exporter by sales Infosys rose 1.34% extending Tuesday's 1.71% gains. Its ADR rose 0.4% on Tuesday.

Hindustan Fertiliser and Chemicals clocked highest volume of 1.64 crore shares on BSE. Infinite Computer Solutions (1.63 crore shares), Fame India (1.62 crore shares), Cals Refineries (1.55 crore shares) and Reliance Natural Resources (1.31 crore shares) were the other volume toppers in that order.

Infinite Computer Solutions clocked the highest turnover of Rs 313.88 crore on BSE. Tata Steel (Rs 166.25 crore), State Bank of India (Rs 162.30 crore), National Fertiliser (Rs 103.54 crore) and Relaince Industries (Rs 91.04 crore) were the other turnover toppers in that order.