Small-cap, mid-cap indices outshine Sensex as market recovers from two-day slide

The key benchmark indices rebounded after a two-day slide, tracking gains in European stocks and higher US index. The BSE 30-share Sensex rose 123.39 points or 0.71%, up close to 125 points from the day's low and off close to 30 points from the day's high. The market breadth was strong. Most Asian stocks declined.

Interest rate sensitive banking, auto and realty shares rose on renewed buying. Metal stocks advanced on bargain hunting, reversing a two-day fall. But, fast moving consumer goods (FMCG) pivotals declined on fears profitability in the forthcoming quarters could be under pressure due to higher input and advertising costs. IT pivotals saw mixed trend. Index heavyweight Reliance Industries (RIL) rose amid a bout of volatility in the second half of the trading session.

The market was volatile as traders rolled over positions in the derivatives segment from the April 2010 series to the May 2010 series ahead of the near-month April 2010 contracts. The April-2010 derivatives contracts expired today. The market pared gains after a firm opening. It moved in a range in morning trade. The market was further off the day's high in mid-morning trade. The market struck a fresh intraday high in early afternoon trade. The market came off the higher level later. The market surged to the day's high in late trade.

NSE's volatility index India VIX lost 6.78% to 21.19. The index had jumped 14.68% to 22.73 on Wednesday, 28 April 2010, when debt worries in the euro zone spooked world markets. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days. The index is calculated based on the S&P CNX Nifty options prices.

From a recent high of 17,745.28 on Monday, 26 April 2010, the Sensex lost 365.20 points or 2.05% to 17,380.08 on Wednesday, 28 April 2010, as debt worries in the euro zone rattled world equities.

Food price index rose 16.61% in the year to 17 April 2010, data released by the government today showed. The rise in food prices inflation was slower than an annual rise of 17.65% in the previous week. But, fuel price inflation quickened. The fuel price index rose 12.69% in the year to 17 April 2010 a year ago, faster than the previous week's 12.45% rise. The primary articles index was up 13.55% in the year to 17 April 2010.

The Q4 March 2010 corporate earnings announced so far have been good. The combined net profit of a total of 499 companies rose 28.1% to Rs 31286 crore on 33.6% rise in sales to Rs 271074 crore in the quarter ended March 2010 over the quarter ended March 2009.

The government today kicked off its disinvestment programme for the fiscal year March 2011 with the initial public offering (IPO) of the state-run SJVN. The government plans to raise Rs 1000 crore through the IPO, and is offloading 10% of its stake in the company.

European shares edged higher after the US Federal Reserve at the end of a two-day policy meeting on interest rates said it would keep rates near zero for an extended period. The key benchmark indices in Germany, UK and France rose by between 0.53% to 0.8%.

Asian stocks edged lower in volatile trade. Key benchmark indices in South Korea, Taiwan, China and Hong Kong were down by between 0.32% and 1.10%. But, the key benchmark indices in Singapore and Indonesia rose 0.76% to 0.81%. Japanese markets were closed for the Showa Day Holiday, and will remain closed Monday-Wednesday next week for local holidays.

US markets edged higher in volatile trade on Wednesday, 28 April 2010, after the US Federal Reserve offered a more upbeat view of the US economy and employment prospects giving some relief to investors worried about possible debt defaults in Europe. Stocks had declined earlier in the day after Standard & Poor's downgraded its debt rating on Spain, a day after its downgrades on Greece and Portugal.

The US Federal Reserve after a two-day policy meeting that concluded on Wednesday, 28 April 2010, left interest rates unchanged. The Fed retained its pledge to keep interest rates low for an extended period because of low inflation and high unemployment. The Fed has kept interest rates near zero since December 2008.

The Standard & Poor's cut its ratings on Spain to AA from AA+ saying a longer-than-expected period of low growth could undermine efforts to cut the budget deficit.

Trading in US index futures indicated that the Dow could rise 33 points at the opening bell on Thursday, 29 April 2010.

Back home, the Congress-led United Progressive Alliance government sailed through a trial of strength in parliament on Tuesday, 27 April 2010, by winning the cut motion demanded by opposition parties against an unpopular hike in fuel and fertiliser prices with smaller parties giving it a leg up to achieve a surprisingly strong victory. However, major reforms may take a backseat for the some time to come as there is a stiff resistance by the opposition on fears it may hurt the poor.

On the macro front, the latest data showed infrastructure sector output jumped 7.2% in March 2010 from a year earlier, higher than an upwardly revised rise of 4.7% in February 2010.

The Indian Meteorological department (IMD) expects normal rainfall in the June-September monsoon season this year. Rainfall is likely to be 98% of the long-term average, the IMD said on 23 April 2010. Good monsoon rains would help raise farm output, boost rural incomes and lower food inflation. The south west monsoon is important for India as about 60% of the country's farmlands are rain-fed and more than half of the workforce is employed in the agriculture sector. The quantum of rainfall in the crucial sowing month of July and distribution of rainfall during the monsoon season holds key.

The Reserve Bank of India expects India's economy to expand 8% in the year ending March 2011 (FY 2011) with an upward bias, assuming a normal monsoon this year and sustenance of good performance of the industrial and services sectors on the back of rising domestic and external demand.

The RBI at its annual policy review, last week, said it will continue to monitor macroeconomic conditions, particularly the price situation closely and take further action as warranted. A 25 basis points hike in the cash reserve ratio (CRR) with effective from 24 April 2010 will suck out excess liquidity of Rs 12500 crore from the banking system.

In its half-yearly World Economic Outlook, the International Monetary Fund (IMF) has pegged India's GDP growth at 8.75% in calendar 2010 and 8.5% in calendar 2011. According to the IMF, domestic demand in India will strengthen as the labour market improves, and investment is expected to be boosted by strong corporate profitability, rising business confidence and favourable financing conditions.

The BSE 30-share Sensex rose 123.39 points or 0.71% to 17,503.47. The index rose 152.78 points at the day's high of 17,532.86 in late trade. The Sensex rose 2.01 points at the day's low of 17,382.09 in early trade.

The S&P CNX Nifty gained 38.70 points or 0.74% to 5254.15.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1926 shares advanced as compared with 1002 that declined. A total of 93 shares remained unchanged.

The total turnover on BSE amounted to Rs 4232 crore, lower than Rs 4780.99 crore on Wednesday, 28 April 2010.

The BSE Mid-Cap index rose 1.08% and the BSE Small-Cap index rose 1.29%. Both these indices outperformed the Sensex.

Most of the sectoral indices on BSE rose. BSE Realty index (up 1.96%), Consumer Durables index (up 1.69%), Bankex (up 1.62%), Metal index (up 1.14%), Oil & Gas index (up 1.1%), Auto index (up 0.92%), outperformed the Sensex.

BSE FMCG index (down 0.96%), Healthcare index (down 0.34%), IT index (down 0.25%), Teck Index (down 0.18%), Capital Goods index (up 0.31%), PSU index (up 0.43%), Power index (up 0.69%), underperformed the Sensex.

From the 30 share Sensex pack, 19 stocks rose while the rest fell.

Interest rate banking shares edged higher on expectations of a strong growth in lending in a rebounding economy. India's largest private sector bank by net profit ICICI Bank rose 2.86%. It was the top gainer from the Sensex pack.

India's biggest commercial bank in terms of branch network State Bank of India rose 1.73%, extending recent strong gains triggered by brokerage upgrades on the counter. A prominent foreign brokerage reportedly raised its rating on the stock to 'neutral' from 'sell'. Another foreign brokerage has reportedly predicted a re-rating of the counter on the back of an expected lending growth.

India's second largest private sector bank by net profit HDFC Bank rose 0.55% to Rs 1978.95. The stock staged a sharp pullback from day's low of Rs 1948.

India's top mortgage lender by total income Housing Development Finance Corporation (HDFC) gained 0.72% to Rs Rs 2830.75 after the company said its board will consider share-split proposal on 3 May 2010. However, the stock was off sharply from day's high of Rs 2868.90.

Interest rate sensitive auto stocks were mixed. India's largest car maker by sales Maruti Suzuki India rose 1.36% on bargain hunting after a recent steep slide. The stock had declined 7.80% four trading days to Rs 1271.05 on 28 April 2010 from a recent high of Rs 1378.65 on 22 April 2010 as the company's profit margin declined in Q4 March 2010.

India's largest commercial vehicle maker by sales Tata Motors surged 2.61%. India's largest tractor maker by sales Mahindra & Mahindra (M&M) fell 0.12%, reversing early gains.

India's top bike maker by sales Hero Honda Motors fell 0.67%. However, India's second largest bike maker by sales Bajaj Auto rose 0.4%

Realty shares gained on renewed buying. DLF, Sobha Developers, HDIL, Unitech, Orbit Corporation and Indiabulls Real Estate rose by between 0.28% to 4.15%.

Index heavyweight Reliance Industries (RIL) rose 1.74% to Rs 1034.70 on bargain hunting after a recent slide. The stock rebounded from day's low of Rs 1019. The company said on Wednesday it had discovered oil in one of its exploration blocks in the Cambay basin on India's western coast, the block in which it holds 100% controlling interest. This is its fourth oil discovery in the region.

India's top dam builder by sales Jaiprakash Associates rose 1.09% as the initial public offer (IPO) of its infrastructure unit Jaypee Infratech opened for bidding today. Jaiprakash Associates is offering 6 crore shares of Jaypee Infratech through the IPO which also includes fresh issue of shares by Jaypee Infratech.

India's largest private sector utility firm by sales Reliance Infrastructure rose 0.9%. As per reports its unit Reliance Cementation is planning to set up a Rs 1500 crore cement plant in Karnataka.

Metal stocks rose on bargain hunting, reversing a two-day fall. India's largest non-ferrous metal firm by sales Sterlite Industries surged 1.31% after its ADR rose 1.55% on Wednesday.

India's largest private sector steelmaker by sales Tata Steel rose 1.33% on reports its overseas unit Corus will raise prices of structural sections used in the construction industry by 80 pounds ($122.2) a tonne on all deliveries from 30 May 2010. The rise is driven by the continued increases in raw material costs and rising demand for structural sections in the UK and Europe.

Hindalco Industries, NMDC, JSW Steel, Hindustan Zinc, Steel Authority of India rose by between 0.08% to 4.86%.

Fast moving consumer goods (FMCG) pivotals declined on fears profitability in the forthcoming quarters could be under pressure due to higher input and advertising costs. India's largest FMCG company by sales Hindustan Unilever lost 2.31%. India's largest cigarette company by sales ITC shed 0.98%.

IT pivotals saw mixed trend. India's largest information technology services provider by sales, TCS, lost 1.49%. India's third largest IT exporter by sales, Wipro fell 0.17% with the stock falling for the third straight day.

India's second largest IT exporter by sales, Infosys rose 0.21%, with the stock snapping last three days' losses.

The partially convertible rupee was trading at 44.51/52 per dollar, stronger than its close of 44.64/65 per dollar on Wednesday. A firm rupee adversely affects operating profit margin of IT firms as the sector derives a lion's share of revenue from exports.

Tea stocks rose on firm global commodity prices. Tata Tea, Dhunseri Tea, McLeod Russel, Jayshree Tea rose by between 0.78% to 11.84%.

UltraTech Cement fell 5.19% as net profit declined 26.1% to Rs 228.54 crore in Q4 March 2010 over Q4 March 2009. The company announced the result during market hours today.

With regard to the outlook for the current year, UltraTech said a significant capacity addition during the last fiscal year year with the possible addition of around 30 mtpa in the year ending March 2011 may lead to a surplus scenario. Capacity utilisation is expected to be around 80%. These factors are likely to put pressure on cement prices. However, the company expects cement demand to grow 10% in the long term on the back of government's thrust on infrastructure and housing sectors.

Infrastructure stocks gained on reports the government may allow infrastructure firms to refinance part of their domestic debt through cheaper overseas borrowings. Larsen & Toubro, Hindustan Construction Company, Nagarjuna Construction Company and Punj Lloyd rose by between 0.44% to 3.35%.

India's largest mobile services provider by sales Bharti Airtel rose 0.76%. Consolidated net profit as per US accounting standards declined 8% to Rs 2055 crore on 2% growth in total revenue to Rs 10056 crore in Q4 March 2010 over Q4 March 2009. The result was announced during trading hours on Wednesday. Chairman & Managing Director Sunil Bharti Mittal said at the time of announcing the Q4 results that Bharti Airtel continues to be strongly positioned in India despite a hyper competitive market.

Cals Refineries clocked the highest volume of 1.83 crore shares on BSE. FCS Software (1.65 crore shares), Visa Steel (1.53 crore shares), Sanraa Media (84 lakh shares) and Adani Power (83.28 lakh shares) were the other volume toppers in that order.

State Bank of India clocked the highest turnover of Rs 113.21 crore on BSE. Adani Power (Rs 102.69 crore), MSK Projects (Rs 101.90 crore), Reliance Industries (Rs 92.24 crore) and Dr Reddy's Laboratories (Rs 84.47 crore) were the other turnover toppers in that order.