Market ekes out small gains

The key benchmark indices settled marginally higher, giving away strong intraday gains, as European stocks and US index futures fell. The BSE 30-share Sensex rose 23.94 points or 0.15%, off close to 290 points from the day's high and up close to 55 points from the day's low. Banking, metal, auto and realty stocks reversed initial gains.

Index heavyweight Reliance Industries (RIL) pared initial gains triggered by a truce between the two Ambani brothers - Mukesh and Anil on Sunday, 23 May 2010. Shares of Anil Dhirubhai Ambani group surged. The S&P CNX Nifty settled below the psychological 5,000 mark after alternatively moving above and below that level earlier in the day.

Volatility was high as traders rolled over positions in the futures & options (F&O) segment from May 2010 series to June 2010 series ahead of the expiry of the near-month May 2010 contracts on Thursday, 27 May 2010. The market surged in early trade tracking gains in Asian stocks. It held firm in morning trade. The market extended gains in early afternoon trade as European stocks rose at the onset of the trading session. The market came off the higher level in afternoon trade. The market was further off the day's high in mid-afternoon trade as European stocks gave up initial gains. The market slipped into the red in late trade.

NSE's volatility index India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, declined 2.98% to 31.30. India VIX is calculated based on the S&P CNX Nifty options prices. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days.

Cabinet Secretary K.M. Chandrasekhar on Monday said inflows towards the third-generation (3G) spectrum auction, which concluded last week will bring down fiscal deficit and cut the government's borrowing plans. The government has mopped up almost Rs 70000 crore from the sale of 3G spectrum, which is twice the projected revenue. The government could additionally generate about Rs 15000 crore from sale of pan-India licenses for broadband wireless access (BWA) services.

Prime Minister Manmohan Singh on Monday said inflation is showing signs of moderating and the government expects to achieve a medium term target of 10% GDP growth annually. In a news conference to mark the completion of one year of the ruling Congress led United Progressive Alliance government at the Centre, the prime minister said he expects inflation to moderate to 5-6% by December 2010. Singh expects 8.5% GDP growth in the year ending March 2011 (FY 2011).

European shares turned negative on Monday after falling in the previous three sessions, with investors staying cautious on a Spanish bank bailout and on worries the euro zone crisis could hurt growth. The key benchmark indices in France, UK and Germany were down 0.43% to 1.24%.

Earlier in the global day, most Asian stocks rose, tracking gains on Wall Street on Friday, 21 May 2010. The key benchmark indices in China, South Korea, Indonesia, Hong Kong, Singapore and Taiwan rose by between 0.3% to 3.48%. But, the key benchmark indices in Indonesia and Japan fell by between 0.27% to 0.52%.

US index futures fell in volatile trade. Trading in US index futures indicated that the Dow could fall 96 points at the opening bell on Monday, 24 May 2010.

US stocks snapped a three-day losing streak on Friday as investors bought beaten-down shares including banks on bets the financial regulation bill won't be as onerous as some had feared. Bank shares rose a day after the US Senate approved a sweeping overhaul of regulation of Wall Street firms, capping months of wrangling over the biggest changes since the 1930s. The Dow Jones Industrial Average gained 125.38 points, or 1.25% to 10,193.39. The Standard & Poor's 500 Index jumped 16.10 points, or 1.50% to 1,087.69. The Nasdaq Composite Index rose 25.03 points, or 1.14% to 2,229.04.

Back home, India's monsoon rains are on track to hit the country's southern coast on 30 May 2010, and the Laila cyclone in the Bay of Bengal would not derail the vital June-September rainfall, a weather office spokesman told a news agency last week. The India Meteorological Department (IMD) in late April 2010 said rainfall is likely to be 98% of the long-term average. 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 also holds key.

The latest data showed the food price inflation picked up for the second consecutive week in early May 2010. The food price index rose 16.49% in the year to 8 May 2010, a tad higher than the prior week's annual reading of 16.44% as fruit and vegetables prices climbed on the back of a heat wave. The fuel price index was steady at 12.33%, while the primary articles index was up 16.19% versus 16.76%

While the headline inflation declined to 9.59% in April 2010 from 9.9% rise in March 2010, the data for February 2010 was revised upwards to 10.06% from provisional figure of 9.89%, the latest government data showed. The RBI has forecast the headline inflation to ease to 5.5% at end-March 2011 on expectations of a normal monsoon.

Industrial output rose lower than expected 13.5% in March 2010. The growth was also slower than February's 15.1% expansion. Manufacturing sector output rose 14.3% in March 2010. Industrial output rose 10.4% in the 2009/10 fiscal year, faster than the 2.6% growth clocked in the previous fiscal year.

The RBI 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 on 20 April 2010 said it will continue to monitor macroeconomic conditions, particularly the price situation closely and take further action as warranted.

In its World Economic Outlook in April 2010, the International Monetary Fund (IMF) pegged India's GDP growth forecast at 8.75% in calendar 2010 and 8.5% in calendar 2011. IMF's optimism was based on expectations of strengthening of domestic demand as the labour market improves. Expectations of increase in investment on the back of strong corporate profitability, rising business confidence and favourable financing conditions, were other factors cited by IMF for its prediction of strong growth in India's economy.

The fourth quarter corporate results have been decent. The combined net profit of a total of 2,332 companies rose 23.2% to Rs 59,592 crore on 24.3% rise in sales to Rs 5,87,466 crore in the quarter ended March 2010 over the quarter ended March 2009.

The BSE 30-share Sensex rose 23.94 points or 0.15% to 16,469.55. The Sensex gained 312.12 points at the day's high of 16,757.73 in afternoon trade. The index fell 32.58 points at the day's low of 16.413.03 in late trade.

The S&P CNX Nifty rose 12.80 points or 0.26% to 4,943.95. It came off an intraday high of 5,029.55.

The BSE Mid-Cap index rose 0.02% and underperformed the Sensex. The BSE Small-Cap index rose 0.61% and outperformed the Sensex.

Sectoral indices on BSE were mixed. BSE Oil & Gas index (up 1.61%), Power index (up 1.16%), Capital Goods index (up 1.1%), IT index (up 0.34%), and Consumer Durables index (up 0.23%), outperformed the Sensex. BSE Realty index (down 1.92%), Metal index (down 0.93%), Auto index (down 0.83%), banking sector index Bankex (down 0.55%), FMCG index (down 0.32%), PSU index (down 0.32%), and Healthcare index (down 0.15%), underperformed the Sensex.

The market breadth, indicating the overall health of the market was strong. On BSE, 1691 shares advanced as compared to 1155 shares that declined. A total of 83 shares were unchanged. The breadth was much stronger earlier in the day.

From the 30 share Sensex pack, 18 stocks fell and rest rose.

BSE clocked turnover of Rs 4060 crore, lower than Rs 4347.89 crore on Friday, 21 May 2010.

Index heavyweight Reliance Industries (RIL) rose 2.58% to Rs 1021.45 after the two Ambani brothers - Mukesh and Anil took a step towards reconciliation in their long-running feud on Sunday, ending non-compete agreements. However, the stock came off the day's high of Rs 1049. Both the groups said they aim to reach a conclusion soon for a gas supply agreement between Mukesh Ambani's RIL and younger brother Anil's Reliance Natural Resources (RNRL).

The scrapping of the non-compete agreement between the two groups means RIL can enter financial services, telecom and infrastructure sectors whereas the ADAG can enter petroleum and petrochemical businesses. Reliance Industries and the ADAG said they agreed to cancel all existing non-compete pacts the groups had signed in 2006 and entered into a new non-compete pact only for gas-based power generation.

The settlement comes two weeks after the Supreme Court ruled in Mukesh Ambani's favour in a bitter public dispute over gas pricing. The court on 7 May 2010 ordered the brothers to renegotiate within six weeks a private natural gas supply contract between Reliance Industries and Reliance Natural Resources. The new contract must abide by a government price of $4.2 per million metric British thermal unit (mmBtu), compared with $2.34 per mmBtu the brothers agreed on in 2005 for a 17-year period.

Shares of Anil Dhirubhai Ambani group (ADAG) firms soared, boosted by the truce between the two Ambani brothers. Reliance Natural Resources (up 22.58%), Reliance Communications (up 10.87%), Reliance Power (up 7.66%), Reliance Infrastructure (up 6.23%), Reliance Capital (up 4.8%) and Reliance MediaWorks (up 3.9%), jumped.

Sun Pharmaceutical Industries rose 0.4%. Net profit fell 29% to Rs 898.65 crore in the year ended Mach 2010 over the year ended March 2009. The company announced the result during market hours today.

Auto shares reversed initial gains. India's top truck maker by sales Tata Motors fell 0.52% to Rs 706.60, with the stock falling for the seventh straight day. The stock came off the day's high of Rs 739.95. The company's global vehicles sales rose 53% to 77,732 units in April 2010 over April 2009. Global sales include that of Jaguar and Land Rover brands, which rose 61% to 17,909 vehicles. The figures were announced on 14 May 2010.

India's largest tractor maker by sales Mahindra & Mahindra fell 1.88% to Rs 529.30, reversing initial gains. The stock came off the day's high of Rs 556.90.

India's largest small car maker by sales Maruti Suzuki India fell 1.72%. Maruti's total sales rose almost 30% to 93,058 units in April 2010 over April 2009. Domestic sales rose 23.4% to 80,034 units. The data was unveiled on 1 May 2010.

Car sales in India rose an annual 39.5% to 143,976 cars in April 2010 over April 2009, data from the Society of Indian Automobile Manufacturers (SIAM) showed. Sales of trucks and buses, a barometer of economic activity, rose 64.5 % to 49,086 units in April 2010 over April 2009, SIAM said.

Bajaj Auto fell 2.23%. The stock had hit a record high of Rs 2219.90 in intraday trade on 14 May 2010, boosted by strong Q4 results. Net profit surged 306% to Rs 528.65 crore in Q4 March 2010 over Q4 March 2009. The company announced the result during market hours on 12 May 2010. India's largest motorbike maker by sales Hero Honda Motors rose 1.31%.

Some metal stocks reversed initial gains. Sterlite Industries, Hindalco Industries, JSW Steel, Tata Steel, Steel Authority of India fell by between 0.83% to 3.93%.

Tata Power Company fell 1.32% ahead of its Q4 result today.

Realty stocks fell, reversing initial gains. Peninsula Land, DLF, Indiabulls Real Estate, Unitech, HDIL fell by between 0.08% to 2.66%.

Bank stocks reversed initial gains. Private sector lender ICICI Bank fell 0.34% to Rs 832. The stock came off the day's high of Rs 852. Its ADR rose 3.5% on Friday, 21 May 2010. The stock had slumped 7.24% on Wednesday, 19 May 2010, amid concerns the bank is paying a high price for its proposed deal to buy small rival bank Bank of Rajasthan.

The boards of ICICI Bank and Bank of Rajasthan (BoR), which met on Sunday, cleared the merger proposal between the two. Both banks have called for an extraordinary general meeting of shareholders on 21 June 2010 to approve the deal. The two private sector banks had on 18 May 2010 approved an exchange ratio of 25 shares of ICICI Bank for 118 shares of BoR. The favourable swap ratio send shares Bank of Rajasthan surging for yet another day.

India's biggest commercial bank in terms of branch network State Bank of India (SBI) fell 1.26% to Rs 2243, reversing initial gains. The stock came off the day's high of Rs 2311.65. SBI expects its advances to grow by 22-23% in the current financial year. SBI's net profit declined 31.93% to Rs 1866.60 crore in Q4 March 2010 over Q4 March 2009. The bank announced the result on Friday, 14 May 2010.

India's second largest private sector bank by net profit HDFC Bank fell 0.07% to Rs 1823.40, with the stock falling for the straight eighth day. The stock came off the day's high of Rs 1867. Its ADR rose 2.92% on Friday, 21 May 2010.

India's largest mortgage lender by total income Housing Development Finance Corporation fell 1.87%.

India's largest cigarette maker by sales ITC fell 1.18% reversing early gains. The stock hit a record high of Rs 281.95 today. ITC said at the time of announcing Q4 March 2010 results on Friday, 21 May 2010, that a meeting of the board of directors will be held on 18 June 2010 to consider issue of bonus shares.

The cigarette major's profit rose 27% to Rs 1028.22 crore in Q4 March 2010 over Q4 March 2009. The company announced the result during market hours on Friday, 21 May 2010.

India's largest FMCG maker by sales Hindustan Unilever rose 0.43% in volatile trade ahead of its Q4 result tomorrow, 25 May 2010.

India's largest thermal power producer by sales NTPC rose 0.99%, on bargain hunting after recent losses triggered by lower fourth quarter bottom line. Net profit declined 4.52% to Rs 2017.65 crore in Q4 March 2010 over Q4 March 2009. The company announced the result during market hours on 17 May 2010

Some consumer durables stocks rose on bargain hunting after a recent steep fall. Videocon Industries, Blue Star, Gitanjali Gems rose by between 1.52% to 3.2%.

IT stocks rose on gains in American depository receipts on Friday, 21 May 2010. India's third largest software services exporter Wipro rose 0.98% as its ADR rose 1.79% on Friday, 21 May 2010. India's second largest software services exporter Infosys rose 0.41%, with the stock recovering from last three days' losses. Its ADR rose 2.19% on Friday, 21 May 2010. But, India's largest software services exporter TCS fell 0.18%, with the stock falling for the second straight day.

India's largest engineering and construction firm by sales Larsen & Toubro rose 1.25%. At the time of announcing Q4 March 2010 results on Monday, 17 May 2010, L&T's management gave a guidance of 20% growth in revenue and 25% growth in new orders in the current financial year.

L&T's order inflow jumped 90% to Rs 23843 crore in Q4 March 2010 over Q4 March 2009. The company's order book as at 31 March 2010 stood at Rs 1,00,239 crore, which is 2.7 times its sales of Rs 36,996 crore for the year ended March 2010. Net profit rose 44% to Rs 1438.10 crore in Q4 March 2010 over Q4 March 2009. The company announced the result during market hours on 17 May 2010.

India's largest equipment maker by sales Bharat Heavy Electricals rose 0.38%. The company will announce its Q4 result on Wednesday, 26 May 2010.

Among other capital goods stocks, ABB, Thermax, Siemens, Crompton Greaves rose by between 0.22% to 1.69%.

Cals Refineries clocked the highest volume of 6.48 crore shares on BSE. Reliance Natural Resources (2.41 crore shares), Birla Power Solutions (1.42 crore shares), Sanraa Media (82.04 lakh shares) an Unitech (58.75 lakh shares) were the other volume toppers in that order.

Adani Enterprises clocked the highest turnover of Rs 331.27 crore on BSE. Piramal HealthCare (Rs 257.73 crore), Reliance Natural Resources (Rs 131.79 crore), Reliance Industries (Rs 130.48 crore) and Reliance Infrastructure (Rs 126.37 crore) were the other turnover toppers in that order.