NSE's volatility index jumps 12.5%

The key benchmark indices extended losses on the last trading day of the week, with the market declining in all the five trading sessions this week as euro zone debt worries rattled global stocks. Index heavyweight Reliance Industries (RIL) bucked the weak market trend after a three member Supreme Court bench ruled 2-1 in favour of the company on gas dispute with Reliance Natural Resources (RNRL). The court ordered the two feuding firms to renegotiate a gas contract which was first drawn up in 2005 as a part of a family settlement. RNRL and other Anil Dhirubhai Ambani group (ADAG) shares slumped.

Except the oil & gas index, all the other sectoral indices on the BSE were in the red. The market breadth was weak. The BSE 30-share Sensex fell 218.42 points or 1.29%, up close to 85 points from the day's low and off close to 170 points from the day's high. Realty, banking, metal, pharma, capital goods and telecom stocks fell.

The Sensex has lost 789.60 points or 4.49% in the past five trading sessions from a recent high of 17558.71 on 30 April 2010.

Volatility was high today. The market trimmed losses after a weak start. The market came off the lower level amid immense volatility in mid-morning trade as shares of Reliance Industries (RIL) witnessed sharp swings when Supreme Court was delivering the verdict on the gas dispute between the two Ambani brothers. The market slipped again in early afternoon trade with the Sensex hitting a fresh intraday low. The market pared losses in afternoon trade. The market weakened again later.

NSE's volatility index India VIX, a measure of traders' perception of near-term risks in the market based on options prices, jumped 12.48% to 27.40. The volatility index rose for the fifth day in a row. India VIX is calculated based on the S&P CNX Nifty options prices. India VIX is a measure ofthe market's expectation of volatility over the next 30 calendar days.

European market extended previous day's steep losses on Friday following a sell-off in US stocks on Thursday that was triggered by mounting concerns about a severe debt crisis in the euro zone. The key indices in UK, France and Germany were down by 0.38% to 2.6%.

Asian shares declined in choppy trade in the aftermath of a sell-off on Wall Street on Thursday and on escalating concerns that Greece's debt problems could spill over to other weaker European countries. The key benchmark indices in China, Hong Kong, Japan, Indonesia, South Korea, Singapore and Taiwan fell by between 0.16% to 3.10%.

Trading in US index futures indicated Dow could gain 68 points at the opening bell on Friday, 7 May 2010. Futures swung between gains and losses.

US stocks plunged 9% in the last two hours of trading on Thursday before clawing back some of the losses as a suspected trading glitch and fears of a new credit crunch in Europe threw markets into disarray. The Dow suffered its biggest ever intraday point drop 998.50 points. The massive intraday slide was rumored to have been caused by erroneous trades that showed some shares briefly fell to nearly zero. The Dow Jones Industrial Average dropped 347.80 points, or 3.20% to 10,520.32 at close of trade. The Standard & Poor's 500 Index fell 37.75 points, or 3.24% to 1,128.15. The Nasdaq Composite Index lost 82.65 points, or 3.44% to 2,319.64.

European Central Bank President Jean-Claude Trichet on Thursday rejected calls for more aggressive action to avert fiscal contagion in Southern Europe, shaking investors as he suggested the euro zone's monetary-policy makers have done all they can for now. Trichet offered only rhetorical support for Greece and Portugal, the two countries most at risk from high indebtedness and stagnant economic growth.

Back home, the fourth quarter corporate results announced so far have been fairly encouraging. The combined net profit of a total of 1272 companies rose 27.9% to Rs 41433 crore on 28.9% rise in sales to Rs 385708 crore in the quarter ended March 2010 over the quarter ended March 2009.

Meanwhile, business at Indian service companies rebounded to a 21-month-high in April 2010 on new business and high input prices. The HSBC Markit Business Activity Index, based on a survey of 400 firms, rose to 62.1 in April, its highest since July 2008, and compared with 58.1 in March 2010.

A recent industry body report showed that business confidence in India improved on the back of economic recovery. The bi-annual Business Outlook Survey of the Confederation of Indian Industry (CII) showed that the Business Confidence Index (BCI) of the Indian industry increased by 1.5 points for the April-September 2010 period, compared to the past six months.

Inflation based on food prices rose 16.04% in the year through 24 April 2010, slower than previous week's annual rise of 16.61%, the latest government data showed. Fuel prices inflation remained at elevated level. The fuel price index rose 12.69% in the year through 24 April 2010, same as a week ago. The primary articles index rose 13.93% in the year through 24 April 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 on 20 April 2010 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 fell 218.42 points or 1.29% to 16,769.11. The index shed 47.95 points at the day's high of 16939.58 in early trade. The Sensex lost 303.40 points at the day's low of 16,684.13 in afternoon trade.

The S&P CNX Nifty was down 72.80 points or 1.43% to 5018.05. It hit a low of 4,995.90.

BSE clocked turnover of Rs 4815 crore, higher than Rs 4492 crore on Thursday, 6 May 2010.

The BSE Mid-Cap index fell 2.54% and the BSE Small-Cap index fell 3.01%. Both the indices underperformed the Sensex.

Except BSE Oil & Gas index, all the rest sectoral indices on BSE declined. The BSE Realty index (down 4.32%), Bankex (down 3.26%), IT index (down 2.31%), Power index (down 2.22%), Metal index (down 2.09%), Healthcare index (down 2.07%), Auto index (down 1.6%), Consumer Durables Index (down 1.73%), PSU index (down 1.47%), underperformed the Sensex.

The BSE Oil & Gas index (up 0.69%), BSE Capital Goods index (down 1.01%) and FMCG index (down 0.44%) outperformed the Sensex.

The market breadth, indicating the overall health of the market, was weak. On BSE, 2345 shares declined as compared to 537 shares that advanced. A total of 50 shares remained unchanged.

Among the 30-share Sensex pack, 25 declined while one rose.

Index heavyweight Reliance Industries (RIL) rose 2.27% to Rs 1033.85 after a favourable ruling on gas dispute with Reliance Natural Resources (RNRL). But, the stock came off the day's high of Rs 1060. The stock was the top gainer from the Sensex pack. The stock rose on heavy volume of 40 lakh shares on BSE.

Reliance Natural Resources (RNRL) slumped 22.82%. The stock declined on huge volume of 10.68 crore shares. Other energy stocks of Anil Dhirubhai Ambani group also slumped. Reliance Power fell 8.97%. Reliance Infrastructure was down 7.01% and was the top loser from the Sensex pack.

Supreme Court judge P Sathasivam declared that the brothers' MoU was not binding and that RIL and RNRL must renegotiate the gas contract in six weeks. The judge said that the government owned all the gas assets till they reached the users. He added that Production Sharing Contract (PSC) will override all the prior agreements and the MoU between the Ambani brothers is not binding. He also said that it was not feasible to restrain the government's power on gas and it is a natural asset which belongs to the people.

Justice B.Sudarshan Reddy then delivered dissent to Justice Sathasivam's verdict. At the end of both verdicts, the Chief Justice of India KG Balakrishnan supported Justice Sathasivam.

Earlier, the Bombay High Court, in its order dated 15 June 2009 had directed that RNRL will get assured supply of 28 mmscmd of gas from RIL's Krishna-Godavari basin for 17 years at $2.34 per million British thermal units (mBtu). The gas price was 44.28% lower than the price fixed by the government for gas sale from the RIL block in the KG basin at $4.2 mBtu.

Shares of oil exploration firms were mixed after oil futures weakened for the third day in a row Thursday, dropping more than $9 a barrel in three days in three days. Oil's continued losses were prompted by accelerating weakness in the euro and global stock markets due to concerns over debt problems in Europe. Fall in crude oil prices would result in lower realizations from crude sales for oil exploration firms. Cairn India fell 2.56%. India's second largest oil exploration firm by sales Oil India fell 1.04%. But, India's largest oil exploration firm by sales ONGC rose 0.23%.

Light, sweet crude for June delivery settled down $2.86, or 3.6%, at $77.11 a barrel on the New York Mercantile Exchange on Thursday.

The sharp slide in crude oil prices, however, lifted PSU OMCs. HPCL (up 0.63%), BPCL (up 1.96%) and Indian Oil Corporation (up 0.69%), rose. Fall in crude oil prices will reduce under-recoveries of state-run oil firms on domestic sale of petrol, diesel, LPG and kerosene at controlled prices.

The finance ministry has reportedly decided to pay Rs 14,000 crore to state-owned oil marketing companies (OMCs) as part compensation for selling kerosene and cooking gas below cost in 2009-10.

Interest rate sensitive banking shares extended recent losses on fears the Reserve Bank Interest of India may resort to further monetary tightening to counter soaring inflation. India's second largest private sector bank by net profit HDFC Bank fell 2.74%, with the stock falling for the fifth straight day. Its ADR fell 3.89% on Thursday.

India's largest private sector bank by net profit ICICI Bank fell 2.91%, with the stock falling for the fifth straight day. Its ADR fell 5.3% on Thursday.

India's biggest commercial bank in terms of branch network State Bank of India fell 3.61%.

India's largest mortgage lender by total income Housing Development Finance Corporation slipped 0.98%, with the stock falling for the third straight day. The company's board on 3 May 2010 approved a 5-for-1 stock-split.

India's largest FMCG maker by sales Hindustan Unilever rose 0.99% on defensive buying.

Pharma stocks fell on profit taking. Dr Reddy's Laboratories, Cipla, Ranbaxy Laboratories and Sun Pharmaceutical Industries fell by between 1.26% to 2.95%.

Capital goods stocks also fell on profit taking. SKF India, BEML, Larsen & Toubro, Bharat Heavy Electricals, Praj Industries fell by between 0.14% to 4.75%.

Telecom stocks extended recent fall on concerns high costs for acquisition of third-generation mobile spectrum licenses would impact earnings. India's largest cellular services provider by sales Bharti Airtel fell 1.56%. India's second largest listed cellular services provider by sales Reliance Communications lost 2.67%.

Realty stocks extended recent losses on fears the Reserve Bank of India may resort to further monetary tightening to counter soaring inflation. Ackruti City, DLF, Sobha Dvelopers, Indiabulls Real Estate and Unitech fell by between 2.61% to 6.24%.

Most metal and mining stocks fell on recent steep slide in metal prices on the London Metal Exchange. Sesa Goa, Tata Steel, Hindalco Industries, Jindal Saw, National Aluminium Company, Jindal Steel & Power, Sterlite Industries, Steel Authority of India, Hindustan Zinc fell by between 0.36% to 5.88%.

IT pivotals fell on lingering worries about sovereign debt issues in the euro zone. Europe is the second largest market for Indian IT firms. India's third largest software services exporter Wipro fell 3.32%, with the scrip falling for the second straight day. Its ADR fell 3.66% on Thursday. India's second largest software services exporter Infosys declined 1.52% with the scrip falling for the second straight day. Its ADR fell 3.56% on Thursday. India's largest software services exporter TCS fell 3.21%.

Auto shares declined on fears the Reserve Bank of India may resort to further monetary tightening to counter soaring inflation. India's largest small car maker by sales Maruti Suzuki India fell 0.19%, with the stock falling for the second straight day. 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.

India's top truck maker by sales Tata Motors fell 6.4%, with the stock falling for the fifth straight day. The stock had hit a 52-week high of Rs 882.20 on 3 May 2010. Total sales including exports of commercial and passenger vehicles jumped 52% to 57,202 vehicles in April 2010 over April 2009. Domestic sales rose 49% to 54,065 units. Exports rose 148.8% to 3,137 units.

Bajaj Auto declined 0.21%. India's largest motorbike maker by sales Hero Honda Motors fell 0.24%.

But, India's largest tractor maker by sales Mahindra & Mahindra rose 0.76%. The company's total vehicle sales rose 13% to 26,043 units in April 2010 over April 2009. The company announced the monthly sales data during trading hours on Monday, 3 May 2010.

Reliance Natural Resources clocked the highest volume of 10.68 crore shares on BSE. Cals Refineries (9.44 crore shares), Suzlon Energy (79.44 lakh shares), Birla Power Solutions (76.36 lakh shares) and Reliance Power (73.21 lakh shares) were the other volume toppers in that order.

Reliance Natural Resources clocked the highest turnover of Rs 563.75 crore on BSE. Reliance Industries (Rs 414.45 crore), Engineers India (Rs 148.38 crore), Tata Steel (Rs 117.32 crore) and Sesa Goa (105.10 crore) were the other turnover toppers in that order.