Small-cap, mid-cap indices outshine Sensex

The key benchmark indices eked out small gains in choppy trading session, tracking higher European stocks and gains in US index futures. Index heavyweights Reliance Industries (RIL) and Larsen & Toubro pared gains in late trade. Consumer durables, capital goods and IT stocks gained. Oil exploration stocks rose as crude oil prices rebounded from 5 month lows. Auto stocks were mixed. Metal stocks fell.

The market breadth was strong as buying was witnessed in mid-cap and small-cap stocks. The BSE 30-share Sensex rose 40.20 points or 0.24%, up close to 125 points from the day's low and off about 130 points from the day's high.

Volatility was high right from the onset of the trading session. The market edged lower in early trade on weak Asian stocks. The market cut losses in morning trade after hitting a fresh intraday low. The market weakened once again after turning positive for a brief period in mid-morning trade when it hit a fresh intraday high. The market hit a fresh intraday high in early afternoon trade. Gains in European stocks pushed the market further higher, with the Sensex kissing the psychological 17,000 level in afternoon trade. The market came off the higher level amid intense volatility in mid-afternoon trade.

NSE's volatility index India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, declined 2.32% to 26.54. 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

European stocks gained on Tuesday, led by banks and miners as euro zone debt worries eased following a meeting of the region's finance ministers during which they played down differences on how a massive bailout plan should be deployed. Key benchmark indices in UK, France and Germany rose by 0.86% to 1.52%.

Chinese stocks led a recovery Asian stocks which moved between positive and negative zone on Tuesday. The key benchmark indices in China, Japan, Singapore Hong Kong and Indonesia were up by between 0.07% to 1.36%. But, the key benchmark indices in South Korea and Taiwan fell by between 0.18% to 0.50%.

Asia's strong growth outlook and prospects for better returns will lift capital inflows into the region but that could increase appreciation pressure on currencies which may require authorities to impose capital controls, a report from Asian Development Bank said.

The Reserve Bank of India (RBI) governor D Subbarao on 11 May 2010 said India prefers long-term capital inflows to short-term flows and non-debt flows to debt flows. There is no proposal to impose a Tobin type tax to rein in excessive capital inflows, the RBI governor said. However, it needs reiterating that no policy instrument is clearly off the table and the choice of instruments will be determined by the context, Subbarao added.

But, worries over fiscal problems in southern Europe triggered outflow from China and India funds during the week ended 12 May 2010. As a result, Asia funds, excluding Japan, saw only $27 million inflows, their worst week in well over a year, as per data from global fund tracker EPFR Global.

US index futures edged higher in volatile trade, reversing initial losses. Trading in US index futures indicated that the Dow could gain 46 points at the opening bell on Tuesday, 18 May 2010.

US stocks staged a comeback in late trading on Monday as bargain hunters snapped up beaten-down shares, setting aside concerns that efforts to tackle the euro-zone debt crisis could stifle the global economy. The Dow Jones Industrial Average edged up 5.67 points, or 0.05% to end at 10,625.83. The Standard & Poor's 500 Index added 1.26 points, or 0.11% to 1,136.94. The Nasdaq Composite Index rose 7.38 points, or 0.31% to close at 2,354.23.

Back home, the fourth quarter corporate results announced so far have been fairly encouraging. The combined net profit of a total of 2,078 companies rose 24.2% to Rs 54,530 crore on 25.3% rise in sales to Rs 5,53,114 crore in the quarter ended March 2010 over the quarter ended March 2009.

On the macro front, 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.

The latest economic data showed 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 India Meteorological Department (IMD) said on Monday, 17 May 2010, that conditions are favourable for further advance of monsoon over more parts of Bay of Bengal and remaining parts of Andaman during next 48 hours. The southwest monsoon has set over the Andaman and Nicobar islands and some parts of southeast Bay of Bengal.

The 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 also holds key.

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 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 40.20 points or 0.24% to 16,875.76. The Sensex rose 164.78 points at the day's high of 17,000.34 in afternoon trade. The index fell 91.13 points at the day's low of 16,744.13 in early trade.

The S&P CNX Nifty rose 6.30 points or 0.12% to 5,066.20.

The BSE Mid-Cap index rose 0.42%. The BSE Small-Cap index rose 0.71%. Both the indices outperformed the Sensex.

Sectoral indices on BSE were mixed. BSE Capital Goods index (up 1.62%), Consumer Durables index (up 1.5%), FMCG index (up 0.73%), Oil & Gas index (up 0.71%), and BSE PSU index (up 0.33%), outperformed the Sensex. BSE IT index (up 0.14%), Power index (down 0.1%), Healthcare index (down 0.1%), banking sector index Bankex (down 0.21%), Auto index (down 0.44%), Realty index (down 0.55%), and Metal index (down 1.91%), underperformed the Sensex.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1637 shares advanced as compared to 1199 shares that declined. A total of 89 shares were unchanged.

From the 30 share Sensex pack, 19 stocks gained, while others fell.

BSE clocked turnover of Rs 3909 crore, lower than Rs 3987.71 crore on Monday, 17 May 2010.

Index heavyweight Reliance Industries (RIL) rose 0.39% to Rs 1020.70 on bargain hunting after last three days' losses. The stock was volatile. It hit a high of Rs 1033.45 and a low of Rs 1009. RIL has agreed with Russia's Sibur to set up a joint venture in India to make butyl rubber amid rising demand from the auto industry. As per the agreement, butyl rubber will be produced at RIL's integrated petrochemical site in Jamnagar.

The RIL stock had surged early this month, boosted by after a favourable ruling in the Supreme Court on gas dispute with Anil Ambani controlled Reliance Natural Resources (RNRL). The Supreme Court ordered the two firms to renegotiate a deal based on government policy on gas utilization.

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.

Oil exploration stocks rose as oil regained $70 a barrel level after hitting a five-month low the previous day on concerns about the health of the global economy. US crude for June delivery rose 2.58% to $71.89 in Asian electronic trading. Cairn India rose 0.64%. India's largest oil & gas exploration firm by sales ONGC rose 2.22%. India's second largest oil & gas exploration firm by sales Oil India rose 0.42%. Rise in crude oil prices would result in higher realizations from crude sales.

India's largest cellular services provider by sales Bharti Airtel rose 0.47%, with the stock gaining for the second straight day on bargain hunting after recent sharp fall triggered by telecom regulator Telecom Regulatory Authority of India (Trai)'s recommendation that telecom firms pay a one-time fee for holding radio-spectrum beyond 6.2 mega hertz (MHz) based on 3G prices.

Bharti Airtel said the telecoms regulator's proposals on allocation of second-generation (2G) spectrum are shocking, arbitrary and retrograde and are against all existing global norms for spectrum allocation. The company said it was confident that the Department of Telecommunications (DoT) and that the government will take a rational approach and summarily reject these arbitrary, impractical and perverse recommendations.

India's second largest listed cellular services provider by sales Reliance Communications (RCom) rose 2.4% on bargain hunting. The stock had lost 2.01% on Monday on weak financial performance. Consolidated net profit declined 22.99% to Rs 4655 crore in the year ended March 2010 over the year ended March 2009. The company announced the result on Saturday, 15 May 2010.

At the time of announcing the results, chairman Anil Ambani said RCom will be able to sustain profitable growth in the coming quarters despite a highly competitive environment.

Metal and mining stocks fell after LMEX, a gauge of six metals traded on the London Metal Exchange, plunged 5.96% on Monday, 17 May 2010. Hindustan Zinc, Jindal Steel & Power, Sterlite Industries, Tata Steel, Jindal Saw, Hindalco Industries, Steel Authority of India, Sesa Goa, fell by between 0.6% to 5.1%.

Auto shares were mixed. India's top truck maker by sales Tata Motors fell 2.21%, with the stock falling for the third straight day. 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 rose 0.36%, rebounding after last two days losses.

India's largest small car maker by sales Maruti Suzuki India was flat. 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 rose 0.86%, rebounding after last two days' losses. The stock hit a record high of Rs 2219.90 in intraday trade on Friday, 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 result during market hours on Wednesday, 12 May 2010.

India's largest engineering and construction firm by sales Larsen & Toubro rose 3.26% to Rs 1657.95, extending Monday's near 5% post-result rally as the management gave a guidance of 20% growth in revenue and 25% growth in new orders in the current financial year at the time of announcing Q4 March 2010 results on Monday, 17 May 2010. But the stock came off the day's high of Rs 1680. The stock was the top gainer from the Sensex pack.

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 Monday, 17 May 2010.

Among other capital goods stocks, Bharat Heavy Electricals, BEML, Thermax and Punj Lloyd rose by between 0.64% to 4.82%.

IT pivotals rose on bargain hunting after recent losses on hopes their limited exposure to the debt-ridden countries in Europe would not seriously dent their outlook. Europe is the second biggest market for Indian IT firms. India's second largest software services exporter Infosys rose 0.28%, with the stock rebounding from losses in the past three trading sessions.

India's third largest software services exporter Wipro rose 2.21%, with the stock rebounding from a three-day fall. But, India's largest software services exporter TCS fell 0.94% on reports the UK government will review outsourcing contracts, including agreements signed with TCS, in a bid to cut government spending.

India's largest thermal power producer by sales NTPC lost 0.2%, extending Monday's losses as 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 Monday, 17 May 2010.

Some pharma stocks fell on profit taking. Ranbaxy Laboratories, Sun Pharmaceutical Industries, Cipla fell by between 0.93% to 1.08%.

Reliance Infrastructure rose 0.31% on bargain hunting. The stock had lost nearly 3% on Monday, 17 May 2010, on weak Q4 result. Net profit fell 27.46% to Rs 251.09 crore in Q4 March 2010 over Q4 March 2009. The company announced the result on Saturday, 15 May 2010.

Consumer durables stocks rose on bargain hunting. Rajesh Exports, Blue Star, Titan Industries and Gitanjali Gems rose by between 0.04% to 2.81%.

Interest rate sensitive banking shares declined on profit taking. India's largest private sector bank by net profit ICICI Bank fell 1.45%, with the stock falling for the third straight day.

India's second largest private sector bank by net profit HDFC Bank fell 1.49% with the stock falling for the fourth straight day.

But, India's biggest commercial bank in terms of branch network State Bank of India (SBI) rose 1.1%, with the stock gaining for the second straight day. 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 during market hours on Friday, 14 May 2010.

India's largest mortgage lender by total income Housing Development Finance Corporation fell 0.44% with the stock falling for the third straight day. The company's board on 3 May 2010 approved a 5-for-1 stock-split.

HDFC has reportedly extended concessional home loan scheme till 30 June 2010. Under the scheme, HDFC would offer a fixed interest rate of 8.25% up to March 2011, 9% for the next one year and a floating rate thereafter. The scheme was scheduled to end on 30 April 2010.

Tarapur Transformers clocked the highest volume of 6.35 crore shares on BSE. Cals Refineries (2.76 crore shares), Birla Power Solutions (1.33 crore shares), Bank of Rajasthan (1.1 crore shares) and Reliance Natural Resources (47.34 lakh shares) were the other volume toppers in that order.

Tarapur Transformers clocked the highest turnover of Rs 361.38 crore shares on BSE. Tata Steel (Rs 168.95 crore), State Bank of India (Rs 154.56 crore), Larsen & Toubro (Rs 142.48 crore) and Bank of Rajasthan (Rs 109.98 crore) were the other turnover toppers in that order.