HCL Tech, Kotak Mahindra Bank slide after bulk deals

The key benchmark indices registered marginal losses amid high volatility as traders rolled over positions in the derivatives segment from the near-month June 2010 contracts to July 2010 contracts. The near-month June 2010 derivatives contracts expired today, 24 June 2010. Weakness in global stocks caused by US Federal Reserve's more downbeat language on economic growth in the world's biggest economy weighed on investor sentiment.



Banking and IT stocks fell. Index heavyweight Reliance Industries (RIL) was weak. The BSE 30-share Sensex was down 25.70 points or 0.14%, off close to 115 points from the day's high and up close to 100 points from the day's low.

Intraday volatility was high. The market edged higher in early trade, tracking firm Asian stocks. It soon extended gains. The market trimmed gains in mid-morning trade. The market once again pared gains after hitting a fresh intraday high in early afternoon trade. Stocks slipped into the red in afternoon trade as European stocks declined. The market extended losses to hit fresh intraday low in mid-afternoon trade. Immense volatility was witnessed in the last one hour of trade.

Rollover in Nifty futures was a little over 54% at the end of Wednesday's (23 June 2010) trade. Rollover in Mini Nifty futures was a little over 55% and market-wide rollover stood at a little over 64%. Rollover has been high in GTL, India Cements, Aurobindo Pharma, United Phosphorus and Nagarjuna Fertilizers.

NSE's volatility index, India VIX, which is a gauge of traders' perception of near-term risks in the market based on options prices, declined 1.33% to 20.07. 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.

On the macro front, food inflation accelerated in mid-June 2010, maintaining pressure on the Reserve Bank of India to tighten monetary policy at a faster pace. The food price index rose 16.90% in the year to 12 June 2010, higher than the previous week's annual reading of 16.12%, data released by the government today showed. The fuel price index remained unchanged at 13.18% in the year to 12 June 2010.

European stocks declined, led by shares in Greece, Spain and Portugal, as concern increased that the region's debt crisis may derail the economic recovery. The key benchmark indices in France, Germany and UK fell by between 0.56% to 1.15%.

Asian stocks were mixed after the Federal Reserve gave a more cautious tone about the strength of the US economic recovery. The key benchmark indices in Japan, Indonesia, South Korea and Taiwan rose by between 0.05% to 0.82%. But, the key benchmark indices in China, Singapore, and Hong Kong fell by between 0.12% to 0.86%.

Japan on Thursday said that exports rose 32.1% in May from a year earlier to 5.3 trillion yen ($59 billion), marking the sixth month of year-on-year increase.

US index futures reversed initial gains. Trading in US index futures indicated that the Dow could slump 55 points at the opening bell on Thursday, 24 June 2010.

US stocks mostly fell in a volatile session on Wednesday after the Federal Reserve downgraded its assessment of the economic recovery as it vowed to keep cheap money flowing. The Dow Jones industrial average edged up 4.92 points or 0.05% to finish at 10,298.44. But the Standard & Poor's 500 Index dipped 3.27 points, or 0.30% to close at 1,092.04. The Nasdaq Composite Index fell 7.57 points, or 0.33% to close at 2,254.23.

Sales of new US homes dropped a record 32.7% in May to the lowest level in at least four decades as the impetus from a popular tax credit faded, a report showed on Wednesday.

At the end of a two-day policy meeting, the Federal Reserve in a statement scaled back its assessment of the pace of recovery in the world's largest economy, taking note of pockets of weakness, and also issued a cautionary note about volatile financial markets in light of Europe's debt woes. Fed in its monetary policy statement, suggested interest rates will remain near zero longer than expected.

Back home, most Indian firms including Reliance Industries, L&T, Tata Steel and Tata Motors, have paid higher advance tax in Q1 June 2010 over Q1 June 2009. Higher advance tax payment normally indicates higher profits for the period under review. Advance tax payments by companies during the April-June quarter account for 15% of the total advance tax payable in the fiscal year.

Investors will closely watch the progress of the monsoon rains. Annual monsoon rains were 11.1% below normal between June 1-23, the India Meteorological Department (IMD) said on Thursday, 24 June 2010.

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 south-west monsoon usually covers the entire country by mid-July. The weather office 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.

Global rating agency Fitch recently raised India's growth forecast to 8.5% in the year to March 2011 from earlier forecast of 7% growth. The rating agency raised the local currency rating outlook to stable from negative as it forecast a decline in government debt to GDP ratio to 80% by March 2011 from 83% at the end of March 2010.

Meanwhile, in a major development, the government recently ended the row over unit linked insurance plans or Ulip by promulgating an ordinance on Friday, 18 June 2010, stating that unit linked insurance policies with investment component are insurance products which will come under the regulatory jurisdiction of the Insurance Regulatory & Development Authority (Irda) and not the Securities & Exchange Board of India (Sebi). It amended four Acts to make it clear that Ulips are not securities and they did not form part of collective investment schemes or mutual funds.

Foreign funds have made heavy purchases of Indian stocks over the past few days. The net inflow totaled Rs 5746.12 crore in June 2010 so far (till 23 June 2010) compared to a massive outflow of Rs 12071.13 crore in May 2010.

Domestic funds, which had absorbed some of the heavy selling from foreign funds last month, offloaded stocks worth a net Rs 3076.32 crore this month so far. Domestic funds had mopped up equities worth a net Rs 6361.17 crore in May 2010.

The BSE 30-share Sensex was down 25.70 points or 0.14% at 17,730.24. The Sensex rose 89.71 points at the day's high of 17,845.65 in early afternoon trade. The Sensex fell 123.14 points at the day's low of 17,632.80 in late trade.

The S&P CNX Nifty was down 2.55 points or 0.05% to 5,320.60.

The BSE Mid-Cap index was up 0.12%. The BSE Small-Cap index was up 0.17%. Both the indices outperformed the Sensex.

Sectoral indices on BSE were mixed. BSE FMCG Index (up 1.01%), Capital Goods index (up 0.77%), Healthcare index (up 0.3%), Auto index (up 0.08%), Consumer Durables index (up 0.04%), and BSE PSU index (down 0.10%), outperformed the Sensex. BSE IT index declined 0.14%, matching the decline in the Sensex. BSE Realty index (down 0.78%), BSE Oil & Gas index (down 0.66%), banking sector index Bankex (down 0.56%), Metal index (down 0.5%), and Power index (down 0.21%), underperformed the Sensex.

The market breadth though positive, it weakened when compared to a strong breadth earlier in the day. On BSE, 1580 shares advanced while 1315 shares declined. A total of 86 shares remained unchanged.

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

BSE clocked turnover of Rs 4989 crore, higher than Rs 4058.64 crore on Wednesday, 23 June 2010.

India's largest engineering and construction company by revenue Larsen & Toubro rose 1.25% on bargain hunting after a two-day sharp slide. It was the top gainer form the Sensex pack. L&T announced during market hours on Tuesday, 22 June 2010 that it bagged Rs 827 crore orders for thermal power plant construction. The stock on Monday, 21 June 2010 hit a 52-week high of Rs 1,843.75.

Among other capital goods stocks, Siemens, ABB, Bharat Heavy Electricals, Punj Lloyd rose by between 0.09% to 3.18%.

FMCG stocks rose on expectations that a normal monsoon this year will boost rural sales. Dabur India, United Spirits, Marico and Hindustan Unilever rose by between 1.44% to 1.97%.

India's largest cigarette maker by sales ITC rose 0.79%, extending recent gains. The stock hit a record high of Rs 307.50 today. The company's board of directors recently recommended liberal 1:1 bonus issue.

Index heavyweight Reliance Industries (RIL) fell 0.69% to Rs 1051.30. The stock came off the day's high of Rs 1065. The company has entered into a joint venture with US based Pioneer Natural Resources Company under which RIL will acquire 45% interest in Pioneer's core Eagle Ford shale acreage position in two separate transactions.

RIL will pay $1.31 billion for its implied share of 1,18,000 net acres. The transaction will include combined upfront cash payment of $263 million and deferred payments of $1.05 billion associated with a carry arrangement for 75% of Pioneer's and Newpek's capital costs over four years.

RIL will also participate with Pioneer in the development of midstream assets in the Eagle Ford Shale as a 49.9% partner.

Bank stocks were mixed. India's largest private sector bank by market capitalisation ICICI Bank fell 1.9% as its American depository receipt fell 2.2% on Wednesday, 23 June 2010. India's second largest private sector bank by operating income HDFC Bank rose 0.12% in volatile trade. Its American depository receipt fell 1.08% on Wednesday, 23 June 2010.

Kotak Mahindra Bank fell nearly 3% to Rs 761.10 after a total of 1.08 crore shares of the private-sector lender were traded in block deals in early trade today. As per market buzz, Dutch financial services group ING has sold its entire little over 3% stake in Kotak Mahindra Bank through bulk deals today.

PSU banking major State Bank of India rose 0.29% in volatile trade. Among the other PSU stocks, Punjab National Bank and Bank of India rose by between 1.09% to 2.61%. Bank of Baroda fell 2.84% after turning ex-dividend for a dividend of Rs 15 per share.

India's largest mortgage lender by market capitalisation HDFC rose 0.72% in volatile trade.

IT stocks fell after the Federal Reserve downgraded its assessment of the economic recovery in the US, the biggest market for Indian IT firms. India's largest IT exporter by sales Tata Consultancy Services fell 1.49%. India's third largest IT exporter by sales Wipro fell 0.82%. Its American depository receipt fell 0.69% on Wednesday, 23 June 2010.

But, India's second largest IT exporter by sales Infosys rose 0.69% to Rs 2817.90. The stock came off the day's low of Rs 2783.70. Its American depository receipt rose 0.26% on Wednesday, 23 June 2010.

HCL Technologies fell 3.9% after HCL Corporation today announced that it has sold 1.67 crore of shares in HCL Technologies, constituting 2.5% stake of the company. The sale proceeds will be donated to Shiv Nadar Foundation to be used for philanthropic initiatives.

Select auto stocks rose on expectations that a normal monsoon this year will boost rural sales. Mahindra & Mahindra, Bajaj Auto, Hero Honda Motors and Ashok Leyland rose by between 0.27% to 2.18%.

India's largest commercial vehicle maker by sales Tata Motors fell 0.73% extending Wednesday's 0.92% losses on equity dilution concerns after the company said during market hours on Wednesday that a meeting of the board of directors of the company will be held on 28 June 2010 to consider various options for raising long term capital funds. Maruti Suzuki India fell 1.64%.

According to a monthly report released by auto industry body the Society of Indian Automobile Manufacturers (Siam) on 9 June 2010, car sales in India rose 30.4% to 1.48 lakh units in May 2010 over May 2009. Auto sales rose despite recent price increases and a partial withdrawal of government stimulus measures in February 2010. The auto industry expects consumer demand to sustain following the overall economic expansion.

Metal stocks fell as LMEX, a gauge of six metals traded on the London Metal Exchange fell 1.14% on Wednesday, 23 June 2010. Tata Steel, Steel Authority of India, National Aluminum Company, Hindustan Zinc and Sterlite Industries fell by between 0.02% to 1.92%.

India's second largest mobile services provider by sales Reliance Communications (RCom) rose 0.29% in volatile trade. French media and telecom giant Vivendi on Wednesday denied reports that it is negotiating with RCom to buy a 26% stake in the firm.

India's largest mobile services provider by sales Bharti Airtel fell 0.25%. As per recent reports the company will spend $100 million over the next three years on network expansion in Malawi, Africa.

Cals Refineries clocked the highest volume of 3.7 crore shares on BSE. HCL Technologies (2.99 crore shares), Sanraa Media (1.41 crore shares), Digjam (86.95 lakh shares) and FCS Software (73.62 lakh shares) were the other volume toppers in that order.

HCL Technologies clocked the highest turnover of Rs 1070 crore on BSE. Sesa Goa (Rs 105.16 crore), Tata Steel (Rs 87.80 crore), Hindustan Oil Exploration (Rs 84.46 crore) and Kotak Mahindra Bank (Rs 83.79 crore) were the other turnover toppers in that order.