Market ekes out small gains

The key benchmark indices eked out small gains in a choppy trading session as data showing a surge in car sales in May 2010 triggered bargain hunting after a two-day slide. Revival of the monsoon rains supported the domestic bourses. European stocks and US index futures which had dropped before the Indian market closed, rose later. Asian stocks were mixed. The BSE 30-share Sensex advanced 40.79 points or 0.25%, off close to 160 points from the day's high and up close to 65 points from the day's low.



IT and FMCG stocks fell. But, metal stocks rose. Index heavyweights Reliance Industries, ICICI Bank and Larsen & Toubro regained strength in late trade. The S&P CNX Nifty closed a tad above the psychological 5,000 mark, having alternately moved above and below that level in intraday trade.

The Sensex had lost 500.59 points or 2.9% in two trading sessions to 16,617.10 on Tuesday, 8 June 2010 from a recent high of 17,117.69 on 4 June 2010. Earlier, the market had witnessed a strong rebound from lower level. The Sensex had risen 1,095.21 points or 6.83% in eight trading sessions to 17,117.69 on 4 June 2010, from a low of 16,022.48 on 25 May 2010.

The Sensex has lost 1,312.13 points or 7.3% from a recent peak of 17,970.02 on 7 April 2010. The barometer index has lost 4.6% in calendar 2010 so far after jumping 81% in 2009.

Coming back to today's trade and intraday volatility was on the bourses was high. The market edged higher in early trade, shrugging off weak Asian stocks. It pared gains later. It soon regained strength to hit fresh intraday high in morning trade. The market once again pared gains soon. The market jumped in early afternoon trade as Chinese stocks surged. The market pared gains in afternoon trade after hitting a fresh intraday high. The market slipped into the red in mid-afternoon trade as European stocks pared gains. The market soon regained positive zone.

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 2.12% to 28.16. 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.

Car sales in India jumped 30.4% to 1.48 lakh units in May 2010 over May 2009, as rising incomes and a rapidly expanding economy offset the impact of price increases, data released by the Society of Indian Automobile Manufacturers (SIAM) today showed. It was the highest sales in May ever, the industry body said.

Meanwhile, the monsoon rains have covered good ground to make up for most of the delayed onset forced by tropical cyclone Phet, reaching Karwar on the west coast on Monday. Conditions are favourable for its further advance over some parts of Konkan, Goa, Madhya Maharashtra, Karnataka and Andhra Pradesh during the next three days, an India Meteorological Department (IMD) update said on Tuesday, 8 June 2010.

The monsoon rains were 11% below normal in the week to 2 June 2010. The June-September monsoon rains hit Kerala on 31 May 2010, a day ahead of schedule. 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.

Last month, Australia's weather bureau said the El Nino weather pattern was over. El Nino is caused by an abnormal warming of the eastern Pacific Ocean and can play havoc with weather patterns across the Asia-Pacific region.

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.

Shares in Europe were higher on Wednesday, as a favourable investor response to updates from retailer Inditex and aerospace giant EADS helped offset losses in the oil and gas sector. The key benchmark indices in UK, France and Germany were up by 0.08% to 0.69%.

Chinese stocks surged, reversing earlier losses, boosted by a report of upbeat export and loan growth in May 2010. The Shanghai Composite jumped 2.78%. The key benchmarks in Indonesia and Hong Kong rose by 0.21% to 0.69%. In other Asian stocks, the key benchmark indices in Singapore, Japan, South Korea and Taiwan fell by 0.24% to 1.12%.

US index futures were volatile. Trading in US index futures indicated that the Dow could rise 11 points at the opening bell on Wednesday, 9 June 2010.

US Stocks mostly rose in volatile trading on Tuesday 8 June 2010 led by materials and financial shares, but investors shied away from big-cap technology shares on concerns about their European exposure. The Dow Jones Industrial Average gained 123.49 points, or 1.26% to 9,939.98. The Standard & Poor's 500 Index rose 11.53 points, or 1.10% to 1,062.00. But, the Nasdaq Composite Index dropped 3.33 points, or 0.15% to 2,170.57.

Federal Reserve Chairman Ben Bernanke said the US economy seemed to have enough momentum to avoid a double-dip recession, giving support to domestic-oriented companies.

Euro zone debt worries caused massive outflow of foreign funds from India recently as investors shunned risk. Foreign funds sold shares worth a net Rs 832.21 crore in the first six trading sessions this month, as per data from the stock exchanges. Foreign institutional investors (FIIs) had dumped shares worth a net Rs 12071.14 crore in May 2010.

Domestic funds have absorbed part of the selling by FIIs. Domestic funds bought stocks worth a net Rs 166.75 crore in the first six days this month. Domestic funds bought stocks worth a net Rs 6361.17 crore in May 2010.

On the macro front, data last week showed business activity remained strong for India's vast services sector in May 2010, with a key gauge growing for a 13th consecutive month even as some momentum was lost over the previous month. The HSBC-Markit Business Activity Index stood at 58.2 in May 2010 from a 21-month high of 62.1 in April 2010. A reading above 50 indicates expansion. Services make up about 55% of India's $1.2 trillion economy.

HSBC Markit Purchasing Managers' Index (PMI), based on a survey of 500 Indian firms, surged to a 27-month high of 59 in May 2010 from 57.2 in April 2010, bolstered by steady growth in output, new orders and employment. The rate of growth had slowed in March 2010 and April 2010.

On a flip side, another data showed that the food articles index rose 16.55% in the year to 22 May 2010, accelerating from previous week's rise of 16.23%. The primary articles index, which also includes food articles, rose 16.89%, higher than previous week's 15.90% rise. The fuel price index increased to 14.14 % versus 12.08% rise in the previous week.

India's economy grew at 8.6% in the March 2010 quarter driven by robust manufacturing sector on the back of government and consumer spending, data released by the government on Monday, 31 May 2010, showed. The growth was significantly higher than the revised 6.5% expansion in Q3 December 2009 and a 5.8% growth in Q4 March 2009. The manufacturing sector grew 16.3%, farm output rose 0.7%, mining sector expanded 14% and services increased by 8.4% in January-March 2010 quarter from a year earlier. For the full year to March 2010, the economy expanded 7.4%, above a government forecast of 7.2%. Economic growth had slowed down to 6.7% in year ended March 2009.

Investors will eye the first installment of the corporate advance tax payment which will give some clue about Q1 June 2010 corporate results. The first installment of corporate advance tax falls due on 15 June.

The BSE 30-share Sensex rose 40.79 points or 0.25% to 16,657.89. The Sensex rose 200.59 points at the day's high of 16,817.69 in early afternoon trade. The Sensex fell 25.84 points at the day's low of 16,591.26 in mid-afternoon trade.

The S&P CNX Nifty gained 13.20 points or 0.26% to 5,000.30.

The BSE Mid-Cap index rose 0.48%. The BSE Small-Cap index rose 0.29%. Both the indices outperformed the Sensex.

Most sectoral indices on BSE rose. BSE Metal index (up 1.54%), Healthcare index (up 1.36%), Oil & Gas index (up 1.28%), Realty index (up 0.92%), PSU index (up 0.7%), Capital Goods index (up 0.68%), Banking sector index Bankex (up 0.63%), Auto index (up 0.35%), and Consumer Durables index (up 0.26%), outperformed the Sensex.

BSE FMCG index (down 2.41%), IT index (down 1.26%), Power index (down 0.22%), Teck index (down 0.19%), underperformed the Sensex.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1483 shares advanced as compared with 1309 that declined. A total of 108 shares were unchanged. The breadth was much stronger earlier in the day.

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

BSE clocked turnover of Rs 3882 crore, higher than Rs 3464.09 crore on Tuesday, 8 June 2010.

Index heavyweight Reliance Industries (RIL) rose 1.04% to Rs 1006.85. The stock hit a high of Rs 1014.80 and a low of Rs 1000. Anil Ambani withdrew a Rs 10000-crore defamation suit filed in the Bombay High Court against elder brother Mukesh Ambani as the two brothers seek harmonious relationship. Anil had accused Mukesh of defaming him in a 2008 interview with the New York Times.

Meanwhile, RIL may reportedly foray into nuclear energy after being freed from a non-compete agreement with the Anil Dhirubhai Ambani Group (ADAG) that barred it from investing in some businesses, including power. Recently, reports had also suggested that RIL may make its first big-ticket investment in coal-fired power plants.

Shares of three oil exploration firms gained after crude oil prices rose nearly 1% on the New York Mercantile Exchange on Tuesday, 8 June 2010. Cairn India rose 0.82%. India's second biggest oil and gas exploration firm by revenue, Oil India, gained 2.4%. India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) advanced 2.22%. Rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms. Light, sweet crude oil gained 55 cents or 0.77%, to $71.99 a barrel on Tuesday, 8 June 2010 on weak dollar.

PSU OMCs rose on price hike hopes. HPCL, BPCL and Indian Oil Corporation rose by between 1.23% to 2.37%. On Tuesday, Finance Minister Pranab Mukherjee said he would meet other cabinet ministers on Thursday to decide on the date for the next meeting to discuss the issue of fuel deregulation which was deferred on Monday. Mukherjee said the decision on fuel prices would be taken shortly. Oil Minister Murli Deora said market-driven prices of fuel would not hurt people.

The Indian government early this week deferred a decision on raising fuel prices, the second time in a year it has tripped on pushing politically-sensitive reform measures that could help trim a budget deficit. An empowered group of ministers (EGoM) was to discuss on Monday, 7 June 2010, a report by an experts' committee headed by Planing Commission member Kirit Parikh, which had recommended freeing petrol and diesel prices and a steep Rs 100 per cylinder hike in LPG rates and a Rs 6 per litre increase in kerosene prices.

India's largest cigarette maker by sales ITC fell 4.19% after the stock turned ex-dividend. The stock was the top loser from the Sensex pack. The stock had hit a record high of Rs 292.45 on Tuesday. ITC had declared a dividend of Rs 4.50 per share for the year ended March 2010 and also a special centenary dividend Rs.5.50 per share.

ITC's board meets on 18 June 2010 to consider the bonus share issue. The company had last issued bonus shares in the ratio of 1:2 in 2005.

India's largest FMCG maker by sales Hindustan Unilever fell 0.7%. The company said after market hours on Thursday, 3 June 2010, that its board of directors will meet on 11 June 2010 to consider buyback of shares.

Among other FMCG stocks, United Spirits, Tata Tea and Dabur India fell by between 0.69% to 2.12%.

Metal and mining stocks rose as LMEX, a gauge of six metals traded on the London Metal Exchange rose 2.03% on Tuesday, 8 June 2010. Sesa Goa, Jindal Steel & Power, Hindustan Zinc, Steel Authority of India, Sterlite Industries rose by between 0.5% to 3.31%.

India's largest steel maker by sales Tata Steel rose 2.2%. The stock fell 2.19% on Tuesday after the company announced before market hours on Tuesday that its subsidiary has raised stake in Canadian mining firm New Millennium Capital Corp (NML). The company now holds 27.4% outstanding shares of NML.

Hindalco Industries rose 0.61% on reports company plans to borrow about Rs 14000 crore in the next couple of years to build two new plants that will treble its aluminium making capacity.

Banking stocks rose in volatile trade. ICICI Bank was up 1.23% to Rs 826.95, on bargain hunting after a 3% fall on Tuesday. The stock a high of Rs 838.75 and a low of Rs 814. India's second largest private sector bank by sales HDFC Bank rose 1.16% to Rs 1882.05 as its ADR rose 3.65% on Tuesday, 8 June 2010. The stock hit a high of Rs 1894 and a low of Rs 1852.60.

India's largest bank in terms of branch network State Bank of India fell 0.5%. SBI is likely to launch a Rs 20000-crore rights issue in the second half of 2010/11, Chairman O.P. Bhatt said on Wednesday.

Bank credit to businesses and individuals has seen a pick-up of around Rs 5,600 crore while deposits with banks have fallen by nearly Rs 5,000 crore during the fortnight ended 21 May 2010.

IT stocks extended recent losses on disappointing US non-farms payroll data for May 2010. US is the biggest market for the Indian IT firms. India's second largest software services exporter by sales Infosys fell 1.04%, with the stock falling for the third straight day. Its ADR rose 1.47% on Tuesday, 8 June 2010. India's largest software services exporter by sales TCS fell 1.96%, with the stock falling for the third straight day.

India's third largest software services exporter by sales Wipro fell 2.12%, with the stock falling for the third straight day. Its ADR rose 0.55% on Tuesday, 8 June 2010. The company announced during market hours on Monday that it has fixed 16 June 2010 as the record date for issue of bonus shares in the ratio of 2:3.

High beta realty stocks rose on bargain hunting. DLF, Indiabulls Real Estate, Unitech, Phoenix Mills, Anant Raj Industries rose by between 0.25% to 5.1%.

Capital goods stocks rose on expectations of continued order flows. Bharat Heavy Electricals, ABB, Larsen & Toubro, Praj Industries, Crompton Greaves, Punj Lloyd rose by between 0.05% to 1.02%.

India's largest mobile telecom services provider by sales Bharti Airtel rose 5.57% and was the top gainer form the Sensex pack. The stock rose on heavy volume of 28.01 lakh shares on BSE. The average daily volume in the stock in the past one quarter to 4 June 2010 stood at 9.5 lakh shares.

The stock had lost nearly 4% in a weak market on Tuesday after company announced during trading hours that it had completed the acquisition of Zain Group's (Zain) mobile operations in 15 countries across Africa for an enterprise valuation of $10.7 billion.

India's second largest mobile services provider by sales Reliance Communications (RCom) rose 1.37%. The company's board on Sunday, 6 June 2010, gave an in-principle approval for induction of strategic/private equity investors into the company. The approval is for sale of up to 26% stake. The RCom stock had jumped 14% last week, with speculation rife that Abu Dhabi's Etisalat and South Africa's MTN could be potential partners. However, MTN had denied merger talks with the firm.

Auto stocks were mixed. India's largest tractor maker by sales Mahindra & Mahindra (M&M) rose 1.09%. M&M's auto sales rose 69% to 28,486 units in May 2010 over May 2009.

India's largest small car maker by sales Maruti Suzuki India rose 0.65%. Maruti's total sales rose 27.90% to 1,02,175 units in May 2010 over May 2009. The company's domestic sales rose 27.2% to 90,041 units in May 2010 over May 2009. This is highest ever monthly domestic sales. Exports increased 33.5% to 12,134 units in May 2010 over May 2009. The company announced the sales figures on 1 June 2010.

But, India's top truck maker by sales Tata Motors fell 1.09%. The company reported 41% growth in vehicle sales in May 2010 over May 2009. The company sold 56,779 units in May 2010 as against 40,196 units sold in May 2009. The company unveiled the monthly sales data on 1 June 2010.

Car sales rose an annual 30.4% in May 2010, an industry body said on Wednesday. Domestic firms sold 1,48,481 cars in the month, compared with 1,13,810 units a year ago, data from the Society of Indian Automobile Manufacturers (Siam) showed. Sales of trucks and buses, a barometer of economic activity, rose 58% to 48,580 units in May 2010, Siam said.

India's largest bike maker by sales Hero Honda Motors fell 0.36%. The company recently raised prices of its products by up to Rs 1,000 due to rising input costs.

Cals Refineries clocked the highest volume of 2.91 crore shares on BSE. FCS Software (1.08 crore shares), Hindalco Industries (87.32 lakh shares), Satluj Jal Vidyut Nigam (57.40 lakh shares) and Reliance Communications (55.61 lakh shares) were the other volume toppers in that order.

Sesa Goa clocked the highest turnover of Rs 174.02 crore on BSE. Tata Steel (Rs 164.01 crore), State Bank of India (Rs 146.29 crore), Tata Motors (Rs 129.22 crore) and Hindalco Industries (Rs 116.14 crore) were the other turnover toppers in that order.