Small-cap, mid-cap indices outshine Sensex

Higher US index futures and recovery in European stocks helped the domestic bourses erase steep intraday losses to close flat. Stocks were volatile as traders rolled over positions in the derivatives segment from the near-month June 2010 contracts to July 2010 contracts ahead of the expiry of the near-month June 2010 derivatives contracts on Thursday, 24 June 2010. The BSE 30-share Sensex rose 6.25 points or 0.04%, up close to 125 points from the day's low and off close to 25 points from the day's high. Realty, auto, healthcare, consumer durables and steel stocks rose.



Index heavyweight Reliance Industries (RIL) dropped in volatile trade. Another index heavyweight Larsen & Toubro fell for the second straight day after hitting 52 week high on Monday, 21 June 2010. The market breadth was strong as buying was witnessed in select mid-cap and small-cap stocks.

The market was volatile. The market recovered from an initial steep slide triggered by weak Asian stocks. The market weakened once again in morning trade. The market rebounded sharply in early afternoon trade. The recovery gathered steam, with the market hitting a fresh intraday high in afternoon trade. The market moved into positive zone in mid-afternoon trade. The Sensex moved between positive and negative terrain later.

Rollover in Nifty futures was 40% at the end of Tuesday (22 June 2010)'s trade. Rollover in Mini Nifty stood at about 46%.

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 1.45% to 20.34. 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 shares recovered initial sharp losses caused weak economic data in the US, the world's biggest economy. The key benchmark indices in France, Germany and UK rose by between 0.25% to 0.56%.

Asian stocks fell on Wednesday, 23 June 2010, after an unexpected decline in US home sales raised concern about the strength of growth in the world's largest economy. The key benchmark indices in China, Japan, Indonesia, South Korea, Singapore and Taiwan fell by between 0.22% to 1.87%. But, Hong Kong's Hang Seng reversed initial losses to rise 0.18%.

Trading in US index futures indicated that the Dow could gain 44 points at the opening bell on Wednesday, 23 June 2010.

US Stocks fell more than 1% in yet another late-day sell-off on Tuesday 22 June 2010 as poor housing figures and the puncture of a key technical level sapped buying interest. The S&P 500 fell through its 200-day moving average, which had been a basis of support in the last few days. The Dow Jones industrial average dropped 148.96 points, or 1.43% to 10,293.45. The Standard & Poor's 500 Index fell 17.86 points, or 1.60% to 1,095.34. The Nasdaq Composite Index lost 27.29 points, or 1.19% to 2,261.80.

The sales of previously occupied homes unexpectedly fell 2.2% in May 2010, much below the market expectations of a 5% rise.

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. Between June 1-16, rains were 5% deficient due to super cyclone Phet over the Arabian sea. The cyclone slowed the initial progress of the monsoon which had hit the Kerala coast a day ahead of schedule on 31 May 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.

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 5480.79 crore in June 2010 so far (till 22 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 2210.10 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 up 6.25 points or 0.04% at 17,755.94. The Sensex rose 32.72 points at the day's high of 17,782.41 in mid-afternoon trade. The Sensex fell 120.50 points at the day's low of 17,629.19 in early trade.

The S&P CNX Nifty was up 6.60 points or 0.12% to 5,323.15.

The BSE Mid-Cap index was up 0.84%. The BSE Small-Cap index was up 0.7%. Both the indices outperformed the Sensex.

Most sectoral indices on BSE rose. The BSE Realty index (up 1.43%), Healthcare index (up 1.42%), Consumer Durables index (up 0.76%), IT index (up 0.73%), Auto index (up 0.67%), FMCG index (up 0.6%), banking sector index Bankex (up 0.4%), and PSU index (up 0.37%), outperformed the Sensex. The BSE Power index (down 0.07%), Oil & Gas index (down 0.1%), Metal index (down 0.34%) and Capital Goods index (down 1.38%), underperformed the Sensex.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1784 shares advanced while 1083 shares declined. A total of 123 shares remained unchanged.

From the 30-share Sensex, 20 stocks rose and rest fell.

BSE clocked turnover of Rs 4035 crore, lower than Rs 4840 crore on Tuesday, 22 June 2010.

Index heavyweight Reliance Industries (RIL) was down 0.47% to Rs 1058.60. The stock was volatile. It hit a high of Rs 1067.70 and a low of Rs 1054. As per reports, RIL is close to announcing a $1.35 billion deal with Pioneer Natural Resources for a stake in the Eagle Ford shale gas field. Reliance will buy a 45% stake in the field in south Texas, reports suggest.

RIL chairman Mukesh Ambani said on Friday, 18 June 2010, at the company's AGM that RIL aims to build a significant position in the shale gas business and that RIL will commit capital to accelerate development of shale gas.

India's largest engineering and construction company by revenue Larsen & Toubro fell 3.08%, extending Tuesday's 0.83% losses on reports NTPC has disqualified L&T Power from its mega deal to supply supercritical boilers and turbines. The stock was the top loser from the Sensex pack today.

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.

India's second largest mobile services provider by sales Reliance Communications (RCom) rose 0.83% even as French media and telecom giant Vivendi 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 rose 0.76% on reports the company will spend $100 million over the next three years on network expansion in Malawi, Africa.

Some steel makers rose after the Chinese Ministry of Finance said it will scrap a tax rebate previously available on exports of a range of commodities, including various forms of steel. Tata Steel, Steel Authority of India and Ispat Industries rose by between 0.79% to 1.65%.

The move, which is reportedly a part of Beijing's efforts to cut carbon emissions in some polluting industries, is expected to be positive for steel makers in India. There are substantial steel imports into India from China.

High beta realty stocks rose in volatile trade. Housing Development & Infrastructure (HDIL), Indiabulls Real Estate, DLF, Unitech, Ackruti City, Omaxe rose by between 0.07% to 2.22%.

Orbit Corporation jumped 4.27% to Rs 268.90 ahead of 30 June 2010 record date for a liberal 1:1 bonus issue.

Auto shares rose on expectations of strong Q1 June 2010 results as most auto firms paid higher advance taxes in Q1 June 2010 over Q1 June 2009. Bajaj Auto, Maruti Suzuki India, Hero Honda Motors rose by between 0.9% to 2.78%. But, Mahindra & Mahindra fell 0.34%, reversing initial gains.

India's largest commercial vehicle maker by sales Tata Motors reversed initial gains to fall 0.92% on equity dilution concerns after the company said during market hours today 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.

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.

Consumer durables stocks rose for the second straight day on bargain hunting. Gitanjali Gems, Titan Industries, Blue Star, Blue Star and Rajesh Exports rose by between 0.16% to 3.45%.

Sun Pharmaceutical Industries rose 2.03%, with the stock gaining for the second straight day after the company announced during market hours on Tuesday that the US Food & Drugs Administration has granted an approval for an abbreviated new drug application to market a generic version of optivar, which is used to treat itching of the eyes. The company also announced that it settled litigation over generics Stalevo and Comtan with Orion.

Among other healthcare stocks, Pfizer, DR Reddy's Laboratories, Lupin, Biocon and Ranbaxy Laboratories rose by between 0.01% to 2.94%.

India's largest cigarette maker by sales ITC rose 0.3%, extending Tuesday's gains. The stock hit a record high of Rs 303.90 today. The company's board of directors recently recommended liberal 1:1 bonus issue

Banking stocks reversed initial slide on expectations of a pick up in lending growth in a fast rebounding economy. India's largest private sector bank by market capitalisation ICICI Bank rose 0.99%. India's second largest private sector bank by operating income HDFC Bank rose 0.58%. India's largest mortgage lender by market capitalisation HDFC rose 0.42%.

But, PSU banking major State Bank of India declined 0.23% with the stock falling for the second straight day. Among the other PSU stocks, Bank of Baroda and Bank of India fell by between 0.54% to 0.6%. But, Punjab National Bank rose 0.42%.

IT stocks reversed initial fall. India's largest IT exporter by sales Tata Consultancy Services rose 0.89%. India's second largest IT exporter by sales Infosys rose 1.1%. But, India's third largest IT exporter by sales Wipro declined 0.54%, with the stock falling for the second straight day.

PSU OMCs rose for the second straight day after Oil Minister Murli Deora on Tuesday said an empowered group of ministers (EGoM) will hold a meeting on Friday, 25 June 2010 to decide on fuel prices. HPCL, BPCL and Indian Oil Corporation rose by between 0.65% to 1.9%. Shares of these three PSU OMCs had risen by between 3.58% to 4.36% on Tuesday.

The Indian government early this month 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 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.

Mahindra Satyam clocked the highest volume of 2.02 crore shares on BSE. Cals Refineries (1.85 crore shares), Sanraa Media (1.78 crore shares), Karuturi Global (1.14 crore shares) and SEL Manufacturing Company (96.25 lakh shares) were the other volume toppers in that order.

Mahindra Satyam clocked the highest turnover of Rs 189.57 crore on BSE. Tata Steel (Rs 107.84 crore), VIP Industries (Rs 97.82 crore), Sesa Goa (Rs 76.06) and Karnataka Bank (Rs 75.52 crore) were the other turnover toppers in that order.