Small-cap, mid-cap indices underperform Sensex

The key benchmark indices extended gains for the third straight day, tracking firm world stocks. Index heavyweight Reliance Industries (RIL) jumped. The company said after trading hours it has acquired a majority stake in Infotel Broadband Services, which today, 11 June 2010, won nationwide licenses to offer broadband services. The BSE Sensex regained the psychological 17,000 mark. Strong industrial production data for April 2010 underpinned sentiment.

Capital goods, auto and banking stocks rose. But, telecom stocks fell. The market breadth was strong. The BSE 30-share Sensex rose 142.87 points or 0.84% off close to 65 points from the day's high and up about 70 points from the day's low.

Foreign funds today bought stocks worth a net Rs 820.88 crore, as per the provisional data released by the stock exchanges after trading hours. Domestic funds offloaded shares worth a net Rs 213.76 crore

Stocks have been on a roller coaster ride recently. The Sensex has risen 447.85 points or 2.69% in the past three trading sessions from 16,617.10 on Tuesday, 8 June 2010. Earlier, the barometer index had lost 500.59 points or 2.9% in two trading sessions to 16,617.10 on 8 June 2010 from a recent high of 17,117.69 on 4 June 2010. Before the two-day slide, 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 market is off recent highs. The Sensex has lost 905.07 points or 5.03% from a recent peak of 17,970.02 on 7 April 2010. The barometer index has lost 2.2% in calendar 2010 so far after jumping 81% in 2009.

Coming back to today's trade, NSE's volatility index India VIX, which is a gauge of traders' perception of near-term risks in the market based on options prices, fell for the third day in a row. The index declined 5.28% to 25.10. 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.

The BSE Sensex regained the psychological 17,000 mark at the onset of the trading session on firm Asian stocks. The market held firm in morning trade. The market extended gains in mid-morning trade on reports of strong industrial production growth in April 2010. The market pared gains in early afternoon trade.after hitting fresh intraday high. Profit booking continued in afternoon trade, but the Sensex held 17,000 mark. The market came off the lower level in mid-afternoon trade.

Industrial output rose much faster than expected at 17.6% in April 2010 from a year earlier on strong consumer demand and government spending, data released by the government today showed. March's annual growth rate was revised upwards to 13.9% from 13.5%. Manufacturing output rose 19.4% in April 2010. The industrial output rose 10.4% in the 2009/10 fiscal year (April-March), faster than the 2.6% clocked in the previous fiscal year.

European shares edged higher on Friday, rising for the third day on optimism over global growth. Key indices in UK and France rose by 0.53% to 0.99%. But, Germany's DAX fell 0.14%.

Spain on Thursday sold 3.9 billion euros of a 3-year benchmark bond seeing strong demand, a positive sign for investors worried about appetite for debt from struggling European nations.

Asian stock markets rose Friday, buoyed by optimism that the global economy could weather Europe's debt crisis after China's exports surged and U.S. jobless claims fell. The key benchmark indices in Japan, China, South Korea, Indonesia, Hong Kong, Taiwan and Singapore rose by between 0.29% to 1.70%.

Latest data showed China's consumer inflation accelerated to a 19-month high in the year to May while industrial output and fixed-asset investment growth moderated, sending mixed signals about the state of the world's third-largest economy.

Trading in US index futures indicated that the Dow could gain 3 points at the opening bell on Friday, 11 June 2010. US index futures moved between positive and negative zone.

US Stocks jumped on Thursday in response to signs of health in the euro debt markets and as investors accumulated energy shares crushed in the previous day's sell-off. The Dow Jones Industrial Average jumped 273.28 points, or 2.76% to 10,172.53. The Standard & Poor's 500 Index rose 31.15 points, or 2.95% to 1,086.84. The Nasdaq Composite Index gained 59.86 points, or 2.77% to 2,218.71.

A US government reported before the opening bell that the number of new filings for unemployment benefits fell less than expected last week, while the international trade deficit widened slightly in April, pointing to a moderate economic recovery.

Back home, on the macro front, the food price index rose 16.74% in the year to 29 May 2010, higher than the previous week's annual reading of 16.55% as fruits and potato prices rose, data released by the government on Thursday, 10 June 2010, showed. The fuel price index climbed 14.23% compared with an annual rise of 14.14% in the previous week.

India's monsoon delivered normal rainfall in the past week, the India Meteorological Department (IMD) said on 10 June 2010. Rainfall in the seven days to 9 June 2010 recovered to normal after an initial hiccup when cyclone Phet hindered the advance of the June-September monsoon, which irrigates 60% of farms in India. The IMD in its update on Thursday said Southwest monsoon has advanced into some parts of Konkan & Goa, south Madhya Maharashtra and north interior Karnataka, remaining parts of coastal and south interior Karnataka, some more parts of Rayalaseema and coastal Andhra Pradesh.

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.

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.

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.

Meanwhile, the Union Cabinet on Thursday deferred a decision to sell stake in state-run Coal India and miner Hindustan Copper.

The BSE 30-share Sensex rose 142.87 points or 0.84% to 17,064.95. The Sensex rose 209.48 points at the day's high of 17,131.56 in mid-morning trade. The Sensex rose 71.99 points at the day's low of 16,994.07 in early trade.

The S&P CNX Nifty rose 40.75 points or 0.8% to 5119.35.

The BSE Mid-Cap index rose 0.28%. The BSE Small-Cap index rose 0.44%. Both the indices underperformed the Sensex.

Most of the sectoral indices on BSE rose. BSE Oil & Gas index (up 1.67%), Banking sector index Bankex (up 1.04%), Capital Goods index (up 1.01%), Auto index (up 0.98%), Power index (up 0.87%) outperformed the Sensex.

BSE Healthcare index (down 0.55%), Teck index (down 0.48%), Realty index (down 0.26%), Consumer Durables index (down 0.24%), PSU index (down 0.02%), IT index (up 0.08%), Metal index (up 0.22%), FMCG index (up 0.31%), underperformed the Sensex.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1539 shares advanced as compared with 1326 that declined. A total of 104 shares were unchanged. The breadth was much stronger earlier in the day.

From the 30 share Sensex pack, 21 rose and rest fell.

BSE clocked turnover of Rs 4147 crore, higher than Rs 3602.05 crore on Thursday, 10 June 2010.

Index heavyweight Reliance Industries (RIL) rose 3.03%, with the stock gaining for the third straight day. RIL announced after market hours today that it has entered into an agreement to acquire a majority stake in Infotel Broadband Services which has emerged as the successful bidder in all the 22 circles of the auction for broadband wireless access spectrum conducted by Department of Telecommunications.

RIL will invest about Rs 4800 crore by subscribing to the fresh equity capital to be issued by Infotel. Post investment, RIL will own 95% stake in Infotel, making it a subsidiary of RIL.

Earlier, RIL announced during market hours today its sixth oil discovery in exploratory block in the Cambay basin in Gujarat.

Capital goods stocks rose on expectations of continued order flows. Bharat Heavy Electricals, ABB Usha Martin, Jyoti Structures, Crompton Greaves, Havells India, BEML, Praj Industries rose by 0.17% to 2.66%.

India's largest engineering and construction firm by sales Larsen & Toubro rose 0.28% to Rs 1677.30. But, the stock came off the day's high of Rs 1685.85. The company announced during market hours on Thursday it won orders worth Rs 747 crore for metallurgical and material handling projects.

Banking stocks rose on pick up in credit offtake. India's second largest private sector bank by sales HDFC Bank rose 1.54%, with the stock gaining for the third straight day as its ADR rose 4.99% on Thursday, 10 June 2010.

India's largest bank in terms of branch network State Bank of India rose 0.47%, with the stock gaining for the second straight day. 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, 9 June 2010. Among other PSU stocks, Bank of Baroda and Bank of India fell by between 0.42% to 0.72%. But, Punjab National Bank rose 1.25%.

India's largest private sector bank by sales ICICI Bank rose 1.94%, with the stock gaining for the second straight day. Its ADR rose 3.04% on Thursday, 10 June 2010.

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.

Telecom stocks fell on worries record auctions for wireless broadband spectrum and 3G services could hurt profitability. The wireless broadband spectrum auction ended on Friday after 16 days of bidding, the government said. Unlisted Infotel Broadband Services won spectrum in all the 22 zones, while US chipmaker Qualcomm and leading Indian mobile firm Bharti Airtel won spectrum in four zones each. Aircel won spectrum in eight zones. Vodafone's India unit, Reliance Communications and Idea Cellular did not win broadband spectrum in any of the zones

Shares of India's largest listed mobile telecom services provider by sales Bharti Airtel fell 3.75 % on profit taking. Bharti today said it had secured broadband spectrum in select circles to experiment with new technologies. Bharti will pay a total of Rs 3314 crore for the spectrum, it said. The Bharti Airtel stock had surged sharply over the past two trading sessions after company announced the completion of 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 listed mobile telecom services provider by sales Reliance Communications (RCom) fell 0.89%. India's third largest listed mobile telecom services provider by sales Idea Cellular fell 1.63%.

RCom today said it would focus on wireless broadband through its CDMA network and the 3G spectrum it had won in a recent auction.

Auto stocks extended recent gains on robust vehicle sales in the month of May 2010. India's largest tractor maker by sales Mahindra & Mahindra (M&M) rose 2.11%, with the stock gaining for the third straight day. The stock was the top gainer from the Sensex pack. 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 0.8%, with the stock gaining for the third straight day. Maruti's total sales rose 27.90% to 102,175 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.

India's top truck maker by sales Tata Motors rose 0.74%, extending Thursday's 4.31% gains. Its ADR rose 4.38% on Thursday, 10 June 2010. 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 rose 0.3%, extending Thursday's 4.14% gains. The company recently raised prices of its products by up to Rs 1,000 due to rising input costs.

Bajaj Auto rose 2.28% to Rs 2294.70. The scrip hit a record high of Rs 2304.90 today.

Reliance Infrastructure fell 0.9%, on profit taking after the stock rose 5% on Thursday. Reliance Power's wholly owned unit Reliance Coal Resources has entered into share purchase agreements to acquire the entire stake in the two coal companies in Indonesia. The two Indonesian companies own three coal-mines in Indonesia. The coal from these mines will be used in the Krishnapatnam ultra mega power project and other power projects of the group, Reliance Power said on Thursday. Reliance Infrastructure holds 44.96% stake in Reliance Power (as on 31 March 2010).

IT stocks rose on recent positive economic data in the US, the biggest market for the Indian IT firms. India's largest software services exporter by sales TCS rose 1.12%. India's third largest software services exporter by sales Wipro rose 0.77%. Its ADR rose 4.5% on Thursday, 10 June 2010. The company has fixed 16 June 2010 as the record date for issue of bonus shares in the ratio of 2:3.

But, India's second largest software services exporter by sales Infosys fell 0.5%, reversing initial gains. Its ADR rose 3.04% on Thursday, 10 June 2010.

India's largest FMCG maker by sales Hindustan Unilever rose 0.14%. The company announced after market hours today that its board of directors has approved a proposal for buy-back of shares at a price not exceeding Rs 280 per share. The company has set aside Rs 630 crore for buyback.

Among other FMCG stocks, Nestle India, ITC, Tata Tea and United Spirits rose by between 0.04% to 2.56%.

India's largest steel maker by sales Tata Steel rose 0.37%, with the stock gaining for the third straight day. A subsidiary of Tata Steel recently raised stake in Canadian mining firm New Millennium Capital Corp (NML) to 27.4%.

Hindalco Industries rose 0.62% extending recent strong gains triggered by reports the 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.

Copper maker Sterlite Industries fell 1.04%. The company announced after the market hours today that it has fixed 22 June 2010 as the record date for sub-division of equity shares from Rs 2 each to Rs 1 each and 1:1 bonus issue on sub-divided equity shares of Rs 1 each.

Standard Chartered PLC's Indian depository receipts settled at Rs 103.05 on BSE, at a discount of 0.91% to the issue price of Rs 104. The IDR debuted at Rs 105, a 0.96% premium to the issue price. It hit a high of Rs 108 and low of Rs 100.60. A total of 1.98 crore IDRs were traded in early trade on the BSE.

Standard Chartered PLC clocked the highest volume of 1.98 crore shares on BSE. SpiceJet (1.41 crore shares), Cals Refineries (1.35 crore shares), Shree Ashtavinayak Cine Vision (72.65 lakh shares) and IFCI (65.77 lakh shares) were the other volume toppers in that order.

Standard Chartered PLC clocked the highest turnover of Rs 205.05 crore on BSE. ARSS Infra (Rs 179.76 crore), Reliance Industries (Rs 169.05 crore), Tata Steel (Rs 92.73 crore) and Hindalco Industries (Rs 88.42 crore) were the other turnover toppers in that order.