Market ekes out small gains; RIL slides

The key benchmark indices eked out small gains as global stocks rose. Sustained buying by foreign funds, revival of monsoon rains this month and latest data showing easing of food inflation, supported stocks. The BSE 30-share Sensex rose 34.63 points or 0.19%, up close to 90 points from the day's low and off close to 20 points from the day's high. Index heavyweights Reliance Industries (RIL) edged lower in volatile trade. The market breadth was negative.



The BSE Sensex closed below the psychological 18,000 mark, after piercing that level in intraday trade. Banking stocks gained on expectations of strong lending growth in a fast rebounding economy. FMCG stocks rose as revival of monsoon rains may boost rural sales. Realty stocks reversed initial losses. But, telecom and metal stocks fell.

The market edged lower in early trade on weak Asian stocks. The market was a tad lower in morning trade after moving between positive and negative terrain near the flat line earlier. The Sensex hit fresh intraday low in mid-morning trade. The market came off the lower level later. The market moved into positive zone in early afternoon trade. The Sensex soon hit a fresh intraday high. Stocks were unable to sustain higher level - the key benchmark indices slipped into the red in afternoon trade.

The market regained strength to hit fresh intraday high in mid-afternoon trade. The key benchmark indices hit fresh intraday highs at the fag end of the trading session after slipping into the red for a brief period in late trade, as global stocks rose.

NSE's volatility index India VIX, which is a gauge of traders' perception of near-term risks in the market based on options prices, plunged 6.1% to 18.33. The index had risen 1.56% to 19.52 on Wednesday, 28 July 2010. 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.

In the derivatives segment, the near-month July 2010 derivatives contracts expired today, 29 July 2010.

Foreign funds continue to mop up Indian stocks. Foreign funds today, 29 July 2010, bought shares worth a net Rs 578.85 crore, as per provisional data from the stock exchanges. Domestic funds dumped stocks worth a net Rs 920.35 crore.

Foreign funds have bought shares worth a net Rs 8109.64 crore this month (till 29 July 2010), absorbing most of the selling by domestic institutional investors. Domestic funds have sold shares worth a net Rs 6193.15 crore this month (till 29 July 2010), as per data from the stock exchanges.

Foreign funds had pumped in Rs 7713.97 crore in equities in June 2010, absorbing selling by domestic funds in that month. Domestic funds had dumped shares worth a net Rs 4777.05 crore in June 2010.

On the macro front, the food inflation declined in the week ended 17 July 2010 falling to single digit levels for the first time in many months while inflation in the fuel group remained elevated. Inflation in the Primary Articles group also fell, the Government said on Thursday. According to the data released today by the Commerce & Industry Ministry, inflation in the Food Articles group stood at 9.67% in the week ended 17 July 2010 versus 12.47% in the previous week. Inflation in the Primary Articles group was at 14.5% as against 16.48% in the week ended 10 July 2010 while inflation in the Fuel & Power group rose to 14.29% from 14.27% in the preceding week.

Meanwhile, the revival of monsoon rains in the crucial sowing month of July 2010 augurs well for the Indian economy which is driven by strong domestic demand. The annual monsoon rains were 38% above normal in the week to 28 July 2010, bouncing back from a 17-percent deficit in the previous week, the weather office said on Thursday, 29 July 2010. Weekly rainfall was the highest in the current June-September season and much heavier than any week in the 2009 monsoon period, which delivered the lowest rainfall since 1972 and triggered a sustained rise in food prices.

Heavy, well-distributed showers in the past week helped total rainfall rise to normal during July, the most important month for planting rice, corn, soybean and cane. The weather office expects increase in rainfall activity over central and northwest India in the near term.

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 weather office expects this year's monsoon rains to be at 102% of the long-period average. Good monsoon rains would help raise farm output, boost rural incomes and lower food inflation.

European shares rose as strong earnings from AstraZeneca and Capgemini pleased investors. The key benchmark indices in UK, France and Germany were up 0.59% to 0.8%.

Economic sentiment in the 16-nation euro zone rose in July 2010 the European Commission said Thursday. The commission's economic sentiment indicator rose to 101.3 from an upwardly revised 99 in June.

Chinese stocks led a recovery in Asian equities on Thursday, 29 July 2010, after the China's central bank said it will keep a moderately loose monetary policy. The key benchmark indices in China, Hong Kong, Singapore, Taiwan and Indonesia rose by between 0.01% to 1.29%. But, the key benchmark indices in Japan and South Korea were down by between 0.15% to 0.59%.

Japan's retail sales in June rose for the sixth straight month, but the pace of growth is slowing, the latest data showed. The government said Thursday that June retail sales climbed 3.2% from a year earlier.

Trading in US index futures indicated that the Dow could gain 44 points at the opening bell on Thursday, 29 July 2010.

US stocks fell on Wednesday on weak durable goods figures and a downbeat assessment of the economy from the Fed's Beige Book. The Dow Jones industrial average dropped 39.81 points, or 0.38% to 10,497.88. The Standard & Poor's 500 Index dropped 7.72 points, or 0.69% to 1,106.12. The Nasdaq Composite Index dropped 23.69 points, or 1.04% to 2,264.56.

The US Federal Reserve's Beige Book, a summary of national economic conditions, added to the disappointment. It indicated activity was not as robust in a few districts and had lost steam over the past several weeks. Meanwhile, new orders for long-lasting US manufactured goods unexpectedly fell for a second straight month in June, posting their largest decline since August 2009, a reminder of the challenges faced by the economy.

Attention is now turning to US jobless claims later in the day and U.S. second quarter GDP data on Friday, 30 July 2010.

Closer home, infrastructure sector output grew 3.4% in June from a year earlier, slower than the annual growth of 5% in May, government data showed on Wednesday. The infrastructure sector accounts for 26.7% of India's industrial output. The industrial output rose 11.5% in May from a year earlier, at its slowest pace in seven months.

The Reserve Bank of India (RBI) at its Q1 monetary policy on Tuesday, 27 July 2010, raised its key short term interest rates for the fourth time this year to curb surging inflation. The central bank also raised its economic growth and inflation forecasts.

The RBI raised GDP forecast to 8.5% for the year ending March 2011 (FY 2011), from 8% with an upside bias earlier. The central bank said the upward revision in growth forecast is primarily based on better industrial production and its favourable impact on the services sector and also giving due consideration to the global scenario.

The RBI also signaled its strong preference for tight liquidity, saying it would ensure that excess liquidity in the system doesn't dilute the effectiveness of policy-rate actions.

The RBI also raised the baseline projection for inflation based on wholesale price index for March 2011 to 6% from 5.5% indicated in the April 2010 policy statement, taking into account the emerging domestic and external scenario. The RBI said its outlook on inflation will partly be shaped by the distribution of monsoon rains and their impact, as the agricultural harvest will be crucial to easing currently high food prices in the country.

The central bank said consumer price inflation remains at elevated levels and demand-side pressures need to be contained. The central bank also said real policy rates are not consistent with strong economic growth.

The dominant concern that has shaped the monetary policy stance in this review is high inflation, RBI Governor D Subbarao said in a statement. Non-food inflation has risen, and demand-side pressures are clearly evident. With growth taking firm hold, the balance of policy stance has to shift decisively to containing inflation and anchoring inflationary expectations, the RBI said.

The Reserve Bank of India said the economy could face a significant risk in the form of a slowdown in capital flows, at a time when the current account deficit is widening. In its first quarterly review of monetary policy, the Reserve Bank of India said that a potential slowdown in capital inflows could impact the current and trade deficit. The current deficit is already widening as imports continue to rise with the rebound in economic growth.

RBI has said that the risk of capital flows runs both ways. Given the present state of the global economy, central banks in advanced economies are likely to maintain accommodative monetary policies for an extended period. With the strong growth potential of emerging market economies, including India, this is likely to trigger large capital inflows. Large capital inflows above the absorptive capacity of the economy will pose a challenge for monetary and exchange rate management. This also has implications for asset prices. In this scenario, a widening current account deficit will help absorb a larger proportion of the inflows.

On the corporate front, the combined net profit of a total of 847 companies fell 7.5% to Rs 42259 crore on 24.3% rise in sales to Rs 520628 crore in Q1 June 2010 over Q1 June 2009.

The BSE 30-share Sensex rose 34.63 points or 0.19% to 17,992. The Sensex rose 55.73 points at the day's high of 18,013.10 at the fag end of the trading session. The index lost 54.53 points at the day's low of 17,902.84 in morning trade.

The S&P CNX Nifty rose 11.35 points or 0.21% to 5,408.90.

The BSE Mid-Cap index rose 0.22%. The Small-Cap index fell 0.17%.

Sectoral indices on BSE were mixed. The BSE PSU index (up 1.62%), banking sector index Bankex (up 0.92%), FMCG index (up 0.73%), and Auto index (up 0.49%), outperformed the Sensex. The BSE Realty index (up 0.13%), Metal index (down 0.11%), IT index (down 0.12%), Power index (down 0.23%), Healthcare index (down 0.24%), Capital Goods index (down 0.25%), Consumer Durables index (down 0.36%), and Oil & Gas index (down 0.76%), underperformed the Sensex.

BSE clocked turnover of Rs 4579 crore, lower than Rs 5028 crore on Wednesday, 28 July 2010.

The market breadth, indicating the health of the market, was negative. On BSE, 1502 shares declined while 1433 shares advanced. A total of 82 shares remained unchanged. The breadth moved between positive and negative zone throughout the day.

From the 30 share Sensex pack, 17 stocks rose and the rest fell.

Banking stocks rose after some banks raised their deposit rates on Wednesday, a day after the central bank raised key short-term interest rates on Tuesday, 27 July 2010.

India's biggest commercial bank in terms of branch network, State Bank of India recovered from the day's low and rose 0.1%. State Bank of India after market hours on Wednesday, 28 July 2010, announced the acquisition of its affiliate bank State Bank of Indore. The acquisition is effective from 26 August 2010.

India's second largest private sector bank by market capitalisation HDFC Bank rose 0.71% in volatile trade. HDFC Bank has decided to raise deposit rates for various maturities by 0.25% to 0.75%, with effect from 30 July 2010.

For deposits with maturity between 91 days and 6 months, the rate would be raised by 75 basis points to 5.25% from the existing 4.5%. For fixed deposit between 9 months and one year, the new rates would be higher by 50 basis points at 6.25% while for 1 year 16 days category it will be 7%, 25 basis points more than the existing rate of 6.75%.

India's largest private sector bank by market capitalisation ICICI Bank rose 1.91%, reversing initial fall.

India's largest dedicated housing finance firm by revenue HDFC rose 2.75%. HDFC has fixed 20 August 2010 record date for a 5-for-1 stock split.

Most metal stocks fell on worries about global economy. Hindustan Zinc, JSW Steel, Sesa Goa, Jindal Steel & Power, National Aluminum Company fell by between 0.37% to 2.84%.

LMEX, a gauge of six metals traded on the London Metal Exchange rose 1.19% on Wednesday, 28 July 2010.

Steel Authority of India fell 1.61% after the company announced during market hours today its net profit fell 11.55% to Rs 1176.65 crore in Q1 June 2010 over Q1 June 2009.

But, aluminum maker Hindalco Industries rose 1.96% and was the top gainer from the Sensex pack.

Index heavyweight Reliance Industries (RIL) fell 1.03% to Rs 1,010.45. The stock hit a high of Rs 1028.70 and low of Rs 1008.10. The RIL stock had lost 3.09% on Wednesday as production is likely to stagnate at 60 million standard cubic metres of gas a day for a while. Reliance Industries will be able to pump natural gas at full capacity from its deep-sea field during the year to March 2013, Oil Secretary S. Sundareshan said on Wednesday.

RIL's net profit jumped 32.3% to Rs 4851 crore on 86.7% increase in net turnover to Rs 58,228 crore in Q1 June 2010 over Q1 June 2009. The results were announced after trading hours on Tuesday 27 July 2010.

India's largest oil & gas exploration firm by sales ONGC fell 1.07%. The company announced after market hours today its net profit fell 24.48% to Rs 3661.14 crore in Q1 June 2010 over Q1 June 2009.

UltraTech Cement rose 1.94% after the company said the outlook for the company remains positive. The company announced during market hours today net profit fell 41.89% to Rs 242.73 crore in Q1 June 2010 over Q1 June 2009.

Telecom stocks declined. India's largest mobile services provider by sales Bharti Airtel fell 1.28%. India's second largest mobile services provider by sales Reliance Communications fell 2.1% and was the top loser from the Sensex pack.

Rate sensitive realty stocks reversed early losses on reports banks may not raise interest rates any time soon, easing worries that higher interest will crimp property demand. Phoenix Mills, Unitech, HDIL, Indiabulls Real Estate rose by between 0.06% to 2 %.

Realty major DLF fell 0.82%. DLF's consolidated net profit rose 3.79% to Rs 411.03 crore in Q1 June 2010 over Q1 June 2009. DLF's boards has approved further issue equity shares by its wholly owned subsidiary, DLF Brands to a promoter group company. DLF Brands will cease to be a subsidiary of DLF after the issue.

FMCG stocks rose as revival of monsoon rains may boost rural sales. Nestle India, United Spirits and United Breweries rose by between 0.01% to 1.75%.

India's largest FMCG maker by sales Hindustan Unilever rose 1.6%, recovering from a two-day slide triggered by weak Q1 June 2010 results. Net profit fell 1.84% to Rs 533.21 crore on 8.42% increase in total income to Rs 4918.34 crore in Q1 June 2010 over Q1 June 2009. The result was announced during market hours on Tuesday, 27 July 2010.

Cigarette maker ITC rose 0.86%. The scrip hit all-time high of Rs 311 today ahead of 4 August 2010 record date for 1:1 bonus issue.

India's largest motorbike maker by sales Hero Honda Motors rose 0.85%, ahead of its Q1 result. Net profit declined 1.6% to Rs 491.69 crore on 12% growth in turnover to Rs 4296.61 crore in Q1 June 2010 over Q1 June 2009. The company announced the result after trading hours today, 29 July 2010.

India's largest car maker by sales Maruti Suzuki fell 0.41%. The stock had slumped 12.31% in a single trading session on Monday, 26 July 2010, after net profit fell 20.2% to Rs 465.40 crore on 27% growth in net sales to Rs 8050.70 crore in Q1 June 2010 over Q1 June 2009. Maruti said the fall in net profit was due to higher commodity prices, increase in royalty and lower 'other income'. The company said income from exports to Europe declined due to weakening of the euro.

India's second largest bike maker by sales Bajaj Auto fell 0.25%, snapping last three days' gains. The stock hit a record high of Rs 2,734.95 today, 29 July 2010.

Among other auto stocks, Tata Motors and Mahindra & Mahindra rose by between 0.02% to 1.65%.

India's largest engineering & construction firm by sales Larsen & Toubro (L&T) fell 0.29%, with the stock falling for the fourth straight day. The company early this week said that order inflow jumped 63% to Rs 15626 crore in Q1 June 1010 over Q1 June 2009. L&T's profit after tax from normal operations rose 15% to Rs 666 crore on 6.5% growth in gross customer sales to Rs 7913 crore in Q1 June 2010 over Q1 June 2009. The result was announced during trading hours on Tuesday, 27 July 2010.

Larsen & Toubro has forecast 20% sales growth for the year ending March 2011 (FY 2011). The company has maintained its earlier forecast of 25% rise in new order inflows for FY 2011.

IT pivotals reversed early losses on positive economic data in Europe, the second biggest market for Indian IT firms. India's second largest software services exporter Infosys Technologies rose 0.02%. India's third largest software services exporter Wipro rose 0.53%. But, India's largest software services exporter TCS fell 0.49%, with the stock snapping last three days' gains.

Cals Refineries clocked the highest volume of 2.53 crore shares on BSE. Aster Silicates (1.56 crore shares), IFCI (1.42 crore share), Karuturi Global Solutions (1.32 crore shares) and FCS Software (1.18 crore shares) were the other volume toppers in that order.

Aster Silicates clocked the highest turnover of Rs 373.13 crore on BSE. ARSS Infra (Rs 200.72 crore), Aban Offshore (Rs 163.40 crore), Reliance Industries (Rs 134.01 crore) and Monsanto India (Rs 113.50 crore) were the other turnover toppers in that order.