Market registers modest gains; SBI scales record high

The key benchmark indices registered modest gains even as profit taking ahead of the weekend pulled the market off the intraday high. The BSE 30-share Sensex jumped 93.13 points or 0.52%, off close to 90 points from the day's high and up close to 120 points from the day's low. Index heavyweight Reliance Industries (RIL) came off the higher level. The market breadth was positive, weakening from a strong breadth earlier in the day. Realty, IT, banking and consumer durables stocks rose. European stocks reversed initial gains. US index futures, too, reversed initial gains.



Shares of India's largest commercial bank State Bank of India (SBI) hit a record high above Rs 2,800, extending Thursday's near 7% post-result rally after the parliament approved a bill on Thursday enabling the government to reduce its holding in State Bank of India to 51% and help it raise capital.

The market opened on a firm note after a strong debut of Indian travel agency MakeMyTrip on the Nasdaq on Thursday, 12 August 2010. Stocks extended gains as the barometer index BSE Sensex hit a fresh intraday high in early afternoon trade. The market came off the higher level, soon after hitting a fresh intraday high in afternoon trade. It further trimmed gains in mid-afternoon trade as index heavyweight Reliance Industries (RIL) pared gains. The market came off the lower level in late trade.

Shares of MakeMyTrip soared 89% on Thursday, 12 August 2010, as the Indian travel agency made its debut on the Nasdaq. Shares of MakeMyTrip (MMYT) were up $12.45 to close at $26.45 on the Nasdaq on Thursday. In its initial public offering (IPO) in the US, the company had offered 5 million ordinary shares priced at $14 a share. The IPO had received strong investor response.

NSE's volatility index, India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, plunged 7% at 16.74. The index had lost 0.61% to 18 on Thursday, 12 August 2010. The index had risen 4.5% to 18.11 on Wednesday, 11 August 2010. The index had risen 1.94% at 17.33 on Tuesday, 10 August 2010. The index had lost 2.13% to 17 on Monday 9 August 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.

European shares turned negative, reversing initial gains on Friday as declines in retailers outweighed gains in the miners, with Delhaize slipping after the supermarket group cut it 2010 outlook. The key benchmark indices in France, Germany and UK were down by between 0.5% to 0.91%.

Euro zone gross domestic product grew at its fastest pace in more than three years in the second quarter, boosted by a strong performance by Germany and France, but concerns remain that the rebound could falter. European Union statistics agency Eurostat said GDP in the 16-nation currency zone expanded by 1% in the second quarter from the first, and by 1.7% versus the second quarter of 2009.

The latest data showed the German economy, Europe's biggest, grew by 2.2% in the second quarter compared with the previous three-month period.

Asian stocks edged higher on Friday, 13 August 2010, as investors hunted for bargains following a three-day losing streak. The key benchmark indices in Singapore, China, Taiwan, Indonesia, South Korea and Japan were up by between 0.44% to 1.42%. But Hong Kong's Hang Seng fell 0.16%.

US index futures reversed initial gains. Trading in US index futures indicated that the Dow could fall 27 points at the opening bell on Friday, 13 August 2010.

US stocks ended down for a third straight day on Thursday, 12 August 2010, as an unexpected rise in jobless claims and a sobering revenue outlook from Cisco underscored the hurdles to economic recovery. Thursday's drop comes a day after all three major indices posted their worst percentage declines in more than a month, erasing gains for the year in the aftermath of a gloomier outlook from the US Federal Reserve at a regular policy meeting early this week.

The Dow Jones Industrial Average slipped 58.88 points, or 0.57% to 10,319.95. The Standard & Poor's 500 Index dropped 5.86 points, or 0.54% to 1,083.61. The Nasdaq Composite Index tumbled 18.36 points, or 0.83% to 2,190.27.

The number of US workers filing new claims for unemployment benefits unexpectedly rose to nearly a six-month high, increasing ongoing fears about the weak labor market. It was the second straight week of increases.

Back home, the latest data showed the food price index rose 11.40% in the year to 31 July 2010, while the fuel price index climbed 12.66%. Food inflation accelerated from the previous week's annual rise of 9.53% while fuel inflation eased from the week-ago reading of 14.26%. The primary articles index rose 15.66% compared with the previous week's reading of 14.36%.

The industrial output rose 7.1% in June 2010 compared with revised 11.3% rise in May 2010, the latest data showed. Manufacturing grew 7.3%, mining sector grew 9.5%, consumer goods sector rose 8.3%, capital goods sector expanded 9.7% and electricity generation rose 3.5%.

Meanwhile, the industrial production growth rate for May 2010 was revised marginally down to 11.3% from 11.5% reported earlier. The growth rate for March 2010 was revised upward to 14.5% from 13.9% reported earlier.

Analysts expect the Reserve Bank of India to raise interest rates by 25 basis points at a mid-quarter monetary policy review on 16 September 2010, to rein in inflation and inflation expectations.

The Reserve Bank of India (RBI) at its Q1 monetary policy on 27 July 2010 raised a key lending rate by 25 basis points to curb surging inflation. With growth taking firm hold, the balance of policy stance has to shift decisively to containing inflation and anchoring inflationary expectations, the RBI said at that time. 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.

Meanwhile, the Indian government early this week relaxed the requirement of a minimum 25% public shareholding for listed state-run firms. It may be recalled that the government in early June 2010 had announced changes in the Securities Contracts (Regulation) Rules 1957, so as to ensure that all listed companies maintain a minimum public float of 25%. Existing listed companies having less than 25% public holding have to reach the stipulated level by an annual addition of not less than 5% to public holding, the government had said at that time. The new rule had raised concerns there will be a deluge of share sales from government-owned firms to meet the minimum 25% public shareholding requirement.

As per the relaxed norms, listed state-owned companies that have less than 10% public stake will have to reach that threshold over a period of three years. The modified rules also give a breather to the private sector companies. While they will have to comply with the minimum 25% public float within three years, they now have flexibility in how the limit is reached i.e. the requirement of a minimum annual 5% increase has been scrapped.

The first quarter June 2010 earnings seasons is almost over. The Q1 results were a mixed bag. The combined net profit of a total of 2,965 Indian companies fell 8.4% to Rs 68.344 crore on 19.8% rise in sales to Rs 8,29,064 crore in Q1 June 2010 over Q1 June 2009.

The vital monsoon rains were 26% below normal in the week to 12 August 2010 the first weekly fall in three weeks, the weather office said on Thursday, 12 August 2010. The rains were 16% above normal in the week to 4 August 2010 and 38% above average in the week to 28 July 2010.

There are concerns about scanty rains in the eastern parts of the country. Large swathes of farm land in Gangetic West Bengal, Bihar, Jharkhand, eastern Uttar Pradesh, Assam and eastern Madhya Pradesh have received very little rainfall so far. Until last week, paddy (de-husked rice) sowing was down by about 10.43% in West Bengal -- the country's largest rice producing state and down by around 5.19% in Bihar, reports suggest.

The monsoon deficiency in the East is, however, unlikely to have an impact on total kharif paddy output in the country, and procurement is good, reports suggest. Production in Punjab, Haryana and southern India, coupled with huge rice stocks estimated to be in excess of around 25 million tonnes, would help cap any price flare-up or shortages in supply, reports suggest.

Meanwhile, the improvement in rainfall early this month in the country as a whole, has resulted in a spectacular improvement in the water stock in reservoirs, reports suggest. The total water storage in the 81 major reservoirs stood at 52.09 billion cubic metres (BCM) as on 5 August 2010, against 28.65 BCM a fortnight ago. The present storage is a mere 6% short of normal, against 35% a fortnight ago, reports suggest.

The cumulative rainfall during the period from 1 June 2010 to 12 August 2010 was 5% below normal. Rainfall over the country as a whole for the second half (August to September) of the 2010 southwest monsoon season is likely to be normal, according to the India Meteorological Department (IMD). Quantitatively, rainfall for the country as a whole during the period August-September 2010 is likely to be 107% of long period average (LPA) with a model error of plus/minus 7%, according to the weather office.

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. If the southwest monsoon for the June-September monsoon season turns out good and if it is well distributed, it will help raise farm output, boost rural incomes and lower food inflation.

Coming back to stocks, foreign funds have made heavy purchases of Indian stocks over the past two months. Foreign funds on Thursday, 12 August 2010, bought shares worth a net Rs 218.19 crore as per the provisional figures released by the stock exchanges. Domestic funds dumped shares worth Rs 656.05 crore on that day. Foreign funds bought equities worth a net Rs 4016.02 crore in the first few trading days this month, till 12 August 2010, absorbing selling of Rs 2348.35 crore from domestic funds, as per data from the stock exchanges.

Foreign funds had bought shares worth a net Rs 8320.50 crore in July 2010, absorbing selling by domestic institutional investors. Domestic funds sold shares worth a net Rs 6323.13 crore in July 2010.

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.

The BSE 30-share Sensex was up 93.13 points or 0.52% to 18,167.03. At the day's high of 18,260.39 hit in afternoon trade the index rose 186.49 points. The index fell 23.48 points at the day's low of 18,050.42 in early trade.

The S&P CNX Nifty was up 35.65 points or 0.66% to 5452.10.

The BSE Mid-Cap index was up 0.98%. The Small-Cap index rose 0.67%. Both these indices outperformed the Sensex.

The market breadth, indicating the health of the market, was positive. On BSE, 1,508 shares advanced while 1477 shares declined. A total of 101 shares remained unchanged. The breadth was much stronger earlier in the day.

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

BSE clocked turnover of Rs 6081 crore, higher than Rs 5496.66 crore on Thursday, 12 August 2010.

Index heavyweight Reliance Industries (RIL) rose 0.7% to Rs 979.05 with the stock snapping last six days' losses. But, the stock came sharply off the day's high of Rs 993.95. Reliance Industries recently denied a media report that the company may sell treasury stocks worth more than $1 billion. The company has no such plans, Reliance spokesman Manoj Warrier clarified to the media on Wednesday, 11 August 2010.

A unit of RIL recently signed definitive agreements to enter into a Marcellus Shale gas joint venture with United States-based Carrizo Oil & Gas Inc. RIL will pay a total $392 million, comprising $340 million of cash and $52 million of drilling carry obligations. Under the deal, Reliance will acquire a 60% interest in Marcellus Shale acreage in Central and Northeast Pennsylvania that is currently held in an equal joint venture between Carrizo and an affiliate of Avista Capital Partners. Reliance will acquire all of Avista's stake and 20% of Carrizo's stake in the existing joint venture.

Realty stocks rose as most realty companies posted good Q1 results. Anant Raj Industries, Phoenix Mills, Indiabulls Real Estate, Orbit Corporation, Unitech, Parsvnath Developers, Peninsula Land, Unitech, DLF, Housing Development & Infrastructure rose by between 0.11% to 4%.

Shares of Sterlite Industries fell 4.26% and was the top loser from the Sensex pack amid reports that its parent Vedanta Resources is looking to buy a 51% stake in Cairn India for $8-8.5 billion. Shares of Cairn India rose 4.36%.

India's second mobile services by sales Reliance Communications fell 2.94%. Consolidated net profit fell 84.7% to Rs 250.89 crore in Q1 June 2010 over Q1 June 2009. The company announced the result after trading hours today, 13 August 2010.

India's largest commercial bank State Bank of India (SBI) rose 2.35% to Rs 2849.40, after the parliament approved a bill on Thursday enabling the government to reduce its holding in State Bank of India (SBI) to 51% and help it raise capital. The stock hit record high of Rs 2879.95 today. The SBI stock had surged close to 7% on Thursday boosted by strong Q1 result. On a consolidated basis, net profit rose 22% to Rs 3365.26 crore on 0.98% decline in total income to Rs 32808.06 crore in Q1 June 2010 over Q1 June 2009. The results were announced during trading hours on Thursday, 12 August 2010.

India's largest private sector bank by market capitalisation ICICI Bank rose 1.19% as the bank announced before market hours today that Reserve Bank of India has approved the scheme of amalgamation of Bank of Rajasthan with ICICI Bank with effect from the close of business on 12 August 2010.

India's second largest private sector bank by market capitalisation HDFC Bank rose 0.58%, reversing initial losses. The stock had scaled a record high of Rs 2,140.90 on Monday, 2 August 2010. HDFC Bank raised 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 dedicated housing finance firm by revenue HDFC fell 0.24%, with the stock falling for the third straight day. HDFC has fixed 20 August 2010 record date for a 5-for-1 stock split.

IT stocks reversed early losses after positive economic data in Europe, the second biggest market for Indian IT firms. India's largest software services exporter TCS rose 0.22%. The stock on Thursday, 5 August 2010, hit a record high of Rs 882. India's second largest software services exporter Infosys Technologies rose 0.06%. India's third largest software services exporter Wipro rose 0.4%.

FMCG stocks rose on good overall monsoon rains so far and expectations of good rains during the remaining period of the current monsoon season. Rural market contributes to a substantial chunk of sales of FMCG firms. Dabur India, ITC, Marico, United Spirits rose by between 0.27% to 1.96%.

Ranbaxy Laboratories fell 0.35%, with the stock falling for the second straight day after the company on Thursday said its chief executive officer (CEO) and managing director (MD) Atul Sobti will step down from the positions effective from 19 August 2010. The company did not mention the reason for his departure. Arun Sawhney, who is currently president of Ranbaxy's global pharmaceutical business, will take over as managing director from 20 August 2010.

Ranbaxy's consolidated operational net profit soared 4818% to Rs 457.40 crore on 22% growth in sales to Rs 2102.90 crore in Q2 June 2010 over Q2 June 2009.

Among other healthcare stocks, Biocon, Lupin and Sun Pharmaceutical Industries rose by between 1.11% to 2.29%.

Auto stocks were mixed. Commercial vehicle maker Tata Motors fell 0.68%, on profit taking after last three days' solid gains triggered by turnaround Q1 June 2010 results which the company announced during trading hours on Tuesday, 10 August 2010. The stock on Thursday, 12 August 2010, hit a record high of Rs 1,031.80.

The company reported consolidated net profit of Rs 1988.73 crore for Q1 June 2010 compared to a net loss of Rs 328.78 crore in Q1 June 2009. Net revenue jumped 64.2% to Rs 27055.57 crore in Q1 June 2010 over Q1 June 2009. Tata Motors said the Jaguar Land Rover business continued to show strong profitability, with increase in volumes coupled with significantly favorable currency movement in Q1 June 2010, reporting profit before tax of Great British Pounds (GBP) 233.82 million (Rs 1590.25 crore).

India's largest tractor maker by sales Mahindra & Mahindra fell 0.79%. The company has been picked as the preferred bidder to buy South Korea's Ssangyong Motor in a deal estimated at $500 million.

Maruti Suzuki, India's top car maker rose 1.86%. Managing Director Shinzo Nakanishi said last week that the company is looking to advance its capacity expansion plans. Its second unit in Haryana is scheduled to come up by April 2012. Nakanishi said the company is working on ways to advance that to an earlier date.

Maruti, last week, launched a new version of its best selling car Alto. The new version, Alto-K10 is powered by 998cc K10B engine and is priced between Rs 3.03 - Rs 3.16 lakh (ex-showroom Delhi).

Maruti's total vehicle sales rose 29.2% to 1,00,857 units in July 2010 over July 2009. The company announced the sales figures during market hours on Monday, 2 August 2010. Maruti Suzuki India recently raised prices across models by 1% to 1.5% due to a sharp increase in input costs. The price rise was between Rs 2,000 to Rs 7,500. The company decided to keep prices of its best selling model Alto unchanged.

India's largest motorbike maker by sales Hero Honda Motors rose 0.91%, with the stock gaining for the second straight day. The company reported a jump of 16.60% in sales at 4,27,686 units in July 2010 over July 2009. The company has recorded dispatches of more than four lakh units in a single month for the third consecutive time.

India's second largest bike maker by sales Bajaj Auto rose 1%, with the stock gaining for the second straight day. The stock had hit a record high of Rs 2767.35 on Thursday, 5 August 2010. Bajaj Auto's total vehicle sales jumped 65% at 3.18 lakh units in July 2010 over July 2009.

Metal stocks rose as LMEX a gauge of six metals traded on the London Metal Exchange rose 0.95% on Thursday, 12 August 2010. JSW Steel, National Aluminum Company, Hindustan Zinc rose by between 0.15% to 1.49%.

Shree Ashtavinayak Cine Vision clocked highest volume of 2 crore shares on BSE. Cals Refineries (1.98 crore shares), FCS Software (1.89 crore shares), SpiceJet (1.78 crore shares) and Birla Cotsyn (1.11 crore shares) were the other volume toppers in that order.

Patni Computer Systems clocked highest turnover of Rs 349.36 crore on BSE. State Bank of India (Rs 309.04 crore), Bombay Dyeing (Rs 217.16 crore), Raymond (Rs 163.74 crore) and Reliance Industries (Rs 147.71 crore) were the other turnover toppers in that order.