Pharma shares rally

The key benchmark indices edged lower, snapping two-day gains, as profit booking and weak global cues played spoilsport. European and Asian markets declined today weighed by poor US economic data, which reignited global economic worries. The BSE 30-share Sensex was down 53.12 points or 0.29%, off 62.32 points from the day's high and up 40.92 points from the day's low.



The market breadth was negative. Metal stocks declined, tracking weak metal prices in London. Telecom stocks declined on recent reports the rollout of 3G services may be delayed on security concerns with the government. Banking stocks declined on profit booking. Shares of software exporters declined after poor economic data in the US, the biggest market for Indian IT firm. Auto stocks saw mixed trend. Sugar shares surged in late trade on reports the government could lift the ban on sugar futures early next month.

Realty shares gained after the latest data showed a slower rise food and fuel inflation in early August 2010, easing fears of aggressive monetary tightening by the central bank. Cement stocks saw an across-the-board rally for the second straight session on buzz cement prices have been hike in Western India. Pharma stocks gained on defensive buying.

A bout of volatility was witnessed at the onset of the trading session as the key benchmark indices cut losses, soon after an initial slide. But, the intra-day recovery proved short-lived. The Sensex once again lost ground in morning trade, tracking weak Asian stocks. The market once again came off the lows in mid-morning trade as index heavyweight RIL bounced back. The market moved into positive zone later. The market soon slipped into the red. Stocks moved in a narrow range in afternoon trade. The market remained subdued in mid-afternoon trade as European stocks reversed initial gains. Weakness persisted on the bourses in late trade.

NSE's volatility index, India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, was up 1.03% at 16.70. The index had risen 0.79% to 16.53 on Thursday, 19 August 2010. The index had slumped 6.98% at 16.40 on Wednesday, 18 August 2010. The index had lost 2.65% at 17.63 on Tuesday, 17 August 2010. The index had jumped 8.18% to 18.11 on Monday, 16 August 2010, a day after it had lost 7% on Friday, 13 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.

The Union Cabinet has reportedly cleared changes to nuclear liability bill, aimed at opening up the country's $150 billion nuclear power market. The bill is likely to be placed in parliament on Saturday, 21 August 2010, reports suggest.

Billionaire legendary investor George Soros, through his hedge fund Quantum (Mauritius), has reportedly bought close to 4% equity stake in the Bombay Stock Exchange (BSE) for about $35 million. Dubai Financial Holding, owned by the Emirates ruler Sheikh Mohammed bin Rashid al-Maktoum, was the seller, reports suggest.

Foreign funds have made heavy purchases of Indian stocks over the past 2-1/2 months. Foreign funds today, 20 August 2010, bought shares worth a net Rs 662.86 crore, as per provisional data from the stock exchanges. Domestic funds sold shares worth a net Rs 102.16 crore.

Foreign funds have bought equities worth a net Rs 7028.83 crore so far this month, till 20 August 2010, absorbing selling of Rs 3149.57 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.

European stocks extended early fall on Friday, 20 August 2010, on grim US data that had brought back fears of a double-dip recession at the forefront of investors' minds. The key benchmark indices in France, UK and Germany fell by between 0.57% to 1.03%.

Asian markets fell on Friday, 20 August 2010, after US jobless claims unexpectedly increased and an index of manufacturing in the Philadelphia area slumped. Persistent yen strength hurt Japanese exporters, while a fall in commodity prices hit resource stocks across the region. The key benchmark indices in Japan, South Korea, Singapore, Hong Kong, Taiwan and China were down by between 0.02% to 1.96%. However, Indonesia's Jakarta Composite index rose 0.40%.

Chinese shares dropped after Beijing announced new property tightening measures, with the Ministry of Land and Resources saying on Thursday, 19 August 2010, it will reinforce its campaign to crack down on land hoarding and misuse by property developers.

US markets stocks slumped on Thursday, 19 August 2010, as disappointing unemployment and industrial data rekindled worries about the recovery of the world's biggest economy. The Dow Jones Industrial Average plunged 144.33 points or 1.39% to 10,271.21. The Nasdaq composite index declined 36.75 points or 1.66% to 2,178.95 while the S&P 500 index shed 18.53 points or 1.69% at 1,075.63.

The number of Americans filing new weekly claims for jobless benefits jumped unexpectedly to 500,000, the highest level in nine months, the Labor Department said on Thursday, quashing expectations for a small improvement. It is the third straight week in which claims have risen and reignites the threat posed by unemployment on the recovery from the worst US recession in decades.

Also a manufacturing survey showed that economic activity in Philadelphia region fell by 7.7% on August 2010 after rising 5.1% in July 2010.

Trading in US index futures slumped. Trading in US index futures that the Dow could slide 55 points at the opening bell on Friday, 20 August 2010.

Back home, multilateral lender Asian Development Bank may raise inflation forecast for India at its next Economic Outlook slated for 28 September 2010, depending on progress of the monsoon rains. ADB has forecast a 8.2% GDP growth for 2010 and average inflation of 5% for the year.

Data on 19 August 2010 showed the primary articles index rose 14.85% in the year to 7 August 2010, lower than previous week's annual rise of 15.66%. The food price index rose 10.35%, lower than previous week's annual rise of 11.4%, as prices of vegetables, potatoes and onions fell. The fuel price index rose 12.57%, lower than previous week's annual rise of 12.66%.

The liquidity situation in the financial markets has improved, a senior Reserve Bank of India (RBI) official said on Friday, 20 August 2010. The Reserve Bank of India (RBI) is also keeping a close watch on the liquidity situation, said Janak Raj, an adviser at the RBI's monetary policy division.

Chief Statistician T.C.A. Anant on Thursday, 19 August 2010, said the headline inflation is expected to ease further in coming months. Data early this week showed that the headline inflation eased in July 2010, fuelling expectations that the central bank may lessen the scale and pace of increase in interest rates.

Saumitra Chaudhuri, a Planning Commission member in charge of economic development, told a news agency, early this week, that inflation has peaked and would start easing at a faster rate from September 2010. The Reserve Bank of India will undertake a mid-quarter monetary policy review on 16 September 2010, as per the schedule. Finance Minister Pranab Mukherjee said this month rising prices were a cost of rapid economic growth.

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.

Bond yields rose in choppy trade. The yield on benchmark 10-year 2020 bond was hovering at 7.98%, compared to Wednesday's (18 August 2010) close of 7.94%. The yield on the second most traded, 8.13% 2022 bond was hovering at 8.02%, slightly higher than Wednesday's (18 August 2010) close of 8.01%. Debt markets were shut on Thursday, 19 August 2010, for a bank holiday.

Meanwhile, the introduction of a good and services tax (GST) could miss the deadline of April 2011 after the Centre and states failed to break the deadlock over their differences on the tax architecture. The Bharatiya Janata Party (BJP), the principal opposition party, refused to budge from its stand even after the Centre relented on its position and thereby ruled out attempts to forge a consensus.

Finance Minister Pranab Mukherjee on Wednesday, 18 August 2010, offered concessions on most major demands by states on the constitutional amendments needed to allow the ambitious tax reform to take effect from next April. After states objected to a clause in the draft GST bill giving the union finance minister veto power over state tax matters, the finance minister dropped this clause altogether. In a major concession to dissenting states, Mukherjee said decisions taken by a proposed GST council will be taken by consensus. Mukherjee also promised states another revised draft of the GST bill to reflect these concessions.

However, some states, especially those ruled by the opposition Bhartiya Janta Party, wanted one month to consider the draft GST bill which also needs approval from state legislatures before the new tax system can be introduced. Some media reports suggested that even if the GST bill is introduced in the next session of parliament starting towards the end of the year, the deadline for the rollout of GST from 1 April 2011, could be met.

India needs to channelise more pension and insurance funds into the infrastructure sector, Finance Minister Pranab Mukherjee said in a government statement released on Wednesday, 18 August 2010. India plans to spend $1.5 trillion between 2007 and 2017 to upgrade its infrastructure to support double-digit economic growth rates.

India's exports in July grew an annual 13.2% to $16.24 billion, Trade Secretary Rahul Khullar said on Tuesday, 17 August 2010, the ninth straight month of expansion. Imports for the month rose 34.3% to $29.17 billion, he said.

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%.

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.

Improved rainfall this year has helped farmers plant various crops over a larger area than last year. The kharif sowing has been 10% more than the drought-hit 2009, leading to optimistic outlook for harvests. The cumulative rainfall during the period from 1 June 2010 to 19 August 2010 was 4% below normal.

The Southwest monsoon was vigorous over Sub-Himalayan West Bengal & Sikkim and Uttarakhand and active over Bihar, East Uttar Pradesh, Haryana, Chandigarh & Delhi, Himachal Pradesh, East Rajasthan and East Madhya Pradesh during past 24 hours, the India Meteorological Department (IMD) said in its daily update on Thursday, 19 August 2010. The IMD expects widespread rainfall activity over Sub-Himalayan West Bengal & Sikkim, Bihar, Uttar Pradesh, Haryana, East Rajasthan, Uttarakhand, Himachal Pradesh, northeastern states, Coastal Karnataka and Kerala, over the next few days.

The weather office late last week said rainfall was likely to remain below normal for another week, but could revive soon, particularly in the soybean-growing central region. 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.

The BSE 30-share Sensex was down 53.12 points or 0.29% to 18,401.82. The Sensex lost 94.04 points at the day's low of 18,360.90 in early trade. The index rose 9.20 points at the day's high of 18,464.14 in mid-morning trade.

The S&P CNX Nifty was down 9.55 points or 0.17% to 5,530.65

The market breadth, indicating the health of the market was negative, in contrast with a positive breadth earlier in the day. On BSE, 1,626 shares declined while 1,397 shares rose. A total of 86 shares remained unchanged.

The BSE Mid-Cap index fell 0.12% to 7,821.20 and the BSE Small-Cap index rose 0.12% to 9,875.76. Both the indices outperformed the Sensex.

The total turnover on BSE amounted to Rs 5201 crore, lower than Rs 5270 crore on Thursday, 19 August 2010.

Most sectoral indices on BSE edged lower. The BSE IT index (down 0.94%), the BSE TecK index (down 0.82%), and the BSE FMCG index (down 1.02%), were the top losers.

The BSE Realty index (up 1.81%), the BSE Capital Goods index (up 1.37%), and the BSE Oil & Gas index (up 0.82%), were the top gainers.

From the 30-share Sensex pack, 20 stocks declined while the rest of them gained. Reliance Infrastructure (up 0.60%), Jindal Steel & Power (up 0.81%), and Hero Honda Motors (up 0.82%), edged higher from the Sensex pack

ITC (down 1.79%), Hindustan Unilever (down 1.74%), and ONGC (down 0.87%), edged lower from the Sensex pack

India's top truck maker by sales Tata Motors lost 2.57% to Rs 1013.35, extending Thursday's 0.71% fall, on equity dilution worries. It was the top loser from the Sensex pack. As per reports, the company plans to raise $700-750 million through issue of shares with differential voting rights to retire debt.

Other auto stocks saw mixed trend. India's top car maker by sales Maruti Suzuki India fell 0.92%. But, India's largest tractor maker by sales Mahindra & Mahindra rose 0.65%.

Shares of software exporters declined after poor economic data in the US, the biggest market for Indian IT firm. India's second largest software services exporter by sales Infosys fell 1.18% after its ADR slipped 1.29% on 19 August 2010. India's third largest software services exporter by sales Wipro shed 1.74% after its ADR lost 2.06% on 19 August 2010. India's largest software services exporter by sales TCS fell 0.92%, in volatile trade.

Telecom stocks declined on recent reports the rollout of 3G services may be delayed on security concerns with the government.

India's largest cellular services provider by sales Bharti Airtel slipped 1.50% on reports the company has won the rights to sponsor all cricket series played in India until 2013 and will pay $700,000 per match.

India's second largest cellular services provider by sales Reliance Communications (RCom) fell 0.71%. RCom today said it has entered into a pact with Nokia India, a a first-of-its-kind multi-faceted business partnership.

Cement stocks saw an across-the-board rally for the second straight session on buzz cement prices have been hike in Western India. JK Lakshmi Cement (up 1.20%), JK Cement (up 1.34%), Gujarat Sidhee Cements (up 10.62%), UltraTech Cement (up 2.22%), Madras Cement (up 1.67%), advanced.

Optimism the upcoming festive season and conclusion of monsoon season will give a boost to cement demand, also aided the rally in cement counters. Cement stocks also played a catch-up with rest of the market after underperforming the Sensex recently.

But, North India's largest cement firm by sales ACC lost 1.22% on profit booking after a three-day 5.61% rally.

Index heavyweight Reliance Industries (RIL) surged 0.94% to Rs 986. The stock hit a high of Rs 990.90 and low of Rs 971. Reportedly the stock market regulator Securities & Exchange Board of India has rejected a second attempt by RIL to settle charges of insider trading out of court. Sebi will continue its investigation into trades carried out by entities allegedly linked to RIL, in November 2007.

BPCL gained 2.78% as Bharat PetroResources, a wholly-owned subsidiary of the company, entered into an agreement with Norwest Energy, Australia to acquire stake in two shale gas acreages in Australia.

Chennai Petroleum Corporation tumbled 6.98% after the stock turned ex-dividend for a dividend of Rs 12 per share for the year ended March 2010.

Pharma stocks gained on defensive buying. Wockhardt (up 9.99%), Wyeth (up 1.30%), Ranbaxy Laboratories (up 3.36%), Unichem Laboratories (up 0.76%), Pfizer (up 0.86%), and Lupin (up 2.62%), edged higher.

India's largest pharma firm by sales, Cipla, gained 2.13% to Rs 311.10 and was the top gainer from the Sensex pack. As per reports, the company is in talks with a slew of global pharma heavyweights to strike supply pacts for its choloroflurocarbons free inhalers on a long-term basis.

Banking and financial fell on profit taking after a recently solid rally triggered by optimism the sector will be the key beneficiary of the economic expansion. India's largest private sector bank by net profit ICICI Bank declined 1.89% after jumping more than 4% on Thursday, 19 August 2010. The bank had recently announced a hike of 0.5% to 16.25% in its prime lending rate effective 18 August 2010.

India's largest bank by net profit and branch network State Bank of India slipped 0.84%, extending four-day fall.

Punjab National Bank was unchanged at Rs 1190. Bank of Baroda (down 0.16%) and Bank of India (down 2.05%) declined.

India's largest mortgage lender by total income HDFC shed 0.71%, reversing a more than 3% rally on Thursday, 19 August 2010. The stock had turned ex-split for a 5-for-1 stock split on Wednesday, 18 August 2010.

But, India's second largest private sector bank by net profit HDFC Bank rose 0.42% to Rs 2,240.50, a record high for the counter. The stock bounced back from a low of Rs 2,207.

Realty shares gained after the latest data showed a slower rise food and fuel inflation in early August 201, easing fears of aggressive monetary tightening by the central bank. Most of the deals in the realty sector -- be it commercial realty or residential buying, is primarily driven by borrowed funds. India's largest realty firm by sales DLF spurted 3.58% to Rs 332.80 and was the top gainer from the Sensex pack.

HDIL (up 0.95%), Omaxe (up 0.88%), Unitech (up 1.49%), Parsvnath Developers (up 0.25%), gained.

Metal stocks declined as LMEX a gauge of six metals traded on the London Metal Exchange fell 1.19% on Thursday, 19 August 2010. Hindalco Industries (down 0.67%), Steel Authority of India (down 0.26%), Tata Steel (down 0.47%), Sterlite Industries (down 0.68%), Hindustan Zinc (down 0.91%), Sesa Goa (down 0.14%), declined.

Sugar shares surged in late trade on reports the government could lift the ban on sugar futures early next month, by when there will be clarity on the estimated sugar production for the current season. The move is likely to facilitate decontrol of the sugar industry. Bajaj Hindusthan (up 3.71%), Balrampur Chini Mills (up 3.71%), Shree Renuka Sugars (up 2.32%), Sakthi Sugars (up 2.67%), Triveni Engineering & Industries (up 1.50%), and Dwarikesh Sugar (up 4.75%), gained.

GVK Power & Infrastructure rose 3.52% on reports the company plans to buy Siemens Project Ventures' 40% stake in the Bangalore International Airport and take majority control.

Hindustan Construction Company fell 4.25% on reports the Lavasa hill city project, being built by a unit of the company in Pune, has come under the scanner of the ministry of environment and forests.

Inox Leisure gained 2.82% after the company's new multiplex cinema theater at Jaipur commenced operations today, 20 August 2010. The company made this announcement during trading hours today, 20 August 2010.

Crest Animation Studios was locked at 10% upper limit at Rs 96.15 after the company said its board will meet on 23 August 2010 to consider a corporate restructuring plan. The company announced the board meet before trading hours today, 20 August 2010.

Jet Airways spurted 4.05% on reports the company has sought the Reserve Bank of India's approval to raise foreign currency loans to repay expensive rupee loans taken from local banks.

Cals Refineries clocked the highest volume of 1.77 crore shares on BSE. Karuturi Global (96.26 lakh shares), SpiceJet (94.28 lakh shares), KingFisher Airlines (90.14 lakh shares) and Birla Cotsyn (82.64 lakh shares) were the other volume toppers in that order.

Jubilant FoodWorks clocked the highest turnover of Rs 175.48 crore on BSE. BF Utilities (Rs 138.23 crore), SKS Microfinance (Rs 130.73 crore), Reliance Industries (Rs 124.05 crore) and Jet Airways India (Rs 121.59 crore) were the other turnover toppers in that order.