Sensex shuts with modest gains

Major headlines

Pantaloon Retails’ Q4FY10 net profit up 168% yoy; the stock closes 1% lower

Mundra Port and Special Economic Zone commences operations at Dahej; the stock closes 0.56% down

Glenmark Pharmaceuticals discovers new molecule for pain; the stock ends lower by 1.36%



Global signals

European shares rose on Monday (August 30, 2010), extending a rally to a third day after reassurances that the US Federal Reserve was ready to take further steps if needed to spur economic recovery. FTSE 100 was closed today.

Major Asian indices ended the session in the positive territory except Jakarta Composite.

The US stock index futures indicate higher opening on the Wall Street on Monday. July personal income and consumption data as well as the core PCE data will be eyed.

Indian indices

After a heavy sell-off in the previous session, the domestic indices bounced back today and closed the first day of a new week with modest gains following recovery in late trades. The indices opened gap-up tracking strong global cues but thereafter, could not hold on to its gains on the back of profit booking in select sectors. The indices climbed in late trades as the government introduced a tax bill (Direct Tax Code) that may lead to lower levies and amid expectations that gross domestic product (GDP) expanded at a fastest pace in 2 1/2 years. In a volatile trade, the Sensex managed to regain 18000 levels.

The Direct Tax Code (DTC) bill has been tabled in the Parliament today. It is learnt that short-term capital gains will be taxed at income tax rates, while short-term capital gains for companies is flat at 30%. Besides, the new DTC bill will have dividend distribution tax of 5% for both equity mutual funds and unit-linked insurance plans (ULIPs). While exemption limit is hiked to Rs2 lakh.

Bharti Airtel, the largest mobile-phone operator, gained the most in a month. Oil & Natural Gas Corporation, the largest state-owned oil explorer, climbed to a 34-month high. Index heavyweight Reliance Industries continued to slide.

Taking lead from the strong Asian indices, the key benchmark index - Sensex started the session 65 points higher at 18063. The index widened its gains in early trades to hit the day’s high of 18216. As the session progressed, the index started to pare its gains after the Asian markets trimmed gains and also selling pressure witnessed in the information technology (IT) stocks. However, the Sensex remained in the green throughout the morning trade. In the afternoon session, the index erased all its gains and slipped into the negative territory to hit the day’s low of 17960. However, in late trades, the index recovered and traded in the positive zone as IT stocks saw buying at lower levels. Finally amid volatility, the Sensex ended the session with modest gains.

At the closing bell, the Sensex shut at 18032, 34 points higher. The Nifty closed at 5415, up by 7 points.

Bond Market Update: India’s 10-year bonds dropped, snapping a two-day gain, on concern that the central bank may raise interest rates next month to curb inflation. India’s rupee rose the most in two weeks on optimism that the government data due tomorrow will show economic growth accelerated in the three months through June.

Market Outlook: Data to be watched tonight in the US will be Personal Income and Spending. India’s Q2 GDP will be announced tomorrow and is expected to grow by 8.8%.

Market sentiment

Despite of positive closing, the market breadth was negative as declining stocks outnumbered the advancing ones. Of the 3,058 scrips traded on the BSE, 1,599 scrips fell while 1,348 scrips rose. Hundred and eleven shares remained unchanged.

Sectoral & stock screening

Of the 13 sector indices on the BSE, eight closed in the green while five closed in the red. BSE Metal was the topper, gained by 1.46%, followed by BSE Consumer Durables (CD) that surged by 0.54%. On the other hand, BSE Fast Moving Consumer Goods (FMCG) fell the most with losses of 0.67%, followed by BSE Information Technology (IT) that declined by 0.64% and BSE Capital Goods (CG) that quoted 0.62% down.

Among 'A' group stocks, EIH was the best performer, up by 11.46%, followed by Power Grid Corporation India that rose by 4.17% after the company got shortlisted by the Nigerian government for electricity grid and Tata Steel that rose by 3.49%. On losers' list, Hindustan Construction Company fell the most by 3.26%, followed by Chennai Petroleum Corporation that declined by 2.61% and Jet Airways India that slipped by 2.58%.

Viewing volumes

Pharma company - Piramal Healthcare was the most traded with over 1.02 crore shares changing hands on the BSE, followed by leading integrated steel makers - Ispat Industries (0.95 crore shares), wind turbine major - Suzlon Energy (0.41 crore shares), India’s second largest developer - Unitech (0.32 crore shares) and industrial finance company - IFCI (0.25 crore shares).