Across-the-board buying propels key indices

The key indices rallied in the second half of trading session, boosted by gains in index pivotals Reliance Industries, Infosys, and ICICI Bank. The market had opened higher, but turned range bound in afternoon trade. However, strength in US index futures and European markets aggravated buying in the mid-afternoon session. Strong auto sales, data showing expansion in manufacturing sector in August 2010 and data showing resumption of buying by foreign funds, underpinned sentiments.



The BSE 30-share Sensex rose 234.75 points or 1.31%, up 178.75 points from the day's low and off 21.27 points from the day's high. The rally was broad-based. Small-cap and mid-cap indices on BSE outperformed the BSE Sensex. All the sectoral indices on BSE were in green and the market breadth was strong.

Stocks surged in early trade, tracking firm Asian stocks. The barometer index BSE Sensex moved past the psychological 18,000 level. The market extended gains in morning trade. The Sensex came off highs later. The market turned range bound in mid-morning trade. Stocks were off highs in early afternoon trade. The market came off the lower level in afternoon trade. The market spurted to the day's high in mid-afternoon trade. The Sensex extended gains in late trade as European stocks and US index futures rose.

NSE's volatility index, India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, tumbled 9.58% at 16.70. The index had risen 0.6% to 18.47 on Tuesday, 31 August 2010. It had lost 6.47% to 18.36 on Monday, 30 August 2010. The index had jumped 14.86% to 19.63 on Friday, 27 August 2010, a day after dropping 9.67% at 17.09, on Thursday, 26 August 2010. The index risen 11.36% to 18.92 on Wednesday, 25 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.

Foreign funds bought shares worth a net Rs 287.88 crore on Tuesday, 31 August 2010, as per the provisional data released by the stock exchanges. Domestic funds dumped shares worth a net Rs 595.33 crore on that day.

Exports rose for the ninth straight month in July 2010, growing an annual 13.2% to $16.24 billion, the latest government data showed. Imports for the month rose 34.3% to $29.17 billion, widening the country's trade deficit to $12.93 billion. Exports during the April-July period rose 30.1% to $68.63 billion.

The trade deficit edged back into double digits in April 2010 after averaging $9.1 billion in Q4 March 2010 and has remained elevated since then. Latest data shows the gap stood at $12.93 billion in July 2010, highest since September 2008 and widening further from $10.55 billion in June 2010.

The HSBC Markit Purchasing Managers' Index, based on surveys of 500 Indian companies, fell to 57.25 in August 2010 from 57.6 in July 2010, but strength in new orders helped the index remain well above the 50 mark that divides growth from contraction. The manufacturing PMI had edged up to 57.6 in July 2010 from 57.3 in June 2010, when it slipped from a multi-year high.

The new orders index was 61.99 in August 2010, down from 62.82 in July 2010. The survey showed that output prices rose at their slowest rate in 10 months in August 2010, while the input price index rose for the second consecutive month.

HSBC may also unveil the services sector PMI for August 2010 this week. The index, which shows business activity in the services sector, had eased to 61.7 in July 2010 from 64 in June 2010.

The gross domestic product (GDP) grew 8.8% in Q1 June 2010, data released by the government on Tuesday, 31 August 2010, showed. The manufacturing sector grew 12.4%, mining sector expanded 8.9%, construction sector grew 7.5%, and farm sector expanded at 2.8%. Output in the combined sectors -- trade, hotels, transport and communication, jumped 12.2%.

The economy could grow better than 8.5% in the fiscal year that ends in March 2011, Planning Commission deputy chairman Montek Singh Ahluwalia said on Tuesday, 31 August 2010. Government spending is expected to pick up after the June-September monsoon rains, Ahluwalia said.

The yield on the benchmark 10-year 2020 bond was hovering at 7.96%, higher than Tuesday's (31 August 2010) close of 7.93%. The yield on the second most traded, 8.13% 2022 bond was almost unchanged at Tuesday's (31 August 2010) close of 8.02%.

European stocks rose Wednesday, 1 September 2010, after a bout of initial volatility, as rebound in China's manufacturing activity in August 2010 and data showing better-than-expected second-quarter growth in Australia, served to soothe some jitters over the global economy. The Key benchmark indices in UK, France and Germany were up 1.06% and 1.87%.

Asian stocks edged higher on Wednesday, 1 September 2010, on positive economic data in US and China. The key benchmark indices in Hong Kong, South Korea, Indonesia, Taiwan, Singapore and Japan were up by between 0.43% to 1.26%. But, China's Shanghai Composite declined 0.60%.

China's manufacturing activity accelerated in August 2010, two competing surveys showed Wednesday, supported by rising domestic orders related to construction activity. The HSBC China Manufacturing Purchasing Managers Index, compiled by Markit, rose to 51.9 from 49.4, rebounding into expansionary territory after readings in July indicated the first contraction in activity in 16 months.

A rival PMI released by the government-run China Federation of Logistics and Purchasing rose to 51.7 from 51.2 in July, also indicating an expansion in manufacturing activity. The Federation's PMI had indicated manufacturing activity moderated for the third straight month in July. But unlike the HSBC survey, the Federation's PMI reading still showed an expansion in manufacturing.

Trading in US index futures indicate the Dow could jump 100 points at the opening bell on Wednesday, 1 September 2010.

The BSE 30-share Sensex rose 234.75 points or 1.31% to 18,205.87. The index rose 256.02 points at the day's high of 18,227.14 in late trade. The Sensex rose 56 points at the day's low of 18,027.12 in early trade.

The S&P CNX Nifty rose 69.45 points or 1.29% to 5,471.85.

The BSE Mid-Cap index was up 1.67% and the BSE Small-Cap index was up 1.81%. Both these indices outperformed the Sensex.

The market breadth, indicating the health of the market, was strong. On BSE, 2203 shares rose while 749 shares declined. A total of 112 shares remained unchanged.

From the 30-share Sensex pack, 27 stocks rose while the rest of them fell.

Index heavyweight Reliance Industries rose 1.92% to Rs 936.45. The stock had lost 3.05% on Tuesday (31 August 2010) after the company after trading hours on Monday, 30 August 2010, said it had acquired 14.12% stake in EIH from Oberoi Hotels and certain other promoters of EIH for a total consideration of about Rs 1021 crore. RIL said it has full faith and would support the management of EIH and there will be no change in management, operation or control of EIH. The deal price works out to Rs 184 a share. Shares of EIH rose 2.68% to Rs 143.70.

India's largest private sector bank by market capitalisation ICICI Bank rose 1.77% to Rs 994.60.

India's second largest software exporter by sales Infosys Technologies rose 2.54% to Rs 2775.75.

India's largest motorcycle maker by sales Hero Honda Motors fell 1.85% to Rs 1758.65.

Mortgage lender HDFC fell 0.42% at Rs 622.50, off day's high of Rs 649.80. The stock hard risen in early trade after it increased its retail prime lending rate (PLR) by 50 basis points (bps) to 14.25%. This is the first time HDFC is increasing its PLR in two years.

Recently, an influential foreign brokerage cut its rating on HDFC to "sell" from "neutral". The foreign brokerage has attributed the downgrade on the stock to lack of near-term catalysts, intensifying competition in the housing finance segment and rising wholesale borrowing costs from low levels.

India's largest state-run oil explorer by market capialisation ONGC fell 0.38%. to Rs 1333.60.

Telecom stocks were in demand as the Department of Telecommunications will start the process of allocating third generation (3G) spectrum from today, 1 September 2010, which will pave way for the roll out of advanced mobile services by private operators in their respective circles for which they have bagged the spectrum.

Reliance Communications (up 4.94%), Bharti Airtel (up 3.10%), MTNL (up 2.54%), Tata Teleservices (Maharashtra) (up 1.79%) and Idea Cellular (up 0.91%), rose.

The country's top two mobile firms Bharti Airtel and Reliance Communications, each won 13 of the 22 telecom zones on offer while other major operators Vodafone Essar, Idea Cellular and Tata won a total of 9, 11 and 9 circles, respectively.

Idea had paid Rs 5,765 crore for 11 circles, Bharti had paid Rs 12,290 crore for 13 circles, RCom had paid Rs 8,583 crore for 13 circles. Among the unlisted bidders, Vodafone paid Rs 11,617 crore for 9 circles, Aircel paid Rs 6,498 crore for 13 circles, Tata Teleservices paid Rs 5,864 crore for 8 circles and Sing Tel shelled out Rs 337 crore for 3 circles. Videocon and Etisalat did not get any 3G spectrum in any circle.

Select auto makers rose after disclosing August sales data. India's largest tractor and utility vehicles maker Mahindra & Mahindra rose 0.29%, as sales jumped 29% to 28,900 units.

Maruti Suzuki India rose 1.38% as total vehicle sales grew 23.6% to 1.04 lakh in August 2010 over August 2009. This is the highest ever monthly sales recorded by the company.

TVS Motor Company rose 1.30% as total vehicle sales in August rose 34% to 1,70,735 units in August 2010 over August 2009.

India's largest truck maker by sales Tata Motors rose 0.11%. The company's total vehicle sales rose 32% at 65,938 units in August 2010 over August 2009. However, on a month-month basis, the sales were down 2.7%.

Auto component makers rallied on the back of strong auto sales in August. Clutch Auto, Steel Strips Wheels, Ramkrishna Forgings, CEAT, Minda Industries, Phoenix Lamps, Banco Products, Sona Koyo Steering, Gabriel, Automotive Axles, Subros, Apollo Tyres, Lumax Industries and Bharat Seats rose by 0.71% to 16.18%.

Metal and mining shares rallied. Hindustan Zinc, NMDC, Hindalco Industries, JSW Steel, Tata Steel, Sterlite Industries, Sesa Goa, Welspun Corp, Jindal Steel & Power, Jindal Saw, National Aluminium Company and Steel Authority of India rose by 0.59% to 6.62%.

IT stocks rose across the board. Infosys Technologies, TCS, Wipro, Tech Mahindra, Rolta India, Oracle Financial Services Software, Patni Computer, MphasiS and HCL Technologies were up by 0.78% to 2.67%.

Realty stocks, which were beaten down in previous trade, were in demand today, 1 September 2010. Sobha Developers, Anant Raj Industries, Indiabulls Real Estate, Peninsula Land, Unitech, HDIL, DLF, Parsvnath Developers, Mahindra Life Space Developers, Phoenix Mills, Orbit Corporation, Ansal Properties & Infrastructure, and Omaxe, rose by 1.05% to 5.34%. The BSE Realty index had corrected 1.71% on Tuesday, 31 August 2010.

Select PSU stocks were in demand. Hindustan Copper, State Trading Corporation of India, Dredging Corporation of India, MMTC and NMDC rose 4.10% to 17.68%.

Shares of State Trading Corporation of India soared on reports the company has bagged NTPC's tender to ship 12 million tonnes coal from Indonesia. STC pipped three other companies -- MMTC India, Metal Scrap Trading Corporation and Coal India to bag the tender that was floated about two weeks ago, reports suggest.

Air carriers rose after state-run oil marketing companies reduced jet fuel prices. Jet Airways, Kingfisher Airlines and SpiceJet were up by 0.51% to 5.14%.

State-owned oil marketing companies -- BPCL, HPCL and Indian Oil Corporation -- have cut jet fuel prices by 4% to Rs 41,388 a kiloliter (kl) from Rs 43,188 a kl in Mumbai from Tuesday (31 August 2010) mid-night. Rates in Delhi came down by Rs 1,715 per kl, or 4.09%, to Rs 40,138 per kl.

Piramal Healthcare reported a highest turnover of Rs 475.03 crroe on BSE. Bajaj Auto (Rs 213.88 crore), Midfield Industries (Rs 124.77 crore), Prakash Steelage (Rs 118.51 crore) and Hindustan Copper (Rs 116.92 crore), were the other turnover toppers on BSE.

Cals Refineries clocked a highest volume of 1.96 crore shares on BSE. Shree Ashtavinayak Cine Vision (1.29 crore shares), Birla Power Solutions (1.01 crore shares), Piramal Healthcare (94.72 lakh shares) and JCT Electronics (90.48 lakh shares), were the other volume toppers on BSE.