Banking, metal stocks lead late rebound

In a complete turnaround, the key benchmark indices ended on a firm note, with metal and banking stocks staging a strong rebound in the last 40 minutes or so of trade. The BSE Sensex and the S&P CNX Nifty regained the psychological 20,000 and 6,000 levels respectively in late trade. Seven out of 13 sectoral indices on BSE rose. Banking major State Bank of India hit a record high at the fag end of the trading session. Trading was choppy throughout the session ahead of the Allahabad High Court's verdict on the Ayodhya issue.



The market breadth was negative, contrasting positive breadth in early trade. The BSE 30-share Sensex jumped 112.78 points or 0.57%, up close to 205 points from the day's low and off close to 46 points from the day's high.

NSE's volatility index, India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, inched up 0.41% to 22.25. The index had risen 4.47% to 22.16 on Wednesday, 29 September 2010. The index had dropped 5.14% to 21.21 on Tuesday, 28 September 2010. The index had risen 2.99% to 22.36 on Monday, 27 September 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.

Intraday volatility was high as traders rolled over positions in the derivatives segment, from the near-month September 2010 series, to October 2010 series, ahead of the expiry of the near-month September 2010 derivatives contracts today, 30 September 2010. The market moved between positive and negative terrain in early trade. It slumped to intra-day low in morning trade. The market extended losses to hit fresh intra-day low in mid-morning trade.

The market pared losses after hitting fresh intraday low in early afternoon trade. The intraday recovery gathered steam in afternoon trade. The market weakened once again after turning positive for a brief period in mid-afternoon trade. The Sensex reversed losses to hit fresh intraday high in late trade.

The food price index rose 16.44% while the fuel price index climbed 10.73% in the year to 18 September 2010, government data released toady showed. In the prior week, annual food and fuel inflation stood at 15.46% and 11.48% respectively. The primary articles index was up 18.31% in the latest week compared with an annual rise of 16.80% in the previous week, both under a new series of data with a different base year of 2004-05, new components and weightings. The wholesale price index, the most widely watched gauge of prices in India, rose 8.5% in August 2010.

The Lucknow bench of the Allahabad high court today, 30 September 2010, ruled that the ownership of the disputed site in Ayodhya will be divided into three parts: the site of the Ramlala idol will go to Lord Ram, Nirmohi Akhara will get Sita Rasoi and Ram Chabutara and the Sunni Wakf Board will get the rest. The court also ordered that a status quo at the site for three months. The decision hit the market after trading hours.

The dispute revolved around the ownership of a piece of land, where once stood the Babri Masjid but is claimed to be the birth place of Lord Ram by Hindu groups.

In global news, Moody's Investor Service on Thursday downgraded Spain's debt rating to Aa1 from AAA, with a stable outlook, in a move that has largely expected by financial markets this week. Spain had been on a three-month rating review by Moody's, which was the last of the three main ratings agencies to hold an AAA rating on Spanish debt. Moody's said the country's weak growth prospects and the "challenge this presents for fiscal consolidation," were key reasons for the downgrade, citing "considerable deterioration" of the government's fiscal strength. Moody's said Spain's economy would grow only 1% annually on average for the next few years, against higher, though sluggish, rates in the rest of Europe.

Meanwhile, Ireland's central bank said Irish lenders could need as much as 14.3 billion euros ($19.4 billion) more capital. The latest round of capital injection plans could lift the total bill for rescuing the country's banks to somewhere approaching 50 billion euros, including a surprise further capital injection for Allied Irish Banks, which will leave the firm almost entirely in the hands of the government.

In an interview with the Financial Times, Irish Finance Minister Brian Lenihan said the country had no choice other than to rescue the banks and that letting Anglo Irish Bank fail would "bring down" Ireland.

European stocks fell Thursday as concerns over the fiscal positions of some of the 'peripheral' euro-zone countries continue to undermine sentiment. The key benchmark indices in UK, France and Germany were down by 0.20% to 0.82%.

Germany's unemployment rate dropped to 7.2% in September as the strength of Europe's biggest economy helped the labor market recover quickly from the economic crisis, data showed Thursday.

Most Asian stocks fell on Thursday amid concern Europe's debt crisis will slow a global economic recovery and after Japan's Nintendo Co. cut its profit forecast. The key benchmark indices in Indonesia, Hong Kong, Japan, Singapore and Taiwan fell by between 0.04% to 1.99%. But, the key benchmark indices in China and South Korea rose by between 0.17% to 1.72%.

Growth across Asia and the Pacific will be the fastest this year since 2007 as the region recovers strongly from the global crisis, but will moderate in 2011, the Asian Development Bank said on Tuesday, 28 September 2010. Developing Asia, a diverse group of 45 economies including China, India, Tajikistan, Samoa, and Indonesia, would grow 8.2% in 2010 and 7.3% in 2011, the ADB said in its update of its 2010 Asian Development Outlook. The 2010 growth forecast has been revised up from 7.5% in April and a forecast of 6.4% a year ago; the 2011 forecast is unchanged from April. Indian growth was expected to pick up slightly to 8.7% in 2011 from 8.5% this year, driven by domestic demand, company profits and favourable financing conditions, the ADB said.

Trading in US index futures indicated that the Dow could fall 21 points at the opening bell on Thursday, 30 September 2010. US index futures were off initial lows.

Closer home, foreign funds continue to aggressively mop up Indian shares. Foreign institutional investors (FIIs) bought shares worth a net Rs 756.37 crore on Wednesday, 29 September 2010, as per the provisional data from the stock exchanges.

FII inflow in September 2010 totaled Rs 21115.54 crore (till 29 September 2010), as per data from the stock exchanges. FII inflow in the calendar year 2010 totaled Rs 40,610.64 crore (till 29 September 2010).

But, a section of the market is concerned that the large initial public offer (IPO) of state-run Coal India in mid-October 2010 would soak liquidity from the secondary equity markets. The government plans to raise about Rs 15000 crore to Rs 16000 crore from divestment of 10% stake in Coal India. The IPO is billed as the country's largest issue ever.

On the macro front, the growth of core infrastructure industries slowed to 3.7% in August 2010, as compared to 6.4% in the same month last year, according to data released by the government. These six segments account for 26.7% of the country's total industrial output.

The BSE 30-share Sensex rose 112.78 points or 0.57% to 20,069.12. The Sensex rose 158.39 points at the day's high of 20,114.73 in late trade. The index fell 91.88 points at the day's low of 19,864.46 in early afternoon trade.

The S&P CNX Nifty rose 38.65 points or 0.65% at 6,029.95.

The BSE Mid-Cap index fell 0.24%. The BSE Small-Cap index rose 0.11%. Both these indices underperformed the Sensex.

The market breadth was negative, in contrast with positive breadth in early trade. On BSE, 1644 shares declined while 1309 shares advanced. A total of 120 shares remained unchanged.

BSE clocked turnover of Rs 4558 crore, lower than Rs 4719 crore on Wednesday, 29 September 2010.

The BSE FMCG index (up 1.40%), Metal index (up 0.82%) and the banking index Bankex (up 0.76%), outperformed the Sensex.

The BSE IT index (up 0.26%), Capital Goods index (up 0.07%), Realty index (up 0.02%), Healthcare index (down 0.09%), Power index (down 0.34%), PSU index (down 0.51%), Auto index (down 0.51%), Consumer Durables index (down 0.89%) and Oil & Gas index (down 1.17%), underperformed the Sensex.

From the 30 share Sensex pack, 19 rose and the rest fell.

Some FMCG stocks rose on renewed buying. ITC, Dabur India, Nestle India, Hindustan Unilever, Britannia Industries and Marico rose by between 0.24% to 2.53%.

Copper major Sterlite Industries rose 3.28% on bargain hunting after it slumped 8.5% on Wednesday. The stock had declined sharply on Wednesday after the Madras High Court on Tuesday, 28 September 2010, ordered closure of Sterlite Industries' copper smelting plant at Tuticorin after noting that the company has failed to comply with environmental issues.

Sterlite's Tuticorin operations include a smelter, refinery, phosphoric acid plant, sulphuric acid plant and copper rod plant. According to reports, Sterlite's copper division accounts for 9-10% of total profit after tax and the impact will depend on the outcome of the legal process.

In a statement issued on Tuesday, 28 September 2010, Sterlite Industries stated that the company is awaiting the full text of the order to decide on necessary recourse measures. The statement suggested that the Tuticorin smelter has been operating for more than 12 years and has been in compliance with necessary rules and regulations. It deploys ISA smelt process, which is considered globally as an environmentally advanced technology.

Among other metal stocks, Hindalco Industries, JSW Steel, Jindal Steel & Power, Steel Authority of India, Jindal Saw and Sesa Goa rose by between 0.03% to 2.61%.

India's largest steel maker by sales Tata Steel fell 0.21% to Rs 651.70. The stock came off the day's low of Rs 642.50. Tata Steel UK Holdings, a 100% indirect subsidiary of Tata Steel, signed a senior facility agreement with a syndicate of 13 banks for an over $5-billion (Rs 22,500 crore) term loan and revolving credit facility, intended to replace the current term loan and revolving credit facilities entered into at the time of the acquisition of Corus in 2007.

Banking stocks rebounded from initial losses. India's second largest private sector bank by net profit HDFC Bank rose 1.45%. India's largest private sector bank by net profit ICICI Bank rose 0.80%.

India's largest commercial bank by net profit and branch network State Bank of India (SBI) rose 1.22% to Rs 3233.20. The stock hit a record high of Rs 3268 today.

India's largest dedicated housing finance firm by revenue HDFC rose 3.29%.

Index heavyweight Reliance Industries (RIL) fell 1.27% to Rs 986.35. RIL has reportedly revived plans to build a cracker and downstream facilities in Jamnagar. Plans for the petrochemical complex, which is located in a special economic zone, were put on ice in the wake of the global financial downturn. The new complex will complement the site's second refinery, reports suggest.

India's top car maker, Maruti Suzuki rose 0.74% to Rs 1440.95 after Chairman R.C. Bhargava said on Thursday that the company expects September 2010 vehicle sales to rise 32% to 33% from the same period a year earlier. Maruti, 54.2% owned by Japan's Suzuki Motor, also expects sales in September 2010 to be higher than in August 2010, Bhargava said.

India's largest engineering and construction firm by sales Larsen & Toubro rose 0.50% to Rs 2044.70, reversing initial losses. The company announced during market hours today that it won orders worth Rs 700 crore from water & material handling sectors.

Mahindra Satyam clocked a highest turnover of Rs 161.74 crore on BSE. Orchid Chemicals & Pharmaceuticals (Rs 159.98 crore), State Bank of India (Rs 149.23 crore), Edserv Softsystems (Rs 108.99 crore) and Reliance Industries (Rs 108.96 crore), were the other turnover toppers on BSE in that order.

Cals Refineries reported the highest volume of 4.96 crore shares on BSE. Mahindra Satyam (1.75 crore shares), Birla Power Solutions (1.63 crore shares), BAMPSL Securities (1.49 crore shares) and Shree Ashtavinayak Cine Vision (1.46 crore shares), were the other volume toppers on BSE in that order.