BSE Mid-Cap, Small-Cap indices edge higher

The key benchmark indices edged lower in thin trade as profit taking emerged ahead of a crucial economic data in the US later in the global day. US is the world's biggest economy. The market snapped last two days' gains. The BSE 30-share Sensex was down 16.88 points or 0.09%, off close to 95 points from the day's high and up close to 15 points from the day's low. The S&P CNX Nifty fell below the psychological 5,500 mark, after crossing that level at the onset of the trading session. Metal stocks fell. But, fertilizer, hotel, realty and auto stocks rose. Index heavyweight Reliance Industries (RIL) edged lower.



The market edged higher in early trade, tracking gains in Asian stocks. The market moved in a narrow range in morning trade. The market slipped into the red to hit fresh intraday low in mid-morning trade as investors turned cautious ahead of the key US non-farm payroll data. The market was hovering near the flat line in early afternoon trade. The key benchmark indices moved between gains and losses after hitting a fresh intraday low in afternoon trade. The market moved in a narrow range in mid-afternoon trade. The market hit a fresh intraday low 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 down 1.8% at 15.86. 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.

There is no concern on capital flows into India as of now, K.C. Chakrabarty, deputy governor at the Reserve Bank of India, said on Friday, 3 September 2010.

Meanwhile, food inflation inched higher in the third week of August as did inflation for the Fuel group and the Primary Articles group, data released by the Government on Friday, 3 September 2010, showed. Inflation for the Food Articles group stood at 10.86% for the year to 21 August 2010, as against 10.05% in the previous week, the Commerce & Industry Ministry data showed. Higher prices of fruits and vegetables led to food inflation accelerating in the latest data.

Inflation for the Primary Articles group also rose to 15.19% from 14.75% in the year through 14 August 2010, the data showed. Inflation for the Fuel & Power group increased to 12.71% from 12.57% in the preceding week, according to the Commerce Ministry data.

The yield on the benchmark 10-year 2020 bond was was almost unchanged at Thursday's (2 September 2010)'s close of 7.98%. The yield on the second most traded, 8.13% 2022 bond was hovering at 8.05, a tad higher than Thursday's close of 8.04%.

Last month, D. Subbarao, governor of the Reserve Bank of India (RBI) said that there is evidence that inflationary pressures in the economy are easing.

Growth in India's service sector slowed for a second month in August 2010 after hitting a two-year peak in June 2010, but businesses were more optimistic about the outlook, a survey showed on Friday, 3 September 2010. The HSBC Markit Business Activity Index, based on a survey of 400 Indian firms, eased to 59.3 in August from 61.7 the previous month, but stayed well above the 50 mark that divides growth from contraction.

The data continued to reflect sharp growth in the Indian service sector, with the strongest expansions in postage & telecommunications as well as services such as sports clubs, the survey showed. The survey showed business expectations spiked to 72.3 in August from 67.8 in July, with almost half of the panelists saying they expect activity levels to rise over the coming year on the back of an improving global economy.

European stocks edged higher on Friday, 3 September 2010, tracking gains in the United States and Japan, but traders were cautious ahead of a key US labour market report. The key benchmark indices in UK, France and Germany were up by 0.32% to 0.63%.

The pace of growth in Britain's services sector slowed more than expected in August 2010, data indicated Friday. The CIPS/Markit services purchasing managers index fell to 51.3 from 53.1 in July 2010. Economists had forecast a slip to 52.8. A reading of more than 50 indicates growth in activity, while a figure of less than 50 signals contraction.

Retail sales volumes in the 16-nation euro zone rose 0.1% in July after a revised 0.2% rise in June, the European Union statistics agency Eurostat reported Friday. Compared to July 2009, sales rose 1.1%. Economists had forecast a flat monthly reading and a 0.7% year-on-year increase.

Activity in the 16-nation euro zone's private sector witnessed slower growth in August 2010. The Markit euro-zone August composite purchasing managers index fell to 56.2 from 56.7 in July 2010. The reading was slightly above a preliminary estimate last month of 56.1. Markit said its final August euro-zone PMI for the services sector rose to a three-month high of 55.9 from 55.8 in July 2010, topping a preliminary estimate of 55.6

The European Central Bank held interest rates at a record low on Thursday, 2 September 2010, and extended its liquidity safety-net in response to a lopsided recovery and worries about vulnerable banks. The ECB also raised growth forecasts for this year and next but ECB President Jean-Claude Trichet said while recent economic data had been stronger than expected, recovery would occur "at a moderate pace with uncertainty still prevailing".

The ECB extended its commitment to provide unlimited one-week and one-month funding until at least 18 January 2011. It will also offer unlimited funds at its three-month tenders until at least the end of this year.

Most Asian stocks rose on Friday, 3 September 2010, as investors took heart from improving US housing and jobs data amid lingering worries over the pace of the global economic recovery. The key benchmark indices in Singapore, Hong Kong, Indonesia, South Korea, Taiwan and Japan were up by between 0.24% to 1.42%. But, China's Shanghai Composite fell 0.01%.

Four of China's five biggest banks reported increases in special-mention loans in the second quarter from the preceding quarter, offering fresh evidence of potentially high credit risk in the local banking system, the China Securities Journal reported on Friday, 3 September 2010, citing its own statistics. Special-mention loans refer to loans that have a potential weakness or pose an unwarranted financial risk that, if not corrected, could weaken the asset and lead to higher risks.

China's banks issued a record CNY9.6 trillion worth of loans last year, triggering concerns about a potential surge in lenders' bad-loans ratios to crippling levels last seen in the first half of this decade.

South Korea's central bank revised down the nation's second-quarter economic growth rate Friday, as construction investment was less than previously thought. The Bank of Korea said real gross domestic product rose 1.4% during the quarter, compared to an initial estimated growth of 1.5% made in July.

US index futures were marginally higher. Trading in US index futures indicated that the Dow could gain 7 points at the opening bell on Friday, 3 September 2010.

US stocks rose in light volume on Thursday, 2 September 2010, as data showed improvement in housing and job market a day ahead of the critical monthly payrolls figures. The Dow Jones Industrial Average added 50.63 points, or 0.49% to 10,320.10. The Standard & Poor's 500 Index rose 9.81 points, or 0.91% to 1,090.10. The Nasdaq Composite Index gained 23.17 points, or 1.06% to close at 2,200.01.

Data from the National Association of Realtors showed pending home resales rose unexpectedly in July 2010 and a separate report showed new claims for unemployment insurance fell for a second straight week.

The key data due later in the global day today, 3 September 2010, is the US non-farm payroll for August 2010. Economists expect a decline of 100,000 jobs overall, and a rise of 41,000 private-sector jobs in August. The official unemployment rate is projected to rise to 9.6% from 9.5%.

US market remains closed on Monday, 6 September 2010, for the Labor Day holiday.

Closer home, exports rose for the ninth straight month in July 2010, growing an annual 13.2% to $16.24 billion, government data released on 1 September 2010 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 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 robust growth bolsters the case for further interest rate increases, and analysts anticipate a 25-basis point rate rise at a 16 September 2010 Reserve Bank of India (RBI) policy review.

The consumer price index (CPI) rose 11.25% in July 2010, slower than an annual rise of 13.73% a month ago, data early this week showed.

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.

The key monsoon rains were 16% above normal in the past week, compared with 29% above normal in the previous week, the weather office said on Thursday, 2 September 2010. The weekly reading reflects good showers over most parts of the country, except the eastern region, where the seasonal rains were poor. Cumulative rainfall since 1 June 2010 was 1% below normal, it said.

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 BSE 30-share Sensex was down 16.88 points or 0.09% to 18,221.43. The Sensex fell 31.81 points at the day's low of 18,206.50 at the fag end of the trading session. The index rose 78.01 points at the day's high of 18,316.32 in early trade.

The S&P CNX Nifty was down 6.75 points or 0.12% at 5,479.40. The Nifty hit a high of 5,510.40 in early trade.

The BSE Mid-Cap index was up 0.97% and the BSE Small-Cap index was up 0.94%. Both these indices outperformed the Sensex.

Most of the sectoral indices on BSE rose. Realty index (up 1.25%), Auto index (up 0.9%), Healthcare index (up 0.58%), PSU index (up 0.38%), IT index (up 0.26%), Power index (up 0.19%), banking sector index Bankex (up 0.18%), Consumer Durables index (up 0.15%), FMCG index (up 0.12%), Capital Goods index (down 0.01%) outperformed the Sensex.

The BSE Metal index (down 1.09 %) and Oil & Gas index (down 0.55%) underperformed the Sensex.

The market breadth, indicating the health of the market, was strong. On BSE, 1677 shares rose while 1260 shares declined. A total of 115 shares remained unchanged.

From the 30-share Sensex pack, 17 stocks fell while the rest of them rose.

BSE clocked turnover of Rs 4752 crore, lower than Rs 5269.87 crore on Thursday, 2 September 2010.

Index heavyweight Reliance Industries (RIL) fell 1.23% to Rs 925.60. RIL said on 1 September 2010 it bought additional 26.7 lakh shares or about 0.68% stake in EIH, raising its stake in the hotel chain to 14.8%. It may be recalled that RIL had early this week bought a 14.12% stake in EIH from EIH promoters in an off-market deal valued at Rs 1,021 crore, or an average price of Rs 184 a share.

Hotel shares rose. EIH, EIH Associates Hotels, UP Hotels, Indian Hotels, Hotel Leela Venture, Viceroy Hotels and Advani Hotel rose by between 0.02% to 4.86%.

Shares of software exporters reversed initial gains. India's largest software services exporter by sales TCS fell 0.74%, reversing initial gains. India's third largest software services exporter Wipro fell 0.52%. Wipro has appointed billionaire founder-chairman Azim Premji's oldest son Rishad Premji as chief strategy officer.

India's second largest software services exporter by sales Infosys rose 0.76% to Rs 2771.65. But, the stock came off the day's high of Rs 2802.

Most auto stocks gained on upbeat sales in August 2010. Ashok Leyland rose 1.28% after company reported a 56.35% jump in sales at 7,480 units in August 2010 over August 2009.

India's largest tractor and utility vehicles maker Mahindra & Mahindra (M&M) rose 0.57%. M&M's auto sales jumped 29% to 28,903 units in August 2010 over August 2009.

India's largest bike maker by sales Hero Honda Motors rose 2.14% after falling 3.73% on Thursday. The company reported 2.16% rise in total vehicle sales to 4.24 lakh units in August 2010 over August 2009.

Bike maker TVS Motor Company rose 1.43%. Total vehicle sales rose 34% to 1,70,735 units in August 2010 over August 2009.

Bajaj Auto rose 3.13%. Total sales rose 55% to 329,364 units in August 2010 over August 2009.

But, India's top small car maker by sales Maruti Suzuki India fell 0.31%, reversing initial gains. Total sales grew 23.6% to 1.04 lakh vehicles in August 2010 over August 2009. This is the highest ever monthly sales recorded by the company.

India's largest truck maker by sales Tata Motors fell 0.44%, reversing initial gains. Total 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%.

Realty stocks rose on renewed buying. Omaxe, Unitech, HDIL and Sobha Developers rose by between 0.27% to 2.85%.

DLF, India's largest real estate company by sales rose 0.45%, reversing initial losses. As per media reports, DLF has put on hold its plan to sell its non-core assets including ultra-luxury hotel chain Aman Resorts and wind energy business for the next three quarters.

FMCG stocks rose on good monsoon rains. Rural market contributes substantially to the top line of FMCG firms. Britannia Industries, Hindustan Unilever, Nestle India rose by between 0.33% to 1.12%.

Fertiliser shares rose on good monsoon rains this year. Deepak Fertilisers, Chambal Fertilisers & Chemicals, GSFC, GNFC and National Fertilizer rose by between 1.96% to 6.38%.

The fortunes of the fertilizer sector are directly linked to monsoon. A bountiful monsoon boosts sales whereas a drought hits sales adversely.

Leading Indian mobile operator by sales Bharti Airtel rose 1.6% after the company said it has appointed the son of its billionaire founder-chairman as a manager, setting the ball rolling for his eventual succession of the $27 billion company. Shravin Bharti Mittal, 23, one of twin sons of Sunil Bharti Mittal, will be part of Bharti's international operations in Africa, the company said in a statement. He may be elevated to the board of the company's international unit or equivalent position in future, the company said. Shravin Mittal will initially get an annual salary of 50,000 euros, according to a company statement.

Some capital goods stocks edged lower on profit taking. Larsen & Toubro, Bharat Heavy Electricals, SKF India fell by between 0.19% to 0.36%.

Banking stocks were mixed. India's second largest private sector bank by net profit HDFC Bank rose 0.57%, reversing initial losses. India's largest private sector bank by net profit ICICI Bank fell 0.32%, with the stock halting last four-day gains.

India's largest bank by net profit and branch network State Bank of India rose 0.56%, reversing initial losses. Punjab National Bank and Bank of Baroda fell by between 1.06% and 0.76%, respectively. But, Bank of India rose 1.46%.

Cals Refineries clocked the highest volume of 2.86 crore shares on BSE. Suzlon Energy (1.36 crore shares), Mahindra Satyam (1.28 crore shares), Birla Power Solutions (1.22 crore shares) and Prakash Steelage (87.58 lakh shares) were the other volume toppers in that order.

Piramal Healthcare clocked the highest turnover of Rs 446.11 crore on BSE. Prakash Steelage (Rs 159.22 crore), Midfield Industries (Rs 158.28 crore), Mahindra Satyam (Rs 117.09 crore) and Jindal Poly Film (Rs 92.54 crore) were the other turnover toppers in that order.