Investors lock profit after indices peak 32 month highs

The key benchmark indices took a breather after a three-day winning streak with negative global cues playing the spoilsport. Investors took some cash off the table after the recent strong gains which saw indices scale their 32 month highs. High volatility was the hallmark of the day's trading session. Both the BSE Sensex and S&P CNX Nifty closed below the psychological levels of 20,000 and 6,000 respectively after trumping these levels in early trade to scale 32-month peak. The BSE 30-share Sensex was down 59.83 points or 0.3%, off close to 160 points from the day's high and up close to 140 points from the day's low.



Asian markets were mixed. US markets were little changed Tuesday after the US Federal Reserve hinted it could take additional measures to stimulate economic growth.

The market breadth was weak, contrasting strong breadth in opening session of trade. Telecom and realty stocks dived on selling pressure. High beta infrastructure stocks took a breather after the recent surge. Select auto stocks gained on expectations of jump in demand for vehicles in festive season. IT pivotals were mixed. Software heavyweights TCS and Infosys, tractor and utility vehicles giant Mahindra & Mahindra and truck major Tata Motors, all struck record highs in intra-day trade. Index heavyweight Reliance Industries edged lower after a firm start.

European shares fell on Wednesday, led by banks on lingering concerns over the pace of the global economic recovery following the latest Federal Reserve's assessment. The key benchmark indices in France, Germany and UK were down by between 0.56% to 1.18%.

Asian markets erased early gains to slide in negative zone Wednesday. The key benchmark indices in Indonesia and Japan and were down 0.64% and 0.37%. However, indices in Singapore and Hong Kong rose 0.02% and 0.21% respectively.

The mainland Chinese markets are closed for a holiday for the remainder of this week. Markets in South Korea and Taiwan are also closed for holidays.

Trading in US index futures indicate that the Dow could fall 27 points at the opening bell on Wednesday, 22 September 2010.

US markets ended mixed on Tuesday after the Federal Reserve hinted it could take additional measures to stimulate economic growth. The Dow Jones Industrial Average rose 7.41 points, or 0.07%, to 10761.00, closing at its highest level since May. The Nasdaq Composite fell 6.48 points, or 0.3%, to 2349.35 and the Standard & Poor's 500-share index fell 2.93 points, or 0.3%, to 1139.78.

The Fed concluded its one-day policy meeting without announcing additional steps to boost the recovery. The US central bank kept its key interest rate unchanged yesterday and refrained from expanding its holdings of securities. But its officials signaled they are uncomfortable with the recent low levels of inflation and said they are prepared to take additional action to boost the economic recovery.

Back home, foreign institutional investors (FIIs) are in a buying spree in India. As per provisional figures, foreign institutional investors (FIIs) bought shares worth a net Rs 2311.77 crore on Tuesday, 21 September 2010. Domestic institutional investors dumped shares worth Rs 1259.98 crore on that day.

FII inflow in September 2010 totaled Rs 13,738.45 crore (till 20 September 2010). FIIs had bought equities worth Rs 11687.50 crore in August 2010. FII inflow in the calendar year 2010 totaled Rs 71824.50 crore (till 16 September 2010).

Global fund tracker EPFR Global on Friday, 17 September 2010, said developing-nation equity funds received inflow of about $3.3 billion in the week to 15 September 2010 as Chinese industrial output gains bolstered sentiment. Inflow into Asia ex-Japan equity funds hit a seven-week high. Flows into India equity funds hit an eight-week high.

Meanwhile, the Union Cabinet on Thursday, 16 September 2010, approved amendments to the Forward Contracts (Regulation) Act 1952, paving the way for the introduction of the Forward Contracts (Regulation) Amendment Bill, 2010 in Parliament. If passed by the both the Houses, it will pave the way for local and foreign institutional investors in commodity futures and bring in new products.

At a mid-term policy review on Thursday, 16 September 2010, the Reserve Bank of India (RBI) signaled that it may be nearing a pause in its current tightening cycle. The central bank said its rate and liquidity actions since October 2009 have been driven by two considerations -- normalisation of the monetary policy stance as the crisis abated and inflation management. The Reserve Bank of India believes that the tightening that has been carried out over this period has taken the monetary situation close to normal, it said. Consequently, the role of normalisation as a motivation for further actions is likely to be less important, the RBI said.

The RBI on Thursday, 16 September 2010 raised its repo rate, or benchmark lending rate, by a quarter point to 6%, at a mid-term monetary policy review. The central bank also hiked the reverse repo rate, or the rate at which it borrows funds, by half a point to 5%. Both these changes will take place with immediate effect.

India's exports grew 22.5% to $16.64 billion in August 2010 over August 2009, while imports rose 32.3% to $29.7 billion data last week showed. As a result, trade deficit, or the difference between exports and imports, widened to $13.5 billion. During the April-August 2010 period, exports posted a growth rate of 28.6% to $85.27 billion over the previous year, while total imports grew by 33.1% to $141.89 billion, according to initial estimates released by the Ministry of Commerce and Industry.

Cumulative rainfall in the country during 1 June to 15 September was 2% above normal, IMD data showed. 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 59.83 points or 0.3% to 19,941.72. The Sensex gained 103.99 points at the day's high of 20,105.54, its highest level since 15 January 2008, in early trade. The index lost 197.53 points at the day's low of 19,804.02 in mid-afternoon trade.

The S&P CNX Nifty was down 18.05 points or 0.3% to 5,991. Nifty struck a high of 6,037.40 in early trade, its highest level since 16 January 2008.

The market breadth, indicating the health of the market, was weak contrasting a strong breadth in opening session. On BSE, 1869 shares declined while 1115 shares advanced. A total of 96 shares remained unchanged.

The total turnover on BSE amounted to Rs 5211 crore lower than Rs 5431.78 crore on Tuesday, 21 September 2010.

Among the 30-share Sensex pack, 15 declined while the rest gained.

The BSE Mid-Cap index fell 0.37% and underperformed the Sensex. The BSE Small-Cap index fell 0.22% and outperformed the Sensex.

The BSE Consumer Durables index (up 0.99%), BSE Banking index Bankex (up 0.42%), BSE FMCG index (up 0.21%), BSE Auto index (up 0.08%), BSE Metal index (up 0.06%), BSE Power index (up 0.02%), BSE PSU index (down 0.06%), BSE Healthcare index (down 0.25%) outperformed the Sensex.

The BSE Realty index (down 1.6%), BSE IT index (down 1.33%), BSE Oil & Gas index (down 1.03%) and BSE Capital goods index (down 0.94%) and underperformed the Sensex.

High beta infrastructure stocks took a breather after the recent surge. India's largest dam builder by sales Jaiprakash Associates lost 2.76% to Rs 119.70 and was the top loser from the Sensex pack.

Larsen & Toubro, Reliance Infrastructure and Bharat Heavy Electricals fell by between 0.57% to 1.97%.

Index heavyweight Reliance Industries (RIL) fell 1.32% to Rs 1019.25, off day's high of Rs 1042.40. Reports last week indicated RIL is in advanced talks with US-based Chesapeake Energy to buy a stake in Eagle Ford shale gas project in the US.

Telecom stocks dived on selling pressure. India's largest listed cellular services provider by sales and Bharti Airtel declined 0.9% while India's second largest listed cellular services provider by sales Reliance Communications (RCom) fell 2.08%.

Auto stocks were mixed in volatile trade. India's top small car maker by sales Maruti Suzuki India jumped 3.59% to Rs 1463.45 and was the top gainer from the Sensex pack. Reportedly, the company is planning to roll out a multi utility vehicle at the start of 2012.

India's largest tractor and utility vehicles maker Mahindra & Mahindra (M&M) rose 0.15% to Rs 682.95, off sharply from a record high of Rs 744.70 struck today.

India's leading bike maker by sales Hero Honda Motors slipped 0.11% to Rs 1809.20, rebounding sharply from day's low of Rs 1765. Reports Honda Motor Co of Japan is looking to end its joint venture with the Munjal family – the promoters of Hero Honda Motors. Both own 26% each in the bike maker triggered early fall.

India's top truck maker by sales Tata Motors fell 0.63% to Rs 1070.65 on profit booking after striking a lifetime high of Rs 1089.30 today. Tata Motor's Nano, the world's cheapest car, which comes with a 600-cc petrol engine, is reportedly set to roll out in a diesel avatar apart from new petrol variants. The new engines will have capacities of 1,000 cc and above.

A recent Society of Indian Automobile Manufacturers data showed domestic automobile sales rose 25.24% to a record 12.63 lakh units in August 2010 in over August 2009, boosted by rising incomes, new models and lower borrowing costs. Exports climbed 28% to 191,033 units.

Software pivotals saw mixed trend. India's largest IT exporter by sales TCS lost 1.91% to Rs 934.55 after hitting an alltime high of Rs 959 today. The company before market hours on 15 September 2010 announced that it entered into a significant multi-year agreement with SUPERVALU Inc, one of the largest grocery retailers in North America, for full services engagement.

India's second largest software services exporter by sales Infosys slipped 1.85% to Rs 3002, retracing from record high of Rs 3066 today. Recent reports indicated the company has won approval for a special economic zone in Bangalore.

India's third largest software services exporter by sales Wipro rose 0.92% after the company's American depository receipt, or ADR rose 1.08% to $14.05 in the New York Stock Exchange on Tuesday, 21 September 2010.

Realty stocks fell on worries rate hike could crimp demand for housing properties. Ansal Properties, Omaxe, Indiibulls Rela Estate, DLF and Unitech fell by between 0.74% to 2.87%.

Metal stocks were mixed. Jindal Steel & Power, Tata Steel, Sterlite Industries and Steel Authority of India rose by between 0.04% to 0.88%. But, Hindustan Zinc, Hindalco Industries and National Aluminum Company fell by between 0.61% to 1.49%.

Mahindra Satyam clocked highest volume of 4.92 crore shares on BSE. Cals Refineries (2.89 crore shares), Sanraa Media (1.27 crore shares), Shree Ashtavinayak Cine Vision (1.18 crore shares) and Delta Corp (1.09 crore shares) were the other volume toppers in that order.

Mahindra Satyam clocked the highest turnover of Rs 529.82 crore on BSE. State Bank of India (Rs 194.65 crore), Tata Steel (Rs 127.50 crore), Tech Mahindra (Rs 97.65 crore) and Midfield Industries (Rs 96.79 crore) were the other turnover toppers in that order.