Market ends marginally lower

The key benchmark indices registered marginal losses amidst high intraday volatility 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 on Thursday, 30 September 2010. An intraday recovery in European stocks and US index futures, aided a strong intraday rebound on the domestic bourses.



The barometer index BSE Sensex closed above the psychological 20,000 level, having moved above and below that level since afternoon trade. The 50-unit S&P CNX Nifty regained the crucial 6,000 level after falling below that level in intraday trade. IT and metal socks fell. But, capital goods stocks rose. Index heavyweight Reliance Industries pared losses in volatile trade.

The market breadth was negative, contrasting positive breadth earlier in the day. The BSE 30-share Sensex was down 12.52 points or 0.06%, off close to 55 points from the day's high and up close to 120 points from the day's low.

NSE's volatility index, India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, dropped 5.14% to 21.21. The index had risen 2.99% to 22.36 on Monday, 27 September 2010.

The market moved between positive and negative terrain near the flat line in early trade. The market firmed up in morning trade led by gains in shares of state-run banks. The key benchmark indices reversed direction, soon after hitting fresh intraday highs in mid-morning trade as weak Asian stocks weighed on investor sentiments.

The Sensex hit a fresh intraday low in early afternoon trade. Selling intensified in afternoon trade after European market opened lower. The market came off the lower level in mid-afternoon trade, soon after hitting a fresh intraday low. The intraday recovery gathered steam in late trade.

The Supreme Court today, 28 September 2010, lifted the stay on Allahabad High Court's (HC) verdict on the Ram Janmabhoomi-Babri Masjid title suit case. However, the apex court has not fixed any date for HC to give verdict. Attorney General G E Vahanvati, appearing before a three-judge special bench headed by Chief Justice S H Kapadia, said the most preferred solution to the problem would be settlement but it has not taken place and the uncertainty which is prevailing should not be allowed to continue.

Today's crucial hearing assumed significance as the Sunni Central Waqf Board and Akhil Bharat Hindu Mahasabha, two opposite parties to the title suit, have ruled out the scope of reconciliation in their affidavits filed in the apex court.

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. 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.

Foreign institutional investors (FIIs) bought shares worth a net Rs 1307.20 crore on Monday, 27 September 2010, on the top of a robust inflow of Rs 1,338.70 crore on Friday, 24 September 2010.

FII inflow in September 2010 totaled Rs 24,083.70 crore (till 27 September 2010). FIIs had bought equities worth Rs 11,687.50 crore in August 2010. FII inflow in the calendar year 2010 totaled Rs 83,465.30 crore (till 27 September 2010).

Asia ex-Japan equity funds had their best week of inflows in more than 15 months for the week ended 22 Sept 2010, according to global fund tracker EPFR Global. The heavy flows into Asia ex-Japan were mainly driven by interest in India and China. New money heading to India equity funds reached their highest level in nearly three years while China equity funds had their best week in over four months.

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.

Meanwhile, the Centre reportedly wants to amend the Contract Labour Act of 1971 to ensure a fair deal for contract workers, with a vast part of the workforce now employed on contract basis without any job security. The proposed amendment mandates that contract workers get the same wages, facilities and benefits as regular employees, reports suggest.

Once the proposed changes become law, it would constitute a significant reform in India's archaic labour legislations that are out of sync with post-liberalisation industrial realities. Firstly, it would take cognisance of the fact that contract labour is here to stay -- something that trade unions have been refusing to accept for two decades. More importantly, the changes could set the stage for Indian industry to hire workers with more freedom and give Indian youth a chance to realise the country's much-vaunted demographic dividend.

European stock markets pared early losses to trade close to flat on Tuesday, 28 September 2010, as gains for US stock market futures helped investors in Europe look past worries about sovereign debt. The key benchmark indices in UK and France were down by 0.12% to 0.27%. Germany's DAX rose 0.11%.

Analysts believe Moody's Investors Service could downgrade Spanish debt from its current AAA rating this week, according to several media reports published on Tuesday. At the end of June 2010, Moody's threatened to cut its rating by two notches and put it under a three-month review owing to deteriorating economic conditions. That deadline expires this week and analysts believe Moody's may need to catch up with Standard & Poor's and Fitch, which have already cut the debt rating of Spain to AA.

British retailers saw a rise in September sales compared to the same month last year, the Confederation of British Industry said Tuesday.

Earlier in the global day, most Asian stocks retreated on Tuesday, tracking lackluster showing by Wall Street on Monday triggered by worries European government finances are worsening, raising concern the global recovery will stall. The key benchmark indices in China, Hong Kong, Japan, Taiwan and South Korea fell by between 0.03% to 1.12%. But, Indonesia's Jakarta Composite rose 0.13%.

Shares in China were weighed down by concerns Beijing may launch further measures to cool the property sector. China will release on Wednesday, 29 September 2010, data on manufacturing purchasing managers index (PMI). The consensus is that the China PMI will rise to 52.8 in September 2010 from 51.7 in August 2010.

US index futures edged higher in volatile trade. Trading in US index futures indicated that the Dow could gain 14 points at the opening bell on Tuesday, 28 September 2010.

Closer home on the macro front, the food price index rose 15.46% while the fuel price index climbed 11.48% in the year to 11 September 2010, government data on Thursday, 23 September 2010 showed. In the prior week, annual food and fuel inflation stood at 15.10% and 11.48% respectively.

The primary articles index was up 16.80% in the latest week compared with an annual rise of 16.22% in the previous week, which was the first reading of 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.

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.

The cumulative rainfall in the country during 1 June to 22 September was 4% above normal, IMD data showed. Meanwhile, reports suggested monsoon rains have finally started withdrawing from grain-producing regions of northwest India. 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 12.52 points or 0.06% to 20,104.86. The index fell 135.42 points at the day's low of 19,981.96 in mid-afternoon trade. The Sensex gained 40.13 points at the day's high of 20,157.51 in morning trade.

The S&P CNX Nifty was down 6.15 points or 0.1% at 6,029.50. The index came sharply off the day's low of 5,991.30.

The BSE Mid-Cap index rose 0.2% and the BSE Small-Cap index rose 0.03%. Both these indices outperformed the Sensex.

Most sectoral indices on BSE rose. The BSE Power index (up 1.15%), Capital Goods index (up 0.93%), Realty index (up 0.48%), banking sector index Bankex (up 0.33%), PSU index (up 0.3%), Metal index (up 0.26%), Auto index (up 0.16%) and Consumer Durables index (up 0.03%), outperformed the Sensex. The BSE FMCG index (down 0.16%), Healthcare index (down 0.23%), IT index (down 0.46%) and Oil & Gas index (down 0.74%), underperformed the Sensex.

The market breadth was negative. On BSE, 1656 shares declined while 1338 shares advanced. A total of 91 shares remained unchanged. The breadth was strong earlier in the day.

From the 30 share Sensex pack, 15 fell and the rest rose.

BSE clocked turnover of Rs 4808 crore, lower than Rs 4948.22 crore on Monday, 27 September 2010.

Index heavyweight Reliance Industries (RIL) fell 1.12% to Rs 998.25, with the stock snapping last two days' gains. The stock hit high of Rs 1012.80 and low of Rs 993.25. Reliance Industries reportedly plans to invest in excess of Rs 40,000 crore by 2014 in its Jamnagar-based refining complex. According to reports, the firm has earmarked Rs 16,000 crore to set up a cracker unit as part of a proposed petrochemicals project in Jamnagar.

Reliance Communications, India's second-biggest mobile carrier rose 0.41% after Chairman Anil Ambani said on Tuesday company is in talks with investors for a sale of stake in its tower unit.

Sun Pharmaceutical Industries rose 1.07% after company announced during market hours today it has received United States Food & Drug Administration's tentative approval for generic Rilutek.

India's largest engineering and construction firm by sales Larsen & Toubro (L&T) rose 0.99% as L&T Finance, the non-banking financial company of L&T is reportedly planning to file Draft Red Herring Prospectus (DRHP) for a Rs 1500 crore initial public offering.

Among other capital goods stocks, Siemens, Bharat Heavy Electricals, ABB and SKF India rose by between 0.24% to 4.61%.

Interest rate sensitive realty stocks fell on profit taking. Omaxe, Indiabulls Real Estate, HDIL, Ackruti City and Unitech fell by between 0.12% to 1.51%.

IT stocks fell, weighed by a recent sharp rise in the rupee against the greenback. Reports that IT giants TCS, Infosys and Wipro are planning another round of pay hike and promotions to retain talent, also weighed on IT stocks. Higher salaries could dent profit margins.

India's second largest software services exporter by sales Infosys fell 0.29%. India's largest IT exporter by sales TCS declined 0.74%. The company announced during market hours on Monday that it won contract for establishing and managing state data centre for the state of Karnataka.

India's third largest software services exporter by sales Wipro fell 0.66%.

The partially convertible rupee had firmed up above 45 per dollar mark in intraday trade on Monday. A firm rupee adversely affects operating profit margin of IT firms as the sector derives a lion's share of revenue from exports.

Cigarette maker ITC rose 0.06%. The stock hit all-time high of Rs 181.50 on Monday, 27 September 2010. But, FMCG major Hindustan Unilever fell 0.83%.

Metal stocks declined after LMEX, a gauge of six metals traded on the London Metal Exchange, fell 0.58% on Monday, 27 September 2010. National Aluminum Company, Steel Authority of India, Sesa Goa, Sterlite Industries fell by between 0.36% to 0.74%. But, Tata Steel and Hindustan Zinc rose 0.95% and 0.25% respectively.

Aluminum maker Hindalco Industries fell 0.74%. The stock hit a 52-week high of Rs 199.45 on Monday, 27 September 2010.

Some sugar shares rose for the second straight day on reports an influential foreign brokerage has upgraded its view on the Indian sugar industry to 'attractive' from 'cautious'. Shree Renuka Sugars, Balrampur Chini Mills and Dhampur Sugars rose by between 0.39% to 1.46%.

Reports suggested that the latest upgrade in the sector has come mainly on account of the government's decision to resume trading in sugar futures from November or December. The suspension on sugar futures trading ends on 30 September 2010.

Reliance Power rose 1.68% after Chairman Anail Ambani said today the company would increase its capacity to 5,000 megawatts in 24 months from 600 megawatts now. Ambani also told shareholders the company would commission more than 1,000 megawatts of solar and wind power in five years.

Reliance Infrastructure which holds 44.96% stake in Reliance Power, rose 2.52%.

Auto stocks fell on profit taking. India's top truck maker by sales Tata Motors fell 0.38%. 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.

India's largest tractor and utility vehicles maker Mahindra & Mahindra (M&M) rose 2.54% on reports company will raise prices of its vehicles by Rs 3,000-8,000, effective 1 October 2010. The increase is primarily due to higher raw material costs and new emission norms.

India's leading bike maker by sales Hero Honda Motors fell 0.36%. Bajaj Auto fell 0.65%.

India's top small car maker by sales Maruti Suzuki India fell 0.75%.

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.

Banking stocks rose on a pick up in credit offtake in a fast recovering Indian economy. India's second largest private sector bank by net profit HDFC Bank rose 0.5%.

Shares of a number of state-run banks rose. India's largest commercial bank by net profit and branch network State Bank of India (SBI) rose 0.33% to Rs 3190.25. The stock hit a record high of Rs 3208 today. Union Bank Of India Bank of India and Bank of Baroda rose by between 0.71% and 3.91%. Punjab National Bank was flat.

But, India's largest private sector bank by net profit ICICI Bank fell 0.4%.

India's largest dedicated housing finance firm by revenue HDFC fell 1.96%.

Cals Refineries clocked the highest volume of 10.39 crore shares on BSE. Mahindra Satyam (1.9 crore shares), Piramal Glass (1.77 crore shares), Sujana Towers (1.39 crore shares) and Radhe Developers (1.33 crore shares) were the other volume toppers in that order.

Piramal Glass clocked the highest turnover of Rs 232.89 crore on BSE. Mahindra Satyam (Rs 187.78 crore), SKS Microfinance (Rs 122.03 crore), Sujana Towers (Rs 114.43 crore) and State Bank of India (Rs 105.22 crore) were the other turnover toppers in that order.