Market skids for the second straight day

The key benchmark indices skidded for the second straight day tracking subdued European markets after data suggested weak economic activity in that region. US index futures also declined ahead of the crucial economic data. Major Asian markets were shut today on account of holiday. In domestic economic news, the spike in food inflation in the latest week rekindled worries that the central bank may interfere to check it earlier than expected. The BSE 30-share Sensex was down 80.71 points or 0.4% up close to 90 points from the day's low and off close to 135 points from the day's high. The S&P CNX Nifty closed below the psychological 6000 mark after scaling that level in opening trade.



The market breadth turned negative in late trade from positive breadth earlier in the day. Interest rate sensitive banking and realty stocks led the fall. Telecom stocks also declined. Index heavyweight Reliance Industries was the second major loser from the Sensex pack. But, defensive FMCG stocks rose. IT stocks reversed initial losses.

The market after opening higher soon slipped into the red in early trade. It recovered from the day's low but soon weakened in morning trade. It moved in a narrow range in mid-morning trade. It recovered in early afternoon trade. Weakness persisted on the bourses in afternoon trade. It once again weakened in mid-afternoon trade as European stocks turned negative and US index futures pared gains. It recovered from the day's low in late trade.

As per the TV media news the Supreme Court has ordered Allahabad court to extend the verdict on Ayodhya case to 29 September 2010. The verdict was scheduled to be delivered on Friday, 24 September 2010. Earlier, the Lucknow bench of the Allahabad High Court had rejected a plea for deferring the judgment in the Ramjanambhoomi-Babri Masjid title suit. A 3-judge special bench of the court rejected the application of one Ramesh Chandra Tripathi, a defendant, for reaching an amicable settlement through reconciliation and deferment of the judgment on 24 September 2010.

After a long-standing dispute on whether the spot where the Babri Masjid was situated in Ayodhya was the birth place of Hindu deity Lord Ram, the 16th century mosque was razed to the ground by Hindu radicals in December 1992, triggering widespread communal violence in the country.

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 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.

The economy will grow more than 8.5% in the fiscal year to end-March 2011, Finance Minister Pranab Mukherjee said today, a forecast in line with other government projections.

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 914.77 crore on Wednesday, 22 September 2010. Domestic institutional investors dumped shares worth Rs 973.81 crore on that day.

FII inflow in September 2010 totaled Rs 16,964.98 crore (till 22 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).

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.

The monsoon rains were 44% above normal in the week to 22 September, the weather office said on Thursday. 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.

European shares fell on Thursday, extending their decline for a third day, as fresh euro zone data added to existing worries about the strength of the global economic recovery. The pace of growth in the euro zone's services and manufacturing sectors slowed much more than expected this month. The key benchmark indices in UK, Germany and France were down by between 0.8% to 1.3%

Ireland's gross domestic product contracted 1.2% in the second quarter from the preceding three months, the nation's Central Statistics Office said Thursday. In the first quarter, the Irish economy had grown 2.2%. The decline in the second quarter defied market expectations for a small rise in Irish GDP.

Asian stocks fell in quiet trade Thursday, with major markets like Japan, China, Hong Kong and South Korea closed for public holidays. The key benchmark indices in Indonesia and Singapore fell 0.18% and 0.42% respectively. But, Taiwan's Taiwan Weighted rose 0.07%.

Investors await U.S. existing home sales data for August and weekly jobless claims.

US index futures reversed gains. Trading in US index futures indicated that Dow could fall 58 points on Thursday, 23 September 2010.

U.S. stocks slipped on Wednesday, ending the Dow's five-day winning streak, following Adobe's discouraging revenue outlook and investors' disappointment over Microsoft's new dividend. The Dow Jones industrial average dipped 21.72 points, or 0.20% to 10,739.31. The Standard & Poor's 500 Index slipped 5.50 points, or 0.48% to 1,134.28. The Nasdaq Composite Index lost 14.80 points, or 0.63% to 2,334.55.

The BSE 30-share Sensex was down 80.71 points or 0.4% to 19,861.01. The Sensex gained 56.60 points at the day's high of 19,998.32, in early trade. The index lost 170.09 points at the day's low of 19,771.63 in mid-afternoon trade.

The S&P CNX Nifty was down 31.45 points or 0.52% to 5,959.55. Nifty struck a high of 6,006.80 in early trade.

The market breadth, indicating the health of the market, was turned negative. The breadth was positive earlier in the day. On BSE, 1584 shares declined while 1419 shares advanced. A total of 78 shares remained unchanged.

Among the 30-share Sensex pack, 17 declined while the rest advanced.

The BSE Mid-Cap index fell 0.21%. The BSE Small-Cap index rose 0.07%. Both the indices outperformed the Sensex.

BSE clocked turnover of Rs 4566 crore lower than Rs 5240.72 crore on Wednesday, 22 September 2010.

Index heavyweight Reliance Industries (RIL) fell 2.11%, extending two-day 1.96% slide. 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.

India's largest oil & gas exploration firm by sales Oil and Natural Gas Corporation surged 1.49%. The company announced after market hours today that the two exploration discoveries have been notified to Directorate General of Hydrocarbons. It also said that company began first shale gas exploration in Ichapur village in Burdwan district in West Bengal.

FMCG stocks jumped after a weak start on defensive buying. ITC United Spirits and Hindustan Unilever rose by between 0.32% and 1.71%.

Telecom pivotals fell. Reliance Communications and Bharti Airtel fell 1.09% and 1.89%.

Interest rate sensitive realty stocks fell on worries rate hike could crimp demand for housing properties which are mostly driven by finance. HDIL, Ansal Properties, Phoenix Mills, Indiabulls Real Estate, DLF and Unitech fell by between 0.23% to 3.88%.

Banking stocks fell on rate hike worries. India's largest bank by net profit and branch network State Bank of India (SBI) fell 0.23%. Bank of India, Punjab National Bank and Bank of Baroda fell by between 0.15% and 1.26%. India's second largest private sector bank by net profit HDFC Bank fell 0.62%. India's largest private sector bank by net profit ICICI Bank fell 2.25%.

High beta metal stocks were mixed. Jindal Steel & Power, National Aluminum Company and Steel Authority of India fell by between 0.39% to 1.23%. But, Hindustan Zinc, Tata Steel, Sterlite Industries and Hindalco Industries rose by between 0.01% to 1.08%.

LMEX, a gauge of six metals traded on the London Metal Exchange rose 2.14% on Wednesday, 22 September 2010.

India's largest engineering and construction firm by sales Larsen & Toubro rose 0.17% to Rs 1998.10 rebounding from day's low of Rs 1968. The company during market hours today announced its collaboration with Befula Investments (South Africa) for power transmission & distribution opportunities in South Africa.

Software pivotals reversed initial losses. India's second largest software services exporter by sales Infosys rose 0.23%. The stock hit record high of Rs 3066 on Wednesday, 22 September 2010. 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 0.58%.

But, India's largest IT exporter by sales TCS lost 0.22% with the stock falling for the second straight day. The stock hit an all-time high of Rs 959 on Wednesday, 22 September 2010. 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.

Auto stocks were mixed. India's top truck maker by sales Tata Motors gained 0.14%. 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 1.11%, extending Monday's rise.

India's top small car maker by sales Maruti Suzuki India fell 0.27%. Reportedly, the company is planning to roll out a multi utility vehicle at the start of 2012.

India's leading bike maker by sales Hero Honda Motors lost 0.73%. Recent reports indicated 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.

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.

Cals Refineries clocked the highest volume of 2.95 crore shares on BSE. Mahindra Satyam (2.74 crore shares), Birla Cotsyn (1.28 crore shares), Ispat Industries (1.23 crore shares) and Development Credit Bank (93.14 lakh shares) were the other volume toppers in that order.

Mahindra Satyam clocked the highest turnover of Rs 292.59 crore on BSE. State Bank of India (Rs 118.76 crore), Tata Steel (Rs 107.33 crore), Orchid Chemicals (Rs 104.87 crore) and Punj Lloyd (Rs 102.05 crore) were the other turnover toppers in that order.