Sensex, Nifty attain 32-month closing highs

The key benchmark indices eked out small gains to attain their highest closing levels in more that 32 months as firm global stocks and the recent strong foreign fund inflows underpinned sentiment. However, profit booking pulled market off their intraday highs. Index heavyweight Reliance Industries (RIL) cut intraday gains. The BSE 30-share Sensex was up 72.20 points or 0.36%, off close to 150 points from the day's high and up close to 35 points from the day's low. The market gained for the second straight trading session today, 27 September 2010. Realty, capital goods, metal and consumer durables stocks rose. But, FMCG stocks fell. IT stocks, too, fell on a firm rupee.



The market pared gains after hitting a 32-month high at the onset of the trading session. The market regained strength in morning trade. The market moved in a narrow range in mid-morning trade. The market held firm in early afternoon trade. The market came off highs in afternoon trade. Stocks further trimmed gains in mid-afternoon trade. The market further pared gains 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, rose 2.99% at 22.36.

Foreign funds have made heavy purchases of Indian stocks this month. Foreign institutional investors (FIIs) bought shares worth a net Rs 1338.70 crore on Friday, 24 September 2010, on the top of an inflow of Rs 582.60 crore on Thursday, 23 September 2010.

FII inflow in September 2010 totaled Rs 22,776.50 crore (till 24 September 2010). FIIs had bought equities worth Rs 11,687.50 crore in August 2010. FII inflow in the calendar year 2010 totaled Rs 82,158.20 crore (till 24 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.

Indian stocks may remain volatile this week as traders roll over positions 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.

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 from divestment of 10% stake in Coal India. The IPO is billed as the country's largest issue ever.

Finance minister Pranab Mukherjee on Monday, 27 September 2010, said contesting parties in the Ayodhya title suit have to resolve the issue through discussions or accept the court verdict. A three-judge bench headed by Chief Justice S.H. Kapadia will on Tuesday, 28 September 2010, decide the fate of the special leave petition seeking deferment of the Allahabad High Court verdict on the Ayodhya title suit. The apex court had on Thursday, 23 September 2010, stayed for a week the High Court verdict following a petition by a retired bureaucrat Ramesh Chand Tripathi seeking its deferment to explore the possibility of an out-of-court settlement.

The two rival sides in the case involving the title suit in the Babri Masjid-Ramjanmabhoomi, are reportedly in no mood for an out-of-court settlement. The legal cell of the All India Muslim Personal Law Board (AIMPLB) is to meet in Delhi on Monday, 27 September 2010, to review the situation in the wake of the apex court's notices to all parties. Hindu Mahasabha counsel H.S. Jain has reiterated that verdict should not be delayed.

European equities edged higher on Monday, 27 September 2010, extending the previous session's sharp gains, with food and beverages shares gaining on news Unilever is to acquire a US company for $3.7 billion in cash. The key benchmark indices in France and Germany were up by 0.1% to 0.15%. But, UK's FTSE 100 fell 0.02%.

Asian stock markets kicked off a new week of trading on Monday, 27 September 2010, in good spirits, encouraged by an improvement in US economic indicators and higher metal prices. The key benchmark indices in China, Hong Kong, Japan, Indonesia, South Korea, Singapore and Taiwan rose by between 0.31% to 2.07%.

Japan's annual export growth slowed for a sixth straight month in August, in a sign that a strong yen and moderating overseas demand could hurt the economy's export-led recovery. August's 15.8% annual rise in exports was less than a median forecast for a 19.0% gain, Ministry of Finance data showed on Monday

US index futures came off highs. Trading in US index futures indicated that the Dow could gain 20 points at the opening bell on Monday, 27 September 2010.

US stocks notched their fourth week of gains on Friday 24 September 2010 as investors used a rise in business spending to revive the September rally after three days of losses. Economic data gave a mixed picture, but traders latched on to a rise in August business spending as the latest sign the recovery is on firmer ground. That seemed to trump a lackluster report on new home sales in August. The Dow Jones industrial average was up 197.84 points, or 1.86% at 10,860.26. The Standard & Poor's 500 Index finished up 23.82 points, or 2.12% at 1,148.65. The Nasdaq Composite Index was up 54.14 points, or 2.33% at 2,381.22.

Back home, 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. 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 up 72.20 points or 0.36% to 20,117.38, its highest closing since 15 January 2008. The Sensex gained 222.80 points at the day's high of 20,267.98 in early trade. The index rose 37.08 points at the day's low of 20,082.26 in early trade.

The S&P CNX Nifty was up 17.35 points or 0.29% to 6,035.65, its highest closing since 15 January 2008. Nifty hit high of 6,073.50 in early trade.

The market breadth, indicating the health of the market, was positive. On BSE, 1505 shares advanced while 1497 shares declined. A total of 94 shares remained unchanged. The breadth was much stronger earlier in the day.

The BSE Mid-Cap index rose 0.33% and the BSE Small-Cap index rose 0.13%. Both these indices underperformed the Sensex.

Most sectoral indices on BSE rose. The BSE Metal index (up 2.15%), Consumer Durables index (up 1.64%), Realty index (up 1.23%), Oil & Gas index (up 0.85%), Power index (up 0.83%), PSU index (up 0.82%), Healthcare index (up 0.63%), Auto index (up 0.48%), and Capital Goods index (up 0.42%), outperformed the Sensex. Banking sector index Bankex (down 0.01%), IT index (down 0.48%) and FMCG index (down 0.67%), underperformed the Sensex.

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

The BSE clocked turnover of Rs 4915 crore, lower than Rs 5689.04 crore on Friday, 24 September 2010.

India's largest oil & gas exploration firm by sales Oil and Natural Gas Corporation rose 1.4%, with the stock gaining for the third straight day. The company announced after market hours on Thursday, 23 September 2010 that the two exploration discoveries have been notified to Directorate General of Hydrocarbons. ONCG also said that company began first shale gas exploration in Ichapur village in Burdwan district in West Bengal.

Index heavyweight Reliance Industries (RIL) rose 0.79% to Rs 1009.55, with the stock gaining for the second straight day. But, the stock came off the day's high of Rs 1018.90. 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.

India's largest engineering and construction firm by sales Larsen & Toubro (L&T) rose 0.49% after company announced during market hours today that it has won Rs 1610-crore order from Visa Power for a 1200 megawatt (MW) power plant.

Among other capital goods stocks, Bharat Heavy Electricals, Punj Lloyd, Siemens, ABB and BEML rose by between 0.03% to 3.17%.

Metal stocks rose as LMEX, a gauge of six metals traded on the London Metal Exchange rose 0.72% on Friday, 24 September 2010. National Aluminum Company, Steel Authority of India, Tata Steel, JSW Steel, Sterlite Industries and Hindustan Zinc, rose by between 0.63% to 3.83%.

Aluminum maker Hindalco Industries rose 3.33% to Rs 197.25. The stock hit a 52-week high of Rs 199.45.

Consumer durables stocks rose on expectations of good demand in the forthcoming festive season. Blue Star, Videocon Industries, Rajesh Exports and Titan Industries rose by between 0.91% to 4.14%.

Interest rate sensitive realty stocks rose on renewed buying. HDIL, Peninsula Land, Omaxe, DLF, Indiabulls Real Estate and Unitech rose by between 0.98% to 1.95%.

FMCG stocks fell on profit taking. Cigarette maker ITC fell 0.28% to Rs 178.30. The stock came off the all time high of Rs 181.50 hit today.

India's largest FMCG maker by sales Hindustan Unilever fell 1.94%.

IT stocks fell after the rupee climbed to its strongest level in more than four months as overseas investors stepped up purchases of local equities. 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 0.65%. India's third largest software services exporter by sales Wipro fell 0.34%.

India's largest IT exporter by sales TCS declined 0.45%. The company announced during market hours today that it won contract for establishing and managing state data centre for the state of Karnataka.

The partially convertible rupee was at 45.14/15 after hitting 44.99, which was its highest since 13 May 2010, and firmer than 45.25/26 at close on Friday. A firm rupee adversely affects operating profit margin of IT firms as the sector derives a lion's share of revenue from exports.

Sugar shares rose across the board on reports an influential foreign brokerage has upgraded its view on the Indian sugar industry to 'attractive' from 'cautious'. Bajaj Hindustan, Shree Renuka Sugars, Balrampur Chini and Dhampur Sugars rose by between 2.28% to 4.43%.

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.

Auto stocks were mixed. India's top truck maker by sales Tata Motors rose 1.25%. 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 0.57%.

India's leading bike maker by sales Hero Honda Motors fell 0.4%. Bajaj Auto rose 0.9%.

India's top small car maker by sales Maruti Suzuki India fell 0.2%.

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.

Some auto ancillary stocks also rose on robust demand for vehicles. Exide Industries, Bharat Forge, Ramkrishna Forging, Gabriel India rose by between 0.92% to 4.29%.

Banking stocks rose on expectations of pick up in credit offtake in a fast recovering Indian economy. India's largest bank by net profit and branch network State Bank of India (SBI) rose 1.13%, with the stock gaining for the second straight day. India's largest private sector bank by net profit ICICI Bank rose 0.23%, with the stock gaining for the second straight day. But, India's second largest private sector bank by net profit HDFC Bank fell 2.11%.

Cals Refineries clocked the highest volume of 5.41 crore shares on BSE. Mahindra Satyam (2.09 crore shares), Resurgere Mines (1.59 crore shares), Birla Power Solutions (81.50 lakh shares) and Development Credit Bank (75.02 crore shares) were the other volume topper in that order.

Mahindra Satyam clocked the highest turnover of Rs 201.85 crore on BSE. Tata Steel (Rs 110.41 crore), State Bank of India (Rs 108.28 crore), Money Matters Financial Services (Rs 72.21 crore) and Jindal Poly Films (Rs 67.74 crore) were the other turnover toppers in that order