Sensex regains 20000; Nifty above 6000

The key benchmark indices rose for the third straight day with BSE Sensex and the S&P CNX Nifty closing above the psychological marks 20000 and 6000 respectively. Market scaled 32 month closing highs today. Firm global stocks, foreign institutional investors' buying spree and robust Q2 advance tax payments from frontline companies underpinned sentiment. The BSE 30-share Sensex rose 95.45 points or 0.48%, off close to 90 points from the day's high and up close to 140 points from the day's low.



Nevertheless, volatility was intense as the BSE Sensex and the NSE Nifty moved in and out of their psychological levels of 20,000 and 6,000 respectively throughout the day after breaching those marks in opening trade.

Despite the rise, the market breadth which was weak, as small and mid-cap stocks underwent correction. Cigarette major ITC, banking pivotal HDFC Bank, 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. FMCG shares declined on profit booking. Software pivotals gained on improving sentiment in the US economy.

Solid bond auctions in Ireland, Spain and Greece helped to further shore up sentiment in the markets Tuesday while investors waited for the latest policy statement from the U.S. Federal Reserve.. The key benchmark indices in France, Germany and UK rose by between 0.38% to 0.6%.

Asian stocks were mixed Tuesday as caution prevailed ahead of the US Federal Reserve's monetary policy meeting on Tuesday, 21 September 2010. The key benchmark indices in Hong Kong, Singapore, China and Taiwan rose by between 0.11% to 0.47%. However, indices in Indonesia and Japan declined 0.18% and 0.25% respectively.

Trading in US index futures indicate that the Dow could rise 14 points at the opening bell on Tuesday, 21 September 2010. The key event to watch out for is US Federal Reserve's monetary policy meeting on Tuesday, 21 September 2010. The Fed policymakers will access whether the US economy needs reinforced monetary crutches. The US central bank has already cut benchmark interest rates to near zero and pumped more than $1.7 trillion into the economy through purchases of Treasury and mortgage-related debt.

US stocks rallied to their highest level in more than four months on Monday, 20 September 2010, as encouraging financial and home-builder earnings boosted confidence in the economic recovery. The Dow Jones Industrial Average surged 145.77 points, or 1.4%, to 10753.62, its highest close since 13 May and its biggest point and percentage gain since 1 September. The Nasdaq Composite index gained 40.22 points, or 1.7%, to 2355.83, its ninth straight winning session. The Standard & Poor's 500-share index rose 17.12 points, or 1.5% at 1142.71.

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 1792.64 crore on Monday, 20 September 2010. Domestic institutional investors dumped shares worth Rs 457.91 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 rose 95.45 points or 0.48% to 20,001.55 its highest closing level since 15 January 2008. The Sensex gained 182.86 points at the day's high of 20,088.96. The index lost 45.22 points at the day's low of 19,860.88 in mid-morning trade.

The S&P CNX Nifty was up 28.60 points or 0.48% to 6,009.05, its highest closing level since 15 January 200. Nifty struck a high of 6,032.80 in early trade.

The market breadth, indicating the health of the market was weak, in contrast to strong market breadth in opening trade. On BSE, 2182 shares declined while 903 advanced. A total of 76 shares remained unchanged.

The total turnover on BSE amounted to Rs 5402 crore higher than Rs 5229.41 crore on Monday, 21 September 2010.

Among the 30-share Sensex pack, 16 declined while the rest gained.

The BSE Mid-Cap index fell 0.98% and the BSE Small-Cap index fell 1.34%. Both these indices underperformed the Sensex.

The BSE IT index (up 2.43%), BSE Capital goods index (up 1.12%) and Healthcare index (up 1.05%) outperformed the Sensex.

The BSE FMCG index (down 1.34%), BSE Realty index (down 1.3%), BSE Consumer Durables index (down 0.67%), BSE Metal index (down 0.57%), BSE Oil & Gas index (down 0.47%), BSE PSU index (down 0.26%), BSE Banking index Bankex (down 0.06%), BSE Auto index (up 0.11%) and BSE Power index (up 0.44%) underperformed the Sensex.

Software pivotals gained on improving sentiment in the US economy, a prime market for Indian exporters. India's largest IT exporter by sales TCS jumped 4.63% to Rs 952.75 after hitting an alltime high of Rs 957. It was the top gainer from the Sensex pack. 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 third largest software services exporter Wipro surged 3.41%. Reportedly, it has received the nod to set up two special economic zones -- one each at the Kodathi village in Bangalore and Mandya district in Mysore.

India's second largest software services exporter by sales Infosys rose 1.75% on recent reports it has won approval for a special economic zone in Bangalore. The stock struck a record high of Rs 3065 today.

Index heavyweight Reliance Industries (RIL) slipped 0.65% to Rs 1032.90 in volatile trade after swinging between Rs 1025.25 - Rs 1048. 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 engineering & construction firm by sales Larsen & Toubro jumped 1.77% on optimism its infrastructure focused subsidiary L&T IDPL is set to expand aggressively backed by a strong presence across all infrastructure verticals and a large portfolio of assets.

India's top power equipment maker by sales Bharat Heavy Electricals rose 1.50% on reports the firm got a contract worth Rs 2,665 crore to set up a 1,200 megawatts coal-fired power plant at Chhattisgarh in central India.

India's second largest private sector bank by net profit HDFC Bank rose 1.02% to Rs 2470.70 after striking a record high of Rs 2493.20 in intra-day trade today, 21 September 2010, as its American depositary receipt, or ADR rose 1.65% to $185.12 on the New York Stock Exchange on Monday, 20 September 2010.

India's top truck maker by sales Tata Motors gained 2.01% to Rs 1082 after the company's American depositary receipts, or ADR rose 3.35% to $24.08 on the New York Stock Exchange on Monday, 20 September 2010. The stock struck a lifetime high of Rs 1082 today.

India's largest tractor and utility vehicles maker Mahindra & Mahindra (M&M) fell 0.85% to Rs 681.90 after striking a record high of Rs 704.90

India's top cigarette maker by sales ITC slumped 2.18% to Rs 172.75, on profit booking, after hitting a lifetime high of Rs 179.35 today. The stock gained 8.61% in 6 trading sessions to 20 September 2010.

Among other FMCG stocks, Dabur India, United Spirits and Nestle India fell by between 0.21% to 1.93%.

India's second largest listed cellular services provider by sales Reliance Communications fell 1.03% on profit booking after the stock rose 10.68% in the preceding two trading sessions to 20 September 2010.

High beta realty stocks fell on rate hike worries. Phoenix Mills, Unitech, DLF, HDIL and Ackruti City fell by between 0.55% to 3.66%.

Shipping shares declined after the Baltic Dry Index, which tracks rates to ship dry commodities, declined 1.79% in London on Monday, 20 September 2010. Shipping Corporation of India, Great Eastern Shipping Company Mercator Lines fell by between 0.73% to 3.55%.

Cals Refineries clocked the highest volume of 5.42 crore shares on BSE. Shree Ashtavinayak Cine Vision (1.99 crore shares), Ispat Industries (1.67 crore shares), Mahindra Satyam (1.44 crore shares) and Birla Power Solutions (1.33 crore shares) were the other volume toppers in that order.

Midfield Industries clocked the highest turnover of Rs 151.79 crore on BSE.M&M Financial (Rs 141.91 crore), Mahindra Satyam (Rs 137.71 crore), Axis Bank (Rs 102.64 crore) and Larsen & Toubro (Rs 101.80 crore) were the other turnover toppers in that order.