Shipping, sugar, hotel stocks sizzle as market logs small gains

Key benchmark indices eked out small gains in volatile trade as they rose in the first half of the day's trading session in sync with Asian markets. However, lower start from European market capped gains in second half of the day's trading session. The BSE 30-share Sensex rose 32.44 points or 0.18%, off 117.53 points from the day's high and up 23.03 points from the day's low. The S&P CNX Nifty settled below the psychological 5,500 mark after moving above and below that level in the day.



Selling pressure in late trade wiped off almost entire gains of the key benchmark indices in contrast to a strong start. Buoyant auto sales in August 2010 and robust manufacturing activity bolstered sentiment in early trade. However caution prevailed in late trade ahead of the European Central Bank's interest rate decision and US pending home sales later in the day and US non-farm payrolls data on Friday, 3 September 2010. European stocks were trading lower in volatile trade. Asian markets settled on a firm note on encouraging economic data in the US.

The market breadth was strong with small and mid-cap stocks joining the rally. Fresh buying pushed auto, banking, metal and consumer durables stocks higher. Jaiprakash Associates surged on strong cement sales in the month gone by. Index heavyweight Reliance Industries was firm. Sugar stocks rose on reports of possible decontrol in prices. Shipping stocks gained mirroring gains in the Baltic Dry Index.

The market pared gains after a strong start triggered by positive global cues. Buoyant auto sales in August 2010 and robust manufacturing activity bolstered sentiment in early trade. It moved in a narrow range in morning trade. Thereafter, it held firm in mid-morning and early afternoon trade. It pared gains in a volatile afternoon trade only to regain strength in mid-afternoon trade. It cut gains in late trade as index heavyweight Reliance Industries pared gains.

Wholesale price index-based inflation data for week ended 21 August 2010 will be released on Friday as Thursday is a government holiday due to Janmashtami festival.

European markets edged lower in volatile trade on Thursday on caution ahead of the European Central Bank's interest rate decision and US pending home sales. Key benchmark indices in UK, Germany and France were down by between 0.03% to 0.16%.

UK mortgage provider Nationwide Building Society said Thursday that house prices in the country fell by 0.9% in August 2010 compared to July 2010.

Asian stock markets advanced on Thursday, after Wall Street soared on encouraging manufacturing data. The key benchmark indices in Hong Kong, China, South Korea, Taiwan, Singapore and Japan were up by between 0.13% to 1.52%. However, Indonesia's Jakarta Composite fell 0.42%.

US index futures cut initial losses. Trading in US index futures indicated that the Dow could fall 3 points at the opening bell on Thursday, 2 September 2010.

US markets logged steep gains on Wednesday, 1 September 2010 as investor mood brightened after better-than-expected factory data from the United States and China. The Dow Jones Industrial Average rose 254.75 points or 2.54% to 10,269.47, its biggest one-day gain since 7 July 2010 and its fifth-largest one-day gain this year. The Standard & Poor's 500 Index added 30.96 points, or 2.95% to 1,080.29. The Nasdaq Composite Index gained 62.81 points, or 2.97% to 2,176.84.

The Institute for Supply Management (ISM) showed U.S. factory activity grew faster than forecast. The ISM report added fuel to a global equities rally on Wednesday driven by strong overnight data out of China and Australia.

Ahead of the key payrolls data on Friday, investors shrugged off a report from ADP Employer Services showing private U.S. companies unexpectedly cut 10,000 jobs in August as well as government data indicating U.S. construction spending fell to its lowest rate in 10 years.

World trade continued to rebound strongly in the first half of this year, rising by over a quarter from year-ago levels, with emerging economies showing particularly powerful export growth, World Trade Organization (WTO) figures showed on Wednesday. Global exports of merchandise goods, measured by value in current dollars not adjusted for price changes, were 25.8% higher in the second quarter than a year earlier, after a 25.7% rise in the first quarter, WTO statistics showed.

Back home, exports rose for the ninth straight month in July 2010, growing an annual 13.2% to $16.24 billion, government data released on 1 September 2010 showed. Imports for the month rose 34.3% to $29.17 billion, widening the country's trade deficit to $12.93 billion. Exports during the April-July period rose 30.1% to $68.63 billion.

The trade deficit edged back into double digits in April 2010 after averaging $9.1 billion in Q4 March 2010 and has remained elevated since then. Latest data shows the gap stood at $12.93 billion in July 2010, highest since September 2008 and widening further from $10.55 billion in June 2010.

India's gross domestic product (GDP) grew 8.8% in Q1 June 2010, data released by the government on Tuesday, 31 August 2010, showed. The manufacturing sector grew 12.4%, mining sector expanded 8.9%, construction sector grew 7.5%, and farm sector expanded at 2.8%. Output in the combined sectors -- trade, hotels, transport and communication, jumped 12.2%.

The robust growth bolsters the case for further interest rate increases, and analysts anticipate a 25-basis point rate rise at a 16 September 2010 Reserve Bank of India (RBI) policy review.

The consumer price index (CPI) rose 11.25% in July, slower than an annual rise of 13.73% a month ago, data on Tuesday showed.

The HSBC Markit Purchasing Managers' Index, based on surveys of 500 Indian companies, fell to 57.25 in August 2010 from 57.6 in July 2010, but strength in new orders helped the index remain well above the 50 mark that divides growth from contraction. The manufacturing PMI had edged up to 57.6 in July 2010 from 57.3 in June 2010, when it slipped from a multi-year high.

The new orders index was 61.99 in August 2010, down from 62.82 in July 2010. The survey showed that output prices rose at their slowest rate in 10 months in August 2010, while the input price index rose for the second consecutive month.

HSBC may also unveil the services sector PMI for August 2010 this week. The index, which shows business activity in the services sector, had eased to 61.7 in July 2010 from 64 in June 2010.

The key monsoon rains were 16% above normal in the past week, compared with 29% above normal in the previous week, the weather office said on Thursday. The weekly reading reflects good showers over most parts of the country, except the eastern region, where the seasonal rains were poor. Cumulative rainfall since June 1 was 1% below normal, it said.

The south west 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 32.44 points or 0.18% to 18,238.31. The index rose 149.97 points at the day's high of 18,355.84 in early trade. The Sensex rose 9.41 points at the day's low of 18,215.28 in early trade.

The S&P CNX Nifty gained 14.30 points or 0.26% to 5,486.15 after striking day's high of 5,513.95 in early trade.

The BSE Mid-Cap index rose 0.78% and the BSE Small-Cap index rose 1.11%. Both the indices outperformed the Sensex.

BSE clocked turnover of Rs 5242 crore, higher than Wednesday's (1 September 2010) turnover of Rs 5160.03 crore.

The market breadth, indicating the health of the market, was strong. On BSE, 1911 shares rose while 994 shares declined. A total of 78 shares remained unchanged.

From the 30-share Sensex pack, 16 stocks fell while the rest of them rose.

Index heavyweight Reliance Industries (RIL) rose 0.06% to Rs 937. But, the stock came off the day's high of Rs 947.90. RIL said on 1 September 2010 it further bought 26.7 lakh shares or about 0.68% stake in EIH, raising its stake in the hotel chain to 14.8%. On Monday, RIL said it had bought a 14.12% stake in EIH from the Oberois in an off-market deal valued at Rs 1,021 crore, or an average price of Rs 184 a share.

Shares of EIH jumped 3.76% to Rs 149.10 on high volume of 29.84 lakh shares.

Other hotel stocks were also buzzing with activity taking cue from attractive valuation of the RIL-EIH deal. EIH Associates Hotels (up 5.70%), Tulip Star Hotels (up 5%), Royal Orchid Hotels (up 0.67), UP Hotels (up 0.17%), Viceroy Hotels (up 1.37%), Jindal Hotels (up 0.74%), and Advani Hotel (up 0.57%), gained.

Banking stocks rose on hopes of surge in credit offtake in rising economy. India's second largest private sector bank by net profit HDFC Bank rose 1.27%, extending two-day gains. The bank's American depository receipts or ADR surged 4.16% to $166.44 on the New York Stock Exchange, on Wednesday, 1 September 2010.

India's largest private sector bank by net profit ICICI Bank rose 0.95%, with the stock gaining for the fourth straight day.

But, India's largest bank by net profit and branch network State Bank of India fell 0.89% reversing initial gains.

Bank of India, Punjab National Bank and Bank of Baroda rose by between 0.86% and 1.62%.

Shares of software exporters fell on caution ahead of non-farm payrolls data in the US, a prime market for IT exporters. The BSE IT index declined 0.67% and was the top loser among the sectoral indices on the BSE.

India's second largest software services exporter by sales Infosys was down 1.06%. India's largest software services exporter by sales TCS fell 1.66%. India's third largest software services exporter Wipro fell 0.19% reversing initial gains.

Cement stocks edged higher following release of sales figures for August 2010. India's largest dam builder by sales Jaiprakash Associates surged 4.05% after the company reported a 51% surge in cement sales to 1.08 mt in August 2010 over August 2009. It was the top gainer from the Sensex pack.

UltraTech Cement rose 1.71% after cement sales rose 2.4% to 2.96 metric tonne (mt) in August 2010 over August 2009. The cement sales figures include that of the demerged Grasim cement business.

Ambuja Cements rose 0.57% after cement sales were flat at 1.42 mt in August 2010 over August 2009.

ACC rose 0.36%. Its cement sales slipped to 1.57 mt in August 2010 from 1.65 mt in August 2009.

Metal and mining shares rose after LMEX, a gauge of six metals traded on London Metal Exchange, gained 2.27% on Wednesday, 1 September 2010. NMDC, JSW Steel, Tata Steel, Sterlite Industries, Jindal Steel & Power, Jindal Saw, National Aluminium Company and Steel Authority of India rose by between 0.04% to 2.59%.

Most auto stocks gained on upbeat sales in August 2010. India's top small car maker by sales Maruti Suzuki India rose 0.18% with the stock gaining for the fourth straight day. Total sales grew 23.6% to 1.04 lakh vehicles in August 2010 over August 2009. This is the highest ever monthly sales recorded by the company.

India's largest truck maker by sales Tata Motors rose 0.59% with the stock gaining for the fourth straight day. Total sales rose 32% at 65,938 units in August 2010 over August 2009. However, on a month-month basis, the sales were down 2.7%.

India's largest tractor and utility vehicles maker Mahindra & Mahindra (M&M) fell 0.19% reversing initial gains. M&M's sales jumped 29% to 28,900 units in August 2010 over August 2009.

India's largest bike maker by sales Hero Honda Motors fell 3.73%. The company reported 2.16% rise in total vehicle sales to 4.24 lakh units in August 2010 over 4.15 lakh units in August 2009. The stock was the top loser from the Sensex pack.

Bike maker TVS Motor Company fell 0.66% reversing initial gains. Total vehicle sales rose 34% to 1,70,735 units in August 2010 over August 2009.

But, Bajaj Auto rose 1.11% after company said during market hours today its total sales rose 55% to 329364 units in August 2010 over August 2009.

Sugar stocks surged on reports Agricultural Minister Sharad Pawar has made a formal presentation to the Prime Minister for sugar decontrol. This is the first time that an official step has been taken by the Minister in this direction. Dhampur Sugars, Triveni Engineering, Shree Renuka Sugars, Bajaj Hindustan and Balrampur Chini rose by between 2.98% to 10.25%.

Telecom stocks reversed Wednesday's gains on profit booking. India's second largest cellular services provider by sales Reliance Communications fell 0.67%. India's largest cellular services provider by sales Bharti Airtel declined 0.98%. Idea Cellular slipped 1.04%.

The government on 1 September 2010 reportedly allotted 3G spectrum to seven companies. Bharti Airtel and Reliance Communications bagged spectrum in 13 circles each out of 22 followed by Idea Cellular in 11.

Tata Power Company rose 1.41% after company announced during market hours today that the consortium comprising of Tata Power, Origin Energy, PT Supraco Indonesia was declared as the successful bidder for the Sorik Marapi geothermal project in Northern Sumatra, Indonesia.

Shipping shares rose after the Baltic dry index, which tracks rates to ship dry commodities, rose 1.03% to 2,741 in London on Wednesday, 1 September 2010. Great Eastern Shipping Company, Mercator Lines, Varun Shipping Company, Shipping Corporation of India and Essar Shipping rose by between 1.07% to 3.62%.

Select consumer durables stocks rose in anticipation rising household disposable income may stimulate further demand. Gianjali Gems, Titan Industries and Blue Star rose by between 1.41% to 3.68%.

Suzlon Energy soared 12.88% to Rs 52.60 on high volume of 1.23 crore shares. Suzlon soared on bargain hunting after it lost 17.52% in the past one-month and 18.09% in the past three-months till 1 September 2010.

Piramal Healthcare was the top traded counter on the BSE clocking turnover of Rs 636.04 crore after two large bulk deals aggregating 1.20 crore shares were executed on the counter at Rs 510.50 per share in the opening trade. The stock ended 1.48% lower.

Jindal Polyfilms (Rs 173.80 crore), Prakash Steelage (Rs 139.31 crore), Midfield (Rs 121 crore), and SKS Microfinance (Rs 75.46 crore), were the other turnover toppers on BSE.

Birla Power Solutions clocked a highest volume of 1.92 crore shares on BSE. Suzlon Energy (1.27 crore shares), Piramal Healthcare (1.24 crore shares), Cals Refineries (1.14 crore shares) and Ispat Industries (1.06 crore shares), were the other volume toppers on BSE.