Anil Dhirubhai Ambani group shares vault

The key benchmark indices ended lower in choppy trade as resistance emerged after a three-day rally, but sustained foreign fund buying helped the broader market score gains. The market seesawed as traders booked profits at higher levels while investors bought shares on declines. Shares of Anil Dhirubhai Ambani group saw across the board rally today, 5 October 2010.



Seven out of 13 sectoral indices on BSE ended in positive zone. FMCG and metal stocks faced major selling pressure in today's trade. The BSE Mid-Cap and Small-Cap indices outperformed the Sensex. The BSE 30-share Sensex fell 68 points or 0.33%, off close to 152.83 points from the day's high.

Globally, Asian markets ended mixed. European markets were trading higher led by rally in retailers after strong earnings from Tesco PLC. However, Euro-zone September 2010 composite Purchase Manager Index which slipped to 7-month low weighed on the markets.

Back home, intraday volatility was high. The market recovered after a weak start triggered by lower Asian shares. The market recovered sharply after hitting a fresh intraday low in morning trade. The market hit a fresh intraday high in mid-morning trade as Japanese stocks surged after a surprise cut in interest rates from the Bank of Japan. However, the intraday recovery proved short-lived. The Sensex once again slipped into the red later.

The market moved between negative and positive zone near the flat line in early afternoon trade. The market recovered from lower level in afternoon trade as European stocks rose in early trade. The Sensex held positive zone in mid-afternoon trade. The market weakened 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, fell 2.76% to 22.17. The index had risen 6.39% to 22.80 on Monday, 4 October 2010. The index had dropped 3.68% to 21.43 on Friday, 1 October 2010. India VIX is calculated based on the S&P CNX Nifty options prices. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days.

Business activity in the Indian services sector expanded at a considerably slower pace in September 2010 than in the previous month, with the index falling to a 10-month low mainly due to weakness in incoming new business. The HSBC Markit Business Activity Index, based on a survey of 400 Indian firms, saw its third consecutive fall, easing to 55.6 from 59.3 the previous month, but staying above the 50 mark that divides growth from contraction for the 17th month.

Coming back to stocks, foreign funds continue to aggressively mop up Indian shares. Foreign institutional investors (FIIs) bought shares worth a net Rs 1918.90 crore on Monday, 4 October 2010, on the top of an inflow of Rs 1964.50 crore on Friday, 1 October 2010.

Net equity inflow in 2010 now stands at a record $20.30 billion, above last year's $17.45 billion, as per data from the Securities & Exchange Board of India. The Sebi data includes FII inflow through primary and secondary market route.

Reserve Bank of India deputy governor Subir Gokarn today said the central bank is considering measures to deal with an influx of foreign fund flows. Strong FII inflow has sent the rupee surging against the dollar over the past few weeks. A rising rupee is a bad news for exporters, particularly the labour-intensive segments such as textiles.

On Monday, 4 October 2010, Finance Minister Pranab Mukherjee said there was no need to intervene in the foreign exchange market or cap foreign portfolio inflows. "As long as the capital flows are in excess of the current account deficit the pressure to appreciate will continue and it could potentially disrupt," RBI's Gokarn said today.

India requires sustained foreign investment to plug its widening current account deficit, which has been worsened by a yawning trade deficit.

Coming back to stocks, 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.

India needs to take "drastic" action to control inflation, Reserve Bank of India deputy governor Gokarn said on Tuesday, 5 October 2010. He was giving a speech at a private equity conference. He said inflation remains well above the Reserve Bank's comfort zone. Gokarn said normalisation of monetary policy was now near completion, and further policy action would depend on upcoming data on growth and inflation.

An unavoidable consequence of runaway inflation is that drastic action by the central bank and also by the government is needed to rein it in, which is bound to disrupt growth process, Gokarn said. His comments strengthened the possibility of a rate hike at the RBI's next policy review, on 2 November 2010. Food and energy price shocks have been a regular part of the economic landscape and may continue to be so in the future, Gokarn said.

His comments sparked a recovery in bond yields after an initial slide. The yield on the benchmark 10-year bond was almost unchanged at Monday's (4 October 2010) close of 7.94%. The yield on the second most traded 8.13% 2,022 bond, too, was almost unchanged at Monday's close of 8.09%.

The food price index rose 16.44% while the fuel price index climbed 10.73% in the year to 18 September 2010, government data released on Thursday, 30 September 2010, showed. In the prior week, annual food and fuel inflation stood at 15.46% and 11.48% respectively. The primary articles index was up 18.31% in the latest week compared with an annual rise of 16.80% in the previous week, both under 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 2010.

European stocks edged higher on Tuesday, 5 October 2010, as the retail sector got a lift from Tesco PLC's strong results and a broker upgrade. The key benchmark indices in UK, Germany and France were up by 0.4% to 0.71%.

Ireland's Aa2 credit rating is on review for possible downgrade, Moody's Investors Service said Tuesday, in part due to increased uncertainty about the government's ability to preserve "financial strength" after announcing further bank recapitalization measures last week. The ratings agency also cited a clouded outlook for the recovery of domestic demand in light of weak economic data and a further increase in borrowing costs. Moody's also placed the Aa2 rating of Ireland's National Asset Management Agency on review for possible downgrade. The agency's debt is fully and unconditionally guaranteed by the Irish government

Japanese shares surged on Tuesday, 5 October 2010, after the Bank of Japan at the conclusion of its two-day policy meeting on Tuesday, 5 October 2010, unanimously voted to cut its key overnight call rate range to between zero and 0.1%, from 0.1% previously, and pledged to maintain its easy policy until prices stabilize. The Nikkei 225 Average jumped 1.47%

The Bank of Japan said it would set up a fund to buy Japanese government bonds, corporate debt, exchange-traded funds and other funds. The Japanese central bank said that while the Japanese economy is showing signs of a moderate recovery, the pace of the recovery is weakening and growth will likely be slower than it predicted in its July 2010 outlook.

In other Asian markets, the key benchmark indices in Singapore, Hong Kong and Indonesia rose by between 0.09% to 0.62%. The key benchmark indices in Taiwan, and South Korea were down by between 0.02% to 0.55%. Chinese markets were closed for a holiday.

Meanwhile, the Reserve Bank of Australia left its benchmark interest rate unchanged at 4.5% on Tuesday, 5 October 2010, citing a moderation in inflation even as improving business investment was boosting national income.

Trading in US index futures indicated that the Dow could gain 16 points at the opening bell on Tuesday, 5 October 2010.

Factory orders fell 0.5% in August 2010 in the US -- slightly more than expected and contracts for new homes remained far below last year's pace.

Closer home, India's manufacturing sector continued to expand although at a considerably slower pace than in preceding months, predominantly weighed down by a fall in new orders and output. The HSBC Markit Purchasing Managers' Index, based on a survey of 500 companies, slid to 55.1 in September 2010, which marks the lowest reading since November last year, from 57.2 in the August 2010 survey. Though the key index for manufacturing in Asia's third largest economy has slipped, this was the 18th consecutive month it has remained above the 50 mark that divides growth from contraction.

The BSE 30-share Sensex fell 68.02 points or 0.33% to 20,407.71. The index fell 92.57 points at the day's low of 20,383.16 in late trade. The Sensex rose 84.81 points at the day's high of 20,560.54 in mid-morning trade.

The S&P CNX Nifty fell 13.65 points or 0.22% to 6,145.80.

The BSE Mid-Cap index rose 0.78% and the BSE Small-Cap index rose 1.14%. Both these indices outperformed the Sensex.

The BSE Consumer Durables index (up 0.93%), Power index (up 0.87%), Auto index (up 0.74%), Oil & Gas index (up 0.56%), Realty index (up 0.36%), Healthcare index (up 0.24%), PSU index (up 0.23%), IT index (down 0.02%), Capital Goods index (down 0.04%), banking sector index Bankex (down 0.3%), outperformed the Sensex.

The BSE Metal index fell 0.33%, matching Sensex's decline. The BSE FMCG index (down 1.12%), underperformed the Sensex.

The market breadth was positive. On BSE, 1684 shares advanced while 1290 shares declined. A total of 130 shares remained unchanged. The breadth was much stronger earlier in the day.

BSE clocked turnover of Rs 7082 crore, higher than Rs 5441.90 crore on Monday, 4 October 2010.

From the 30 share Sensex pack, 18 fell and the rest rose.

Index heavyweight Reliance Industries (RIL) rose 0.53% to Rs 1023.25. The stock hit a high of Rs 1030.90 and low of Rs 1009.35. The Directorate General of Hydrocarbons (DGH), the oil ministry's exploration and production monitoring agency, has reportedly asked Reliance Industries (RIL) to explain what it called lower than expected oil production from the KG D6 field. Separately, the DGH also pointed out that the two gas fields in D6 were producing just 48-50 million metric standard cubic metres of gas a day (mmscmd), considerably lower than the 80 mmscmd foreseen in the development plan.

Separately, RIL reportedly plans to raise at least $1 billion in the biggest dollar-denominated bond sale by a non-bank India company to fund investments.

FMCG stocks fell on profit taking. United Spirits, Nestle India, Hindustan Unilever, Dabur India, Colgate-Palmolive and ITC fell by 0.91% to 2.40%.

Most auto stocks rose on robust vehicle sales in September 2010. Bajaj Auto rose 3.12%. The stock hit all-time high of Rs 1,589.90 on Monday. Total sales rose 26% to 3,52,769 units in September 2010 over September 2009.

India's largest tractor and utility vehicles maker Mahindra & Mahindra (M&M) rose 2.28% to Rs 748.10 on reports the company is planning to set up a Rs 300-crore tractor-manufacturing unit at its Zaheerabad facility at Andhra Pradesh over the next three years. The stock hit all time high of Rs 750 today.

The company said on Friday, 1 October 2010, it sold 35,177 vehicles in September 2010, nearly 24% more from a year earlier.

India's top car maker, Maruti Suzuki rose 1.51% to Rs 1502.85. Total vehicle sales rose 29.6% to 1,08,006 units in September 2010 over September 2009. This is a record monthly sale from the car major.

But, India's leading bike maker by sales Hero Honda Motors fell 0.56%, reversing initial gains. Sales rose 8.1% to 4.33 lakh units in September 2010 over September 2009.

Commercial vehicle maker Tata Motors fell 0.46%. The stock hit a record high of Rs 1155.75 on Friday, 1 October 2010. The company on Monday said it has acquired 80% stake in Italian design and engineering firm Trilix SRL, for 1.85 million euros. The acquisition will help enhance the company's styling and design capabilities to global standards, Tata Motors said in a statement.

Meanwhile, the company announced during market hours on Monday it has increased the total size of ordinary and 'A' ordinary shares placement to $750 million from a base amount of $525 million following strong investor response. The company said the size of the 'A' ordinary shares issue has been raised to $550 million from $400 million.

Banking stocks fell on profit taking. India's largest private sector bank by net profit ICICI Bank fell 0.89%, with the stock snapping last three days' gains. The stock hit 52 week high of Rs 1169.75 on Monday, 4 October 2010.

India's largest commercial bank by net profit and branch network State Bank of India (SBI) fell 0.21%, with the stock falling for the second straight day. The stock hit a record high of Rs 3299 on Monday, 4 October 2010.

Bank of India and Bank of Baroda rose by between 0.56% to 3.38%. But, Punjab National Bank fell 0.03%.

India's second largest private sector bank by net profit HDFC Bank fell 1.80%, with the stock falling for the second straight day. HDFC Bank raised its key lending rate or the base rate by 25 basis points to 7.50% effective Tuesday, 5 October 2010. The increase follows a tightening policy by the Reserve Bank of India, which has raised its key lending rate or the repo rate by 125 basis points since mid-March 2010, including a quarter percentage point rise in mid-September 2010. HDFC Bank had raised its rates on some deposits by up to 50 basis points effective 24 September 2010.

Metal stocks reversed initial gains. NMDC, Hindalco Industries, JSW Steel, Sterlite Industries, Hindustan Zinc, Steel Authority of India and Tata Steel fell by between 0.13% to 2.15%.

Stocks from the Anil Dhirubhai Ambani group rose across the board. Reliance Natural Resources (up 5.82%), Reliance Broadcast Network (up 4.95%), Reliance Power (up 4.50%), Reliance Capital (up 4.37%), Reliance Communications (up 3.22%) and Reliance Infrastructure (up 3.07%), rose.

Reliance MediaWorks surged a staggering 36.96% in a single trading session today, 5 October 2010, to settle at Rs 292.95.

Temptation Foods galloped 3.62%, after the company said its board will meet on 14 October 2010 to consider raising funds through various modes.

Timken India reported a highest turnover of Rs 803.79 crore on BSE. Reliance MediaWorks (Rs 219.89 crore), Orchid Chemicals and Pharmaceuticals (Rs 201.79 crore), Microsec Financial Services (Rs 199.29 crore) and VIP Industries (Rs 180.85 crore), were the turnover toppers on BSE in that order.

Karuturi Global clocked a highest volume of 5.47 crore shares on BSE. Timken India (5.19 crore shares), FCS Software (4.90 crore shares), Microsec Financial Services (1.69 crore shares) and Cals Refineries (1.33 lakh shares), were the volume toppers on BSE in that order.