BSE Mid-Cap, Small-Cap indices edge lower

Good Q2 results from private sector banking major ICICI Bank, cigarette major ITC and power equipment major Bharat Heavy Electricals (Bhel) helped market stage a rebound from lower level in what was a highly volatile trading session. The market snapped a three-day losing streak. But, the broad market was weak as a number of small-cap and mid-cap stocks fell. World stocks fell as caution prevailed ahead of US third-quarter economic growth data due later in the global day.



The barometer index Sensex and the 50-unit S&P CNX Nifty regained their psychological 20,000 and 6,000 levels, respectively in late trade after trading below those levels for most of the day. The Sensex jumped 91.30 points or 0.46%, up 263.38 points from the day's low and off 47.99 points from the day's high. The Nifty gyrated between a high of 6,032.65 and a low of 5,937.10. The BSE Mid-Cap index lost 0.87% to 8,302.56 and the BSE Small-Cap index slipped 1.50% to 10,597.59.

ICICI Bank surged over 6% to strike a 52-week high after reporting decent Q2 results and cigarette major ITC rose over 1.5% after reporting strong Q2 result. Index heavyweight Reliance Industries (RIL) advanced 1% in volatile trade ahead of its Q2 September 2010 results on Saturday, 30 October 2010. Metal stocks extended Thursday's fall on worries about the pace of global economic recovery. Software and telecom pivotals edged lower while capital goods pivotals saw divergent trend. Most auto stocks declined on profit booking.

Intraday volatility was immense. The market slipped into the red, soon after a positive starts as weak Asian stocks weighed on sentiment. The market came off lows later. The market hovered in negative zone in mid-morning trade. The market erases almost all the initial losses in early afternoon trade. Stocks moved in a narrow range in afternoon trade. Volatility was the order of the day as a sell-off in index pivotals dragged the key benchmark indices to the day's lows in mid-afternoon trade. The key benchmark indices staged a solid comeback in late trade to strike the day's high led by rally in ICICI Bank, which jumped after posting forecast-beating Q2 September 2010 results.

NSE's volatility index, India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, was up 1.17% at 20.76. The index had lost 2.38% to 20.52 on Thursday, 28 October 2010, a day after it had risen 2.29% to 21.02 on Wednesday, 27 October 2010. The index had lost 3.79% to 20.55 on Tuesday, 26 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.

The focus of the market is currently on the second quarter September 2010 results. The results announced so far have been encouraging. The combined net profit of a total of 995 firms surged 44.30% to Rs 66119 crore on 16.90% growth in sales to Rs 408747 crore in Q2 September 2010 over Q2 September 2009.

Meanwhile, the National Stock Exchange (NSE) added 23 more stocks for trading in the futures and options segment from today, 29 October 2010. The new entrants are -- 3i Infotech, Alok Industries, Bajaj Holdings, Bata India, Bombay Dyeing, Central Bank of India, Development Credit Bank, Escorts, Havells India, Hindustan Oil Exploration Company, Indraprastha Gas, Indusind Bank, IRB Infrastructure, Jet Airways, Karnataka Bank, Max India, MRF, Oil India, S Kumars Nationwide, SREI Infrastructure, Sterlite Technologies, Tata Motors DVR 'A' Ordinary and TVS Motor Company.

The Reserve Bank of India (RBI) today, 29 October 2010, unveiled special liquidity measures to tide banks over the temporary cash crunch. The RBI said banks can avail funds under the special measures up to an additional 1% of their deposits. The RBI will conduct two liquidity adjustment facility (LAF) auctions on 29 October 2010 and 1 November 2010 at 14:30 IST and 16:15 IST respectively. The bank will also conduct a special 2-day repo auction on Saturday, 30 October 2010.

The RBI said that the measures were temporary and were being taken to provide liquidity comfort arising out of frictional liquidity pressure.

Meanwhile, flows pouring into emerging market funds slowed considerably in the fourth week of October 2010, as investors grew wary awaiting the outcomes of US elections and the Federal Reserve meeting next week. EPFR Global-tracked emerging markets equity and bond funds took in $2.68 billion and $710 million, respectively, in the week ended 27 October 2010, around half the previous week's totals. Last week, global emerging markets equity funds took in $3.76 billion, topping the record of $3.74 billion set in the first week of October 2010, which had been the highest total since EPFR started compiling weekly flow data.

Brazil equity funds posted another solid week of inflows despite that market's recent efforts to control capital inflows via higher taxes, EPFR said. Last week, the Brazilian government raised the tax on foreign purchases of fixed income to 6% from 4%. It also raised the tax on margin deposits on futures markets to 6% from 0.38%.

European shares edged lower in volatile trade on Friday as traders remained cautious ahead of third-quarter US GDP data, and the Federal Reserve's statement on quantitative easing next week. The key benchmark indices in France, Germany and UK were down by between 0.26% to 0.46%.

Preliminary data showed German retail sales were down 2.3% on the month in September 2010, indicating that the country is still struggling to get domestic demand into higher gear. The month-on-month drop reported Friday followed a 0.4% slip in August.

Asian stocks fell on Friday as concerns about the outlook for earnings weighed on sentiment in Tokyo and Seoul. The key benchmark indices in China, Hong Kong, Taiwan, South Korea, Japan and Indonesia declined between 0.46% and 1.75%. But, Singapore's Straits Times index rose 0.42%

AIA Group, the pan-Asian life-insurance unit of American International Group Inc, sparkled on its debut on the Hong Kong market on Friday, 29 October 2010. Other initial public offerings by companies in the Asian region also enjoyed solid performance on debut on Friday, 29 October 2010.

US markets ended on a mixed note on Thursday as a three-month low in jobless claims and tumbling US dollar lifted the broader markets but 3M kept the Dow from following suit. The Dow Jones Industrial Average fell 16.57 points, or 0.15%, to 11109.71 and the Standard & Poor's 500 rose 1.22 points, or 0.10%, to 1183.67. The Nasdaq Composite added 4.11 points, or 0.16%, to 2507.37.

Investors remain focussed on the possible size and scope of further quantitative easing steps by the US Federal Reserve, widely expected to be announced at next week's policy meeting.

The Labor Department said initial jobless claims slumped by 21,000 to 434,000 last week, surprising economists who had forecasted a rise of 3,000 and marking the lowest level since 10 July 2010. Continuing claims dropped by 122,000 to 4.4 million -- a near two-year low.

Trading in US index futures indicated that the Dow could fall 49 points at the opening bell on Friday, 29 October 2010. .

Back home, the growth of six infrastructure industries slowed to 2.5% in September, pulled down by contraction in output of coal and petroleum refinery. The six core sectors -- crude oil, petroleum refinery products, coal, electricity, cement and finished steel, had expanded 4.3% in September 2009.

The annual food inflation eased in mid-October 2010 as vegetable prices fell. The food price index in the year to 16 October 2010 rose 13.75%, compared with 15.53% rise in the previous week. The fuel price index for the same week rose 11.25% against an annual rise of 11.14% in the previous week. The primary articles price index was up 16.62%, compared with an annual rise of 18.05% a week earlier.

Reserve Bank of India deputy governor Subir Gokarn on Tuesday, 26 October 2010, called high food prices a structural problem and warned rising prices would put upward pressure on inflation and interest rates. Finance Minister Pranab Mukherjee on Tuesday said 4-5 percent inflation is "ideal" for India's economy, but admitted achieving that level might be difficult. The RBI is widely expected to raise its key lending rate by 25 basis points, the sixth such hike since March 2010, when it meets to review policy on 2 November 2010, as it looks to achieve its end-March 2011 projection of headline inflation at 6%.

The government has allowed duty-free import of rice and wheat and has released grains from its stocks to rein in food price rise

RBI governor D Subbarao on Wednesday, 27 October 2010, said managing the exchange rate in the face of volatile flows contains a cost, and the challenge was to minimise that cost. Buying dollars adds liquidity to the banking system, which aggravates inflation. Sterilising resultant liquidity can push up interest rates, which in turn attracts further inflows, the Reserve Bank of India governor said.

Managing currency tensions will require a shared understanding on keeping exchange rates aligned to economic fundamentals, and an agreement that currency interventions should be resorted to not as an instrument of trade policy but only to manage disruptions to macroeconomic stability, Subbarao said. The Group of 20 advanced and emerging economies agreed, late last week, to move towards market-determined exchange rates and to pursue the full range of policies needed to reduce excessive external imbalances.

The RBI governor said managing capital flows is not a problem that should be managed only by emerging market economies. In as much as lumpy and volatile flows are a spillover from policy choices of advanced economies, the burden of adjustment has to be shared, Subbarao said.

Finance Minister Pranab Mukherjee on Tuesday, 26 October 2010, said the government has no plan to put any cap on flow of funds from foreign institutional investors (FIIs), which have pumped in nearly $25 billion so far this year. He said a sharp increase in inflow of funds from FIIs has provided cushion in controlling current account deficit. "I am confident with the flow of FIIs and foreign exchange availability, I will be able to contain current account deficit at around 3% of the GDP," Mukherjee said. The Finance Minister admitted that inflows of foreign funds have put pressure on the Indian currency.

He added that said steps to mop-up liquidity in India, as part of inflation-fighting measures, must not affect economic growth. He said the economy is on the path to regaining the growth momentum seen before the global economic slowdown. The Reserve Bank of India has taken steps to moderate demand to levels which India's economy can support in the light of high inflation, Mukherjee said.

India's economy is seen growing by 8.5% to 9.7% in the 2010/11 fiscal year and monetary tightening should ensure the pace of recovery is not hit, the finance ministry said in a report released on Tuesday, 26 October 2010. The report also said measures to temporarily ease liquidity were consistent with the Reserve Bank of India's (RBI) policy stance of containing inflation and anchoring inflationary expectations. "It has to be ensured that monetary tightening does not adversely affect the pace of recovery at this stage," the Finance Ministry wrote in the report.

Bond yields dropped after the central bank announced measures to ease temporary liquidity problem in banking system. The yield on the most traded 8.13% 2,022 bond was hovering at 8.09%, compared with Thursday's (28 October 2010) close of 8.12%. The yield on the second most traded 7.99% 2017 bond was hovering at 7.96%, compared with Thursday's (28 October 2010) close of 8%. The yield on the benchmark 10-year 7.8% bond was hovering at 8.11%, compared with Thursday's (28 October 2010) close of 8.14%.

The government may lift controls on diesel pricing in a phased manner, instead of in one go, to cushion any blow on the poor, the oil ministry said in a report on Tuesday, 26 October 2010. "It is proposed that increase in prices of diesel will be staggered over time to minimise the overall impact on the poor and the vulnerable," the report said. It also said the government may intervene in the pricing of petrol and diesel in case of a sharp rise or volatility in global crude oil prices.

Foreign funds have made heavy purchases of Indian stocks this year. Net equity inflow in 2010 now stands at a record $24.79 billion, above last year's $17.45 billion, as per data from the Securities & Exchange Board of India (Sebi). The Sebi data includes FII inflow through primary and secondary market route. A sizable chuck of FII inflow this year is from India-focused exchange traded funds as well as long-only funds.

While global liquidity remains ample, a section of the market is worried that a strong equity issuance pipeline over the next six months will soak liquidity from the secondary equity markets. Indian companies are estimated to raise about Rs 80000 crore from equity and debt issue over the next three to six months. State-run Power Grid Corp, Steel Authority of India and Indian Oil Corp are some of the companies that are planning large share sales in coming months.

But, the liquidity in secondary equity markets in the immediate short term could rise as Coal India begins to refund excess subscriptions received towards its initial public offering. The IPO of Coal India IPO was subscribed more than 15 times.

The BSE 30-share Sensex was up 91.30 points or 0.46% to 20,032.34. The Sensex jumped 139.29 points at the day's high of 20,080.33 in late trade. The index lost 172.08 points at the day's low of 19,768.96 in mid-afternoon trade.

The S&P CNX Nifty was up 30 points or 0.50% to 6,017.70. The Nifty oscillated between 6,032.65 and 5,937.10 during the day.

The market breadth, indicating the health of the market was weak. On BSE, 2156 shares declined while 911 shares advanced. A total of 69 shares remained unchanged. The breadth was positive in opening trade.

The total turnover on the BSE amounted to Rs 4981 crore, lower than Thursday's turnover of Rs 5373.44 crore

Sectoral indices on the BSE displayed mixed trend. The BSE Oil & Gas index (up 0.69%), the BSE FMCG index (up 1.30%), and the Bankex (up 1.52%), outperformed the Sensex. The BSE Power index (down 0.89%), the BSE Metal index (down 1.31%), and the BSE Realty index (down 1.16%) underperformed the Sensex.

Among the 30-share Sensex pack, 18 declined while the rest gained. Reliance Infrastructure (down 2.28%), DLF (down 1.80%), and Jaiprakash Associates (down 1.72%), edged lower from the Sensex pack.

Cipla (up 0.89%), Jindal Steel & Power (up 0.49% and Hindustan Unilever (up 0.46%), edged higher from the Sensex pack.

India's largest private sector bank by net profit ICICI Bank galloped 6.48% to Rs 1161, after striking a 52-week high of Rs 1174. The stock staged a sharp rebound from day's low of Rs 1075 after reporting during market hours today a 21.87% rise in consolidated net profit to Rs 1394.94 crore on 0.91% increase in total income to Rs 14595.85 crore in Q2 September 2010 over Q2 September 2009. It was the top gainer from the Sensex pack.

India's second largest private sector bank by net profit HDFC Bank rose 0.10% to Rs 2275, recovering from day's low of Rs 2238.10. The bank's net profit rose 32.68% to Rs 912.14 crore on 14.37% rise in total income to Rs 5770.70 crore in Q2 September 2010 over Q2 September 2009. The private sector bank announced the results after trading hours on 19 October 2010.

India's largest bank by net profit and branch network State Bank of India fell 0.68% to Rs 3156, after gyrating in a wide zone of Rs 3115-3185 during the day. The bank raised its Base Rate by 10 basis points to 7.60% per annum (pa) effective 21 October 2010.

Shriram Transport Finance Company spurted 4.61%. The company's net profit surged 44.11% to Rs 298.96 crore on 25.38% increase in total income to Rs 1342.90 crore in Q2 September 2010 over Q2 September 2009. The result was announced during trading hours on Wednesday, 27 October 2010.

Mahindra & Mahindra Financial Services rose 4.18%. The company's consolidated net profit soared 71.9% to Rs 123.19 crore on 34% rise in total income to Rs 493.15 crore in Q2 September 2010 over Q2 September 2009. The company declared results on 22 October 2010.

Index heavyweight Reliance Industries (RIL) advanced 1.22% to Rs 1096.30, after oscillating in a band of Rs 1080.10-1107.30 during the day. RIL unveils its Q2 September 2010 results on Saturday, 30 October 2010. As per recent reports, RIL is expected to achieve peak output of 80 million standard cubic metres per day (mmscmd) from its KG-D6 block in about 12 months, bringing down the delay in its ramp-up by a year. Currently, natural gas production from the block is stagnant at 60 mmscmd.

India's largest oil exploration firm by sales Oil & Natural Gas Corporation (ONGC) dropped 1% after net profit rose a lesser-than-expected 5.88% to Rs 5388.77 crore on 20.64% rise in net sales to Rs 18193.59 crore in the quarter ended September 2010 over the quarter ended September 2009.

Cairn India jumped 1.30% after consolidated net profit jumped 237.60% to Rs 1585.08 crore on 1069% surge in revenue to Rs 2686.40 crore in Q2 September 2010 over Q2 September 2009.

Essar Oil climbed 4.58% after reporting net profit of Rs 130 crore in Q2 September 2010 as against net loss of Rs 94.00 crore in Q2 September 2009. Net sales rose 13.99% to Rs 11119.00 crore in Q2 September 2010 over Q2 September 2009. The result was announced on 18 October 2010.

India's largest cigarette maker by sales ITC jumped 1.79%, after net profit rose 23.45% to Rs 1246.74 crore on 16.28% increase in net sales to Rs 5061.20 crore in Q2 September 2010 over Q2 September 2009. The company declared its results during trading hours today.

Metal stocks extended Thursday's fall on worries about the pace of global economic recovery. India's largest private sector steel maker by sales Tata Steel lost 2.71% to Rs 588.35 and was the top loser from the Sensex pack.

Hindalco Industries (down 2.29%), Sterlite Industries (down 1.17%), Steel Authority of India (down 4.32%), Sesa Goa (down 0.57%), Tata Steel (down 2.71%), declined.

Most auto stocks declined on profit booking. India's top bike maker by sales Hero Honda Motors declined 2.17%. The company after market hours today, 29 October 2010, reported 15.32% fall in net profit to Rs 505.60 crore on 11.66% rise in net sales to Rs 4511.29 crore in Q2 September 2010 over Q2 September 2009

India's largest tractor maker by sales Mahindra & Mahindra slipped 1.16% to Rs 725 on profit taking. The company during trading hours today, 29 October 2010 reported 7.9% rise in net profit to Rs 758.49 crore on 41.35% increase in net sales to Rs 6311.26 crore in Q2 September 2010 over Q2 September 2009.

Meanwhile, the Korea Fair Trade Commission cleared the acquisition of the South Korean automaker Ssangyong Motor by Mahindra & Mahindra and said the deal raised no anti-competition issues.

India's top small car maker by sales Maruti Suzuki India gained 1.72%. The company will announce its Q2 September 2010 results on Saturday, 30 October 2010.

India's biggest commercial vehicles maker by sales Tata Motors lost 2.39% to Rs 1161.90.

India's largest software services exporter by sales TCS slipped 0.34%. India's second largest software services exporter by sales Infosys shed 0.39% to Rs 2963. India's third largest software services exporter by sales Wipro slumped 2.14%.

India's largest power equipments maker by sales Bhel slipped 0.68%, reversing initial gains. Net profit jumped 33.15% to Rs 1142.28 crore on 24.98% increase in total income to Rs 8652.64 crore in Q2 September 2010 over Q2 September 2009. The result was announced during trading hours today, 29 October 2010.

The company said it had outstanding order book of Rs 1,54,000 crore at the end of Q2 September 2010. The order book is 4.68 times the company's year ended March 2010 net sales of Rs 32880.30 crore, thus giving strong revenue visibility.

India's largest engineering & construction firm by sales Larsen & Toubro advanced 0.68%.

ABB tumbled 5.66% after net profit slumped 86.16% to Rs 11.50 crore on 8.24% decline in revenue to Rs 1334 crore in Q3 September 2010 over Q3 September 2009. The result was announced during trading hours today, 29 October 2010.

India's largest listed cellular services provider by sales Bharti Airtel declined 1.27% on profit booking. The stock had surged over 2.5% on Thursday on reports it is interested in buying the yet-to-be-launched Indian wireless broadband business of Qualcomm.

India's second largest listed cellular services provider by sales Reliance Communications fell 0.19%, extending Thursday's close to 1.5% decline.

ICICI Bank clocked highest turnover of Rs 194.53 crore on BSE. ABG Shipyard (Rs 193.06 crore), Gyscoal Alloys (Rs 181.42 crore), Reliance Industries (Rs 117.88 crore) and Tata Steel (Rs 108.25 crore) were the other turnover toppers in that order.

Alok Industries clocked highest volume of 2.06 crore shares on BSE. Cals Refineries (1.95 crore shares), Shiva Cements (77.63 lakh shares), Tulsi Extrusions (72.90 lakh shares) and Beckons Industries (60.74 lakh shares) were the other volume toppers in that order.

Glenmark Pharmaceuticals soared 7.40%. The company's consolidated net profit jumped 38.01% to Rs 111.62 crore on 23.19% increase in total income to Rs 759.54 crore in Q2 September 2010 over Q2 September 2009. The result was announced during trading hours on Wednesday, 27 October 2010.

Tata Chemicals tanked 8.52% after consolidated net profit tumbled 42.96% to Rs 127.10 crore on 27.68% increase in total income to Rs 3029.08 crore in Q2 September 2010 over Q2 September 2009. The result was announced during trading hours today, 29 October 2010.

Monsanto India lost 7.15% to Rs 2003.25 after the company reported higher net loss of Rs 5.79 crore in Q2 September 2010 compared with a net loss of Rs 4.59 crore in Q2 September 2009. The company declared its results after market hours on Thursday, 28 October 2010.