Infosys scales record high ahead of Q2 results

The key benchmark indices edged lower in choppy trading session as profit booking emerged after the market scaled 33-month high at the onset of the trading session. European stocks came off initial highs. The market breadth was weak, in contrast with a strong breadth at the onset of the trading session. The BSE 30-share Sensex lost 190.24 points or 0.92%, off close 360 points from the day's high and up close to 55 points from the day's low.



Today's decline was partly because investors sold shares in the secondary market to make room for investment in the initial public offer (IPO) of Coal India, which opens for bidding next week. The Coal India IPO is billed as the country's largest issue ever.

Telecom stocks declined on selling pressure. Capital goods pivotals slipped on profit booking. Banking shares underwent correction after recent strong gains. Index heavyweight Reliance Industries (RIL) fell, with most of the slide materialising in late trade. Infosys struck record high ahead of its Q2 result on Friday, 15 October 2010. Tata Motors also hit record high. Wipro hit 52-week highs.

Intraday volatility was high. The market surged in opening trade, tracking firm Asian stocks and on data showing heavy buying by foreign funds on Wednesday, 13 October 2010. The barometer index BSE Sensex and the 50-unit S&P CNX Nifty struck 33-month highs. But, the initial rally was short-lived. The Sensex slipped into the red in early trade. The market came off the lower level in morning trade. The Sensex regained positive zone.

The market moved in a narrow range in mid-morning trade. A bout of volatility was witnessed as the key benchmark indices recovered in early afternoon trade, soon after hitting fresh intraday lows. The market moved between positive and negative terrain near the flat line in afternoon trade. Fresh selling dragged market to the day's low in mid-afternoon trade.

NSE's volatility index, India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, was up 2.9% at 20.60. The index had lost 2.39% to 20.02 on Wednesday, 13 October 2010. The index had declined 3.25% to 20.51 on Tuesday, 12 October 2010. The index had lost 0.93% to 21.20 on Monday, 11 October 2010. The index had lost 4.68% at 21.40 on Friday, 8 October 2010, a day after rising 3.31% to 22.45 on Thursday, 7 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.

Foreign funds continue to aggressively mop up Indian stocks. Net equity inflow in 2010 now stands at a record $22.70 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.

But, a section of the market is concerned 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 36,000 crore from share sales over the next three to six months. This includes a large initial public offer (IPO) from Coal India. The government plans to raise about Rs 15,000 crore from divestment of 10% stake in Coal India. The Coal India IPO is billed as the country's largest issue ever. The IPO of Coal India opens for bidding on Monday, 18 October 2010 and closes on Thursday, 21 October 2010.

The government on Tuesday, 12 October 2010, set Rs 225-245 per share price band for the Coal India IPO. Retail investors and employees will get shares at 5% discount on the final issue price to be discovered through the book-building route. The Indian government is selling roughly 63.16 crore Coal India shares, or 10% of the company.

The Reserve Bank of India governor D Subbarao said over the weekend in Washington that the central bank would intervene in the foreign exchange market if inflows are "lumpy" and "volatile". The rupee has risen sharply over the past one and half months.

The rupee rose for the second straight session today, 14 October 2010, tracking gains in other Asian currencies and on a weak dollar. The partially convertible rupee was at 44.11/12 per dollar, stronger than Wednesday's closing of 44.51/52 per dollar.

The next major trigger for the stock market is Q2 September 2010 results. Brokerage earnings estimates will now roll over to FY 2012 (year ending March 2012).

Tier-1 IT firms viz. Infosys, TCS, Wipro, and HCL Tech are seen reporting strong earnings growth in Q2 September 2010 as high volumes will boost operating margins. However, the IT sector faces headwind of a firm rupee in Q3 December 2010. The rupee hit a 2-year high against the dollar on Thursday, 7 October 2010. Higher volumes and price hike will aid earnings growth of most auto firms in Q2 September 2010 though analysts will closely eye operating profit margins and outlook on margins in the face of rising metal prices

Banks are seen reporting decent-to-strong earnings growth on the back of pick-up in credit offtake. Manufacturers of base metals are also seen reporting strong Q2 results on the back of higher metal prices. Increase in product prices will offset higher input costs for consumer staples firms in Q2 September 2010. But, cement firms will report dismal results due to a sharp fall in cement prices during the monsoon season.

Customs, Central Excise and Service Tax revenue collections at all India level rose 44.4% to Rs 150686 crore during April-September 2010 as compared to corresponding period in previous year, data released on 13 October 2010 showed.

European stocks came off initial highs on Thursday, 14 October 2010. The key benchmark indices in France and Germany rose 0.18% and 0.52% respectively. But, UK's FTSE index fell 0.21%.

Most Asian stocks rose on Thursday, 14 October 2010, as strengthening economic and corporate earnings data boosted confidence in a global recovery. The key benchmark indices in Japan, China, Indonesia, South Korea, Hong Kong and Taiwan rose by between 0.64% to 1.91%. But, Singapore's Straits Times index slipped 0.22%.

Trading in US index futures indicated that the Dow could rise 12 points at the opening bell on Thursday, 14 October 2010. US index futures came off initial highs.

US markets advanced on Wednesday, 13 October 2010 to hit their highest in five months as investors cheered the latest round of US blue-chip earnings. The Dow Jones Industrial Average rose 75.68 points or 0.69% to 11,096.08. The S&P 500 gained up 8.33 points or 0.71% to 1,178.10 and the Nasdaq Composite advanced 23.31 points or 0.96% to 2,441.23.

Back home, industrial production rose at a much slower-than-expected 5.6% in August 2010 from a year earlier, sharply lower than the previous month's revised 15.2% growth, data showed on Tuesday, 12 October 2010. Manufacturing output rose an annual 5.9% in August 2010, lower than a 10.6% rise in August 2009. Industrial production growth for July 2010 was revised upwards to 15.2% from 13.8% earlier.

The government will unveil data on wholesale price index for September 2010 on Friday, 15 October 2010, which will provide clues on the central bank's policy stance at its next policy review scheduled on 2 November 2010. The wholesale price index, the most widely watched gauge of prices in India, rose 8.5% in August 2010.

The yield on the most traded 8.13% 2,022 bond was hovering at 8.06%, slightly lower than Wednesday's (13 October 2010) close of 8.07%. The yield on the benchmark 10-year bond was hovering at 8.02%, slightly higher than Wednesday's (13 October 2010) close of 8.01%.

The BSE 30-share Sensex was down 190.24 points or 0.92% to 20,497.64. The Sensex jumped 166.67 points at the day's high of 20,854.55 in early trade, its highest level since 15 January 2008. The index slipped 245.06 points at the day's low of 20,442.82 in late trade.

Following a recent surge, the BSE Sensex is within a striking distance to its record high of 21,206.77 hit on 10 January 2008.

The S&P CNX Nifty was down 56.55 points or 0.91% to 6,177.35. Nifty struck a high of 6,284.10 in early trade, its highest level since 10 January 2008. Nifty had hit a record high of 6,357.10 on 8 January 2008.

The market breadth, indicating the health of the market, was weak. The breadth was strong at the onset of the trading session. On BSE, 1860 shares declined while 1163 shares advanced. A total of 78 shares remained unchanged.

Among the 30-share Sensex pack, 25 fell while the rest advanced.

The total turnover on BSE amounted to Rs 5288 crore, lower than Rs 6586.30 crore on Wednesday, 13 October 2010.

Most of the sectoral indices on BSE fell. The Capital Goods index (down 1.94%), Oil & Gas index (down 1.54%), Power index (down 1.24%), PSU index (down 1.11%), the banking sector index Bankex (down 1.08%) and underperformed the Sensex.

The BSE Metal index (up 0.55%), IT index (up 0.48%), FMCG index (down 0.37%), Healthcare index (down 0.42%), Realty index (down 0.43%), Auto index (down 0.65%) and Consumer Durables index (down 0.83%), outperformed the Sensex.

The BSE Mid-Cap index fell 0.27%. The BSE Small-Cap index fell 0.49%. Both these indices outperformed the Sensex.

Telecom stocks declined on selling pressure. India's second largest cellular services provider by sales Reliance Communications lost 3.43% and was the top loser from the Sensex pack. India's second largest cellular services provider by sales Bharti Airtel slipped 0.76%.

Banking shares underwent correction after recent strong gains. India's largest private sector bank by total income ICICI Bank fell 1.81% and India's second largest private sector bank by total income HDFC Bank slipped 0.88%. India's largest bank by branch network and net profit State Bank of India declined 1.28%.

Index heavyweight Reliance Industries (RIL) fell 1.3% to Rs 1058.25, off day's high of Rs 1079. As per the reports, the company has started marketing a proposed issue of bonds denominated in US dollars.

Capital goods pivotals slipped on profit booking. India's largest engineering and construction firm by sale Larsen & Toubro (L&T) lost 3.19%, reversing Wednesday's 4.04% rally, on profit booking. The company said on Friday, 8 October 2010, it has bagged new orders worth Rs 1585 crore in buildings & factories segments.

India's top power equipment maker by sales Bharat Heavy Electricals slipped 1.31%.

IT stocks were mixed with Infosys and Wipro gaining on expectations of robust Q2 September 2010 earnings. India's third largest software services exporter by sales Wipro surged 2.34% to Rs 494 and was the top gainer from the Sensex pack. The stock hit 52 week high of Rs 499.90 today.

India's second largest software services exporter by sales Infosys Technologies rose 1.05% to Rs 3,185.10. The stock extended two-day 2.59% gains. The scrip struck a record high of Rs 3,228 today, 14 October 2010. Infosys announces its Q2 September 2010 result tomorrow, 15 October 2010.

But, India's largest software services exporter by sales TCS slipped 0.68% to Rs 985.70 after striking day's high of Rs 1004.30

India's top truck maker by sales Tata Motors rose 0.57% to Rs 1183.05 after its American depositary receipt advanced 2.65% on the NYSE on Thursday, 13 October 2010. The stock hit a record high of Rs 1194.80 today.

India's top car maker by sales Maruti Suzuki India fell 0.48%. India's largest tractor and utility vehicles maker Mahindra & Mahindra (M&M) fell 2.28%.

India's second largest bike maker by sales Bajaj Auto fell 1.06% and India's top bike maker by sales Hero Honda Motors fell 0.88%.

Metal stocks reversed initial gains. Steel Authority of India, Sesa Goa, National Aluminium Company, Hindustan Zinc, Hindalco Industries, JSW Steel fell by between 0.03% to 0.77%. But, Tata Steel and Jindal Steel & Power rose 1.97% and 0.13% respectively.

LMEX, a gauge of six metals traded on the London Metal Exchange rose 0.32% on Wednesday, 13 October 2010.

Interest rate sensitive realty stocks also reversed initial gains. Omaxe, Unitech, DLF, Phoenix Mills, Ackruit City and Lok Housing fell by between 0.64% to 3.99%.

Fertiliser shares rallied on optimism good rains this year will boost sales. Deepak Fertilisers, GNFC, GSFC and Nagarjuna Fertilisers & Chemicals rose by between 0.45% to 10.94%.

Bedmutha Industries settled at Rs 180.80 on BSE, a 77.25% premium over the initial public issue price of Rs 102. The stock debuted at Rs 114.40, a 12.16% premium over the initial public issue (IPO) price.

Ashoka Buildcon settled at Rs 333.35 on BSE, a 2.89% premium over the initial public issue price of Rs 324. The stock debuted at Rs 333.55, a 2.95% premium over the initial public issue (IPO) price.

Sea TV Network settled at Rs 106 on BSE, a 6% premium over the initial public issue price of Rs 100. The stock debuted at Rs 120, a 20% premium over the initial public issue (IPO) price.

Bedmutha Industries clocked highest volume of 6.97 crore shares on BSE. Cals Refineries (5.84 crore shares), Karuturi Global (4.28 crore shares), Sea TV Network (2.07 crore shares) and IKF Technologies (1.57 crore shares) were the other volume toppers in that order.

Bedmutha Industries clocked highest turnover of Rs 1261.31 crore on BSE. Ashoka Buildcon (Rs 288.21 crore), Sea TV Network (Rs 219.78 crore), Karuturi Global (Rs 154.36 crore) and Tata Steel (Rs 114.02 crore) were the other turnover toppers in that order.