Rally continues unabated

Robust foreign fund buying helped the market clock gains for the fifth consecutive week. The key benchmark indices attained their highest closing levels in more that 32 months as firm global stocks also underpinned sentiment. A High Court ruling that the site of a demolished mosque in Ayodhya would be split between the Hindus and the Muslims, dousing immediate fears of a violent backlash, aided the rally.



The BSE Sensex jumped 399.86 points or 1.99% in the week ended Friday, 1 October 2010, to settle at 20,445.04. The S&P CNX Nifty jumped 125.10 points or 2.07% to 6,143.40.

The BSE Mid-Cap index rose 98.51 points or 1.21% to 8,213.67. The BSE Small-Cap index rose 136.32 points or 1.33% to 10,403.65. Both these indices underperformed the Sensex.

Foreign funds continue to aggressively mop up Indian shares. Foreign institutional investors (FIIs) bought shares worth staggering Rs 4755.80 crore in a single trading session on Thursday, 30 September 2010, which was a result of gross purchases Rs 10917.80 crore and gross sales Rs 6162 crore. There was an inflow of Rs 4003.90 crore into secondary equity markets on that day, which was a result of gross purchases Rs 10144.50 crore and gross sales Rs 6140.60 crore.

Net equity inflow in 2010 now stands at a record $19.43 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.

Exports rose for the tenth straight month in August 2010, growing an annual 22.5% to $16.64 billion, government data on Friday showed. Imports for the month rose 32.2% to $29.7 billion, widening the country's trade deficit to $13.04 billion.

Data on Thursday, 30 September 2010, showed that the current account deficit widened in the June 2010-quarter from the previous three months due to a higher merchandise trade gap and lower earnings through services.

The 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 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 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.

The growth of core infrastructure industries slowed to 3.7% in August 2010, as compared to 6.4% in the same month last year, according to data released by the government. These six segments account for 26.7% of the country's total industrial output.

Meanwhile, the Lucknow bench of the Allahabad high court on Thursday, 30 September 2010, ruled that the disputed land in Ayodhya where the Babri Masjid stood for 500 years until it was demolished in 1992 shall be divided into three parts. A two-thirds portion is to be shared by two Hindu plaintiffs and one-third will be given to the Sunni Muslim Waqf Board.

By a 2-1 majority verdict, plaintiffs representing Lord Ram, the Nirmohi Akhara and the Waqf Board were declared joint title-holders of the property. The Bench asserted that the portion under the central dome of the demolished three-dome structure where the idol of Ram Lalla had been kept in a makeshift temple was the birthplace of Lord Rama "as per faith and belief of the Hindus."

The Bench of Justice S.U. Khan, Justice Sudhir Agarwal and Justice D.V. Sharma dismissed the suit filed by the Sunni Waqf Board for possession of the Babri Masjid because it was time-barred. It cited faith as the basis to declare the site the janmasthan of Lord Ram, but ordered a three-way partition on the basis of historical use of the site by Muslims and Hindus.

The Waqf Board said it would file an appeal in the Supreme Court against the judgment. Waqf Board counsel Zafaryab Jilani told a media conference that the All India Muslim Personal Law Board would decide when to file it. The Bench clarified that even though all the three parties are declared to have a one-third share each in the property, minor adjustments could be made -- for which the adversely affected party would be compensated from the adjoining land acquired by the Central Government.

Trading for the week began on a positive note. The key benchmark indices eked out small gains on Monday, 27 September 2010, as firm global stocks and recent strong foreign fund inflows underpinned sentiment. However, profit booking pulled market off intraday high. The BSE 30-share Sensex was up 72.20 points or 0.36% to 20,117.38. The S&P CNX Nifty was up 17.35 points or 0.29% to 6,035.65.

The key benchmark indices registered marginal losses amidst high intraday volatility on Tuesday, 28 September 2010, as traders rolled over positions in the derivatives segment, from the near-month September 2010 series, to October 2010 series, ahead of the expiry of the near-month September 2010 derivatives contracts on Thursday, 30 September 2010. An intraday recovery in European stocks and US index futures, aided a strong intraday rebound on the domestic bourses. The BSE 30-share Sensex was down 12.52 points or 0.06% to 20,104.86. The S&P CNX Nifty was down 6.15 points or 0.1% at 6,029.50.

The key benchmark indices fell for the second straight day on Wednesday, 29 September 2010, as traders resorted to profit taking. The Sensex fell below the psychological 20,000 mark, after moving above and below that level intraday. The 50-unit S&P CNX Nifty also fell below the psychological 6000 mark. The BSE 30-share Sensex was down 148.52 points or 0.74% to 19,956.34. The S&P CNX Nifty was down 38.20 points or 0.63% at 5991.30.

In a complete turnaround, the key benchmark indices ended on a firm note on Thursday, 30 September 2010, with metal and banking stocks staging a strong rebound in the last 40 minutes or so of trade. The BSE Sensex and the S&P CNX Nifty regained the psychological 20,000 and 6,000 levels respectively. The BSE 30-share Sensex rose 112.78 points or 0.57% to 20,069.12. The S&P CNX Nifty rose 38.65 points or 0.65% at 6,029.95.

Equities started October 2010 on a buoyant note on Friday, 1 October 2010, with the two key benchmark indices -- the barometer index BSE Sensex and the 50-unit S&P CNX Nifty, scaling 32-1/2-month highs. Firm global stocks underpinned sentiments. Data showing massive buying by foreign funds on Thursday, 30 September 2010, also boosted sentiment. The BSE 30-share Sensex rose 375.92 points or 1.87% to 20,445.04. The S&P CNX Nifty rose 113.45 points or 1.88% at 6,143.40.

Among the 30 Sensex shares, 23 gained, six fell and one was unchanged.

Aluminium maker Hindalco Industries was the top Sensex gainer last week. It rose 6.99% to Rs 204.25.

India's largest steel maker by sales Tata Steel was the second biggest Sensex gainer. The stock rose 6.08% to Rs 667.75. Tata Steel UK Holdings, a 100% indirect subsidiary of Tata Steel, signed a senior facility agreement with a syndicate of 13 banks for an over $5-billion (Rs 22,500 crore) term loan and revolving credit facility, intended to replace the current term loan and revolving credit facilities entered into at the time of the acquisition of Corus in 2007.

India's largest real estate developer by market capitalisation DLF was the third biggest Sensex gainer. The stock rose 6.06% to Rs 387.8.

Jindal Steel & Power (up 5.61%), Bharat Heavy Electricals (up 5.51%), NTPC (up 4.68%), Tata Power Company (up 4.68%), Tata Motors (up 4.53%) and Larsen & Toubro (up 4.09%), were the other major Sensex gainers.

India's largest state-run oil explorer by market capitalisation Oil & Natural Gas Corporation (ONGC) fell 2.17% to Rs 1406.1. It was the biggest Sensex loser last week.

FMCG major Hindustan Unilever fell 1.54% to Rs 309.8. It was the second biggest Sensex loser last week.

Cement maker ACC declined 1.38% to Rs 1000. It was the third biggest Sensex loser last week.

Hero Honda Motors (down 1.14%), Reliance Communications (down 0.80%) and Bharti Airtel (down 0.77%), were the other major Sensex losers.

Index heavyweight Reliance Industries rose 0.48% to Rs 1006.45. RIL has reportedly revived plans to build a cracker and downstream facilities in Jamnagar. Plans for the petrochemical complex, which is located in a special economic zone, were put on ice in the wake of the global financial downturn. The new complex will complement the site's second refinery, reports suggest.

Copper maker Sterlite Industrues rose 1.74% to Rs 175.35. Reports suggested that the Supreme Court has stayed a lower court order to close Sterlite Industries' copper smelter in south India. The stay order came after the Madras High Court earlier this week ordered the copper smelter to close on safety and worker-health concerns. The stay order is applicable till 18 October 2010