Sensex, Nifty attain 33-month closing highs

The key benchmark indices -- the barometer index BSE Sensex and the 50-unit Nifty, attained their highest closing levels in nearly 33-months, led by rally in metal and realty stocks. Barring the BSE FMCG index, all the sectoral indices, rose. The market breadth was strong as the broader market outperformed the key benchmark indices for the second consecutive session. The Sensex jumped 135.37 points or 0.66%, off close to 127 points from the day's high and up close to 96 points from the day's low.



The market surged in opening trade, tracking firm Asian stocks. The 50-unit S&P CNX Nifty hit highest its highest level in nearly 33 months. The market soon pared gains. Stocks were range bound in morning trade. The market held firm in mid-morning trade. The market once again pared gains in early afternoon trade. The market further pared gains in afternoon trade led by selling in index pivotal ICICI Bank. A bout of volatility was witnessed in mid-afternoon trade as the key benchmark indices bounced back, soon after hitting fresh intraday lows.

NSE's volatility index, India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, fell 1.98% to 21.73. The index had fallen 2.76% to 22.17 on Tuesday, 5 October 2010. It 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.

The market sentiment remains firm on aggressive buying by foreign funds. Foreign institutional investors (FIIs) bought shares worth a net Rs 970.20 crore on Tuesday, 5 October 2010, on the top of an inflow of Rs 1918.90 crore on Monday, 4 October 2010.

Net equity inflow in 2010 now stands at a record $20.52 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.

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 36000 crore from share sales over the next three to six months. This includes a large initial public offer (IPO) from Coal India this month. The government plans to raise about Rs 15000 crore to Rs 16000 crore from divestment of 10% stake in Coal India. The Coal India IPO is billed as the country's largest issue ever. The issue is expected to open for subscription around 20 October 2010.

The rupee strengthened to its highest level in nearly six months on Wednesday, 6 October 2010, as foreign banks and exporters sold dollars, tracking gains in local shares which fuelled expectations for further capital inflows. The partially convertible rupee was at 44.48/49 per dollar, after hitting 44.25 in early deals, its strongest since 15 April 2010. The rupee had settled at 44.69/70 on Tuesday, 5 October 2010.

Reserve Bank of India deputy governor Subir Gokarn on Tuesday, 5 October 2010, said the central bank is considering measures to deal with an influx of foreign fund flows. A rising rupee is a bad news for exporters, particularly the labour-intensive segments such as textiles and leather. The government has recently extended sops to some of the labour intensive export sectors.

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 on Tuesday.

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

European stocks surged on Wednesday, 6 October 2010, tracking gains on Wall Street and in Asia sparked by hopes of further monetary stimulus. The key benchmark indices in UK, France and Germany were up by 0.65% to 0.79%.

The Bank of England and the European Central Bank will announce monetary policy decisions on Thursday, 7 October 2010.

Asian stocks rose Wednesday, 6 October 2010, buoyed by growing expectations that the Federal Reserve will take steps to bolster the US economy following a surprise rate cut by the Bank of Japan on Tuesday, 5 October 2010. Investors cheered the Bank of Japan's move Tuesday to slash its key interest rate to virtually zero. The key benchmark indices in Singapore, Japan, South Korea, Taiwan, Indonesia and Hong Kong rose by between 0.33% to 1.81%. China's markets remained closed for the Golden Week holiday.

US stocks rallied on Tuesday, 5 October 2010, after a trade group said that activity in US services companies, the nation's predominant job-generating sector, powered ahead in September 2010.

Trading in US index futures indicated that the Dow could gain 32 points at the opening bell on Wednesday, 6 October 2010.

Chicago Federal Reserve Bank President Charles Evans was quoted by the media as saying that Fed should do 'much more' monetary easing to spur a sluggish economic recovery.

Back home, 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.

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.

Bond yields declined. The yield on the benchmark 10-year bond was hovering at 7.93%, lower than Tuesday's (5 October 2010) close of 7.94%. The yield on the second most traded 8.13% 2,022 bond was hovering at 8.04%, lower than Tuesday's (5 October 2010) close of 8.09%.

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.

The BSE 30-share Sensex rose 135.37 points or 0.66% to 20,543.08, its highest closing since 14 January 2008. The index surged 262.24 points at the day's high of 20,669.95 in early trade. The Sensex rose 39.34 points at the day's low of 20,447.05 in mid-afternoon trade.

The S&P CNX Nifty rose 40.65 points or 0.66% to 6,186.45, its highest closing since 14 January 2008. Nifty hit high of 6,223.40 in early trade, its highest level since 15 January 2008.

The BSE Mid-Cap index rose 1.10% and the BSE Small-Cap index rose 0.75%. Both these indices outperformed the Sensex.

The market breadth was strong. On BSE, 1788 shares advanced while 1202 shares declined. A total of 126 shares remained unchanged.

BSE clocked turnover of Rs 6111 crore, lower than Rs 7326.80 crore on Tuesday, 5 October 2010.

The BSE Realty index (up 2.75%), Metal index (up 2.25%), Oil & Gas index (up 1.09%), Capital Goods index (up 0.95%) and PSU index (up 0.84%), outperformed the Sensex.

The BSE Power index (up 0.62%), Consumer Durables index (up 0.57%), IT index (up 0.56%), Auto index (up 0.43%), banking sector index Bankex (up 0.16%), Healthcare index (up 0.12%) and FMCG index (down 0.35%), underperformed the Sensex.

From 30 share Sensex pack 20 rose and one fell.

Index heavyweight Reliance Industries (RIL) rose 2.09% to Rs 1044.60, with the stock gaining for the third straight day. RIL and Chesapeake Energy Inc have reportedly ended talks over the sale of a stake in the US company's position in the Eagle Ford shale in south Texas. Recent media reports had suggested that RIL was in talks with Chesapeake for a stake in the Eagle Ford position. Chesapeake has been looking for a partner for its 600,000 acre position in the Eagle Ford.

Jaiprakash Associates jumped 6.69%, extending recent strong rally. The stock was the top gainer from the Sensex pack. The company's cement dispatches advanced 61% to 1.17 million tonnes in September 2010 over September 2009, aided by huge capacity additions by the company.

FMCG stocks reversed initial gains. Nestle India, Colgate-Palmolive India, Hindustan Unilever, Dabur India, ITC and Britannia Industries fell 0.08% to 1.78%.

Metal stocks rose as LMEX, a gauge of six metals traded on the London Metal Exchange, rose 1.57% on Wednesday, 6 October 2010. Hindustan Zinc, Sterlite Industries, Hindalco Industries, NMDC, National Aluminum Company, Jindal Steel & Power, Sesa Goa, Steel Authority of India and JSW Steel rose by between 0.09% to 6.05%.

India's largest steel maker by sales Tata Steel rose 1.38% on reports the company has begun talks Nippon Steel Corp said Tuesday to build a steel plant, including a blast furnace, in India.

High beta realty stocks rose on expectations of pick up housing sales during the upcoming festive season starting with Dasara on 17 October 2010. Indiabulls Real Estate, Unitech, Orbit Corporation, HDIL, Peninsula Land, Omaxe, DLF, Sobha Developers, Anant Raj Industries, Phoenix Mills, Ansal Properties and Mahindra Lifespace Developers rose by between 0.04% to 8.51%.

Consumer durables stocks rose on expectations of pick up in demand during the upcoming festive season. Gitanjali Gems, Rajesh Exports and Blue Star fell by 0.08% to 1.34%. However, Titan Industries (up 3.40%) and Videocon Industries (up 0.89%), rose.

Auto stocks extended recent strong rally on robust vehicle sales in September 2010. Bajaj Auto rose 0.72% extending Tuesday's 3.12% surge. The stock hit all-time high of Rs 1,611.45 today. Total sales rose 26% to 3,52,769 units in September 2010 over September 2009.

India's top car maker, Maruti Suzuki rose 0.88%, with the stock gaining for the second straight day. 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.

India's leading bike maker by sales Hero Honda Motors rose 1.13%. Sales rose 8.1% to 4.33 lakh units in September 2010 over September 2009.

Commercial vehicle maker Tata Motors rose 0.24%. 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.

Tata Motors announced early this week 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.

But, India's largest tractor and utility vehicles maker Mahindra & Mahindra (M&M) fell 0.77%. The stock hit all time high of Rs 758.70 today. The company said on Friday, 1 October 2010, it sold 35,177 vehicles in September 2010, nearly 24% more from a year earlier.

Nagarjuna Construction Company lost 2.25%, on reports the Income Tax department today conducted raids on the company's offices in various states.

Career Point Infosystems settled at Rs 632.35 on BSE, a 103.98% premium over the initial public offering price of Rs 310. The stock debuted at Rs 461, a 48.70% premium over its initial public offering (IPO) price. The stock hit a high of Rs 674 and low of Rs 450.

Eros International Media settled at Rs 190.05 on BSE, a 8.60% premium over the initial public offer price of Rs 175. The stock debuted at Rs 213.35, a 21.91% premium over the initial public offer (IPO) price. The stock hit a high of Rs 217.70 and low of Rs 178.60.

Career Point Infosystems clocked a highest turnover of Rs 856.53 crore on BSE. Eros International Media (Rs 421.26 crore), Kirloskar Brothers (Rs 282.18 crore), Indiabulls Financial Services (Rs 276.21 crore) and VIP Industries (Rs 140.67 crore), were the other turnover toppers in that order.

FCS Software reported a highest volume of 3.20 crore shares on BSE. Eros International Media (2.19 crore shares), Indiabulls Financial Services (1.78 crore shares), Cals Refineries (1.69 crore shares) and JM Financial (1.53 crore shares), were the other volume toppers in that order.