Market edges higher on firm global stocks; SBI slumps

The key benchmark indices eked out decent gains in a choppy trading session on Tuesday tracking firm European stocks and as US index rose. The storng response to Power Grid Corporation of India's FPO which was fully subscribed on the very first day of its bidding also aided sentiment. Consumer durables, realty, FMCG and IT stocks rose. But, index heavyweight Reliance Industries edged lower in volatile trade. The market breadth was strong. State Bank of India slumped more than 4% after weak Q2 result. Capital goods stocks fell. The BSE 30-share Sensex was up 80.10 points or 0.38%, off close to 50 points from the day's high and up close to 170 points from the day's low. Tata Motors hit record high ahead of its Q2 result today.



The market surged to hit day's high after a weak start as most Asian stocks reversed initial losses. It trimmed gains after extending initial gains to hit fresh intraday highs in morning trade. It pared gains in mid-morning trade. It reversed initial gains to hit fresh intraday lows in early afternoon trade. It trimmed losses in afternoon trade. It recovered sharply to regain positive zone in mid-afternoon trade. It extended gains in late trade.

European shares hit a two-year high on Tuesday, with several companies including Vodafone and Barclays gaining after upbeat profit statements, and with the macroeconomic backdrop boosting sentiment. The key benchmark indices in France, Germany and UK rose by between 0.64% to 0.77%.

Most Asian stocks reversed initial losses. The key benchmark indices in South Korea, Singapore, Indonesia and Taiwan rose by between 0.18% to 1.03%. But, the key benchmark indices in China, Hong Kong and Japan fell by between 0.39% to 1.02%.

Gains in global stocks and commodities were extended last week after the U.S. Federal Reserve on Wednesday announced it would sink $600 billion into buying Treasurys over the next eight months to stimulate the sluggish economy by lowering long-term interest rates.

Southeast Asian economies need to shift towards less expansionary fiscal and monetary policies as they recover from the global economic downturn, the Organisation for Economic Cooperation and Development (OECD) said in a report published on Tuesday. Southeast Asian economies are expected to achieve average growth of 6.0% per year in 2011-2015, roughly in line with the precrisis level of 6.1% due to strong domestic demand, the report said. It projected 7.3% growth in the region for 2010.The report, which is the first of its kind issued by the OECD, analyses the long-term economic outlook and the policy challenges for the Southeast Asian region.

Growth rates in the world's developed economies are set to diverge, the OECD said on Monday, with the recovery losing steam in France, Canada, Italy and Britain, but picking up pace in Germany, Japan and the United States.

US index futures reversed initial losses losses. Trading in US index futures indicated that the Dow could gain 18 points at the opening bell on Tuesday, 9 November 2010.

Back home, U.S. President Barack Obama endorsed on Monday India's long-held demand for a permanent seat on the U.N. Security Council, a reflection of the Asian country's growing global weight and its challenge to rival China. In his three-day trip -- the longest stay in any foreign country by Obama -- the U.S. leader announced $10 billion in business deals, Obama will also visit Indonesia, South Korea and Japan on the tour that will see Washington push to prevent countries unilaterally devaluing currencies to protect their exports, a top theme at the G20 summit in Seoul this week. Obama has also announced the United States would relax export controls over sensitive technology, another demand of India's.

Meanwhile, the $ 1.7 billion follow-on public offer of state-run Power Grid Corporation opened for bidding today, 9 November 2010. The issue was fully subscribed by 16:00 IST on the first day of the issue, data on NSE showed. The issue closes on Thursday 11 November 2010 for the qualified institutional bidders and on Friday 12 November 2010 for all other bidders. Follow-on offer price band is fixed between Rs 85 to Rs 90 per Share, and 5% discount will be available to Retail investors and eligible employees at the issue price on allotment.

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. After Power Grid Corp, Steel Authority of India and Indian Oil Corp are some of the other companies that are planning large share sales in coming months.

Meanwhile, share sales by the Indian government in state run firms Manganese Ore India (MOIL) and Shipping Corporation of India are likely to hit the market by end-November, while an offer by Hindustan Copper is likely in December, Disinvestment Secretary Sumit Bose said

On the corporate front, the Q2 September 2010 corporate results have been encouraging. The combined net profit of a total of 2093 firms surged 36.7% to Rs 84386 crore on 17.8% growth in sales to Rs 621280 crore in Q2 September 2010 over Q2 September 2009.

In macro news, the food inflation eased for a third week in late October 2010, the latest government data showed. The food price index in the year to 23 October rose 12.85% compared with 13.75% rise in the previous week, as the prices of vegetables and pulses fell. Fuel inflation for the same period was at 10.67%, slowing from 11.25% the prior week. The primary articles price index was up 15.43%, compared with an annual rise of 16.62% a week earlier. Food makes up a little over 14% of the wholesale price index (WPI) while fuel contributes about 15%.

India's services sector expanded last month at a faster rate than in September 2010, bringing an end to a 3-month decline in the key business activity index, a survey showed on Wednesday, 3 November 2010. The manufacturing sector expanded in October 2010 at a much faster pace than in September 2010, supported by strong output and a sharp rise in new business, a purchasing managers' index (PMI) showed on Monday, 1 November 2010.

The Reserve Bank of India (RBI) at its second quarterly monetary policy review on Tuesday, 2 November 2010, hiked its lending and borrowing rates by a quarter point each, as expected, to tackle inflationary pressures. The central bank signaled a pause in its policy tightening drive that began in October 2009. Based purely on current growth and inflation trends, the Reserve Bank of India (RBI) believes that the likelihood of further rate actions in the immediate future is relatively low, RBI governor D Subbarao said in a monetary policy statement. "However, in an uncertain world, we need to be prepared to respond appropriately to shocks that may emanate from either the global or domestic environment," he added.

The RBI said it will continue to closely monitor both global and domestic macroeconomic conditions. "We will take action as warranted with a view to mitigating any potentially disruptive effects of lumpy and volatile capital flows and sharp movements in domestic liquidity conditions, consistent with the broad objectives of price and output stability", the policy statement said.

So far in 2010, foreign funds have pumped more than $28 billion into Indian primary and secondary equities.

The BSE 30-share Sensex was up 80.10 points or 0.38%, to 20,932.48. At the day's high of 20984.08 hit in morning trade, index jumped 131.70 points. The index fell 89.57 points at the day's low of 20762.81 in early afternoon trade.

The S&P CNX Nifty was up 28.35 points or 0.45% to 6,301.55.

The BSE Mid-Cap index rose 0.38% and matched with Sensex's gains. The BSE Small-Cap index rose 0.85% and outperformed the Sensex.

The BSE clocked turnover of Rs 5404 crore higher than Rs 5161.15 crore on Monday, 8 November 2010.

The market breadth, indicating the health of the market was strong. On BSE, 1749 shares rose while 1239 shares fell. A total of 100 shares remained unchanged.

From the 30 share Sensex pack 20 rose and rest fell.

Index heavyweight Reliance Industries (RIL) fell 0.41% to Rs 1107.45. The stock hit a high of Rs 1120.50 and low of Rs 1097.75. RIL's net profit rose 27.80% to Rs 4923.00 crore on 22.69% rise in net sales to Rs 57479.00 crore in Q2 September 2010 over Q2 September 2009. Its gross refining margin (GRM) for quarter was at $7.9 per barrel as against $6 per barrel in the corresponding period of the previous year.

India's largest bank by branch network and net profit State Bank of India slumped 4.4% after lower than expected Q2 result. The stock was the top loser from the Sensex pack. On a consolidated basis, State Bank of India's net profit fell 22.52% to Rs Rs 2363.95 crore on 14.57% increase in total income to Rs Rs 37925.44 crore in Q2 September 2010 over Q2 September 2009. State Bank of Indore merged with State Bank of India with effect from 26 August 2010. Hence, the results for the quarter ended 30 September 2010 is not comparable with the corresponding period of the previous year. The bank announced Q2 result after market hours on Monday, 8 November 2010.

But, shares of leading private banks rose. India's second largest private sector bank by net profit HDFC Bank rose 2.42%.

India's largest private sector bank by net profit ICICI Bank rose 1.11%. The stock on 5 November 2010 scaled a 52-week high of Rs 1,277.

Capital goods stocks fell on profit taking. BHEL, ABB, Thermax, Larsen & Toubro and BEML fell by between 0.09% to 1.7%.

Some consumer durables stocks rose on renewed buying. Videocon Industries, Titan Industries, Lloyd Electric and Gitanjali Gems rose by between 0.14% to 5.72%.

Software stocks also rose on renewed buying. India's third largest software services exporter by sales Wipro rose 0.05%. India's largest software services exporter by sales TCS rose 2.25%. India's second largest software services exporter by sales Infosys rose 0.94%.

India's largest realty player by sales DLF rose 1.23% ahead of its Q2 result on Wednesday, 10 November 2010. HDIL, Indiabulls Real Estate and Unitech rose by between 0.63% to 6.08%.

FMCG stocks rose on bargain hunting. ITC, Dabur India, Britannia Industries, Hindustan Unilever and Nestle India rose by between 1.34% to 8.4%.

Auto stocks were mixed. India's largest tractor maker by sales Mahindra & Mahindra rose 0.6%, reversing initial losses. The stock hit record high of Rs 797 on Monday, 8 November 2010. The company's auto sales rose 34% to 34,495 units in October 2010 as against 25,670 units during October 2009.

Bajaj Auto rose 0.68% reversing initial losses. The company reported 32% surge in total sales to a 3.7 lakh units in October 2010 over October 2009. The company clocked record motorcycle and commercial vehicle sales in the recently concluded month.

India's top small car maker by sales Maruti Suzuki India fell 1.2%. The company's total sales rose 39.2% to 1.18 lakh vehicles in October 2010 over October 2009.

India's largest bike maker by sales Hero Honda Motors fell 0.19% reversing initial gains. The company reported its highest ever monthly sales at 5,05,553 units in October 2010, registering a jump of 42.75% over the same month last year

India's biggest commercial India's biggest commercial vehicles maker by sales Tata Motors rose 0.2% ahead of its Q2 result today. The stock hit record high of Rs 1294.70 today. Total sales rose 21.26% to 64,757 units during October 2010 compared to 53,404 units in the same month last year. The company unveils its Q2 September 2010 results on 9 November 2010.

Metal stocks rose on expectations of strong domestic demand. Copper maker Hindalco Industries rose 0.56%. The company announced after market hours today that its net profit rose 26.08% to Rs 433.81 crore in Q2 September 2010 over Q2 September 2009. The stock hit a record high of Rs 239.35 on Monday. Hindalco Industries said 8,000 metric tons of cathode production may be lost at its copper plant in Gujarat because a cooling tower broke down.

Sesa Goa, Jindal Steel & Power, Steel Authority of India, Tata Steel and Sterlite Industries and JSW Steel rose by between 0.37% to 2.38%.

But, Hindustan Zinc fell 1.93% after the company cut zinc prices by Rs 2200 per tonne.

Shares of tea makers rose on anticipations of higher tea prices due to a supply disruption. Assam Company India (up 15.05%), Harrisons Malayalam (up 3.18%), Asian Tea & Exports (up 1.84%) and Mcleod Russel India (up 0.78%), rose.

FCS Software clocked the highest volume of 2.59 crore shares on BSE. Birla Power Solutions (1.55 crore shares), Cals Refineries (1.5 crore shares), Assam Company (1.47 crore shares) and Alok Industries (1.19 crore shares) were the other volume toppers in that order.

State Bank of India clocked the highest turnover of Rs 272.35 crore on BSE. Coal India (Rs 204.33 crore), Jet Airways (Rs 141.05 crore), Neha International (Rs 139.33 crore) and Subex (Rs 97.39 crore) were the other turnover toppers in that order.