Tata Motors accelerates in a lackluster market

The key benchmark indices edged lower in a choppy trading session tracking weak European stocks as sovereign debt problems in Europe resurfaced and after China's further monetary tightening. The indices moved in a narrow band near the flat line. Capital goods, FMCG and metal stocks fell. But, consumer durables and IT stocks rose. Index heavyweight Reliance Industries edged lower in volatile trade. Tata Motors jumped to hit record highs after reporting stellar Q2 result. M&M also hit record high. Hindalco Industries slumped after announcing lower than forecasted Q2 result. The market breadth was strong as buying was witnessed in mid cap and small cap stocks.



The BSE 30-share Sensex was down 56.77 points or 0.27%, up close to 25 points from the day's low and off close to 90 points from the day's high. Most Asian stocks rose and US index futures edged higher.

Market edged lower in early trade. It recovered from the day's low in morning trade. It hit fresh intraday highs after moving between the positive and negative terrain in mid-morning trade. It surged to hit fresh intraday highs after slipping into the red for brief period in early afternoon trade. It once again slipped into the red after hitting fresh intraday highs in afternoon trade. It cut some losses in mid-afternoon trade. It weakened to hit fresh intraday lows at the fag end of the trade.

There is no need for India to introduce capital controls on portfolio flows and foreign direct investment levels are not very volatile, a top Indian policy maker, Montek Singh Ahluwalia said on Wednesday.

European shares drifted lower from two-year highs and commodities are mostly softer as concerns about Europe's fiscal condition and further monetary tightening in China weigh on investor sentiment.. The key benchmark indices in France, Germany and UK fell by between 0.35% to 0.58%.There was concern ahead of Wednesday's Portuguese bond auction, where the government is scheduled to sell €750 million.

Bank of England's quarterly inflation report released Wednesday showed that the central bank expects inflation to fall below 2% in 2012 after remaining above target next year, but warned that the outlook for inflation and growth remains uncertain.

Asian stock markets were mostly higher on Wednesday, after a decline overnight in New York as U.S. investors shifted to commodities. The key benchmark indices in Indonesia, Taiwan, Japan and South Korea rose by between 0.06% to 1.4%. But, the key benchmark indices in Singapore, China and Hong Kong fell by between 0.63% to 0.85%.

China's central bank lifted the ratio of required reserve funds for several major lenders by half a percentage point, according to reports Wednesday. The hike will apply to Bank of Communications, along with China's four major state lenders — Bank of China, Agricultural Bank of China, Industrial & Commercial Bank of China and China Construction Bank — the reports said.

The Dow Jones industrial average fell 0.5% to 11,346.75, while the broader Standard & Poor's 500 index slipped 0.8% to 1,213.40. The technology-heavy Nasdaq composite index was down 0.7% at 2,562.98. There are fears in the U.S. that the Federal Reserve's plan to buy bonds could drive up inflation, and hard commodities are seen by some as a safe haven.

Another concern was continuing debt problems in Europe, where there are fears that Ireland's government will have to seek financial aid from the euro-zone and the International Monetary Fund, as Greece did earlier in the year.

US index futures reversed initial losses. Trading in US index futures indicated that the Dow could gain 6 points at the opening bell Wednesday, 10 November 2010.

Back home, the $ 1.7 billion follow-on public offer of state-run Power Grid Corporation was subscribed 1.72 times by 16:00 IST on the second day of bidding today, 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 2252 firms surged 33.2% to Rs 88478 crore on 18% growth in sales to Rs 661340 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 down 56.77 points or 0.27%, to 20,875.71. At the day's high of 20970.91 hit in afternoon trade, index rose 38.43 points. The index fell 82.56 points at the day's low of 20849.92 in late trade.

The S&P CNX Nifty was down 25.85 points or 0.41% to 6,275.70.

The BSE Mid-Cap index rose 0.29%. The BSE Small-Cap index rose 0.86%. Both the indices outperformed the Sensex.

The market breadth, indicating the health of the market was strong. On BSE, 1816 shares rose while 1221 shares fell. A total of 77 shares remained unchanged.

From the 30 share Sensex pack 19 fell and rest rose.

BSE clocked turnover of Rs 5775 crore higher than Rs 5451.12 crore on Tuesday, 9 November 2010.

Index heavyweight Reliance Industries (RIL) fell 0.45% to Rs 1102.50. The stock hit high of Rs 1116.55 and low of Rs 1100. 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.

Tata Motors, India's largest auto maker by sales jumped 2.49% after company posted a 100-fold jump in consolidated net profit due to a buoyant local market and a surge in sales at UK subsidiary Jaguar Land Rover (JLR). The stock hit record high of Rs 1350 today. Net profit rose to Rs 2,222.99 crore for the Q2 September 2010 compared with Rs 21.78 crore in the corresponding quarter a year ago. On a standalone basis, company's net profit declined 40.66% to Rs 432.70 crore on 44.51% rise in net sales to Rs 11449.61 crore in the quarter ended September 2010 over the quarter ended September 2009.

India's largest bike maker by sales Hero Honda Motors fell 0.84%. 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 top small car maker by sales Maruti Suzuki India rose 0.31%. The company's total sales rose 39.2% to 1.18 lakh vehicles in October 2010 over October 2009.

Bajaj Auto fell 0.74%. 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 largest tractor maker by sales Mahindra & Mahindra rose 3.05%. The stock hit record high of Rs 808.95 today. The company's auto sales rose 34% to 34,495 units in October 2010 as against 25,670 units during October 2009.

Car sales in India rose an annual 37.9% in October, an industry body said on Wednesday. Firms sold 1,82,992 cars in the month, data from the Society of Indian Automobile Manufacturers (SIAM) showed. Sales of trucks and buses, a barometer of economic activity, rose 18.17% to 50,835 units in October, SIAM said.

FMCG stocks fell on profit taking. ITC, Hindustan Unileevr, Dabur India and Nestle India fell by between 0.25% to 4.15%.

Capital goods stocks fell on profit taking. Siemens, Thermax, BHEL, SKF India and Larsen & Toubro fell by between 0.61% to 2.54%.

Copper maker Hindalco Industries fell 1.6%. Net profit of Hindalco Industries rose 26.09% to Rs 433.81 crore on 18.66% rise in net sales to Rs 5802.76 crore in the quarter ended September 2010 over the quarter ended September 2009. The company announced the result after market hours on Tuesday.

Among other metal stocks, JSW Steel, Sterlite Industries, Jindal Steel & Power, National Aluminum Company and Tata Steel fell by between 0.25% to 1.26%.

Software stocks rose on renewed buying. India's third largest software services exporter by sales Wipro rose 0.8%, with the stock gaining for the second straight day. India's largest software services exporter by sales TCS was flat. India's second largest software services exporter by sales Infosys rose 1.01%, with the stock gaining for the second straight day. Infosys is eyeing acquisitions in Japan as India's second-largest outsourcer looks for growth outside its main markets in the United States and Europe its chief executive S Gopalkrishnan said.

Consumer durables stocks also rose on renewed buying. Videocon Industries, Titan Industries, Blue Star, Lloyd Electric and Gitanjali Gems rose by between 0.09% to 8.55%.

Bharti Airtel fell 1.77%, after consolidated net profit fell 26.59% to Rs 1661.20 crore on 46.50% increase in consolidated total income to Rs 15231.90 crore in Q2 September 2010 over Q2 September 2009.

Reliance Communications fell 0.72%.

India's largest realty player by sales DLF fell 0.12% ahead of its Q2 result. Among other realty stocks, Unitech, Ackruti City and Indiabulls Real Estate rose by between 0.35% to 1.75%.

India's largest bank by branch network and net profit State Bank of India fell 1.73%, extending Tuesday's 4.4% slump after lower than expected Q2 result. 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 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.

India's second largest private sector bank by net profit HDFC Bank rose 0.1%.

India's largest private sector bank by net profit ICICI Bank fell 1.05%. The stock on 5 November 2010 scaled a 52-week high of Rs 1,277.

Cals Refineries clocked the highest volume of 4.92 crore shares on BSE. FCS Software (1.83 crore shares), Avon Corporation (1.47 crore shares), Alok Industries (1.09 crore shares) and Assam Company (82.43 lakh shares) were the other volume toppers in that order.

Coal India clocked the highest turnover of Rs 231.26 crore on BSE. Tata Motors (Rs 186.31 crore), State Bank of India (Rs 178.09 crore), VIP Industries (Rs 156.07 crore) and Titan Industries (Rs 126.33 crore) were the other turnover toppers in tht order.