BSE Mid-Cap, Small-Cap indices outshine Sensex

The key benchmark indices started the week on a buoyant note, extending Friday (10 December 2010)'s 1.3% gains, on firm global stocks. World markets rose after Beijing refrained from raising interest rates over the weekend. Index heavyweight Reliance Industries (RIL) edged higher in choppy trade. Capital goods, consumer durables, pharma, metal and realty stocks rose. Banking stocks reversed initial losses. The BSE 30-share Sensex was up 182.89 points or 0.94%, up close to 370 points from the day's low and off close to 20 points from the day's high. The market breadth was strong, as small and mid-cap stocks attracted buyers for the second day in a row after a recent sell-off.



Intraday volatility was high. The market regained positive zone after slipping into the red for a brief period after a firm start. Stocks extended gains in morning trade. The key benchmark indices reversed gains in mid-morning trade after a sudden slide. The market soon came off lows. The market moved in a narrow range in afternoon trade. The market regained positive zone in mid-afternoon trade as European stocks rose in early trade. The market extended gains in late trade.

The market shrugged off reports that the Securities & Exchange Board of India (Sebi) plans to make it mandatory for companies to provide more disclosures when they seek to place shares privately with institutional investors and also for block and bulk deals. As per reports, Sebi has started to work on changing the existing rules governing private placement ofshares and off-market transactions after growing evidence that promoters and market operators are routinely exploiting loopholes in the regulations and rigging stocks.

Foreign funds continued selling of Indian shares for a fourth day in a row on Friday, 10 December 2010, data released by the Securities & Exchange Board of India (Sebi) showed. Foreign institutional investors (FIIs) sold shares worth a net Rs 966.20 crore on Friday, 10 December 2010, compared with an outflow of Rs 1197.10 crore on Thursday, 9 December 2010. FIIs have pressed sales of shares worth a net Rs 1161.10 crore so far this month (till 10 December 2010).

NSE's volatility index, India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, was up 4.35% at 22.57. The index had lost 4.29% to 21.63 on Friday, 10 December 2010. The index had jumped 10.62% to 22.60 on Thursday, 9 December 2010. The index had jumped 6.19% to 20.43 on Wednesday, 8 December 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 initial public offer (IPO) of state-run Punjab & Sind Bank was fully bid on the first day of the issue today, 13 December 2010, data on NSE showed. The IPO got bids for 6.31 crore shares compared with 4 crore shares on offer. The price band of the IPO is Rs 113-120 per share. The issue closes on 15 December for QIBs and on 16 December for retail investors and HNIs.

European stocks rose on Monday, 13 December 2010, following Asian markets' strong performance after China didn't hike interest rates over the weekend. The key benchmark indices in France, Germany and UK rose by between 0.31% to 0.77%.

Asian stocks were mostly higher Monday, with the Sydney market supported by banking stocks' gains while shares in China rallied as investors were relieved that there was now more clarity on the economic policy front. The key benchmark indices in South Korea, Hong Kong, Japan and Taiwan rose by between 0.2% to 0.8%. But, key benchmark indices in Singapore and Indonesia fell 0.1% and 1.48% respectively.

Chinese shares advanced Monday in relief after the central bank on Friday ordered banks to set aside more cash as reserves but belied expectations for a weekend interest rate increase despite a surge in monthly inflation. The Shanghai Composite was up 2.88%. Meanwhile, the Chinese government said it would ensure stable economic development for the next year, after a three-day meeting of the central economic work conference, a high-level meeting of economic policy makers.

Official data released Saturday showed China's consumer price index in November jumped 5.1% from a year-earlier to hit the highest level in more than two years. The measure was higher than October's 4.4% and also way above the 4.6% reading anticipated by economists.

Saturday's data showed China's producer price index also climbed by a faster-than-expected 6.1% from the year-ago period. China's monthly industrial production jumped 13.3% and retail sales accelerated 18.7%, while urban fixed asset investment for the first 11 months of the year rose 24.9% from the corresponding period of 2009. The data came a day after the People's Bank of China raised banks' reserve rate requirements by half-a-percentage point

In New York on Friday, 10 December 2010, an encouraging trade report and signs that a tax cut package would pass the Senate sent US stocks to their highest levels in two years. The market was also heartened by US data showing a rise in consumer sentiment to six-month high and a 3.2% rise in exports, figures that pointed to a firmer economic recovery.

Trading in US index futures indicated a flat opening of US stocks on Monday, 13 December 2010. The Federal Open Market Committee (FOMC) holds a scheduled policy meeting on interest rates on Tuesday, 14 December 2010.

Back home, the next major trigger for the equity market is the advance tax payment of corporates for the third installment, which falls due on 15 December 2010. The advance tax figures will provide a cue on Q3 December 2010 corporate earnings.

The large capital flows into India are not a matter of concern, according to a mid-year review of the Indian economy tabled by Finance Minister Pranab Mukherjee in parliament last week. Even after this month's sell-off, the inflow of foreign funds in Indian stocks remains at record level this year.

According to mid-year review, the economy may grow by 9% during the year ending March 2011 (FY 2011). Average headline inflation is seen at 8.98% for the year, it said. The report indicated that the country's fiscal deficit will not be more than 5.5% of its gross domestic product in FY 2011.

The Indian economy grew a robust 8.9% year-on-year in Q2 September 2010, maintaining the same pace of expansion as the previous quarter, boosted by farm output and manufacturing, government data released Tuesday, 30 November 2010 showed. The manufacturing sector grew an annual 9.8% and farm output grew an annual 4.4% in Q2 September 2010. The government revised upwards the Q1 June 2010 GDP growth to 8.9% from 8.8% earlier.

Data announced on Friday, 10 December 2010, showed industrial output in October rose a faster-than-expected 10.8% from a year earlier, higher than the previous month's annual growth of 4.4%. Manufacturing output rose an annual 11.3% in October.

Business activity in India's services sector surged to a four-month high in November 2010, driven by robust growth in new orders, a survey showed on 3 December 2010.

The manufacturing activity strengthened further in November 2010 and the strong growth momentum is showing up in rising inflation pressures, according to an HSBC survey released on 1 December 2010. The HSBC Manufacturing Purchasing Managers' Index rose to 58.4 in November from 57.2 in October, the survey said.

Exports rose an annual 26.8% to $18.9 billion in November 2010, while imports for the month grew 11.2% on the year to $27.8 billion, as the provisional data released byTrade Secretary Rahul Khullar showed on Wednesday.

But, high inflation remains the major cause of concern for the policymakers. The food price index rose 8.69%, while the fuel price index climbed 9.99% in the year to 27 November 2010, government data on Thursday showed. In the prior week, annual food and fuel inflation stood at 8.60% and 9.99% respectively. The primary articlesprice index was up 12.66% in the latest week compared with an annual rise of 12.72% a week earlier.

The government will announce inflation data for the month of November on Tuesday, 14 December 2010. The rate of inflation stood at 8.58% in October 2010, marginally lower than 8.62% in September 2010. The Reserve Bank of India (RBI) undertakes a mid-quarter policy review on Thursday, 16 December 2010. RBI governor D Subbarao recently expressed discomfort with the current levels of inflation. "Inflation is coming down but still above the Reserve Bank's tolerance level; growth on the other hand has been encouraging," Subbarao said.

At a quarterly policy review early last month, the central bank had 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 had said in a monetary policy statement on 2 November 2010. "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 had added.

The BSE 30-share Sensex was up 182.89 points or 0.94% to 19,691.78. The Sensex rose 201.68 points at the day's high of 19,710.57 in late trade. The index lost 187.48 points at the day's low of 19,321.41 in morning trade.

The S&P CNX Nifty was up 50.30 points or 0.86% to 5,907.65.

The BSE Mid-Cap index rose 1.77% and the BSE Small-Cap index rose 2.05%. Both these indices outperformed the Sensex.

Except BSE FMCG index, all the other sectoral indices on BSE rose. Realty index (up 2.79%), Metal index (up 2.1%), Power index (up 2.09%), Capital Goods index (up 1.68%), PSU index (up 1.59%), Oil & Gas index (up 1.29%), Healthcare index (up 1.28%), and Consumer Durables index (up 1.19%) outperformed the Sensex.

FMCG index (down 0.13%), IT index (up 0.17%), Teck index (up 0.22%), Auto index (up 0.6%), Banking sector index Bankex (up 0.68%) and underperformed the Sensex.

The market breadth, indicating the overall health of the market, was strong. On BSE, 2058 shares rose while 886 shares fell. A total of 75 shares remained unchanged.

Among the 30-member Sensex pack, 25 rose while the rest fell.

BSE clocked turnover of Rs 3338 crore, lower than Rs 4333.95 crore on Friday, 10 December 2010.

Index heavyweight Reliance Industries (RIL) rose 1.77% at Rs 1041.80 after oscillating between Rs 1045 and Rs 1009.05 so far during the day. The stock had surged 4% on Friday, 10 December 2010. Billionaire private equity investor Ted Forstmann's sports and entertainment company IMG Worldwide and RIL have reportedly teamed up again to commercially develop another popular global sport in India. IMG and RIL have signed a 15-year deal with Indian soccer's governing body for the commercial rights to the sport, including the potential relaunch of the pro league there.

Consumer durables stock reversed initial losses. Titan Industries, Videocon Industries, Rajech Exports and Gitanjali Gems rose by between 1.04% to 3.52%.

Metal stocks rose in volatile trade on expectations of higher demand for commodities after recent economic data boosted hopes of possible economic recovery in the US. Sterlite Industries, Jindal Steel & Power, Steel Authority of India, Hindalco Industries, National Aluminum Company, Hindustan Zinc, JSW Steel and Tata Steel rose by between 0.24% to 8.22%.

Realty stocks rose on bargain hunting after recent steep losses. Omaxe, DLF, Unitech, Indiabulls Real Estate, Unitech, HDIL and Ackruti City rose by between 0.16% to 6%.

Most capital goods stocks rose. Larsen & Toubro, Thermax, Siemens, Bhel, Praj Industries, ABB and BEML rose by between 0.15% to 3.34%.

Some pharma stocks rose after the European Union and India resolved a dispute over generic drugs. The resolution reached on Friday 10 December 2010 should remove obstacles to Indian drugs manufacturers exporting products to the developing world. Dr Reddy's Laboratories, Biocon, Cipla and Lupin rose by between 0.71% to 2.37%.

Sun Pharmaceuticals rose 0.85% on reports the company is looking at buyout of a $300 million US-based firm.

IT stocks fell were mixed. India's third largest IT exporter by sales Wipro fell 0.36%. The company said after market hours on Friday, 10 December 2010, that it won a 5-year outsourcing contract from Vasan Eye Care. Financial details of the contract were not disclosed.

India's largest software company by sales TCS fell 0.04%. The company announced during market hours on Friday, 3 December 2010 that the Uttar Pradesh state government has selected the company for its State Data Center project.

India's second largest software company by sales Infosys rose 0.03%, reversing initial losses. Infosys Technologies is reportedly looking for an acquisition in the legal process outsourcing business and will consider domestic firms with a strong client base or US firms with technologies in the business.

Banking stocks recovered from a recent steep slide triggered by worries higher cost of funds will hit net interest margins. India's largest bank by net profit and branch network State Bank of India (SBI) rose 0.39%, reversing initial losses. SBI on 6 December 2010, said it has raised deposit rates by 50 to 150 basis points across various maturities with effect from 7 December 2010.

Among all slabs, the sharpest hike is in the 46 to 90-day slab, where the bank would offer 5.50% as against 4% earlier. In case of deposits with a maturity of 181 days to less than one year, the bank will now offer 7.25% as against 6% earlier. The bank will offer 8.5% for 555-day and 1,000-day deposits.

India's largest private sector bank in terms of operating income ICICI Bank rose 0.09% to Rs 1113.55. The stock came off the day's low of Rs 1087.05. The stock had surged 5.71% on Friday, 10 December 2010. The bank has hiked its benchmark prime-lending rate and Floating Reference Rate (FRR) for consumer loans (including home loans) by 50 basis points with effect from 6 December 2010. It has also announced an increase in interest rates for various tenors of retail fixed deposits by 25-50 basis points with effect from 6 December 2010.

India's second largest private sector bank by net profit HDFC Bank rose 0.91%, reversing initial losses.

India's top mortgage lender by total income, Housing Development Finance Corporation (HDFC), rose 3.6%, with the stock snapping last four days' losses. On 3 December 2010 HDFC, hiked its benchmark lending rate by a steep 75 basis points, making home loan dearer for both existing and new borrowers. With this revision, the retail prime lending rate (RPLR) goes up from 14.25% to 15%.

Reliance Communications, India's No. 2 listed mobile phone operator by sales rose 1.98% after company said on Monday it is starting third-generation (3G) mobile services in four cities and would cover all its 13 zones by the end of March next year.

Auto stocks were mixed. Tata Motors rose 2.22%, with the stock snapping last two days' losses. India's top small car maker by sales Maruti Suzuki India rose 0.66%, with the stock gaining for the second straight day.

India's largest tractor and utility vehicles maker Mahindra & Mahindra (M&M) fell 1.25%. The company, early this month, announced strong sales for November 2010.

Bajaj Auto rose 0.34%, reversing initial losses. The company's total sales rose 8% to 2,99,231 units in November 2010 over November 2009. The figures were announced on 2 December 2010.

Bike maker Hero Honda Motors fell 0.67%. As per reports the company has hiked the prices of its models by 1.5% to 2.5% to offset the rising input costs. The price increase amounts to Rs 500 for entry segment models, while the company's high-end models Karizma and ZMR have the highest hike of Rs 1,500.

Reliance Infrastructure rose 3.88% on reports the company is consolidating its road projects into a holding company to pave the way for a potential public offer or private equity investment. The stock was the top gainer from the Sensex pack.

K S Oils clocked highest volume of 1.08 crore shares on BSE. Karuturi Global (79.21 lakh shares), Jupiter Bioscience (65.25 lakh shares), Birla Power Solutions (64.34 lakh shares) and Ispat Industries (60.80 lakh shares) were the other volume toppers in that order.

State Bank of India clocked the highest turnover of Rs 290.38 crore on BSE. Tata Steel (Rs 96.24 crore), Reliance Industries (Rs 73.62 crore), ICICI Bank (Rs 72.49 crore) and Tata Motors (Rs 63.81 crore) were the other turnover toppers in that order.