BSE Mid-Cap, Small-Cap indices outshine Sensex

The market edged higher in three out four trading sessions in a truncated week as investors sought bargains after a steep slide. Small and mid-cap stocks, which were hammered brutally on concerns over a regulatory crackdown on companies, outperformed the large-cap peers. The stock market remains closed on Friday, 17 December 2010, on account of Moharum.



The BSE Sensex rose 355.96 points or 1.82% to 19,864.85 in the week ended Thursday, 16 December 2010. The S&P CNX Nifty rose 91.40 points or 1.56% to 5,948.75. The BSE Mid-Cap index rose 2.19% and the BSE Small-Cap index rose 2.6%. Both these indices outperformed the Sensex.

The Reserve Bank of India (RBI) announced measures to ease liquidity in the banking system while keeping the key policy rates unchanged after a mid-quarter policy review on Thursday, 16 December 2010. The RBI reduced the statutory liquidity ratio (SLR) of scheduled commercial banks (SCBs) from 25% of net demand and time liabilities (NDTL) to 24%, with effect from 18 December 2010. The central bank also said it will conduct open market operation (OMO) auctions for purchase of government securities for an aggregate amount of Rs 48000 crore in the next one month. These two measures are expected to inject liquidity on an enduring basis of the order of Rs 48000 crore, the RBI said after the mid-quarter policy review.

The RBI said the underlying growth momentum of the Indian economy remains strong. Even as inflation has moderated, it remains significantly above the comfort level of the RBI, the RBI said in a statement. Moreover, risks to inflation remain on the upside, both from domestic demand and higher global commodity prices, the RBI said. There is, therefore, a need for continued vigilance on the inflation front against the build-up of demand side pressures. The RBI had earlier projected 5.5% inflation by March 2011.

A major challenge for the RBI in the recent period has been liquidity management. It is the RBI's endeavour to alleviate the liquidity pressure in a manner consistent with the monetary policy stance of containing inflation and anchoring inflationary expectations, the RBI statement said.

The RBI said its latest measures will release sizable primary liquidity into the system. These measures will reduce the liquidity deficit in the system close to the comfort zone of the Reserve Bank of India, it said. The liquidity easing measures will help stabilise interest rates in the overnight inter-bank market closer to the operative policy rate of the Reserve Bank of India, it said.

Meanwhile, corporate India has reportedly paid 15-20% higher tax for the third quarter of the current financial year. State Bank of India paid advance tax of Rs 1850 crore in Q3 December 2010 compared with Rs 1795 crore in Q3 December 2009. HDFC Bank paid Rs 750 crore versus Rs 400 crore, ICICI Bank paid Rs 450 crore versus Rs 301 crore. The tax outgo of HDFC saw a year-on year (y-o-y ) increase of 25% from Rs 320 crore to Rs 400 crore, Punjab National Bank paid Rs 640 crore versus Rs 618 crore, RIL paid Rs 1100 crore in Q3 December 2010 compared with Rs 830 crore in Q3 December 2009. TCS paid Rs 270 crore in Q3 December 2010 compared with Rs 177 crore in Q3 December 2009.

Hindalco Industries paid Rs 200 crore against Rs 148 crore. Tata Power Company paid Rs 58 crore versus Rs 81 crore. Larsen & Toubro paid Rs 270 crore, unchanged from previous year.

M&M paid Rs 236 crore versus Rs 195 crore, Tata Motors paid Rs 220 crore versus Rs 100 crore and Bajaj Auto paid Rs 370 crore in Q3 December 2010 compared with Rs 310 crore in Q3 December 2009. FMCG major Hindustan Lever paid Rs 225 crore, marking a yo-y increase of Rs 45 crore, an increase of over 25%. Petroleum major HPCL recorded a lower tax outgo, Rs 29 crore against Rs 48 crore, a 39% decline.

Trading for the week began on an upbeat note. The key benchmark indices on Monday, 13 December 2010, extended 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. The BSE 30-share Sensex was up 182.89 points or 0.94% to 19,691.78. The S&P CNX Nifty was up 50.30 points or 0.86% to 5,907.65.

Buying demand in second half on waning fears of a near term interest rate hike helped the key benchmark indices log gains for the third running day on Tuesday, 14 December 2010. Firm Asian markets also boosted sentiment. The BSE 30-share Sensex was up 107.41 points or 0.55% to 19,799.19. The S&P CNX Nifty was up 36.45 points or 0.62% to 5,944.10.

The key benchmark indices drifted lower in choppy trade on Wednesday, 15 December 2010, snapping a three-day rally, as weak global stocks triggered profit taking. Concerns that a fuel price hike may stoke inflation pressures also weighed on investor sentiment. The BSE 30-share Sensex was down 151.42 points or 0.76% to 19,647.77. The S&P CNX Nifty was down 51.80 points or 0.87% to 5,892.30.

The key benchmark indices surged on Thursday, 16 December 2010, after the central bank announced measures to ease liquidity crunch in the banking system while keeping the key policy rates unchanged. Firm European stocks and higher US index futures also aided the rally in what was a highly volatile trading session. The BSE 30-share Sensex rose 217.08 points or 1.10% to 19,864.85. The S&P CNX Nifty rose 56.45 points or 0.96% to 5,948.75.

Among the 30 Sensex shares, 19 rose and the rest declined.

India's largest truck maker by sales Tata Motors spurted 8% to Rs 1347.95. It was the biggest Sensex gainer last week. Tata Motors' global vehicle sales, including Jaguar Land Rover, rose 6% to 79,959 units in November 2010 over November 2009. Jaguar and Land Rover sales jumped 22% to 22,957 units in November 2010 over November 2009. Jaguar sales for the month were 5,621 units, up by 30%, while Land Rover sales were 17,336 units, higher by 20%.

India's largest steel maker by sales Tata Steel flared up 6.59% to Rs 658.85. It was the second biggest Sensex gainer last week.

Anil Dhirubhai Ambani-group firm Reliance Infrastructure jumped 6.07% to Rs 828.5. It was the third biggest Sensex gainer last week.

Tata Consultancy Services (TCS) (up 6.05%), Sterlite Industries (up 4.65%), Infosys Technologies (up 4.60%), Wipro (up 4.40%), Hindalco Industries (up 4.24%) and Bharti Airtel (up 3.82%), were the other major Sensex gainers.

TCS jumped on reports the company paid higher advance tax of Rs 230 crore for Q3 December 2010 compared with Rs 177 crore paid for Q3 December 2009. Meanwhile, the company won a deal for implementing smart card based financial inclusion solution for state-run Indian Bank. The deal value is pegged at Rs 85 crore for three years.

India's largest copper maker by sales Sterlite Industries (India) rose after the Supreme Court on Monday, 13 December 2010, extended a stay on a lower court order asking Sterlite Industries to close its copper smelter in Tuticorin, Tamil Nadu.

Index heavyweight Reliance Industries (RIL) rose 3.14% to Rs 1055.80. As per reports, the company has paid advance tax Rs 1100 crore in Q3 December 2010 compared with Rs 830 crore in Q3 December 2009.

India's largest two-wheeler maker by sales Hero Honda Motors tumbled 5.88% at Rs 1679.10. It was the biggest Sensex loser last week. The company announced after market hours on Thursday its board of directors approved a new licensing arrangement with Honda Motor Co, Japan concurrent with the Hero Group's proposed acquisition of Honda's 26% stake in Hero Honda Motors. This arrangement will ensure Hero Honda's growth and sustained competitiveness by giving it opportunity to develop its own R&D capabilities and exploit global export opportunities while Honda continues to provide new models. The board expressed confidence that this arrangement will provide a smooth and gradual transition to the new status of the company and additional avenues for growth.

Shares of auto makers fell on concerns a fuel price hike coupled with rise in auto prices from January 2011, might derail volume growth story. India's largest tractor maker by sales Mahindra & Mahindra slipped 5.79% to Rs 732.6. It was the second biggest Sensex loser. Among other auto sector stocks, Maruti Suzuki India (down 2.46%) and Bajaj Auto (down 2.44%), declined.

Steel maker Jindal Steel & Power fell 3.55% to Rs 670.9. It was the third biggest Sensex loser. ITC (down 1.23%), ICICI Bank (down 1.19%) and HDFC Bank (down 0.90%), were the other major Sensex losers.