Market drifts lower on thin volumes; Nifty below 6,000

The key benchmark indices declined marginally on low volumes, tracking weakness in European and Chinese stocks. Chinese stocks tumbled after a weekend interest rate hike. A surge in crude oil price to 26-month high near $92 a barrel, stoked macroeconomic worries, which also weighed on sentiment. The market reversed direction after hitting a 3-week high in early trade as Reliance Industries, Bharti Airtel and Sterite Industries dropped.



Ten out of 13 sectoral indices on BSE were in the red. The market breadth was positive, having weakened from a strong breadth earlier in the day. Both Mid-Cap and Small-Cap indices on BSE outperformed the Sensex. Anil Dhirubhai Ambani Group's Reliance Communications (RCom) declined the most after elder brother Mukesh Ambani's Reliance Industries reportedly denied market talk it was planning to invest in RCom. The market rumour had helped drive RCom shares rally 10.5% on on Friday, 24 December 2010.

The BSE 30-share Sensex lost 44.73 points or 0.22% to 20,028.93, off close to 161 points from the day's high and up close to 19 points from the day's low. The 50-unit S&P CNX Nifty fell below the psychological 6,000 mark.

The market edged higher in early trade, tracking higher Asian stock. The Sensex was hovering near the day's high in morning trade. The market trimmed gains after hitting a 3-week in mid-morning trade. The market further trimmed gains in early afternoon trade as Chinese stocks slumped in the weak of a rate hike during the weekend. The market slipped into the red later. The market slipped into the red once again to hit fresh intraday low after turning positive for a brief period in mid-afternoon trade.

Expiry of the near-month December 2010 futures & options (F&O) contracts may cause volatility this week, the last trading week of calendar 2010. The near-month December 2010 derivatives contracts expire on Thursday, 30 December 2010.

European stocks declined on Monday, 27 December 2010, in the wake of Saturday's interest-rate hike from China. But, volumes were thin with London markets closed until Wednesday, 29 December 2010. The key benchmark indices in France and Germany were down by 1.08% and 1.13% respectively.

China's key stock index -- the Shanghai Composite slumped 1.9%, reversing initial gains on Monday, 27 December 2010, after the Chinese central bank raised official lending and deposit rates by 25 basis points on the Christmas Day. However, most other Asian markets edged higher, taking in their stride a rate hike from China over the weekend to combat inflation. The key benchmark indices in Japan, Indonesia, Singapore and Taiwan were up by between 0.35% to 0.75%. But, South Korea's Seoul Composite fell 0.37%, reversing initial gains. The stock market in Hong Kong was closed for a holiday.

Trading in US index futures indicated that the Dow could fall 39 points at the opening bell on Monday, 27 December 2010. US stock markets were closed on Friday, 24 December 2010, for the Christmas Eve holiday.

Back home, the food price index rose 12.13% while the fuel price index climbed 10.74% in the year to 11 December 2010, the latest government data showed. In the prior week, annual food and fuel inflation stood at 9.46% and 10.67% respectively. The primary articles price index was up 15.35% in the latest week compared with an annual rise of 13.25% a week earlier.

The Reserve Bank of India (RBI) announced measures to ease liquidity crunch in the banking system while keeping the key policy rates unchanged at a mid-quarter policy review on 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 endeavor 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 stabilize interest rates in the overnight inter-bank market closer to the operative policy rate of the Reserve Bank of India, it said.

Meanwhile, the combined advance tax payment by top 100 corporate taxpayers rose 18.7% to Rs 27,531 crore in Q3 December 2010 over Q3 December 2009, indicating better corporate performance in the third quarter this year. Advance tax is paid in four installments in June, September, December and March and is based on taxpayers' projected earnings, thus giving an indication of industry's performance in the months to come.

The BSE 30-share Sensex was down 44.73 points or 0.22% to 20,028.93. The Sensex rose 116.47 points at the day's high of 20,190.13 in mid-morning trade, its highest level since 6 December 2010. The index declined 63.33 points at the day's low of 20,010.33 in late trade.

The S&P CNX Nifty was down 13.50 points or 0.22% to 5,998.10. The Nifty hit high of 6,045.75 in mid-morning trade, its highest level since 6 December 2010.

The BSE Mid-Cap index fell 0.17%. The BSE Small-Cap index advanced 0.21%. Both these indices outperformed the Sensex.

The market breadth was positive, having weakened from a strong breadth earlier in the day. On BSE, 1461 shares rose while 1399 shares declined. A total of 157 shares remained unchanged.

BSE clocked turnover of Rs 2678 crore, lower than Rs 2980.62 crore on Friday, 24 December 2010.

Most sectoral indices on BSE declined. The BSE Metal index (down 1.24%), Realty index (down 0.82%), PSU index (down 0.51%), Power index (down 0.35%), FMCG index (down 0.30%), TECk index (down 0.26%), underperformed the Sensex.

Healthcare index (up 0.61%), IT index (up 0.25%), Consumer Durables index (up 0.23%), Capital Goods index (down 0.07%), banking sector index Bankex (down 0.08%), Auto index (down 0.10%) and Oil & Gas index (down 0.20%), outperformed the Sensex.

Among the 30-member Sensex pack, 19 fell while the rest rose.

Index heavyweight Reliance Industries (RIL) declined 0.42% to Rs 1055.10. The stock came off the day's high of Rs 1,068. RIL's advance tax payment reportedly surged 42.8% to Rs 1191 crore in Q3 December 2010 over Q3 December 2009.

Anil Dhirubhai Ambani Group's Reliance Communications slumped 3.56% after elder brother Mukesh Ambani's Reliance Industries on Friday, 24 December 2010 denied market talk it was planning to invest in India's second largest listed telecom company by sales.

Metal stocks declined on worries China's interest rate hike could slow down economic growth in China. China is the world's largest consumer of copper and aluminum. Steel Authority of India, Sterlite Industries, Welspun Corp, Tata Steel, JSW Steel, Bhushan Steel, Jindal Steel & Power, Hindustan Zinc and Nalco fell by 0.12% to 4.34%

Hindalco Industries fell 0.90% to Rs 237.20, reversing initial gains. The stock hit record high of Rs 241.35 today.

Realty stocks reversed initial gains. Indiabulls Real Estate, D B Realty, Unitech, Orbit Corporation, Ackruti City, HDIL, Parsvnath Developers and Sobha Developers fell by 0.93% to 2.85%

FMCG stocks reversed initial gains. United Breweries, Tata Global Beverages, United Spirits, Godrej Consumer Products, Marico, ITC and Colgate-Palmolive India were down by 0.13% to 3.49%

Consumer durables stocks edged higher. VIP Industries, Bajaj Electricals, Blue Star, Titan Industries and Rajesh Exports rose by 0.21% to 3.09%

IT stocks gained on expectations of a US economic recovery in 2011. US is the biggest market for Indian IT firms. India's second largest IT services provider by sales Infosys rose 0.30%, with the stock gaining for the fourth straight day. The stock hit record high of Rs 3,391 today.

India's third largest IT exporter by sales Wipro rose 0.64%, with the stock gaining for the third straight day. The company said on 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 was almost unchanged at Rs 1,140.10. The stock had hit record high of Rs 1174.50 on 20 December 2010. The company said on 22 December 2010 that Hilton Worldwide, a leading global hospitality company, has signed a multi-year agreement with TCS.

Shares of public sector oil marketing companies fell as US crude prices rose to an intraday high of $91.79 a barrel, the highest level since October 2008, on freezing weather in the US Northeast. BPCL fell 0.75% at Rs 667.35, off an intraday high of Rs 678. HPCL fell 0.08% at Rs 399.40, off an intraday high of Rs 404.25. Indian Oil Corporation fell 0.07% at Rs 354.25, off an intraday high of Rs 359.

Shares of infrastructure firms rose on renewed buying. Gammon Infrastructure, BL Kashyap, IVRCL Infrastructure, Punj Lloyd, GMR Infrastructure and Alfa Laval (India) rose by 0.95% to 10.05%.

Sugar stocks rose as futures trading in sugar resumed in commodities markets today after a gap of one-and-a-half years. Balrampur Chini, Bajaj Hindusthan, Bajaj Hindustan Sugar, EID Parry and Simbhaoli Sugars were up by 0.41% to 2.69%.

Accurate Transformers soared 16.23% to Rs after the company said a meeting of the board of directors will be held on 30 December 2010 for allotment of 1.48 lakh warrants on a preferential basis to promoters.

BF Utilities galloped 7.65% to Rs 908.90 after the company's board approved sale of a minority stake for Rs 500 crore in its subsidiary Nandi Economic Corridor Enterprises.

Dishman Pharmaceuticals and Chemicals jumped 4.22% to Rs 144.55 on reports the company will manufacture cardiac drug ingredients for a European multinational in a $50 million deal.

Shares of Ravi Kumar Distilleries settled at Rs 80.05 on BSE, a 25.07% premium over the initial public offer price of Rs 64. The stock debuted at Rs 64, at par to the initial public offer (IPO) price. The scrip hit a high of Rs 90.30 and low of Rs 64. The counter clocked volume of 4.43 crore shares.

BF Utilities clocked a highest turnover of Rs 391.13 crore on BSE. Ravi Kumar Distilleries (Rs 373.53 crore), State Bank of India (Rs 74.87 crore), Jindal Photo (Rs 65.91 crore) and Tata Steel (Rs 45.15 crore), were the other turnover toppers on BSE in that order.

Ravi Kumar Distilleries reported a highest volume of 4.43 crore shares on BSE. Cals Refineries (2.62 crore shares), Sanraa Media (97.06 lakh shares), Ispat Industries (77.17 lakh shares) and Suzlon Energy (57.45 lakh shares), were the other volume toppers on BSE in that order.