Market ekes out gains for third straight session on easing rate hike worries

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. Firm Asian markets also boosted sentiment. The BSE 30-share Sensex was up 107.41 points or 0.55%, up close to 180 points from the day's low and off close to 40 points from the day's high.



The market breadth was strong as mid-cap and small-cap stocks continued to attract buyers after recent sharp losses. All the sectoral indices on the BSE, barring the BSE Auto index were in the green. Index heavyweight Reliance Industries rose 1%. Shares from metal, realty, PSU, consumer durables pack were in demand.

The market fizzled out early gains triggered by firm Asian stocks. It recovered from the day's low to regain the positive zone in morning trade. It swung between gains and losses in mid-morning trade. It extended gains to hit fresh intraday highs as near termrate hike worries subsided after data showed inflation eased in the month of November. Market cut gains in afternoon trade. It held firm in rangebound trade in mid-afternoon trade. It trimmed gains after hitting fresh intraday highs in late trade.

The wholesale price index (WPI) rose an annual 7.48% in November, in line with forecast, government data showed on Tuesday. The figure was lower than the annual rise of 8.58% in October. The annual reading for September was upwardly revised to 8.93% from 8.62%.

The Reserve Bank of India (RBI) undertakes a mid-quarter policy review on Thursday, 16 December 2010. At a quarterly policy review early last month, the centralbank had signaled a pause in its policy tightening drive that began in October 2009. Based purely on current growth andinflation trends, theReserveBank 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 headline inflation is expected to ease to 6% by March 2011, Finance Minister Pranab Mukherjee said on Tuesday.

European stocks were little changed on Tuesday, following a lackluster session in the U.S. that saw investors consolidating their gains towards the end of the trading day. The key benchmark indices in France, Germany and UK fell by between 0.05% to 0.14%.

A new survey shows German investor confidence is up for the second month in a row after a lengthy decline, thanks to the steady recovery of Europe's largest economy. The ZEW institute's confidence index rose to 4.3 points in December, up from 1.8 points in November after a six-month slide before that. The institute said Tuesday it remains well below its historical average of 26.8 points.

Britain's stubbornly high consumer inflation rate rose to 3.3 percent in November from 3.2 percent the month before, driven by a surge in food and clothing costs. The Office for National Statistics said Tuesday that prices for food were up 1.6 percent and clothing by 2 percent.

Asian stocks advanced on Tuesday, supported by optimism that China would avoid aggressive moves to curb inflation that could inhibit its strong economic growth and blunt its voracious demand for raw materials. The key benchmark indices in Japan, Hong Kong, China, South Korea and Taiwan rose by between 0.04% to 0.62%. But, the key benchmark indices in Indonesia and Singapore fell 0.07% and 0.17% respectively.

China's central bank has reportedly told six of the country's biggest lenders that a special increase in required reserves will be extended, the latest attempt to quellinflation in a campaign that looks set to intensify. That followed an official reserve requirement increase for all banks, the third in a month that was announced on Friday, 10 December 2010.

Japan's industrial output fell 2% in October, revised data showed on Tuesday, down for the fifth straight month due to cooling overseas demand. The figure compared with an initial reading of a 1.8% fall and a 1.6% decline in September.

In New York Monday, 13 December 2010 US stocks edged higher. Sentiment was bolstered by expectations that the tax deal would be successful. Economists expect the nearly $900 billion tax package to boost economic growth in the world's largest economy may increase the size of the budget deficit.

Trading in US index futures indicated that the Dow could gain 12 points at the opening bell on Tuesday, 14 December 2010. The Federal Open Market Committee rate announcement, which comes after the closing bell in Europe, will be the most eagerly awaited release of the day, as investors try to gauge the U.S. economic recovery.

Back home, Punjab and Sind Bank's Rs 480-crore initial public offering was subscribed 3.65 times by 16:00 IST on the second day of bidding today, 14 December 2010. The price band for the issue has been fixed at Rs 113-120 ashare. The issue closes on 15 December 2010 for institutional bidders and on 16 December 2010 for other investors.

Meanwhile, shares of the state-run manganese producer MOIL are set for debut on Wednesday, 15 December 2010. MOIL's initial public offer had closed on 1 December 2010 and had got strong investors' response. The Rs 1,238 crore IPO was subscribed a massive 56.43 times.Shares were issued at Rs 375 per share, the top end of the Rs 340-375 per share price band.

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.

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 by Trade Secretary Rahul Khullar showed on Wednesday.

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.

The BSE 30-share Sensex was up 107.41 points or 0.55% to 19,799.19. The Sensex rose 145.04 points at the day's high of 19,836.82 in late trade. The index lost 70.37 points at the day's low of 19,621.41 in morning trade.

The S&P CNX Nifty was up 36.45 points or 0.62% to 5,944.10.

The BSE Mid-Cap index rose 1.52% and the BSE Small-Cap index gained 1.62%. Both the indices outperformed the Sensex.

Except BSE Auto index, all the other sectoral indices on BSE rose. The BSE Consumer Durables index (up 3.14%), Metal index (up 1.6%), PSU index (up 0.97%), Realty index (up 0.95%), Capital Goods index (up 0.93%), Oil & Gas index (up 0.92%), Healthcare index (up 0.77%) and Teck index (up 0.64%), outperformed the Sensex.

The BSE Auto index (down 0.2%), FMCG index (up 0.31%), Banking sector index Bankex (up 0.37%), Power index (up 0.42%) and IT index (up 0.42%), underperformed the Sensex.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1973 shares rose while 940 shares fell. A total of 80 shares remained unchanged.

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

The BSE clocked turnover of Rs 3311 crore, lower than Rs 3354.42 crore on Monday, 13 December 2010.

Index heavyweight Reliance Industries (RIL) advanced 1.04% to Rs 1052.60. The stock logged gains for the third straight day after recent reports indicated that RIL has teamed up along with billionaire private equity investor Ted Forstmann's sports and entertainment company IMG Worldwide 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.

Oil and Natural Gas Corp rose 0.3% after an oil ministry official said on Monday the state-run explorer was in talks with Russia's Bashneft to help the oil firm develop the giant Arctic Trebs and Titov oil fields.

State run oil marketing companies rose on reports an Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee may meet on 22 December 2010 to decide on raising diesel prices by Rs 1-2 a litre amid global crude prices hovering near $90 a barrel. HPCL and Indian Oil Corporation rose by between 1.02% to 2.42%. But, BPCL fell 0.48%. The rise in diesel prices would improve finances of PSU OMCs

Metal stocks rose as LMEX, a gauge of six metals traded on the London Metal Exchange rose 2.16% on Monday, 13 December 2010. Sterlite Industries, Steel Authority of India, Hindustan Zinc, National Aluminum Company, JSW Steel and Tata Steel rose by between 0.8% to 3.46%.

Hindalco Industries rose 1.44% on reports the company will receive a dividend of $1.7 billion from its Canadian subsidiary Novelis Inc. Hindalco acquired Novelis in 2007 for $ 6 billion.

IT stocks reversed initial losses. India's third largest IT exporter by sales Wipro rose 1.05% reversing initial losses. The company said aftermarket 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 second largest software company by sales Infosys rose 0.08%. 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.

India's largest software company by sales TCS rose 0.52% reversing initial losses. The company announced on 3 December 2010 that the Uttar Pradesh state government has selected the company for its State Data Center project.

Most auto stocks fell on worries the impending fuel price hike could dent demand. India's top small car maker by sales Maruti Suzuki India fell 0.52%, with the stock snapping last two days gains.

India's largest tractor and utility vehicles maker Mahindra & Mahindra (M&M) fell 1.34%, with the stock falling for the second straight day. The company, early this month, announced strong sales for November 2010.

Bajaj Auto fell 0.23%. 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 3.3% on reports the Munjal family is set to acquire Honda Motors' 26% stake in their joint venture Hero Honda Motors for around $1 billion or half the current value of the stake in the stock market. The stock was the top loser from the Sensex pack.

But, Tata Motors rose 2.19%, with the stock gaining for the second straight day.

Some pharma stocks rose for the second straight day 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, Sun Pharmaceutical Industries, Ranbaxy Laboratories, Biocon, Cipla and Lupin rose by between 0.1% to 2.6%.

Consumer durables stocks rose on bargain hunting. Titan Industries, Rajesh Exports, Videocon Industries, Blue Star and Gitanjali Gems rose by between 1.6% to 7.42%.

Most capital goods stocks rose. Larsen & Toubro, Thermax, Usha Martin, Praj Industries, ABB and BEML rose by between 0.39% to 2.44%.

Realty stocks reversed initial losses. DLF, Indiabulls Real Estate, HDIL and D B Realty rose by between 0.32% to 5%.

Birla Power Solutions clocked highest volume of 1.98 crore shares on BSE. Ispat Industries (1 crore shares), Resurgence Mines (87.87 lakh shares), Hindustan Construction Company (57.90 lakh shares) and IFCI (45.01 lakh shares) were the other volume toppers in that order.

State Bank of India clocked the highest turnover of Rs 184.07 crore on BSE. Tata Steel (Rs 101.87 crore), Reliance Industries (Rs 80.01 crore), Coal India (Rs 70.63 crore) and VIP Industries (Rs 68.89 crore) were the other turnover toppers in that order.