Market ends flat; Nifty ends below 6000 mark

The key benchmark indices had a flat closing on Tuesday, 28 December 2010. Seven out of 13 sectoral indices on BSE were positive. Selling was witnessed in oil & gas, PSU and auto stocks while defensives like FMCG and healthcare stocks ended higher. The market breadth was positive. Volumes were thin as market participation was low from institutional investors ahead of year ending.



In global cues, European stocks and US index futures edged higher while Asian stocks closed on a mixed note. The BSE 30-share Sensex fell 3.51 points or 0.02% at 20,025.42, above the psychological 20,000 mark after slipping below it in afternoon trade. But, the S&P CNX Nifty fell 2.10 points or 0.04% at 5996, below the 6,000 mark.

The market edged higher in early trade. It reversed initial gains to hit fresh intraday lows in morning trade. It regained positive terrain and were marginally higher in mid-morning trade. It moved between the positive and negative terrain in early afternoon trade. The key benchmark indices declined in afternoon trade. It edged higher after recovering sharply from the day's low. It hovered between the postive and negative terrain in late 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 shares rose in holiday-thinned trade on Tuesday, though analysts said an interest rate hike by China on the Christmas day could hurt commodities and mining equities in the coming months. The key benchmark indices in France and Germany rose 0.44% and 0.13% respectively. London Markets remains closed until tomorrow, 29 December 2010.

Asian stock markets were mixed on Tuesday, 28 December 2010 as investors looked past China's rate hikes and stayed on the sidelines ahead of the release of key U.S. home price data later in the day. China's key stock index closed down 1.74% on Tuesday to the lowest closing level in nearly three months, extending the previous session's nearly 2 percent drop in the wake of Saturday's surprise interest rate hike.

The key benchmark indices in Hong Kong, Japan and Taiwan fell by between 0.24% to 0.93%. The key benchmark indices in Singapore, Indonesia and South Korea rose by between 0.55% to 0.96%.

US stocks were little changed on Monday, 27 December 2010 as investors shrugged off China's interest rate increases over the weekend. Beijing aims to tame inflation, which jumped to 5.1% in November, a 28-month high.

Trading in US index futures indicated that the Dow could gain 17 points at the opening bell on Tuesday, 28 December 2010.

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 RBI, 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 RBI, 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 fell 3.51 points or 0.02% at 20,025.42. The Sensex rose 61.48 points at the day's high of 20,090.41 in early trade. The index shed 47.17 points at the day's low of 19,981.76 in afternoon trade.

The S&P CNX Nifty fell 2.10 points or 0.04% at 5996. It gyrated between a high of 6010.90 and low of 5982.25 in the day.

The BSE Mid-Cap index rose 0.07%. The BSE Small-Cap index rose 0.33%. Both the indices outperformed the Sensex.

The market breadth, indicating the overall health of the market, was positive. The breadth had turned negative in afternoon trade. On BSE, 1433 shares declined while 1391 shares rose. A total of 190 shares remained unchanged.

BSE clocked turnover of Rs 2604 crore lower than Rs 3065.31 crore on Monday, 27 December 2010.

FMCG index (up 0.63%), Healthcare index (up 0.47%), TECk index (up 0.34%), IT index (up 0.29%), Power index (up 0.19%), Realty index (up 0.19%) and Metal index (up 0.16%), outperformed the Sensex.

Consumer Durables index (down 0.14%), the banking sector index - the Bankex (down 0.21%), Capital Goods (down 0.28%), Auto (down 0.35%), PSU (down 0.46%) and Oil & Gas (down 0.74%), underperformed the Sensex.

Among the 30-member Sensex pack, 18 gained, 11 declined and one was unchanged.

Index heavyweight Reliance Industries (RIL) fell 0.75% to Rs 1047.15. The stock hit high of Rs 1059.40 and low of Rs 1042.50. RIL's advance tax payment reportedly surged 42.8% to Rs 1191 crore in Q3 December 2010 over Q3 December 2009.

Banking stocks declined on profit taking. India's largest private sector bank by market capitalisation ICICI Bank shed 0.92%. The private sector bank's advance tax payment reportedly surged 49.5% to Rs 450 crore in Q3 December 2010 over Q3 December 2009.

India's largest bank by net profit and branch network State Bank of India (SBI) declined 0.90%. The bank's advance tax rose 4.8% to Rs 1850 crore in Q3 December 2010 over Q3 December 2009.

Among other bank shares, Axis Bank, Bank of India, IDBI Bank, Oriental Bank of Commerce, Karnataka Bank, Indian Overseas Bank, Allahabad Bank, Canara Bank, IndusInd Bank and Federal Bank fell by 0.08% to 2.06%.

But, India's second largest private sector bank by market capitalization HDFC Bank rose 2.02%. Among other bank gainers, Punjab National Bank, Bank of Baroda, Kotak Mahindra Bank, Yes Bank and Union Bank (India) rose by 0.03% to 1%.

Select FMCG stocks rose on bargain hunting. United Breweries, United Spirits, Ruchi Soya Industries, Britannia Industries and ITC rose 0.94% to 13.75%

Healthcare sector stocks rose on defensive buying. Dishman Pharmaceuticals, Wockhardt, Ranbaxy Laboratories, Bilcare, Lupin, Sun Pharmaceutical Industries, Orchid Chemicals, Apollo Hospitals, Pfizer, Biocon, Cipla, Piramal Healthcare, Glenmark Pharmaceutical and Glaxosmit Pharmaceutical rose by 0.13% to 3.25%

Capital goods stocks fell on profit taking. BGR Energy, Usha Martin, ABB, Gammon India, Crompton Greaves, Havells India, Bharat Electricals, Siemens, Lakshmi Machine Works and BEML declined by 0.03% to 1.26%.

India's largest power engineering and construction company by revenue Larsen & Toubro fell 0.54%. India's largest power equipment maker by sales Bharat Heavy Electricals was unchanged at Rs 2297.

But select capital goods stocks rose. Suzlon Energy, Praj Industries, Areva T&D India, Thermax, Punj Lloyd, Reliance Industrial Infrastructure and Alstom Projects rose by 0.01% to 2.57%.

Telecom stocks rose on bargain hunting. Bharti Airtel, MTNL, Idea Cellular and Reliance Communications rose by between 0.18% to 1.72%.

Most Auto stocks rose on higher Q3 advance tax payment by auto firms indicating good Q3 result. Bajaj Auto, Mahindra & Mahindra, Hero Honda Motors and Maruti Suzuki India were up by 0.24% to 0.76%. But, TVS Motor Company, Ashok Leyland and Tata Motors declined by 0.14% to 2.53%.

BF Utilities clocked a highest turnover of Rs 138.92 crore on BSE. Ravikumar Distilleries (Rs 113.90 crore), State Bank of India (Rs 78.60 crore), Reliance Industries (Rs 61.79 crore) and Tata Motors (Rs 55.35 crore), were the other turnover toppers on BSE in the order.

Ravikumar Distilleries reported a highest volume of 1.41 crore shares on BSE. Sanraa Media (1.04 crore shares), Birla Power Solutions (52.61 lakh shares), Cals Refineries (50.99 lakh shares) and Suzlon Energy (49.02 lakh shares), were the other volume toppers on BSE in the order.