Market extends gains for the second day in a row on robust Q2 GDP data

The key benchmark indices reversed initial losses as robust Q2 September 2010 GDP growth data and a pick-in up subscription for the initial public offer of state-run MOIL on the last day of the bidding for the issue by qualified institutional buyers today, 30 November 2010, boosted investor sentiments. The market gained for the second straight day. The BSE 30-share Sensex was up 116.15 points or 0.6%, up close to 300 points from the day's low and off close to 90 points from the day's high. The market breadth was strong, in contrast with a negative breadth at the onset of the trading session.



Realty stocks galloped on bargain hunting after a recent steep slide triggered by unearthing of a bank loans bribery scandal last week, mainly involving realty and infrastructure firms. Banking stocks saw an-across-the board surge. But, index heavyweight Reliance Industries (RIL) came off day's high in volatile trade. Another heavyweight ICICI Bank came off the day's low and telecom major Bharti Airtel surged over 6%.

Stocks were choppy. The market edged lower in early trade on weak Asian stocks. Robust Q2 September 2010 GDP growth data triggered a recovery in morning trade. Immense volatility was witnessed later as the key benchmark indies staged a strong intraday rebound, soon after hitting fresh intraday lows in early afternoon trade. The market struck a fresh intraday high, before paring gains in mid-afternoon trade as index heavyweight Reliance Industries (RIL) witnessed a sudden slide.

NSE's volatility index, India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, was down 2.82% at 20.71. The index had lost 5.62% to 21.31 on Monday, 29 November 2010. The index had risen 4.39% to 22.58 on Friday, 26 November 2010, a day after it had plunged 12.36% to 21.63 on Thursday, 25 November 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 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.

Finance Minister Pranab Mukherjee said GDP growth would be between 8.5% to 8.75% in the current fiscal that ends in March 2011 (FY 2011). Chairman of the Prime Minister's Economic Advisory Council C. Rangarajan said the economy is expected to grow 9% in the year to March 2012 (FY 2012). Rangarajan also said the government may reassess FY 2011 growth expectations and that it was "not impossible" to reach 9% growth in the financial year.

The Reserve Bank of India on Monday, 29 November 2010, decided to extend its liquidity support facility to banks to further ease the funds crunch. The second LAF, which will be conducted daily at 16:15 IST, will be available till 28 January 2011, against 16 December 2010 announced earlier. The RBI has also further eased Statutory Liquidity Ratio (SLR) requirements as a temporary measure. Banks can now maintain a lower SLR that is two percentage points less than the current requirement. Earlier, they were allowed a one percentage point relief.

The initial public offer (IPO) of state-run MOIL, the largest manganese ore producer in India, was subscribed 27.62 times by 16:00 IST on last day of bidding for the IPO by the qualified institutional buyers (QIB) today, 30 November 2010. Bidding by all other category of investors ends on Wednesday, 1 December 2010.

A bribe-for-loan scandal spooked the banking sector and the stock market recently. The Central Bureau of Investigation (CBI) is probing bad loan write-offs by some banks and financial institutions involved in a bribes-for-loans scandal that has shaken corporate and political India, a newspaper report said on Monday, 29 November 2010. The finance ministry has not suggested recalling of corporate loans under scanner in the financial bribery scam, the financial services secretary R. Gopalan said late last week.

The Securities & Exchange Board of India (Sebi) is reportedly examining the possibility of insider trading in shares of at least nine companies. The Sebi has joined the CBI to probe the possibility of insider trading in shares of these companies, named by the investigator as involved in the loan scandal, recent reports suggest.

The CBI has reportedly sent notices to 21 medium-to-large sized Indian companies regarding the ongoing probe into a financial bribery scandal. The cases are limited to individuals and unlikely to create a large fallout, a news agency report said, late last week, citing an unnamed senior CBI official. The CBI is not currently considering widening its probe into bribery over loans to corporates, the report added.

Finance Minister Pranab Mukherjee, last week, asked all banks, financial institutions and insurance firms to look into their exposures to firms named by the Central Bureau of Investigation in a loans bribery scandal. A ministry statement quoted Pranab Mukherjee as calling on regulatory and other institutions to further improve safeguards.

Chiefs of some of the top rung public sector banks and financial institutions were arrested by the CBI on 24 November 2010, for allegedly sanctioning loans in return for bribes. The CBI has arrested the Chief Executive Officer of LIC Housing Finance, Secretary (Investment), LIC based in Mumbai, a General Manager, Bank of India based in Mumbai, a director (Chartered Accountant) of Central Bank of India based in New Delhi, a DGM of Punjab National Bank base in New Delhi. The CBI also arrested Rajesh Sharma, chairman and managing director of Money Matters group, which is at the centre of the scandal.

The CBI said in a statement that it has busted a racket wherein a private financial services company, its CMD and other associates were allegedly bribing senior officials of public sector banks and financial institutions for facilitating large scale corporate loans. They were also gathering confidential business information from financial institutions, the CBI statement said.

Officers of top management and middle management of various public sector banks and financial institutions viz. Bank of India, Central Bank of India, Punjab National Bank, LIC and LIC Housing Finance were receiving illegal gratifications from the private financial services company who were acting as mediators and facilitators for corporate loans and other facilities from financial institutions, the CBI said. Searches were conducted at various locations in Mumbai, Delhi, Chennai, Jaipur, Kolkata and Jalandhar, which have resulted in seizure of incriminating documents, the CBI said in a statement.

"It is an insignificant amount ... it is individual personal greed, it is not systematic failure," R. Gopalan, secretary financial services, government of India, told a news channel on 24 November 2010. Junior finance minister Namo Narain Meena, last week, said the loans bribery scandal that has led to several arrests is not a widespread scam and will not hit markets or the banking sector.

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.

Also, the HSBC Markit Purchasing Managers Index, based on a survey of 500 Indian companies, indicating health of manufacturing activity and the business activity index of the services sector, both for the month of November 2010, due for release in the first week of December 2010 will be closely watched.

Year-end profit taking may cap upside on the domestic bourses in the near term. Funds based in US and Europe follow calendar year as their accounting year. The market has lost ground soon after hitting a record closing high early this month.

European stock markets turned positive in volatile trade Tuesday, 30 November 2010, as investors continued to assess the impact of Ireland's 85 billion euro ($111 billion) bailout. The key benchmark indices in UK and Germany were up by between 0.16% to 0.6%. But, France's CAC 40 fell 0.13%.

Investors are worried that the Irish rescue would do little to prevent the euro-zone debt crisis from spreading to Portugal and Spain.

Chinese shares recovered from a steep intraday slide caused by reports that Beijing is preparing to tighten policy as part of efforts to clamp down on inflation. The Shanghai Composite ended 1.61% lower and Hong Kong's Hang Seng index closed 0.68% lower. China's State Council reportedly announced on Monday, 29 November 2010, that it would stiffen penalties and step up monitoring to discourage hoarding of goods and price manipulation.

In other Asian markets, the key benchmark indices in Indonesia, Singapore, and Japan were down by between 0.43% to 2.74%. The key benchmark indices in South Korea and Taiwan were up 0.48% and 0.06% respectively.

US stocks fell Monday, 29 November 2010, as investors worried that the $112.61 billion Irish bailout might not be enough to contain the euro-zone debt crisis. The Dow Jones Industrial Average declined 39.51 points, or 0.36%, to 11052.49. The Nasdaq Composite fell 9.34, or 0.37%, to 2525.22, and the Standard & Poor's 500 declined 1.64, or 0.14%, to 1187.76.

Trading in US index futures indicated that the Dow could fall 14 points at the opening bell on Tuesday, 30 November 2010.

The BSE 30-share Sensex jumped 116.15 points or 0.6% to 19,521.25. The Sensex surged 205.36 points at the day's high of 19,610.46 in afternoon trade. The index lost 187.08 points at the day's low of 19,218.02 in early afternoon trade.

The S&P CNX Nifty was up 32.70 points or 0.56% at 5,862.70.

The total turnover on BSE amounted to Rs 4659 crore, higher than Rs 4033.48 crore on Monday, 29 November 2010.

The market breadth, indicating the health of the market, was strong. On BSE, 2,008 shares advanced while 929 shares declined. A total of 75 shares remained unchanged. The breadth was negative in opening trade.

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

The BSE Mid-Cap index rose 1.39% and the BSE Small-Cap index rose 1.9%. Both these indices outperformed the Sensex.

Except BSE Oil & Gas index, all the other sectoral indices on BSE rose. BSE Realty index (up 5.67%), Consumer Durables index (up 2.08%), Power index (up 1.38%), PSU index (up 1.73%), FMCG index (up 1.38%), Auto index (up 1.37%), BSE Bankex (up 1.15%), outperformed the Sensex.

The BSE Oil & Gas index (down 0.56%), IT index (up 0.21%), Capital Goods index (up 0.44%), Metal index (up 0.44%), Healthcare index (up 0.55%) underperformed the Sensex.

Index heavyweight Reliance Industries (RIL) fell 1.14% to Rs 986.80. The stock hit the high of Rs 1007.40 and low of Rs 982.25. The stock had jumped over 3% on Monday, 29 November 2010.

Realty stocks edged higher on bargain hunting after a recent steep slide triggered by the back the outbreak of a bank loans bribery scandal last week, mainly involving realty and infrastructure firms. Omaxe, Unitech, HDIL and Indiabulls Real Estate rose by between 1.84% to 8.43%.

India's largest realty stock by sales DLF jumped 7% and was the top gainer from the Sensex pack. The stock gained on bargain hunting after sliding 9.8% in the preceding five trading days.

D B Realty jumped 5% after the company's managing directors clarified that the company is not involved in the bribe-for-loan scam.

Banking stocks were mixed. India's largest bank by net profit and branch network State Bank of India galloped 3.97%. India's second largest private sector bank by net profit HDFC Bank fell 0.1%.

India's largest private sector bank by net profit ICICI Bank fell 0.9% to Rs 1143.65, off day's low of Rs 1128.55.

Telecom stocks gained on bargain hunting after a recent slide triggered by the controversial allotment of 2G spectrum allocation. India's largest listed cellular services by sales Bharati Airtel jumped 6.45% while India's second largest listed cellular services by sales Reliance Communications advanced 3.41%. Idea Cellular rose 4.09%.

Metal pivotals declined after LMEX, a gauge of six metals traded on London Metal Exchange, fell 0.49% to $ 3,678.30 on Monday, 29 November 2010.

India's largest private sector steel maker by sales Tata Steel lost 1.48% and was the top loser from the Sensex pack.

India's largest non-ferrous metal firm by sales Sterlite Industries India slipped 0.12%.

Some other metal stocks gained. Hindustan Zinc, Hindalco Industries and National Alumnum Company rose by between 0.31% to 2.78%.

FMCG stocks rose on bargain hunting. ITC, United Spirits and Hindustan Unilever rose by between 0.34% to 3.98%.

India's largest power generation firm by capacity NTPC rose 2.62%. The company reportedly plans to place orders for generators worth at least Rs 32,850 crore by 31 March 2011 as it accelerates capacity addition to help reduce blackouts. The utility will buy nine generators of 660 megawatts each and the same number of 800-megawatt units.

Auto stocks rose ahead of released of sales data for November 2010. Tata Motors, TVS Motor Company, Maruti Suzuki India and Hero Honda Motors rose by between 1.06% to 4.31%.

IT stocks rose on recent upbeat economic data in US. US is the prime market for India IT firms. Wipro and TCS rose by between 0.89% to 0.91%. But, Infosys fell 0.5%.

Ispat Industries clocked the highest volume of 2.67 crore shares on BSE. Cals Refineries (2.26 crore shares), Birla Power Solutions (2.01 crore shares), Resurgence Mines (1.43 crore shares) and Hindustan Construction Company (1.03 crore shares) were the other volume toppers in that order.

LIC Housing Finance clocked the highest turnover of Rs 247.36 crore on BSE. State Bank of India (Rs 228.98 crore), Gravita India (Rs 186.69 crore), Core Projects (Rs 146.13 crore) and Tata Steel (Rs 145.06 crore) were the other turnover toppers in that order.