Nifty attains 1-1/2-month closing high above 6,000

The key benchmark indices surged one day ahead of the expiry of the near-month derivatives contracts, helped by firm global stocks. The barometer index BSE Sensex and the 50-unit S&P Nifty, both, attained 1-1/2-month closing highs. Banking, consumer durables, FMCG and metal shares led the rally. Hindalco Industries hit a record high. The Nifty regained the psychological 6,000 mark. The market breadth was strong. All the thirteen sectoral indices on BSE were in green. The Sensex jumped 230.61 points or 1.15%, up close to 201 points from the day's low and off close to 18 points from the day's high.



The market edged higher in early trade, tracking higher Asian stocks. The market extended initial gains to hit fresh intraday high in morning trade. The market held positive zone in mid-morning trade. The market extended gains in early afternoon trade. The market hit a three-week high in afternoon trade. The Sensex trimmed gains after hitting 1-1/2-month high in mid-afternoon trade. The market surged in late trade to hit fresh intraday high.

Expiry of the near-month December 2010 futures & options (F&O) contracts may cause volatility in the near term. The near-month December 2010 derivatives contracts expire on Thursday, 30 December 2010.

NSE's volatility index, India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, declined to 17.13% from Tuesday's (28 December 2010) 18.13%. 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.

European shares edged higher on Wednesday, tracking gains in Asia, with Total among the top gainers as oil prices hovered near their highest in more than two years. The key benchmark indices in France and Germany rose by between 0.32% and 0.70%. However, UK's FTSE 100 index fell 0.18%.

Asian stocks rose, sending the MSCI Asia Pacific Index to a 2 1/2-year high for a second day on, as increased oil and gold prices boosted commodities companies. The key benchmark indices in Hong Kong, Indonesia, Japan, Singapore and South Korea rose by between 0.5% to 1.54%. But, Taiwan's Taiwan Weighted fell 0.05%, reversing initial gains and was down 0.05%

China's Shanghai Composite rose 0.68%. China's central bank has raised the rediscount rate to 2.25% from 1.8%, the first such change in two years. The People's Bank of China has also raised the one-year interest rate on loans made to commercial banks by 52 basis points to 3.85%.

Trading in US index futures indicated that the Dow could gain 19 points at the opening bell on Wednesday, 29 December 2010.

US stocks rose in light trading on Tuesday, 2 December 2010, extending this month's rally, as cold weather in the Northeast lifted oil prices and energy shares. The latest data showed US consumer confidence unexpectedly deteriorated in December, while prices of single-family homes fell almost double the expected pace in October, tempering growing optimism on the economy's recovery.

Back home, the food price index rose 12.13% while the fuel price index climbed 10.74% in the year to 11 December 2010, government data, last week, 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 government has extended a ban on pulses exports until further order, farm minister, Sharad Pawar, said on Tuesday. The ban on exports is with an aim to rein in high prices. The government had in June 2006 banned exports of pulses, which has a weightage of 0.72% in the wholesale price index.

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 RBIstatement 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 jumped 230.61 points or 1.15% to 20,256.03, its highest closing level since 15 November 2010. The Sensex rose 248.78 points at the day's high of 20,274.20 in late trade. The index gained 29.22 points at the day's low of 20,054.64 in early trade.

The S&P CNX Nifty rose 64.35 points or 1.07% to 6,060.35, its highest closing level since 15 November 2010. The Nifty hit high of 6,067.55 in late trade.

The BSE Mid-Cap index underperformed the Sensex, rising 0.51%. The BSE Small-Cap index outperformed the Sensex, advancing 1.13%.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1,782 shares rose while 1082 shares declined. A total of 186 shares remained unchanged.

BSE clocked turnover of Rs 2929 crore, higher than Rs 2708.45 crore on Tuesday, 28 December 2010.

All the thirteen sectoral indices on BSE rose. Consumer Durables index (up 1.93%), FMCG index (up 1.64%), Metal index (up 1.48%) and the banking sector index Bankex (up 1.46%), outperformed the Sensex.

Auto index (up 0.83%), TECk index (up 0.82%), PSU index (up 0.80%), Capital Goods index (up 0.53%), IT index (up 0.40%), Power index (up 0.39%), Healthcare index (up 0.29%), Oil & Gas index (up 0.29%) and Realty index (up 0.26%), underperformed the Sensex.

Among the 30-member Sensex pack, 27 rose while the rest declined.

Index heavyweight Reliance Industries (RIL) rose 0.11% to Rs 1048.30. But, the stock came off the day's high of Rs 1054. RIL's advance tax payment reportedly surged 42.8% to Rs 1191 crore in Q3 December 2010 over Q3 December 2009

Auto stocks edged higher on renewed buying. Ashok Leyland, Maruti Suzuki India, Bajaj Auto, Hero Honda Motors and Tata Motors rose by 0.37% to 1.46%.

Mahindra & Mahindra (M&M) rose 1.24% to Rs 773.40, reversing initial losses, on reports the company is set to raise the prices of its products across all categories from January 2011 due to higher commodity prices. The price increase had become imminent considering the increase in the prices of its key raw material -- natural rubber, steel and aluminium. With this price increase, M&M intends to offset the impact of rising input costs on the operating margins to a certain extent.

FMCG stocks gained on bargain hunting. Hindustan Unilever, ITC, United Spirits, Colgate Palmolive, Godrej Consumer Products, Marico, Nestle India and Tata Global Beverages rose 0.14% to 3.48%.

High beta metal stocks rose on strong domestic demand. Hindustan Zinc, Sterlite Industries, Steel Authority of India, Jindal Saw, Jindal Steel & Power, Bhushan Steel, NMDC, JSW Steel, National Aluminium Company, Tata Steel and Sesa Goa rose by 0.34% to 4.73%

India's largest aluminium maker by sales Hindalco Industries gained 1.73% to Rs 241.45. The stock hit record high of Rs 242.80 today.

Bank stocks rose as some prominent banks paid higher advance tax in the third quarter, indicating good Q3 December 2010 result. India's second largest private sector bank by market capitalization HDFC Bank rose 3.23%, with the stock gaining for the second straight day.

India's largest private sector bank by market capitalisation ICICI Bank rose 1.31%. 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) gained 0.94%. The bank's advance tax rose 4.8% to Rs 1850 crore in Q3 December 2010 over Q3 December 2009.

Among other banking shares, Union Bank of India, Axis Bank, Bank of India, Canara Bank, IndusInd Bank, IDBI Bank, Punjab National Bank, Yes Bank, Federal Bank and Kotak Mahindra Bank rose by 0.06% to 2.21%.

Consumer durables stocks edged higher. VIP Industries, Gitanjali Gems, Rajesh Exports, Titan Industries, Whirlpool of India, Bajaj Electricals, Blue Star, Videocon Industries rose by between 0.30% to 8.87%.

VIP Industries clocked the highest turnover of Rs 113.24 crore on BSE. Ravi Kumar Distilleries (Rs 77.19 crore), Gitanjali Gems (Rs 72.49 crore), BF Utilities (Rs 67.19 crore) and Delta Corp (Rs 64.53 crore), were the other turnover toppers on BSE in that order.

Sanraa Media reported a highest volume of 2.20 crore shares on BSE. Ravi Kumar Distilleries (94.09 lakh shares), Cals Refineries (69.29 lakh shares), FCS Software (63.76 lakh shares) and Delta Corp (61.60 lakh shares), were the other volume toppers on BSE in that order.