Nifty settles at 6,000; Sensex at 5-week closing high

The key benchmark indices clocked modest gains, with the Sensex achieving a five-week closing high, as reports of higher advance tax payment by top Indian firms and firm global stocks boosted sentiment. The Sensex extended gains for the third straight day. The market breadth was strong. Metal, consumer durables, realty and banking stocks rose. But, index heavyweight Infosys reversed gains after hitting a record high. Another index heavyweight Reliance Industries (RIL) extended gains in late trade. The BSE 30-share Sensex jumped 171.44 points or 0.86%, up close to 135 points from the day's low and off close to 30 points from the day's high.



The Sensex regained the psychological 20,000 level. The 50-unit S&P CNX Nifty closed a tad above the psychological 6,000 mark.

After a firm start triggered by higher Asian stocks, the market extended gains in morning trade. The market hit a fresh intraday high in mid-morning trade. The market pared gains in early afternoon trade. The market came off lows in afternoon trade. The Sensex regained strength, soon after retracing from higher level in mid-afternoon trade. Stocks extended gains amid a bout of volatility in late trade.

NSE's volatility index, India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, fell below 20% level to settle at 19.77% from 20.78 on Monday, 20 December 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.

Foreign institutional investors (FIIs) sold shares worth a net Rs 32.60 crore on Monday, 20 December 2010, which was lower than an outflow of Rs 113.50 crore on Thursday, 16 December 2010. FII outflow in December 2010 totaled Rs 1460.40 crore this month (till 20 December 2010). FIIs had bought equities worth Rs 18293.10 crore in November 2010.

FII inflow in the calendar year 2010 has totaled Rs 129756 crore so far (till 20 December 2010). In dollar terms the net equity inflow in 2010 stands at $28.58 billion, above last year's $17.45 billion. The annual inflows are at record levels this year.

Advance tax payments 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.

A ministerial panel may meet by end-December on diesel prices, Oil Secretary S. Sundareshan said on Tuesday. He said a scheduled ministerial panel meeting on Wednesday has now been deferred. "The agenda of the meeting will be finalised a day before the meeting," Sundareshan told reporters. If the price of diesel is hiked, it will offset an expected decline in wholesale price inflation arising from a favourable base effect. Diesel is a key transportation fuel and any hike in diesel prices directly adds to inflationary pressure.

The annual headline inflation in January 2011 is expected to be less than the November level of 7.48%, Chief Economic Adviser in the finance ministry, Kaushik Basu said on Tuesday.

European stocks rose for a second consecutive session on Tuesday, 21 December 2010, as investors took in stride news that Portugal's credit rating may be lowered by a major ratings agency. The key benchmark indices in France, Germany and UK rose by between 0.53% to 0.7%.

Moody's Investors Service on Tuesday placed Portugal's government bond ratings on review for possible downgrade. The agency pointed to uncertainties about the nation's longer-term economic vitality, and concerns about its ability to access the capital markets at a sustainable price.

The Organisation of Economic Co-operation and Development (OECD) on Monday said Spain should raise taxes further if its fiscal consolidation plan goes off course and reforms to pensions and banks are vital to boost an economy which will remain weak for years. The OECD in a report published on Monday said that Spain was broadly on track to meet its deficit target 2011 but risks, such as weaker than expected growth, remained which could force the government to take additional measures.

China Vice Premier Wang Qishan today, 21 December 2010, said at the opening of European Union-China trade talks that China supports the measures taken by European officials to stabilize markets hit by the sovereign debt crisis.

Asian stocks rose on Tuesday, 21 December 2010, as risk appetite improved after tensions eased on the Korean peninsula and on broad overnight gains on Wall Street. The key benchmark indices in Hong Kong, China, Japan, South Korea, Singapore, Taiwan, Malaysia and Indonesia were up by 0.22% to 1.92%.

Tension on the Korean peninsula eased as North Korea did not respond after a South Korean artillery drill on Monday, 20 December 2010. Investors had fears that the South Korean artillery test would draw a reprisal fromNorth Korea. Instead, North Korea reportedly said on Monday that it wouldn't respond to the test and that it would allow United Nations nuclear inspectors back into the country.

Meanwhile, Japan's central bank kept its key interest rate unchanged at near zero amid a sluggish economic recovery. The unanimous decision to keep the overnight call rate target at zero to 0.1% was announced today, 21 December 2010, after a two-day meeting of the Bank of Japan's nine-member policy board. The central bank maintained its assessment of the country's economy, saying the moderate recovery appears to be pausing. Japan's economy has been battered by a strong yen and persistent deflation. A key central bank survey last week showed business sentiment is deteriorating.

Trading in US index futures indicated that the Dow could rise 32 points at the opening bell on Tuesday, 21 December 2010.

Back home, the Reserve Bank of India (RBI) on Thursday, 16 December 2010 announced measures to ease liquidity crunch in the banking system while keeping the key policy rates unchanged after a mid-quarter policy review. 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 endeavour 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 stabilise interest rates in the overnight inter-bank market closer to the operative policy rate of the Reserve Bank of India, it said.

The BSE 30-share Sensex jumped 171.44 points or 0.86% to 20,060.32, its highest closing since 15 November 2010. The Sensex rose 201.96 points at the day's high of 20,090.84 in mid-morning trade. The index rose 36.88 points at the day's low of 19,925.76 in early trade.

The S&P CNX Nifty was up 53.60 points or 0.9% to 6,000.65 its highest closing since 2 December 2010. The Nifty a hit a high of 6,007.45 in late trade.

The BSE Mid-Cap index rose 0.79% and underperformed the Sensex. The BSE Small-Cap index rose 0.95% and outperformed the Sensex.

Most sectoral indices on BSE rose. The BSE Metal index (up 2.76%), Banking sector index Bankex (up 2.34%), Realty index (up 1.25%), outperformed the Sensex. The BSE Healthcare index (down 0.32%), Teck index (down 0.24%), IT index (down 0.17%), FMCG index (up 0.03%), Capital Goods index (up 0.05%), Power index (up 0.12%), PSU index (up 0.4%), Auto index (up 0.49%), Consumer Durables index (up 0.58%) and Oil & Gas index (up 0.79%), underperformed the Sensex.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1,806 shares rose while 1,111 shares declined. A total of 100 shares remained unchanged.

Among the 30-member Sensex pack, 20 rose while the rest declined.

BSE clocked turnover of Rs 3575 crore, higher than Rs 3490.89 crore on Monday, 20 December 2010.

Index heavyweight Reliance Industries (RIL) was up 1.32% on reports of higher advance tax payment. RIL's advance tax payment surged 42.8% to Rs 1191 crore in Q3 December 2010 over Q3 December 2009

Another index heavyweight Lasren & Toubro fell 0.16% to Rs 1,974.35. The stock came off the day's high of Rs 1,996.20.

Metal stocks gained across the board after a major deal in the steel sector -- JSW Steel has entered into a pact with the promoters of Ispat Industries to acquire 41.29% stake in Ispat Industries. Hindustan Zinc, Steel Authority of India, Tata Steel, Hindalco Industries and Jindal Steel & Power advanced by between 1.43% to 4.63%.

Ispat Industries slumped 15.03% and JSW Steel rose 2.23%, after JSW Steel said it will acquire a controlling take in Ispat Industries. Ispat will issue 108.66 crore equity shares on preferential allotment basis to JSW Steel at Rs 19.85 per share for an aggregate amount of Rs 2157 crore. Further, JSW Steel will also make an open offer to the shareholders of Ispat Industries as per the Securities & Exchange Board of India (Sebi) takeover regulations.

JSW Steel's holding will be at 41.29% on completion of preferential allotment, with a scope for the stake to go up further based on outcome of the open offer. The existing promoters of Ispat Industries will hold 26% on completion of transaction. JSW will further refinance entire outstanding debt of Ispat.

National Aluminium Company rose 1.49%, extending gains for the third day in a row, as the company's advance tax payment jumped 187.69% to Rs 187 crore in Q3 December 2010 over Q3 December 2009.

Bank stocks rose as some prominent banks have paid higher advance tax in the third quarter, indicating good Q3 results. India's largest private sector bank by market capitalisation ICICI Bank rose 3.56%. 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) rose 1.48%. The bank's advance tax rose 4.8% to Rs 1850 crore in Q3 December 2010 over Q3 December 2009.

India's second largest private sector bank by market capitalization HDFC Bank rose 1.89%.

High beta realty stocks rose on bargain hunting, recovering from recent losses triggered by worries that higher interest rates and higher property prices will dent demand for property. HDIL, DLF, Indiabulls Real Estate and Unitech rose by between 0.03% to 2.26%.

Consumer durables stocks rose on expectations of a rise in demand ahead of Chirstmas and New Year. Videocon Industries, Titan Industries, Blue Star and Rajesh Exports rose by between 0.72% to 1.57%.

IT stocks revered initial gains as the rupee surged against the dollar. A firm rupee adversely impacts operating profit margin of IT firms as the sector derives a lion's shares of revenue from exports. India's largest software company by sales TCS lost 0.59%. The stock had hit record high of Rs 1174.50 on Monday, 20 December 2010. The company announced on 16 December 2010 that Indian Bank selected the company for its financial inclusion solution project.

India's second largest software company by sales Infosys fell 0.65% to Rs 3329.25. The stock came off the day's high of Rs 3370, which is a record high for the counter.

But, India's third largest IT exporter by sales Wipro rose 1.54%, with the stock gaining for the fifth 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.

Auto stocks rose for the second day in a row on renewed buying. Tata Motors and Bajaj Auto rose by between 0.4% to 1.03%. Maruti Suzuki India rose 1.03% on reports the company will launch its first luxury car 'Kizashi' in India on 28 January 2011.

Mahindra & Mahindra rose 1.07% after company announced during market hours today that it has launched its legendary off roader Thar CRDe in India.

Two-wheeler major Hero Honda Motors fell 0.77% on profit taking after jumping 17.99% on Monday, 20 December 2010. Monday's solid rally in the stock was triggered by reports that royalty payment to Japan's Honda Motor is unlikely rise from the current level after the split of the joint venture. Currently, Hero Honda pays 2.6% of sales as royalty charges to Honda. Earlier unconfirmed reports had speculated that royalty payments could shoot up to 8% of sales after the split of the joint venture.

The Hero Group, on 16 December 2010, announced that it will buyout the entire 26% stake of its Japanese partner Honda Motor Company Group in Hero Honda Motors. Without disclosing the size of the deal, Hero Honda Motors stated that the decision to restructure the equity has been reached in a cordial and amicable manner.

Hero Honda will continue to produce and sell the existing models, while new models would be also launched. However, all future products will be rolled out under the new licensing agreement between Hero Group and Honda. Hero Honda brand name will also be changed over time.

Cals Refineries clocked highest volume of 14.35 crore shares on BSE. Ispat Industries (4.28 crore shares), Mahindra Satyam (1.47 crore shares), Sujana Metal Products (93.39 lakh shares) and Sanraa Media (77.80 lakh shares) were the other volume toppers in that order.

Adani Enterprises clocked the highest turnover of Rs 162.44 crore on BSE. Hero Honda Motors (Rs 145.67 crore), State Bank of India (Rs 113.96 crore), SKS Microfinance (Rs 112.68 crore) and Mahindra Satyam (Rs 101.17 crore) were the other turnover toppers in that order.