Sensex jumps 4.47% in four days

The key benchmark indices edged higher in volatile trade as a slew of recent strong economic data, lower inflation and higher global stocks, helped keep sentiments firm. The market extended gained for the fourth straight day. The BSE 30-share Sensex jumped 142.70 points or 0.72%, off close to 90 points from the day's high and up close to 75 points from the day's low. The barometer index BSE Sensex closed below the psychological 20,000 mark after flirting with that level throughout the day. The 50-unit S&P CNX Nifty settled above the psychological 6,000 mark after flirting with that mark throughout the day.



The market has staged a strong comeback after a recent steep slide. From a 2-1/2-month closing low of 19,136.61 on 26 November 2010, the Sensex jumped 856.09 points or 4.47% in four trading sessions.

The market breadth was strong. Index heavyweight Reliance Industries (RIL) gained. Realty stocks edged higher for the third day in a row on bargain hunting after a recent steep slide triggered by the outbreak of a bank loans bribery scandal last week. Software stocks rose on a slew of recent better-than-expected US economic data. Consumer durables, banking and IT stocks also rose.

The market jumped in early trade on positive global cues. The market pared gains in morning trade. A bout of volatility was witnessed as the key benchmark indices regained strength in mid-morning trade on firm Asian stocks. The Sensex moved in a range in early afternoon trade. Gains in index heavyweight Reliance Industries (RIL) helped the key benchmark indices recover from lower level in afternoon trade. The market pared once again pared gains in mid-afternoon trade. The market came off lows 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, was down 2.08% at 18.80. The index had lost 7.29% to 19.20 on Wednesday, 1 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.

As per media reports, the Intelligence Bureau (IB) has identified Ketan Parekh as one of the key players manipulating the stock prices of key companies in the 2010 bull run. Parekh masterminded the 2002 securities scam that rocked the country. Parekh and his associates, in collusion with promoters, "manipulated share prices of many scrips through a web of front entities and demat accounts," says a report from IB. The IB report further adds that Parekh along with a Kolkata-based associate, planned to manipulate the initial share sale of many companies wherein "cartel members would secure 50% of IPO proceeds from promoters of unknown and fringe proceeds after their listings."

The Reserve Bank of India (RBI) deputy governor Governor Subir Gokarn on Wednesday 1 December 2010, said the RBI's monetary stance is still anti-inflationary and said the RBI would not liberalise the key policy ratio viz. the cash reserve ratio (CRR) to leave more funds in the hands of banks. Earlier this week, the RBI reduced the statutory liquidity ratio (SLR), the percentage of deposits kept by banks in government securities by two per cent to infuse liquidity in the cash system.

Gokarn said RBI's actions are conditioned by the need to prevent food inflation from spilling over to more broader base inflation pressure and as the economy is reaching capacity limits that risk is high. The RBI's next policy review--a mid-quarter policy review--is due on 16 December 2010.

The food price index rose 8.60% while the fuel price index climbed 9.99% in the year to 20 November 2010, government data on Thursday showed. In the prior week, annual food and fuel inflation stood at 10.15% and 10.57% respectively. The primary articles price index was up 12.72% in the latest week compared with an annual rise of 13.38% a week earlier.

European shares rose on Thursday, building on strong gains in the previous session, with investors expecting the European Central Bank to announce new measures to tackle the euro zone debt crisis. The key benchmark indices in France, Germany and UK rose by between 0.06% to 0.6%.

Investors are awaiting the outcome a scheduled policy meeting from the decision by the European Central Bank (ECB) later in the global day. All eyes are on whether the ECB decides to expand its bond-purchasing programs--implemented to ease market jitters over the region's sovereign bond crisis.

The number of registered jobless in Spain rose 0.6% in November from a month earlier to 4.1 million, the Labour Ministry said on Thursday.

Asian stocks rose on Thursday, 2 December 2010, after improved economic indicators powered big gains on Wall Street and worries eased about Europe's debt problems. The key benchmark indices in China, Hong Kong, Japan, Indonesia, South Korea, Singapore and Taiwan rose by between 0.5% to 2.09%.

Signs that the US job market thawed in November jump-started the advance in US markets on Wednesday, 1 December 2010. ADP Employer Services, a payroll company, said small businesses added the largest amount of workers in three years last month. Improved economic growth in the US, the world's No. 1 economy, would be a boon for export-reliant Asia. The Institute of Supply Management said its index of manufacturing activity rose in November for the 16th month.

Back home, the initial public offer (IPO) of state-run MOIL, the largest manganese ore producer in India, was subscribed a massive 56.43 times.

India's merchandise exports rose 21.3% to $18 billion in October 2010 over October 2009, boosting hopes that the country may be able to reach the $200 billion target fixed for the current fiscal. Imports during the period grew by 6.8% to $ 27.68 billion, leaving a trade deficit of $9.72 billion, data released today, 1 December 2010, showed.

India's 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 Wednesday, 1 December 2010. The HSBC Manufacturing Purchasing Managers' Index rose to 58.4 in November from 57.2 in October, the survey said. The data on Business Activity Index, indicating the performance of the services sector, is due for release in the coming days.

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.

Finance Minister Pranab Mukherjee on Tuesday 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 output of key infrastructure industries surged by a robust 7% in October 2010, against a 3.9% growth recorded in the same month last year, helped by a strong showing by the electricity, crude oil and the finished steel sectors. The latest data for the six core sector showed a sharp rebound from the output in September 2010, when growth in these sectors had slipped to 2.7%.

A bribe-for-loan scandal spooked the banking sector and the stock market recently. Chiefs of some of the top rung public sector banks and financial institutions were arrested by the Central Bureau of Investigation (CBI) on 24 November 2010, for allegedly sanctioning loans in return for bribes. 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.

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.

But, 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 BSE 30-share Sensex was up 142.70 points or 0.72% to 19,992.70. The Sensex rose 234.25 points at the day's high of 20,084.25 in early trade. The index rose 67.77 points at the day's low of 19,917.77 in morning trade.

The S&P CNX Nifty was up 50.80 points or 0.85% at 6011.70. The Nifty hit a high of 6,029.50 in early trade.

The BSE Mid-Cap index rose 1.07% and the BSE Small-Cap index rose 1.12%. Both these indices outperformed the Sensex.

Except the BSE Capital Goods index and the BSE Auto index, all the other sectoral indices on BSE rose. BSE Realty index (up 2.29 %), Metal index (up 1.48%), IT index (up 1.47%), Oil & Gas index (up 1.47%), Consumer Durables index (up 1.35%), banking sector index Bankex (up 1.23%) and Teck index (up 0.99%), outperformed the Sensex.

BSE Auto index (down 0.3%), Capital Goods index (down 0.26%), Power index (up 0.01%), FMCG index (up 0.06%), Healthcare index (up 0.51%) and BSE PSU index (up 0.59%) underperformed the Sensex.

The market breadth, indicating the health of the market, was strong. On BSE, 1,933 shares advanced while 1045 shares declined. A total of 72 shares remained unchanged.

Among the 30-member Sensex pack, 17 gained while the rest slipped.

The BSE clocked turnover of Rs 4412 crore, lower than Rs 4619.48 crore on Wednesday, 1 December 2010.

Index heavyweight Reliance Industries (RIL) rose 1.96% to Rs 1009.50. The stock hit a high of Rs 10011.50 and low of Rs 996.15. As per recent reports, the natural gas production from RIL's East Coast block has dropped by about 15% to about 45-46 million standard cubic metres per day (mscmd) from 53-54 mscmd. The production from D-1 and D-3 gas fields in the KG-D6 block has dropped due to reservoir complexities.

Metal and mining shares saw an across the board surge after strong investor response to the MOIL issue. Tata Steel, Hindalco Industries, Hindustan Zinc, National Aluminium Company, Bhushan Steel, Sterlite Industries, JSW Steel and Steel Authority of India rose by between 0.69% to 3.13%.

LMEX, a gauge of six metals traded on the London Metal Exchnage rose 2.55% on Wednesday, 1 December 2010.

Consumer durables stocks rose on renewed buying. Videocon Industries, Blue Star, Rajesh Exports, Asian Star Company and Gitanjali Gems rose by between 0.73% to 3.68%.

Most realty stocks edged higher for the third day on bargain hunting after a recent steep slide triggered by the outbreak of a bank loans bribery scandal last week, mainly involving realty and infrastructure firms. DLF, Indiabuuls Real Estate, HDIL, Ansal Properties, Omaxe, Unitech, Sobha Developers and Orbit Corporation rose by between 0.69% to 9.09%.

Banking stocks gained on fresh buying on expectations of a strong credit offtake in a growing economy. India's second largest private sector bank by net profit HDFC Bank advanced 1.16%, with the stock gaining for the second straight day.

India's largest private sector bank in terms of operating income ICICI Bank rose 1.99%, with the stock gaining for the second straight day. As per recent reports, the bank has withdrawn a special housing loan scheme with immediate effect. The schemes have been under the Reserve Bank of India's scrutiny on concerns about asset quality in the housing loan sector.

But, India's largest bank by net profit and branch network State Bank of India 0.24%, reversing initial gains. Among other PSU stocks, Bank of Baroda, Bank of India and Punjab National Bank rose by between 1.37% to 2.06%.

The government on Wednesday, 1 December 2010, approved additional capital infusion of Rs 6000 crore in 10 public sector banks with an objective to raise its holding to a minimum 58% in all state-run banks.

India's top mortgage lender by total income Housing Development Finance Corporation rose 0.79%, with the stock gaining for the second straight day after the company on Wednesday, 1 December 2010, said it would not extend a special housing loan scheme that was available until Tuesday, 30 November 2010.

Software stocks rose on a slew of recent better-than-expected US economic data. US is the key market for Indian IT firms. India's largest software company by sales TCS rose 1.48%, after the company said on Thursday it opened a back office services centre in Manila, its first such facility in Southeast Asia. Back office services revenue was 11.5% of TCS' total revenue in the year to March 2010, the company said.

India's second largest software company by sales Infosys rose 1.34%. India's third largest software company by sales Wipro rose 2.57%.

India's largest bike maker by sales Hero Honda Motors slumped 7.27% on reports the Hero Group has agreed to increase royalty payments made to Japanese automaker Honda Motor Co. to 8% of overall annual sales in return for a technology makeover and a stake sale. It was the top loser form the Sensex pack.

Hero Honda Motors would reportedly make the increased payments until 2014, when the present technology sharing agreement will lapse and be renegotiated. Negotiations are at an advanced stage and a final decision will be made in the next few days, reports suggest.

Other auto stocks saw mixed trend. India's top small car maker by sales Maruti Suzuki India fell 0.35% reversing initial gains. Total sales rose 28.20% to 1.12 lakh vehicles in November 2010 over November 2009. The figures were announced during trading hours on Wednesday, 1 December 2010.

India's largest truck maker by sales Tata Motors rose 2.5%, extending Wednesday's 4.13% jump. The company's total vehicle sales rose 1% to 54,622 units in November 2010 over November 2009. The figures were announced during market hours on Wednesday, 1 December 2010.

India's largest tractor and utility vehicles maker Mahindra & Mahindra (M&M) fell 1.45%. The stock had jumped 4.53% on Wednesday, 1 December 2010, boosted by strong sales in November 2010.

Bajaj Auto fell 0.23%, reversing initial gains. The company's total sales rose 8% to 2,99,231 units in November 2010 over November 2009. The figures were announced during trading hours today, 2 December 2010.

India's largest engineering and construction firm by sales Larsen & Toubro fell 0.86%. The company said during market hours today it has won Rs 415-crore order for thermal power plant construction.

Sugar shares rose on reports the government will take a decision on permitting regular exports of sugar towards the end of December 2010 following an assessment of total production of the sweetener in the 2010-11 crop year. Dhampur Sugars, Shree Renuka Sugars, Bajaj Hindusthan and Balrampur Chini rose by between 0.94% to 3.79%.

Karuturi Global clocked highest volume of 2.4 crore shares on BSE. Cals Refineries (2.07 crore shares), Birla Power Solutions (1.7 crore shares), Resurgence Mines (1.46 crore shares) and Sanraa Media (1.13 crore shares) were the other volume toppers in that order.

State Bank of India clocked the highest turnover of Rs 217.58 crore on BSE. Tata Motors (132.86 crore), Power Grid Corporation of India (Rs 97.75 crore), LIC Housing Finance (Rs 84.09 crore) and ABG Shipyard (Rs 83.80 crore) were the other turnover toppers in that order.