Sensex below 19,000; Nifty under 5,700

The key benchmark edged lower in volatile trade, snapping last two days' gains, weighed down by weak European stocks and lower US index futures. Index heavyweights Reliance Industries (RIL) extended losses in late trade. IT and capital goods stocks declined. FMCG and consumer durables stocks reversed initial gains. Bajaj Auto gained in volatile trade as Q3 net profit surged. The BSE 30-share Sensex was down 113.73 points or 0.6%, off close to 190 points from the day's high and up close to 80 points from the day's low.



The BSE Sensex closed below the psychological 19,000 mark, having alternatively moved above and below that mark in intraday day. The 50-unit S&P CNX Nifty settled below 5,700 level.

Stocks were volatile. The market slipped into the red after a firm start. The market moved into positive zone after hitting fresh intraday low in morning trade. The Sensex moved between gains and losses in mid-morning trade. The market firmed up in early afternoon trade. The market held positive zone in afternoon trade. The market reversed direction after a sudden slide in mid-afternoon trade. The Sensex later trimmed losses after hitting a fresh intraday low. High volatility was witnessed in late trade as the key benchmark trimmed losses after sliding to fresh intraday lows

On the political front, a reshuffle of the Union cabinet on Wednesday saw no major change in the key ministries of finance, home, defence and foreign affairs. Oil Minister Murli Deora was replaced as also Roads Minister Kamal Nath, who was seen as moving slow on boosting infrastructure. Ashwani Kumar is new Ministers of State, Planning and Parliamentary Affairs and Science and Technology and Earth Sciences. K C Venugopal is new Ministers of State, Power.

Ajay Maken and K V Thomas have been elevated as Ministers of State with independent charge. Beni Prasad Verma has been inducted as MoS with Independent Charge. M S Gill has been moved from Sports and Youth Affairs Ministry to Statistics and Programme Implementation. Virbhadra Singh shifted from Steel to Micro, Small and Medium Enterprises while Vilasrao Deshmukh has been shifted from Heavy Industries and Public Enterprises to Rural Development with additional charge of Panchayati Raj.

The cabinet reshuffle was seen as Prime Minister Manmohan Singh's mid-term effort to refresh a coalition government snared by corruption scandals and year-high food inflation as it faces key state elections.

European stock markets reversed initial gains on Wednesday as profit taking emerged after a recent surge. The key benchmark indices in France, Germany and UK shed by between 0.13% to 0.42%.

Asian stock markets were mostly higher Wednesday, with many technology shares rising around the region after upbeat results from Apple and International Business Machines. The key benchmark indices in China, Hong Kong, Japan, South Korea, and Taiwan rose by between 0.36% to 1.86%. However, Singapore's Straits Times fell 0.23% and Indonesia's Jakarta Composite fell 0.88%.

US stocks shook off concerns on Tuesday, 18 January 2011, surrounding Apple Inc, which was hit by news of Chief Executive Steve Jobs' medical leave, helped by strong earnings for the iPhone and iPad maker whose share rose more than 4 percent in extended trade. Optimism about earnings has helped bolster US stocks in recent weeks, fuelling hopes that the world's No.1 economy could return to a sustainable recovery path.

Trading in US index futures indicated that the Dow could fall 9 points at the opening bell on Wednesday, 19 January 2011.

Back home, the initial Q3 earnings have been a mixed bag. After disappointing Q3 results from IT bellwether Infosys, which also gave a muted guidance for Q4 March 2011, IT giant TCS reported stronger-than-expected results. Housing finance major HDFC came out with decent Q3 results, which also showed asset quality remain strong. Engineering & construction major L&T expects revenue growth to remain strong over the medium term on a healthy order book. The company also said while it is facing a substantial increase in the cost of raw materials such as steel and copper, margins are expected to remain healthy. Private sector bank Axis Bank has reported strong Q3 results, with asset quality remaining healthy.

On the macro front, high food prices have raised fears of aggressive hike in policy rates by the central bank in 2011. As per a poll by Capital Market, economists widely expect 25 basis points increase each in repo rate and reverse repo rate at 25 January 2010 policy review. Reserve Bank of India governor Duvvuri Subbarao said on Monday, 17 January 2011, that the country is facing surging inflation and that the RBI needs to calibrate monetary policy in order to manage inflation and also support growth.

The wholesale price index (WPI) rose an annual 8.43% in December 2010 on higher food prices, government data showed on Friday, 14 January 2011. The annual reading for October 2010 was revised upwards to 9.12% from 8.58%. Rising food and commodity prices are major challenges facing the government, Finance Minister Pranab Mukherjee said on Friday, 14 January 2011. Finance Secretary Ashok Chawla said on Monday, 17 January 2011, inflation is expected to ease to around 6.5% by end-March 2011.

The BSE 30-share Sensex was down 113.73 points or 0.6% to 18,978.32. The index rose 75.01 points at the day's high of 19,167.06 in early afternoon trade. The index fell 193.49 points at the day's low of 18,898.56 in late trade.

The S&P CNX Nifty was down 33 points or 0.58% at 5,691.05.

The BSE Mid-Cap index rose 0.15%. The BSE Small-Cap index gained 0.09%. Both these indices outperformed the Sensex.

The market breadth, indicating the health of the market, was positive. On BSE, 1,447 shares advanced while 1,432 shares declined. A total of 116 shares remained unchanged. The breadth was much stronger earlier in the day.

Among the 30-member Sensex pack, 21 declined while the rest rose.

BSE clocked turnover of Rs 3463 crore, higher than Rs 3055.47 crore on Tuesday, 18 January 2011.

Index heavyweight Reliance Industries (RIL) fell 1.32% to Rs 981.50. The stock came off the day's high of Rs 1004.90. The company announces Q3 result on Friday, 21 January 2011. Reliance Industries and US-based Atlas Energy are reportedly exploring options for expanding their shale gas joint venture to new geographies including Canada and Australia.

India's top engineering and construction firm by sales Larsen & Toubro fell 1.87%. The stock has been under pressure last few days as its operating margin in the third quarter declined to 10.8% from 12.4% in Q3 December 2009. The company said profit after tax, excluding exceptional and extra-ordinary rose 16% to Rs 811 crore in Q3 December 2010 over Q3 December 2009. The company announced the results during market hours on Monday, 17 January 2011.

The order book of Rs 114882 crore at end December 2010 is 3.13 times the company's year ended March 2010 sales of Rs 36675.15 crore, giving strong revenue visibility.

Among other capital goods stocks, Bhel, Siemens, Praj Industries and ABB declined by between 0.52% to 1.56%.

TCS declined 0.58% on profit taking after jumping 5.48% on Tuesday after reporting forecast-beating Q3 result. The stock hit record high of Rs 1,208.65 today. On a consolidated basis, net profit rose 9.25% to Rs 2369.83 crore on 5.35% increase in total income to Rs 9857.56 crore in Q3 December 2010 over Q2 September 2010. The result was announced after trading hours on Monday, 17 January 2011.

India's third largest IT exporter by sales Wipro fell 0.85%. The company announces its Q3 December 2010 results on Friday, 21 January 2011.

IT bellwether Infosys declined 1.99%. Consolidated net profit rose 2.5% to Rs 1,780 crore on 2.3% rise in revenues to Rs 7106 crore in Q3 December 2010 over Q2 September 2010 as per International Financial Reporting Standards. The result was announced on Thursday 13 January 2011.

FMCG stocks edged lower. ITC, Hindustan Unilever, Dabur India and United Spirits fell by between 0.31% to 2.35%.

Consumer durables stocks, reversed initial gains. Gitanjali Gems, Rajesh Exports, Videocon Industries and Titan Industries declined by between 0.11% to 2.52%.

HCL Technologies jumped 4.04% after its forecast beating Q2 result. Net profit jumped 46.74% to Rs 285.97 crore on 10.06% increase in revenue to Rs 1649.06 crore in Q2 December 2010 over Q1 September 2010. The company announced Q2 result before market hours today.

Metal stocks rose, tracking higher base metal prices. JSW Steel, Sterlite Industries, Hindalco Industries, Jindal Steel & Power and Steel Authority of India rose by between 2.63% to 4.76%. London copper prices rose to a record high today, 19 January 2011, extending the previous session's 0.7% gains, lifted by a fall in the dollar and positive US earnings expectations. Three-month copper on the London Metals Exchange rose $63 to $9,763 a tonne, a record high for the metal, while Shanghai futures rose 1% to 72,820 yuan, their strongest since May 2007.

Tata Steel gained 1.16% after the company on Tuesday, 18 January 2011, finalised allocation of 83.25 lakh equity shares to anchor investors at Rs 610 per share, the top end of the Rs 594-610 price band for a follow-on public offer (FPO).

The company's FPO received bids for 93.41 lakh shares by 16:00 IST, compared with 4.86 crore shares on offer, data on NSE showed. The FPO closes on Friday, 21 January 2011. The price band for the FPO has been set at Rs 594-610 a share.

Hindustan Zinc fell 0.78%. The company's net profit rose 12.26% to Rs 1289.58 crore on 19.22% rise in total income to Rs 2837.26 crore in Q3 December 2010 over Q3 December 2009. The company's board also announced 1:1 bonus issue and a 5-for-1 stock split.

Telecom stocks reversed initial gains. Reliance Communications and Bharti Airtel shed 0.87% and 0.13% respectively.

Interest rate sensitive banking stocks were mixed. India's largest bank by net profit and branch network State Bank of India (SBI) fell 1.86%. The bank announces Q3 result on Saturday, 22 January 2011. India's second largest private sector bank by net profit HDFC Bank declined 1.48%. India's largest private sector bank by market capitalisation ICICI Bank rose 1.24%.

Axis Bank rose 0.14%, extending last two days' gains triggered by strong Q3 results. Net profit rose 35.88% to Rs 891.36 crore on 28.78% increase in total income to Rs 4986.02 crore in Q3 December 2010 over Q3 December 2009. The result was announced during trading hours on Monday, 17 January 2011.

Auto shares were mixed. Bajaj Auto rose 1.96% to Rs 1319.65 on good Q3 results. The stock came off the day's low of Rs 1274.70. Net profit rose 40.40% to Rs 667.11 crore on 28.40% increase in total income to Rs 4276.54 crore in Q3 December 2010 over Q3 December 2009. The result was announced during trading hours today, 19 January 2011.

India's largest truck maker by sales Tata Motors declined 0.44%. The company's global sales surged 21% to 90,294 units in December 2010 over December 2009. On a sequential basis, however, sales were up 13%. Sales growth was led by strong 29% and 13% growth in the commercial and passenger vehicles segments, respectively.

While Jaguar sales declined 10% to 4,332 units, Land Rover sales posted 4% growth to 17,021 units. Meanwhile, as per media reports, Tata Motors has bagged an order to sell 4,000 Jaguar and 36,000 Land Rover in China in 2011.

India's leading tractor maker by sales Mahindra & Mahindra gained 0.62%. The $7.1 billion Mahindra Group on Monday announced a new brand position -- Rise. This is the first time that Mahindra as a group, which spans from aerospace to automotive, from farm equipment to IT and logistics, will communicate with one brand voice, one face and one 'Mahindra' fore purpose, M&M said.

India's largest carmaker by sales Maruti Suzuki India shed 0.49%. India's top bike maker by sales Hero Honda Motors declined 1.46%.

Reliance Infrastructure jumped 2.71% on bargain hunting and was the top gainer from the Sensex pack. The stock had slumped during the last two days after the Securities and Exchange Board of India (Sebi) late last week passed a consent order with regard to its probe into possible violation of securities market norms by two Anil Dhirubhai Ambani group (ADAG) companies -- Reliance Infrastructure (R-Infra) and Reliance Natural Resources (RNRL).

As per the conditions of the settlement, the two ADAG firms -- R-Infra and RNRL would not be able to invest in any listed shares in the secondary market, other than mutual funds, until December 2012 and the individuals named in the case, which includes ADAG chairman Anil Ambani, cannot invest in secondary market untill December 2011. However, this condition will not apply to primary market issuances, buybacks and open offers. RNRL has been merged with Reliance Power.

Interest rate sensitive realty shares reversed initial losses. Indaibulls Real Estate, Unitech, DLF, and Ackruti City rose by between 0.59% to 3.13%.

Shree Ashtavinayak Cine Vision clocked highest volume of 8.45 crore shares on BSE. LIC Housing Finance (1.12 crore shares), Ispat Industries (88.44 lakh shares), Spectacle Infotek (66.41 lakh shares) and BAMPSL Securities (63.50 lakh shares) were the other volume toppers in that order.

Tata Coffee clocked highest turnover of Rs 274.97 crore on BSE. LIC Housing Finance (Rs 191.99 crore), State Bank of India (Rs 169.19 crore), Orchid Chemicals (Rs 129.36 crore) and Larsen & Toubro (Rs 97.19 crore) were the other turnover toppers in that order.