BSE Small-Cap, Mid-Cap indices outperform Sensex

The key benchmark indices registered small gains in volatile trade as crude oil prices traded off 29-month highs hit recently, which helped ease inflation concerns. Also lifting sentiment, the Congress and DMK on Tuesday, 8 March 2011, clinched a seat sharing deal for the forthcoming assembly polls in Tamil Nadu (TN), ending a crisis that threatened to slow planned reforms by the Congress-led United Progressive Alliance (UPA) coalition government at the Centre. The BSE 30-share Sensex was up 30.30 points or 0.16%, up close to 165 points from the day's low and off close to 115 points from the day's high. The 50-unit S&P CNX Nifty closed above the psychological 5,500 level after sliding below that level in intraday trade. The market gained for the second straight day.



The BSE Small-Cap and Mid-Cap indices outperformed the Sensex, as several side counters rose. The market breadth was positive. Index heavyweight Reliance Industries (RIL) rose close to 1% in volatile trade on reports of higher gas output from the D6 block in Krishna-Godavari basin by April this year. Reliance Communications (RCom) surged over 9% on huge volumes ahead of an announcement just after trading hours China Development Bank has signed final documentation for fully underwriting over Rs 8700 crore ($1.93 billion) loan facility for the company.

Shree Global Tradefin (up 20%), Mcleod Russel (up 8.64%), Cox & Kings (up 6.82%), Bajaj Finserv (up 6.54%) and Raymond (up 6.49%) were the top five gainers from the BSE Mid-Cap index in that order. Entegra (up 19.83%), Bhagwati Banquets & Hotels (up 13.04%), Tata Coffee (up 13.02%), Talwalkars Better Value Fitness (up 11.88%) and Midfield Industries (up 9.96%) were the top five gainers from BSE Small-Cap index in that order.

The market opened on a firm note as political worries abated, with the Congress and DMK on Tuesday, 8 March 2011, clinching a seat sharing deal for the forthcoming assembly polls in Tamil Nadu (TN). Stocks erased almost all the initial gains in morning trade as Asian stocks came off highs. The market slipped into the red in mid-morning trade. The market recovered in early afternoon trade after sliding to the day's lows, as RIL bounced back in choppy trade.

The market moved between positive and negative zone near the flat line later. The Sensex moved into the green in afternoon trade. The market held positive zone in mid-afternoon trade. A bout of volatility was witnessed as the market pared gains in late trade.

The BSE 30-share Sensex was up 30.30 points or 0.16% to 18,469.95. The Sensex gained 143.65 points at the day's high of 18,583.30 in early trade. The index lost 135.85 points at the day's low of 18,303.80 in early afternoon trade.

The S&P CNX Nifty was up 10.20 points or 0.18% to 5,531. The Nifty swung between 5,563.30 and 5,477.45 during the day.

The BSE Mid-Cap index rose 0.65% and the BSE Small-Cap index gained 0.82%. Both these indices outperformed the Sensex.

Most of the sectoral indices on BSE were in the green. The BSE Realty index (up 1.74%), Consumer Durables index (up 0.88%), Auto index (up 0.72%), Power index (up 0.48%), Capital Goods index (up 0.4%), Oil & Gas index (up 0.32%), Metal index (up 0.26%) and Bankex (up 0.25%), outperformed the Sensex.

The BSE Healthcare index (down 0.36%), IT index (down 0.14%), TECk index (up 0.02%), FMCG index (up 0.04%) and PSU index (up 0.07%) underperformed the Sensex.

The market breadth, indicating the health of the market, was positive. On BSE, 1,641 shares gained while 1,230 shares declined. A total of 108 shares remained unchanged. The breadth was much stronger earlier in the day.

Among the 30-share Sensex pack, 16 gained while the rest of them declined.

Index heavyweight Reliance Industries (RIL) rose 0.97% to Rs 993.90 in volatile trade on reports gas output from the D6 block in Krishna-Godavari basin may touch 67 mmscmd (million metric standard cubic metres a day) in April 2011 from current 53 mmscmd. The stock had declined to day's low of Rs 968.10 in mid-morning trade on reports the stock market regulator Securities & Exchange Board of India has sent a show-cause notice to the firm on takeover code violation.

The Sebi notice relates to conversion of non-convertible debentures into equity shares by various founder entities. In 1999, RIL had issued shares to 38 entities related to the promoter groups through preferential allotment, which increased the total shareholding of the promoter group to over 38% from 22% earlier.

India's second largest listed cellular services provider by sales Reliance Communications (RCom) galloped 9.36% to Rs 99.30 on huge volume of 97.30 lakh shares and was the top gainer from the Sensex pack. The company announced after market hours today, 9 March 2011, that it completed final documentation with China Development Bank (CDB) for aggregate financing of Rs 8700 crore ($1.93 billon) with a maturity period of 10 years, which will result in an annual interest cost savings of more than Rs 500 crore.

Reliance Communications said the loan would be fully underwritten by China Development Bank and would be funded by a syndicate of Chinese banks and financial institutions including China Development Bank. The drawdown of the loan, which will be used for paying mobile spectrum fees and buying telecom equipment, is likely to start this month, the company said.

Other Reliance Anil Dhirubhai Ambani (ADA) group stocks also gained on momentum buying. Reliance Infrastructure (up 2.37%), Reliance Capital (up 3.76%) and Reliance Power (up 1.8%), gained.

India's largest listed cellular services provider by sales Bharti Airtel fell 0.57%. The company launched 3G services in Mumbai on Tuesday, 8 March 2011.

IT stocks showed mixed trend. India's third largest IT exporter by sales Wipro rose 0.31%, reversing initial losses. India's largest IT exporter by sales TCS rose 0.58%.

India's second largest software services exporter Infosys was down 0.62%. The company's chairman N.R. Narayana Murthy told a news agency that the firm is now on a constant hunt for acquisitions of tech firms that specialize in health care and government services.

India's top bike maker by sales Hero Honda Motors rose 1.01% to Rs 1,533.45 after gyrating between Rs 1,543.90 and Rs 1,490.60 in the day. Hero Investments during market hours on Monday, 8 March 2011, disclosed a steeply discounted price to buy Honda's 26% stake in Hero Honda. Hero Investments will buy Honda's 26% stake in Hero Honda at Rs 739.97 per share. The Hero Group had in December 2010 agreed to buy Honda's 26% stake in Hero Honda Motors for an undisclosed sum.

Other auto stocks were slightly higher as crude traded off 29-month high. India's second largest bike maker by sales Bajaj Auto rose 2.27%. India's largest tractor and utility vehicles maker by sales Mahindra & Mahindra (M&M) advanced 0.57% and India's top truck maker by sales Tata Motors gained 0.16%. India's largest car maker by sales Maruti Suzuki India gained 0.76%

Banking stocks were mixed. India's largest private sector bank by net profit ICICI Bank rose 1.24% after its ADR gained 2.3% on the NYSE on Tuesday, 8 March 2011.

India's second largest private sector bank by net profit HDFC Bank was flat. India's largest bank by net profit and branch network State Bank of India shed 0.45%.

PSU OMCs fell on reports state-run oil firms are unlikely to raise fuel prices before key state elections starting in April. BPCL, HPCL and Indian Oil Corporation fell by between 0.73% to 1.98%. Petrol prices are market-linked, but diesel, cooking gas and kerosene rates are set by the government, which partly compensates state oil firms for their losses when global crude oil prices increase.

Some interest rate sensitive realty stocks rose as easing crude oil prices receded worries of aggressive monetary action by the central bank to tame inflation. DB Realty, HDIL, Ackruti City, DLF, Indiabulls Real Estate and Unitech rose by between 0.12% to 3.99%.

The Reserve Bank of India is expected to raise key policy rates by 25 basis points at its mid-quarter policy review on 17 March 2011 as headline inflation remains high.

Metal stocks were also mixed. Steel Authority of India, Jindal Saw, National Aluminum Company, Hindalco Industries and JSW Steel rose by between 0.4% to 3.2%. Sterlite Industries, Jindal Steel & Power, Tata Steel and Hindustan Zinc fell by between 0.31% to 1.19%.

LMEX, a gauge of six metals traded on London Metal Exchange, rose 0.25% to $4,279.20 on Tuesday, 8 March 2011.

Tea stocks saw across the board surge in anticipation of price hike on a report the country's tea production fell by 23% to 20.93 million kilogram in January 2011 from a year ago mainly due to bad weather conditions in producing regions. Mcleod Russel India (up 8.64%), Assam Company (up 5.72%), Harrisons Malayalam (up 8.15%), Asian Tea & Exports (up 3.99%) gained.

Sanraa Media clocked highest volume of 2.17 crore shares on BSE. Reliance Communications (97.30 lakh shares), Cals Refineries (86.56 lakh shares), Unitech (64.85 lakh shares) and IFCI (62.19 lakh shares) were the other volume toppers in that order.

Tata Coffee clocked highest turnover of Rs 442.41 crore on BSE. Reliance Industries (Rs 175.62 crore), State Bank of India (Rs 113.56 crore), Bajaj Finserv (Rs 106.76 crore) and Reliance Communications (Rs 96.62 crore) were the other turnover toppers in that order.

Political worries that threatened to slow planned reforms abated after the Dravida Munnetra Kazhagam (DMK) and the Congress on Tuesday, 8 March 2011, clinched a deal, under which the Congress would contest 63 seats in next month's Tamil Nadu assembly elections. The Congress and the DMK were deadlocked on a deal over sharing of seats in the upcoming Tamil Nadu assembly elections following DMK's decision on Saturday, 5 March 2011, to pull out its ministers from the UPA Government over Congress attitude.

DMK said on Monday, 8 March 2011, that the resignations of the party's ministers were put on hold following a request by Finance Minister and a Congress party veteran Pranab Mukherjee to wait for one more day to sort out the differences. DMK is a key ally of the Congress-led UPA Government at the Centre with 18 members of parliament (MPs) in the current Lok Sabha.

The government plans to implement financial sector reforms. The Union Cabinet recently gave its approval for introduction of a Banking Laws Amendment Bill 2011 in Parliament. This Bill seeks to among other things lift the 10% voting rights cap in private sector banks and pave the way for the Reserve Bank of India to give some additional banking licences to private sector players. The proposed Bill will seek to amend the Banking Regulation Act, 1949, so as to remove the voting rights cap for private sector banks. The bill also proposes that an individual or institution can hold a more than 5% stake in a bank only after receiving approval from the central bank

Finance minister Pranab Mukherjee, in his Budget speech on 28 February 2011 had said the UPA government was committed to taking financial sector reforms further. He said the government planned to move on the Insurance Laws (Amendment) Bill 2008, Life Insurance Corporation (Amendment) Bill 2009, the revised Pension Fund Regulatory and Development Authority (PFRDA) bill, first introduced in 2005 and the Banking Regulation (Amendment) Bill 2011, among others.

Insurance Laws (Amendment) Bill 2008 seeks to hike the foreign direct investment cap in the insurance sector, currently pegged at 26%, while the PFRDA Bill would give a legal backing to the interim regulator -- the PFRDA. The bill on LIC seeks to raise the capital base of the entity to Rs 100 crore from the existing Rs 5 crore.

US crude futures were down 22 cents a barrel or 0.21% to $104.80 a barrel on talk that Organisation of Petroleum Exporting Countries (Opec) could step up production. The unrest in North Africa and Middle East has pushed global crude prices to their highest levels since 2008 as markets factored in a disruption in supplies from Libya and potentially other major producers. High crude oil prices remain a cause for concern for India which imports majority of its crude oil requirements.

The fourth advance tax payment installment due 15 March 2011 will provide a cue on Q4 results of individual firms. Indian corporates are required to pay advance tax in four installments based on estimated tax liability for the year under review.

The Central Statistical Organisation (CSO) will unveil the industrial production data for January 2011 on Friday, 11 March 2011. Industrial production growth eased to a 22-month low of 1.6% in December 2010 from an upwardly revised growth of 3.6% recorded in November 2010.

Most Asian stocks edged higher on Wednesday, 9 March 2011, after oil prices retreated and Japanese machinery orders rose more than expected in January 2011. The key benchmark indices in Hong Kong, Japan, Taiwan, China, South Korea and Indonesia were up by between 0.03% to 0.61%. Singapore's Straits Times fell 0.35%.

Japan's machinery orders increased 4.2% in January 2011 from December 2010, signaling that companies will boost spending as economic recoveries abroad strengthen.

US stocks gained ground Tuesday amid hopes on Wall Street that OPEC would increase oil production to make up for lost production in Libya. The Dow Jones Industrial Average jumped 124.35 points, or 1.03%, to 12,214.38. The Standard and Poor's 500 Index gained 11.69 points, or 0.89%, to 1,321.82 and the Nasdaq Composite Index added 20.14 points, or 0.73%, to 2,765.77.

Trading in US index futures indicated that the Dow could rise 20 points at the opening bell on Wednesday, 9 March 2011.

India dedicated equity funds attracted $50 million in net new cash in the week ended 2 March 2011, latest data from global fund tracker EPFR Global showed.

A good news for India is that that the south-west monsoon is likely to be normal for the second straight year in 2011. Good rains would boost farm output that could help the government tame high food prices. Good rains will boost rural income. The India Meteorological Department (IMD) will come out with its first forecast on this year's monsoon season in April 2011 with periodic reviews as the four-month season progresses.

Global rating firm Moody's on Monday, 7 March 2011, said India's recent budget plan for fiscal 2012 is "credit positive" for the Indian government's current Baa3 rating with a stable outlook. The budget projects a deficit of 4.9% of GDP, excluding privatization revenues, down from the 5.3% estimated for fiscal 2011. "This will sustain a faster de-leveraging of government debt than originally forecast, and is credit positive for the Indian government," Moody's said.

Among the positive factors, Moody's cited a liberalization of domestic petroleum prices and one-off price increases in kerosene and liquefied petroleum gas which support the profitability of oil marketing companies, thereby limiting the need to lend to public-sector oil companies. "Nevertheless, high oil prices still pose a risk to the projected budget deficit given the absence of a full or much greater pass through of global oil prices to end users," the rating agency said.