Market recovers from 12-week low

The market staged a rebound from 12-week low as world stocks recovered. Volatility was high as traders rolled over positions in the derivatives segment from the near-month May 2011 series to June 2011 series. The May 2011 derivatives contracts expired on Thursday, 26 May 2011.

The Sensex declined lost 59.99 points or 0.33% to settle at 18,266.10 in the week ended Friday, 27 May 2011. The Nifty shed 10.25 points or 0.18% to 5,476.10. The BSE Mid-Cap index shed 0.39% and the BSE Small-Cap index shed 0.92%. Both these indices underperformed the Sensex.



Trading for the week began on a weak note as the key benchmark indices hit 9-week lows on Monday, 23 May 2011, with a setback in world stocks caused by euro zone debt worries hitting sentiment. The BSE 30-share Sensex lost 332.76 points or 1.82% to 17,993.33, its lowest closing level since 22 March 2011.

Firm global markets helped Indian stocks recover on Tuesday, 24 May 2011. The BSE 30-share Sensex gained 18.64 points or 0.1% to 18,011.97.

The market weakened once again on Wednesday, 25 May 2011. The Sensex lost 164.73 points or 0.91% to 17,847.24, its lowest closing level since 21 March 2011. The S&P CNX Nifty lost 45.90 points or 0.85% to 5,348.95, its lowest closing level since 28 February 2011.

The key benchmark indices surged in a volatile trading session on Thursday, 26 May 27, 2011, as world stocks rose. The BSE Sensex jumped 197.40 points or 1.11% to 18,044.64.

The key benchmark indices extended gains for the second straight day to hit one-week high on Friday, 27 May 2011, buoyed by firm global stocks. The BSE Sensex jumped 221.46 points or 1.23% to 18,266.10, its highest closing level since 20 May 2011.

State-run Bharat Heavy Electricals (Bhel) slumped 6.67% to Rs 1936 during the week on worries of pricing of the proposed follow-on-public offer at a discount to the ruling market price. The company's board on Monday recommended disinvestment of 5% government stake. Usually, a large follow-on public offer from a state-run firm is priced at a discount to the ruling market price to attract investors. Government of India holds 67.72% stake in Bhel (as at end March 2011).

Bhel's board of directors recommended a 5-for-1 stock split at the time of announcement of Q4 March 2011 results. Bhel's net profit jumped 46.5% to Rs 2798.04 crore on 32.17% growth in net sales/income from operations to Rs 17921.43 crore in Q4 March 2011 over Q4 March 2010. Net profit rose 39.4% to Rs 6011.20 crore on 26.4% growth in net sales/income from operations to Rs 41578.80 crore in the year ended March 2011 (FY 2011) over the year ended March 2010 (FY 2010).

India's largest commercial bank by branch network State Bank of India (SBI) dropped 3.77% to Rs 2,234.50 on weak Q4 results. Net profit slumped 98.88% to Rs 20.88 crore on 18.07% rise in total income to Rs 26536.84 crore in Q4 March 2011 over Q4 March 2010. The result was announced on 17 May 2011.

Cigarette major ITC rose 1.78% to Rs 189.10 on strong Q4 results unveiled on 20 May 2011.

Realty major DLF shed 1.08% to Rs 225.20 after reporting poor Q4 results. Consolidated net profit fell 19.19% to Rs 344.54 crore on 34.53% rise in sales and other receipts to Rs 2683.09 crore in Q4 March 2011 over Q4 March 2010. The result was announced after trading hours on Tuesday, 24 May 2011.

DLF said it is focusing on high margin residential projects. In the commercial leasing segment, the company's strategy is to increase average rentals and focus on leasing of semi-finished and ready-to-occupy properties. DLF also said it intends to strengthen operational cash flows and enhance momentum on non-core divestments. The company said it will moderate investments in land aggregation and capex. DLF said it has raised its overall target for asset divestments to Rs 10000 crore from Rs 4500 crore (ex wind power) previously.

DLF said the genuine actual user consumer/corporate demand both in both the residential and commercial leasing segments continues to be healthy. However, speculative demand has petered out and investment demand has slowed down considerably as the financing cost equation has changed for the worse, the realty major said. DLF said product pricing by developers will be done keeping the current/future inflationary trends in mind in an attempt to retain product profitability/margins.

ONGC rose 3.27% to Rs 283 on reports the subsidy share of upstream oil companies for the year ending March 2012 (FY 2012) will be restored to 33% from 38.5% in the year ended March 2011 (FY 2011). The ONGC stock had tumbled recently after the government increased the subsidy burden of upstream oil companies on fuel sales to 38.5% from 33% earlier.

Tata Steel rose 1.21% to Rs 585.35 after reporting turnaround results for the year ended March 2011 (FY 2011). The company reported consolidated net profit of Rs 8982.69 crore for the year ended March 2011 compared with a net loss of Rs 2099.22 crore for the year ended March 2010. Total income rose 15.59% to Rs 119734.10 crore in the year ended March 2011 over the year ended March 2010. The result was announced after trading hours on Wednesday.

IT bellwether Infosys shed 2.2% to Rs 2787.95 after the firm on Tuesday said it had received a subpoena from a grand jury in a US district court that requires the company to provide certain documents and records related the company's sponsorships for and uses of B1 business visas. Infosys said it intends to comply with the subpoena and to cooperate with the investigation.

Hindalco Industries rose 2.7% to Rs 197.50 after the company's US subsidiary Novelis reported turnaround Q4 March 2011 results. Novelis reported net profit of $50 million for Q4 March 2011 as against a net loss of $1 million for Q4 March 2010. Top-line jumped 22.3% to $2.96 billion in Q4 March 2011 over Q4 March 2010. The turnaround result was largely due to higher prices and portfolio optimization.

Tata Motors slumped 6.8% to Rs 1088.65 after the commercial vehicles (CV) major said current macro economic factors like high inflation, rising interest rates and slower industrial growth have the potential to adversely impact CV demand. The company also said that commodity prices and concerns about rising costs continue for the CV division.

With regard to the outlook on its British unit Jaguar Land Rover (JLR), Tata Motors said it will continue to work on profitable volume growth, managing costs and improving efficiencies to sustain the growth momentum. The company said it will emphasis on growth markets viz. China, Russia, India and Brazil for the two luxury brands -- Jaguar and Land Rover. The company said external geopolitical and economic factors including exchange rate, could impact volumes and profitability of JLR going ahead.

Reliance Communications (RCom) rose 1.37% to Rs 85 after the company said it has drawn the third and final tranche of Rs 1200 crore from China Development Bank. RCom said the Chinese loan will help it refinance short-term rupee borrowings, which will result in substantial saving in interest costs apart from extending the company's debt maturity profile.

Index heavyweight Reliance Industries rose 2.7% to Rs 946.30 during the week. Another index heavyweight ICICI Bank gained 2.37% to Rs 1069.