Market snaps two-day rally as world stocks drop

The key benchmark indices snapped two-day gains as weak global stocks sapped risk appetite. The BSE Sensex was down 114.63 points or 0.62%, up close to 105 points from the day's low and off close to 45 points from the day's high. The market breadth was weak. Reliance Anil Dhirubhai Ambani (ADA) Group stocks reversed intraday gains. Media reports after market hours suggested that the court has dismissed a plea for charging group chairman Anil Ambani in 2G scam. Metal and realty stocks also declined.

Index heavyweight Reliance Industries (RIL) edged higher. FMCG stocks also rose on rumours US-based Procter & Gamble is contemplating a 38 billion pound bid for its European rival Unilever. IT stocks declined on selling pressure. Banking pivotals were mixed.



The market edged lower in early trade on weak Asian stocks. A bout of volatility was witnessed as the key benchmark pared losses to hit fresh intraday highs in morning trade. Volatility continued as the key benchmark weakened again after recovering to hit fresh intraday highs in mid-morning trade. The Sensex hit fresh intraday high in early afternoon trade as index heavyweight Reliance Industries reversed initial losses. The key benchmark indices remained subdued in afternoon trade as European stocks fell in early trade. Volatility continued as the key benchmark indices cut losses in mid-afternoon trade.

The BSE Sensex was down 114.63 points or 0.62% to 18,494.18. The Sensex shed 68.14 points at the day's high of 18,540.67 in early afternoon trade. The index fell 218.24 points at the day's low of 18,390.57 in early trade.

The S&P CNX Nifty was down 41.65 points or 0.74% to 5,550.35.

The BSE Mid-Cap index fell 0.68% and the BSE Small-Cap index declined 0.78%. Both of these indices underperformed the Sensex.

The market breadth, indicating the health of the market, was weak. On BSE, 1,679 shares declined while 1,153 shares advanced. A total of 119 shares remained unchanged.

Among the 30-member Sensex pack, 21 stocks declined while rest of them gained.

BSE clocked turnover of Rs 2868 crore, higher than Rs 2711.85 on Wednesday, 1 June 2011.

Index heavyweight Reliance Industries (RIL) rose 0.54% to Rs 951.85, after gyrating between the day's high of Rs 954.50 and the day's low of Rs 937. Recent reports indicated RIL is buying regasified liquified natural gas (R-LNG) from Royal Dutch Shell and Petronet LNG at double the price. The move comes in the wake of shortage of natural gas from its D6 fields in the Krishna-Godavari (KG) basin.

Reliance ADA Group stocks tumbled. As per media reports which trickled in after market hours, the court has dismissed a plea for charging group chairman Anil Ambani in 2G scam. Reliance Infrastructure, Reliance Communications, Reliance Capital, Reliance MediaWorks, and Reliance Power fell by between 2.58% to 6.23%. Most of these stocks had risen earlier in the day, extending Wednesday's gains.

In April 2011, the Central Bureau of Investigation (CBI) filed a chargesheet against three officials of Reliance ADA Group with respect to 2G spectrum scam. Reliance Telecom, a unit of Reliance Communications (RCom) had later clarified that all the three executives were innocent and would defend themselves in the appropriate legal proceedings.

Bajaj Auto rose 2.22% after the company announced during market hours today that total sales rose 20% to 3.58 lakh units in May 2011 over May 2010. Exports rose 32% to 1.26 lakh units. Motorcycle sales rose 18% to 3.17 lakh units. Commercial vehicle sales rose 36% to 40,860 units.

India's largest motorcycle maker by sales Hero Honda Motors rose 0.53% after the company reported 14.7% increase in sales to 5,00,234 units in May 2011 over May 2010. The company unveiled the monthly sales data after trading hours on Wednesday.

India's top truck maker by sales Tata Motors slumped 2.01%, extending Wednesday's 1.19% slide triggered by weak passenger car sales data. Tata Motors' domestic passenger car sales declined 8.25% to 21,549 unit in May 2011 over May 2010. The passenger car sales include Tata and Fiat vehicles. Sales of commercial vehicles in the domestic market rose 19% to 37,361 units in May 2011 over May 2010. Tata Motors' total sales including exports of commercial and passenger vehicles rose 9.7% to 62,296 vehicles in May 2011 over May 2010.

India's largest car maker by sales Maruti Suzuki India fell 2.03%. The stock had risen 1.74% on Wednesday after the company said during market hours on that day that total sales rose 1.9% to 1.04 lakh units in May 2011 over May 2010. Domestic sales rose 3.9% to 93,519 units. Exports fell 13% to 10,554 units.

Mahindra & Mahindra (M&M) declined 2.19%. The company announced a 20% rise in its auto sales to 34,323 units in May 2011 over May 2010. The figures were announced during trading hours on Wednesday. Speaking on the May 2011 sales numbers, Rajesh Jejurikar, CEO, Automotive Division, M&M said, "We are happy with the 20% growth that we have clocked in May 2011. All our brands have been doing well, with the recently launched Verito having sold 1,290 vehicles, almost three times last May".

Jaiprakash Associates rose 0.52%, reversing initial losses after the company's cement shipments rose 3% to 1.37 million tonnes in May 2011 over May 2010.

ACC fell 1.27%. The company's shareholders have approved scheme of amalgamation of Lucky Minmat, National Limestone Company and Encore Cements and Additives Private into ACC.

Power equipment maker Bharat Heavy Electricals fell 0.89%. The company has secured an order worth Rs 62 crore to set up a five megawatt solar power plant in Karnataka.

Most FMCG stocks rose for the second straight day after data on Tuesday showed that farm output rose a strong 7.5% in Q4 March 2011. Tata Global Beverages, Dabur India, Colgate-Palmolive, Britannia Industries, Nestle, GlaxoSmithkline Consumer Healthcare and P&G Hygiene and Healthcare rose 0.36% to 3.06%.

FMCG giant Hindustan Unilever jumped 3.53% and was the top gainer from the Sensex pack on rumours US-based Procter & Gamble is contemplating a 38 billion pound bid for its European rival Unilever.

Cigarette major ITC rose 0.77% to Rs 195.40. The stock hit record high of Rs 197.75 today.

Metal and mining stocks fell as LMEX, a gauge of six metals traded on the London Metal Exchange, declined 1.01% on Wednesday, 1 June 2011. Sesa Goa, Nalco, NMDC, Hindalco Industries, Tata Steel, Hindustan Zinc, Sterlite Industries, and Jindal Steel & Power skidded by between 0.65% to 2.99%.

Realty stocks declined on profit taking after recent gains. Indiabulls Real Estate, DLF, Unitech, HDIL and Phoenix Mills shed by between 0.25% to 3.14%.

Banking pivotals were mixed. India's second largest private sector bank by net profit HDFC Bank declined 1.27% as the stock turned ex-dividend today, 2 June 2011, for dividend of Rs 16.50 per share for the year ended March 2011.

India's largest private sector bank by net profit ICICI Bank fell 3.1% as the stock turned ex-dividend today, 2 June 2011, for dividend of Rs 14 per share for the year ended March 2011.

India's largest commercial bank by branch network State Bank of India (SBI) rose 0.14% in volatile trade.

Tata Power Company rose 0.38% after the company said during market hours today that it has successfully completed its offering of Perpetual Debentures of Rs 1500 crore. The unique features of these debentures are that they are perpetual in nature with no maturity or redemption and are callable only at the option of the company. These debentures will be listed on the National Stock Exchange.

IT stocks edged lower. India's second largest software services exporter Infosys shed 0.33%, halting two-day gains. The IT firm recently 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.

India's largest software services exporter TCS fell 0.88%, with the stock snapping five-day gains. The company announced during market hours on Wednesday said Ahli Brokerage QSC has selected company's TCS BaNCS product to extend its brokerage footprint in the Middle East.

India's third largest software exporter Wipro declined 1.18%, with the stock snapping four-day gains. The company announced after market hours on Wednesday that the Jammu and Kashmir state government has selected the company for automating its state power distribution department.

Sun TV Network slumped 27.9% on reports the Central Bureau of Investigation will question former Telecom Minister Dayanidhi Maran over his alleged role in the 2G spectrum allocation scam. Dayanidhi Maran is currently textile minister in the UPA-II government after serving as telecom minister in the UPA-I government. Dayanidhi Maran is the brother of Kalanidhi Maran, the chairman and managing director of Sun TV Network.

SpiceJet tumbled 16.06%. Kalanithi Maran bought control over SpiceJet by buying stake from its original promoter Bhupendra Kansagra and distressed-assets buyout specialist Wilbur L. Ross in 2010 for around Rs 750 crore. Kalanithi Maran holds a 38.61% stake in SpiceJet through Kal Airways as at end March 2011 and is the chairman of SpiceJet.

SpiceJet clocked highest volume of 2.98 crore shares on BSE. Sun TV Network (1.15 crore shares), Sanraa Media (83.35 lakh shares), Cals Refineries (73.22 lakh shares) and Tata Tele Maharashtra (69.71 lakh shares) were the other volume toppers in that order.

Sun TV Network clocked highest turnover of Rs 314.41 crore on BSE. State Bank of India (Rs 110.58 crore), SpiceJet (Rs 102.87 crore), VIP Industries (Rs 93.17 crore) and Reliance Capital (Rs 84.10 crore) were the other turnover toppers in that order.

The food price index rose 8.06% in the year to 21 May 2011, government data showed on Thursday, slowing down from an annual rise of 8.55% a week ago. The fuel price index climbed 12.54% compared with a rise of 12.11% a week earlier. The primary articles price index was up 10.87% compared with an annual rise of 11.60% a week earlier.

The infrastructure sector output grew 5.2% in April from a year earlier, slower than an annual growth of 7.4% in March, government data showed on Wednesday. The infrastructure sector accounts for 26.7% of India's industrial output.

Growth in India's manufacturing sector eased slightly in May as the pace of new orders slowed, but factories' input and output prices continued to rise sharply. The HSBC Markit Purchasing Managers' Index, based on a survey of around 500 companies, edged down to 57.5 in May from 58.0 in April, weighed down by a slower expansion rate for new orders and a labour shortage.

The Indian economy grew by a slower-than-expected 7.8% in Q4 March 2011 and also slower than a revised 8.3% growth in Q3 December 2010, data showed on Tuesday. The manufacturing sector output rose 5.5% and farm output rose 7.5% in Q4 March 2011. The GDP grew 8.5% in the fiscal year ended March 2011, higher than 8% growth in the previous fiscal year.

The annual monsoon rains have hit Kerala two days earlier than expected this year, boosting prospects for a harvest that could spur Asia's third-largest economy. The India Meteorological Department (IMD) has predicted the southwest monsoon 2011 to be 98% (normal) of the long period average (LPA) with a model error of plus/minus 5%. IMD has indicated that there is very low probability for the season rainfall to be deficient (below 90% of LPA) or excess (above 110% of LPA).

Good rains would help ease food inflation and boost rural income. Rainfall that comes within 96% to 104% of the long-term average is considered a normal monsoon season, but this alone doesn't guarantee a good crop. The timing and spread of the rains are equally important. The quantity and geographical spread of rainfall during the monsoon season is crucial for India's agriculture sector, which lacks irrigation facilities on more than half its farm land. Monsoon rains usually enter India's mainland through the southern state of Kerala in the first week of June, gradually progressing to cover most of central and northern India by July, before retreating in September.

European stocks fell on Thursday, with banks especially responding negatively to a fresh downgrade on Greek sovereign debt, while heavy losses overnight for Wall Street also weighed on sentiment. The key benchmark indices in UK, Germany and France were down by between 0.7% to 0.98%.

Moody's Investors Service on Wednesday, 1 June 2011, downgraded Greece's sovereign credit rating. An increased risk that Greece will fail to stabilize its debt position as well as an increased likelihood that Greece's supporters will at some point demand the participation of private creditors in a debt restructuring triggered the rating cut, Moody's said.

Asian stocks skidded on Thursday after some very weak US data raised questions about future demand for Asian exports as well as the likely trajectory of economic growth. The key benchmark indices in China, Hong Kong, Japan, Singapore, South Korea and Taiwan fell by between 0.39% to 1.69%.

Trading in US index futures indicated that the Dow could gain 24 points at the opening bell on Thursday, 2 June 2011. A key data due in the near term is US non-farm payroll for May 2011 on Friday, 3 June 2011. Economists have been cutting their forecasts for non-farm payrolls in the wake of Wednesday's disappointing data on private-sector hiring in the month just gone by.

The Federal Reserve's second round of quantitative easing or QE2, a temporary policy designed to increase the money supply, keep interest rates low and stimulate the economy, ends on 30 June 2011.