BSE Mid-Cap, Small-Cap indices extend winning streak

Key benchmarks indices registered losses on the first day of the month and the quarter as investors resorted to profit taking after recent sharp surge in share prices. Index heavyweights Reliance Industries (RIL), Bharti Airtel and Larsen & Toubro led the decline. The BSE Sensex fell 83.07 points or 0.44%, up close to 50 points from the day's low and off close to 269 points from the day's high. The Small-Cap and Mid-Cap indices on BSE rose, extending their recent rally. The market breadth was positive.

RIL fell almost 4% on reports the Central Bureau of Investigation (CBI) today, 1 July 2011, searched the house V.K. Sibal, the former chief of the Directorate General of Hydrocarbons, the upstream regulator, after the state auditor said in a report there may have been inflated costs for some of RIL's exploration activities.



FMCG giant Hindustan Unilever (HUL) also dropped on profit taking. Though HUL dropped, many other FMCG stocks rose, extending their recent gains triggered by expectations that a strong monsoon will boost demand from rural areas and also reduce input prices. IT shares rose on expectations of good Q1 June 2011 results. Auto shares fell as data on vehicle sales for June 2011 trickled in. Cement shares rose after ACC reported higher cement dispatches for the month just gone by. Multiplex shares rose on expectation of a good weekend ticket collection with three big-ticket movies releasing today, 1 July 2011.

The barometer index BSE Sensex pared gains after a firm start took it to 8-1/2-week high above the psychological 19,000 level. The market came off lows later. The market pared gains in mid-morning trade as index heavyweight Reliance Industries (RIL) declined. The market slipped into the red later. A bout of volatility was witnessed as the key benchmark indices came off intraday lows early afternoon trade. The market hit a fresh intraday low in afternoon trade as index heavyweight Reliance Industries (RIL) slumped. A bout of volatility was witnessed as the key benchmark indices came off intraday lows in mid-afternoon trade.

The BSE Sensex fell 83.07 points or 0.44% to settle at 18,762.80. The index fell 132.80 points at the day's low of 18,713.07 in afternoon trade, its lowest level since 29 June 2011. The Sensex jumped 185.51 points at the day's high of 19,031.38 in early trade, its highest level since 2 May 2011.

The S&P CNX Nifty was down 20.20 points or 0.36% to 5,627.20. The Nifty hit high of 5,705.80 in intraday trade, its highest level since 3 May 2011.

The BSE Mid-Cap index was up 0.69% and the BSE Small-Cap index rose 0.83%. Both these indices outperformed the Sensex.

The BSE Mid-Cap has risen 5.79% in six sessions from a recent low of 6,524.21 on 23 June 2011. The BSE Small-Cap has risen 5.69% in six sessions from a recent low of 7,781.94 on 23 June 2011.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,700 shares advanced while 1,152 shares declined. A total of 132 shares remained unchanged.

BSE clocked turnover of Rs 2737 crore, higher than Rs 2685.29 crore on Thursday, 30 June 2011.

Among the 30-member Sensex pack, 17 stocks rose while the rest of them fell.

Index heavyweight Reliance Industries (RIL) fell 3.95% to Rs 862.15 on reports the Central Bureau of Investigation (CBI) today, 1 July 2011, searched the house V.K. Sibal, the former chief of the Directorate General of Hydrocarbons, the upstream regulator, after the state auditor said in a report there may have been inflated costs for some of Reliance Industries' exploration activities. Sibal was the chief of the Directorate General of Hydrocarbons when the costs were approved.

The RIL stock had witnessed a sell-off recently following reports a government watchdog has accused the Oil Ministry for favouring RIL by allowing it to double the development cost of its KG-D6 gas field. The stock had hit a 52-week low of Rs 829 in intraday trade on 20 June 2011. As per recent reports, a draft report of the Comptroller and Auditor General of India (CAG) has questioned the decision of the oil ministry and its technical arm, the Director General of Hydrocarbons (DGH), to allow RIL to raise the development cost of RIL's KG-D6 field.

RIL had clarified that it has fully complied with the requirements in its production-sharing contract at all times in conducting petroleum operations.

RIL's advance tax payment reportedly jumped 38.46% to Rs 900 crore in Q1 June 2011 over Q1 June 2010. Higher advance tax payment normally indicates higher profit for the period under review.

India's largest listed mobile operator by sales Bharti Airtel tumbled 2.99% to Rs 383.45 on profit taking.

Cipla (down 1.24%), Tata Steel (down 1.10%), Larsen & Toubro (down 0.82%), NTPC (down 0.45%), HDFC (down 0.30%), HDFC Bank (down 0.23%) and Jindal Steel & Power (down 0.18%), edged lower from the Sensex pack.

Oil and Natural Gas Corporation (ONGC) rose 0.86% to Rs 276.30, off day's high of Rs 290.55. The firm's earnings will get a boost if Cairn Energy and Vedanta Resources accept the conditions set by the government for the Cairn India deal. The Cabinet Committee on Economic Affairs (CCEA) on Thursday, 30 June 2011, granted conditional approval to Vedanta Resources' plan to buy British oil explorer Cairn Energy's Indian assets. CCEA approved the deal subject to the condition that Cairn India has to equally and retroactively share royalty payments with Oil and Natural Gas Corporation (ONGC) on crude-oil production from its main oil-producing block in Rajasthan, reports suggest.

ONGC, which holds a 30% stake in the block, currently pays the entire royalty under rules that had been meant to attract foreign investment in the oil-and-gas sector. Cairn India with the remaining 70% stake is the operator of the block. Shares of Cairn India jumped 4.81% to Rs 325.70.

Hindalco Industries (up 2.98%), Reliance Communications (up 1.78%), Sterlite Industries (up 1.22%), Bajaj Auto (up 1.05%), Hero Honda Motors (up 1.05%) and Reliance Infrastructures (up 1.05%), edged higher from the Sensex pack.

IT shares rose on renewed buying. MphasiS (up 1.76%), Oracle Financial Services (up 0.97%), Infosys (up 0.93%), Mahindra Satyam (up 0.89%), TCS (up 0.51%), Rolta India (up 0.47%), HCL Technologies (up 0.24%) and Patni Computer (up 0.08%), rose.

The National Association of Software and Services Companies (Nasscom), last week, reiterated its forecast of a 16%-18% growth in export revenue for IT outsourcing services in this fiscal year that began on 1 April 2011.

India's third-largest information technology (IT) services firm by sales Wipro inched up 1.05% on reports the company is now eligible to participate in various World Bank projects; a four-year ban on the company in 2007 has expired. However, according to reports, the company has to reapply to become a vendor of the bank, which will be decided based on the eligibility criteria and other norms. Earlier, the World Bank had slapped a four-year ban on Wipro from doing business with the group under its corporate procurement programme for providing improper benefits to the bank's staff.

Realty shares rose on value buying. Peninsula Land, Indiabulls Real Estate, HDIL, Sobha Developers, Phoenix Mills, Unitech, Ackruti City, Mahindra Life Space Developers, Orbit Corporation and Godrej Properties rose by 0.64% to 5.06%.

The ASK Group recently raised Rs 520 crore through the first close of its second real-estate fund. The fund will invest in urban and suburban projects up to 12 months ahead of the projects' launch.

Real estate developer DLF rose 4.65% to Rs 220.35 on reports the company plans to sell its shareholding in two IT special economic zones in Pune and Noida for Rs 1300 crore.

FMCG stocks rose, extending their recent gains triggered by expectations that a strong monsoon will boost demand from rural areas and also reduce input prices. Nestle India, Colgate-Palmolive India, Britannia Industries, Dabur India, Tata Global Beverages, Godrej Consumer Products, United Spirits and United Breweries rose by 0.06% to 4.95%. But, FMCG giant Hindustan Unilever lost 1.75% to Rs 336.75, on profit taking.

ITC reversed early gains and fell 0.37% to 201.70. The stock hit a record high of Rs 205.50 in early trade today.

India's largest car maker by sales Maruti Suzuki fell 2.18% to Rs 1133.15 after its total sales declined 8.8% to 80,298 units in June 2011 over June 2010. The company said production was adversely impacted due labour strike at Manesar plant in June 2011. There was no production for 10.5 days due to the strike. Another reason for lower production was planned shutdown at its units.

Tractor maker Mahindra & Mahindra (M&M) fell 1.43% to Rs 691.30 on profit booking after the company reported 29.11% jump in its total sales at 35,584 units in June 2011 over June 2010. The company unveiled the monthly sales figures during trading hours today, 1 July 2011. The M&M stock had risen 10.77% in eight trading sessions to settle at Rs 701.30 on Thursday, 30 June 2011 from a recent low of Rs 633.10 on 20 June 2011.

Mahindra & Mahindra (M&M)'s domestic sales grew 28.69% to 33,772 units and exports surged 37.38% to 1,812 units in June 2011 over June 2010. "We are happy with the 29% growth that we have clocked in June 2011, given the pressures of increasing interest rates and commodity prices," M&M Chief Executive (Automotive Division) Rajesh Jejurikar said.

Motorcycle maker TVS Motor Company fell 0.47% to Rs 53.40. The company's total sales rose 14% to 1.82 lakh units in June 2011 over June 2010.

India's largest truck maker by sales Tata Motors rose 0.10% to Rs 994.50. The company's total sales declined 0.7% to 66,358 units in June 2011 over June 2010. The company unveiled the monthly sales data during trading hours today, 1 July 2011.

India's second largest cement producer by sales ACC rose 0.61% to Rs 955.05. The company's cement shipments rose 7.3% to 1.91 million tonnes in June 2011 over June 2010. Production in June 2011 rose to 1.89 million tonnes from 1.78 million tonnes a year ago.

Among other cement makers, India Cements (up 2.11%), Madras Cement (up 0.68%), Heidelberg Cement (up 0.13%), UltraTech Cement (up 0.09%) and J K Cements (up 0.05%), rose.

Most multiplex shares rose on expectation of a good weekend ticket collection with three big-ticket movies releasing on Friday, 1 July 2011. Reliance Media Works (up 6.50%), PVR (up 1.58%), Fame India (up 0.91%), Cinemax India (up 0.89%) and Inox Leisure (up 0.71%), edged higher.

The three big-banner movies to hit the screens today are Delhi Belly, co-produced by Aamir Khan Productions and UTV Motion Pictures, Amitabh Bachchan's Bbuddha Hoga Tera Baap and Micheal Bay's Transformers in 3D.

Jubilant FoodWorks clocked a highest turnover of Rs 169.41 crore on BSE. State Bank of India (Rs 121.11 crore), GTL (Rs 111.73 crore), Reliance Industries (Rs 80.01 crore) and Cairn India (Rs 77.12 crore), were the other turnover toppers on BSE in that order.

Cals Refineries reported a highest volume of 2.15 crore shares on BSE. Birla Power Solutions (1.63 crore shares), GTL (1.16 crore shares), GTL Infrastructure (55.32 lakh shares) and Lanco Infratech (52.39 lakh shares), were the other volume toppers on BSE in that order.

The market soon enters the crucial period of corporate earnings. Investors will closely watch the post-Q1 June 2011 result management commentary to gauge the future earnings outlook at a time when firms are witnessing cost pressures amid rising interest rates and staff costs. A hike in transportation costs will add to cost pressure of India Inc. As per reports, freight rates have gone up by 8% to 9% on all routes across India following the latest hike in diesel prices.

Housing finance major HDFC unveils Q1 June 2011 results on Friday, 8 July 2011. IT bellwether Infosys Technologies will unveil Q1 results on 12 July 2011.

The manufacturing sector lost steam last month with marked declines in output indicating taut monetary conditions may be taking hold even as prices remained at elevated levels, a survey showed on Friday, 1 July 2011. The HSBC Markit Purchasing Managers' Index, based on a survey of around 500 companies, showed a sharp fall to 55.3 in June from 57.5 in May, its lowest level since September last year and the steepest monthly fall since November 2008.

The India Meteorological Department (IMD) on Thursday, 30 June 2011, said widespread rainfall is expected over Uttar Pradesh, the largest sugarcane growing state, in the next three to five days. The IMD said a slight increase in rainfall activity is also expected in the southern regions, while scattered rains are likely over central parts. Rainfall from the start of the monsoon season until 30 June 2011 was 182 millimeters, 11% above the long-term average.

According to reports, there could be a lull in the rains in the first week of July 2011 and that may continue until mid-July 2011. Rainfall in the month of July is considered crucial as sowing of a number of crops starts in June and good July rains determine the soil moisture and ensure proper development of the crops planted in June.

Merchandise exports rose 56.9% to $25.9 billion in May 2011 from a year earlier, according to provisional data issued Friday by the Ministry of Commerce. Imports rose 54.1% to $40.9 billion, largely due to a rise in non-oil imports, which were up 71% from a year earlier at $30.75 billion. Oil imports in May rose 18.6% to $10.2 billion.

During the April-May period--the first two months of the current fiscal year--exports rose 45.3% to $49.8 billion, while imports rose 33.3% to $73.7 billion.

European stocks reversed initial losses in choppy trade. The key benchmark indices in UK, France and Germany were up by between 0.12% to 0.48%.

The Markit euro-zone purchasing managers index declined to 52 in June 2011 from 54.6 in May 2011. Over the past two months, output growth has weakened to the greatest extent since late 2008, said Chris Williamson, chief economist at Markit. This reflects a combination of lackluster domestic demand in many countries, especially the austerity-hit periphery, as well as a near-stagnation of export sales.

Asian stocks rose on Friday on optimism Greece will avoid default after Greece's austerity program cleared the final hurdle in parliament on Thursday, 30 June 2011. The key benchmark indices in Japan, Indonesia, South Korea, Singapore and Taiwan were up by between 0.53% to 1.19%. Stock markets in Hong Kong and Thailand were closed for a holiday.

China's Shanghai Composite reversed early gains and was down 0.10% after two surveys showed that China's manufacturing activity slowed more than expected in June 2011

Trading in US index futures indicated that the Dow could rise 26 points at the opening bell on Friday, 1 July 2011. Data out Thursday showed the Chicago PMI rose to 61.1%, up from 56.6%, well above economists' forecasts.

US markets are closed on Monday, 4 July 2011, for Independence Day holiday.