BSE Small-Cap, Mid-Cap indices extend recent steep losses

Bargain hunting after recent heavy losses in share prices helped the key benchmark indices edge higher. Intraday volatility was high. The BSE Sensex jumped 109.86 points or 0.66%, off close to 160 points from the day's high and up close to 130 points from the day's low. Index heavyweights Reliance Industries (RIL) and ICICI Bank hit 52 week lows. Auto major Tata Motors also hit 52-week low. Hindalco Industries, Tata Steel, Tata Power Company, too, hit 52-week lows. Reliance Communications hit a lifetime low.

Realty stocks extended recent losses on worries higher interest rates could dent demand for residential and commercial properties. Realty major DLF hit 52-week low, extending Tuesday's (16 August 2011) sharp losses triggered by a hefty Rs 630-crore fine imposed by the competition regulator for abusing dominant market position. Another realty major Unitech also hit 52-week low. Auto stocks fell on concerns higher interest rates could crimp sales of automobiles. FMCG stocks gained on renewed buying. IT stocks rose for the second straight day on bargain hunting after recent sharp losses. Many construction stocks edged lower.

Many small-cap and mid-cap shares fell on worries higher interest rates will restrict profit growth. The market breadth, indicating the overall health of the market, was weak. BSE Small-Cap and Mid-Cap indices extended recent steep losses. Commercial banks have raised lending rates over the past few days after the Reserve Bank of India (RBI) late last month raised its key lending rate by a steeper-than-expected 50 basis points at a policy review. Three top commercial banks--State Bank of India, ICICI Bank and HDFC Bank, last week, raised lending rates by half a percentage point.

The market edged higher amid a bout of initial volatility. Trading remained choppy as the key benchmark indices regained strength to hit fresh intraday highs soon after paring initial gains in morning trade. The market trimmed gains after hitting fresh intraday high in mid-morning trade. The barometer index BSE Sensex fell below the psychological 17,000 mark soon after kissing that level in mid-morning trade. The market further trimmed gains in early afternoon trade.

Weak opening of European stocks pulled Indian shares into the red in afternoon trade but the market soon regained positive zone. Intraday volatility continued as the key benchmark indices pared gains once again after regaining strength in mid-afternoon trade as lower European stocks weighed on sentiment. The market strengthened again in late trade.

The BSE Sensex jumped 109.86 points or 0.66% to 16,840.80. The index fell 21.96 points at the day's low of 16,708.98 in afternoon trade. The Sensex jumped 269.44 points at the day's high of 17,000.38 in mid-morning trade.

The S&P CNX Nifty was up 20.80 points or 0.41% to 5,056.60. The Nifty hit a high of 5,112.15 and a low of 5,017.25 in intraday trade.

The BSE Mid-Cap index fell 0.87% and the BSE Small-Cap index declined 1.61%. Both these indices underperformed the Sensex. The Small-Cap index has tanked 1,164.92 points or 13.69% from a recent high of 8,505.42 on 25 July 2011. The BSE Mid-Cap index has lost 738.50 points or 10.43% from a recent high of 7,080.31 on 25 July 2011.

BSE clocked turnover of Rs 2383 crore, higher than Rs 2108.63 crore on Tuesday, 16 August 2011.

The market breadth, indicating the overall health of the market, was weak. On BSE, 1,963 shares fell while 890 shares rose. A total of 99 shares remained unchanged.

Among the 30-share Sensex pack, 20 rose and the rest fell.

Index heavyweight Reliance Industries (RIL) fell 0.55% to Rs 754.80, off the day's high of Rs 774.25. The stock hit a 52-week low of Rs 751 in intraday trade today. RIL, last week, said it has received the government's formal approval to sell a 30% stake in 21 oil and gas production sharing contracts to BP PLC. "Following the approval, Reliance and BP will work together to conclude the deal expeditiously," RIL said in a statement.

The initial proposal was for RIL to sell the stake in 23 blocks to BP for $7.2 billion plus another $1.8 billion linked to exploration success. However, the government cleared only 21 blocks and RIL had said it would continue to seek approval for the remaining two blocks.

State-run Coal India gained 2.64%, with the stock gaining for the second straight day on strong Q1 results. Consolidated net profit rose 64.05% to Rs 4143.92 crore on 28.29% rise in total income to Rs 16057.97 crore in Q1 June 2011 over Q1 June 2010. The company announced Q1 results after market hours on Friday, 12 August 2011.

Coal India today, 17 August 2011, overtook Reliance Industries (RIL) as India's largest company in terms of market capitalization. State-run Coal India produces and markets coal and coal products as well as provides related consulting services.

Many construction stocks edged lower. Unity Infrastructure, IRB Infrastructure Developers, Hindustan Construction Company and Patel Engineering fell by between 1.86% to 8.26%.

Auto stocks fell on concerns higher interest rates could crimp sales of automobiles. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.

India's largest small car maker by sales Maruti Suzuki India fell 3.19% on reports that the company has cut production of most of its models, including the best selling Alto, by 5% due to slump in demand in the domestic market. Maruti today, 17 August 2011, unveiled its much awaited sportier and stylish car, new Swift. The new Swift is priced in the range 4.22 lakh to 5.53 lakh for petrol variant and 5.17 lakh to 6.38 lakh in diesel variant.

Speaking at the launch of the new Swift, Shinzo Nakanishi, Managing Director and CEO, Maruti Suzuki said, "We have launched the new Swift at a time when there was significant demand for the ongoing model. In keeping with the Swift's iconic status, we had to ensure that the brand continues to offer the latest and the best in terms of features, design, performance and aspiration. I am confident that the new Swift will create new benchmarks with its improved fuel efficiency, stylish and sportier looks and high performance."

India's largest tractor and utility vehicles maker by sales Mahindra & Mahindra (M&M) declined 1.67%. The company said during market hours today that its consolidated net profit rose 6.7% to Rs 662.30 crore on 66.2% rise in gross revenue and other income to Rs 14256 crore in Q1 June 2011 over Q1 June 2010.

Commenting on the results, Mahindra Group Executive Director and Chief Financial Officer Bharat Doshi said, "We are delighted to announce the consolidated financials of the Mahindra Group which in addition to the auto and farm businesses are a reflection of the robust growth of the various group companies in the IT, finance, real estate, hospitality and Systech sectors. Mahindra Satyam's significant growth in margins and profit and SsangYong Motor Company's improved sales volume is heartening to note; it is with great satisfaction that we see the integration of both these companies in the group."

India's largest commercial vehicle maker by sales Tata Motors declined 2.8% to Rs 779.30 after global sales fell 6% to 85,392 units in July 2011 over July 2010. The stock hit 52-week low of Rs 771.75 today. While sales of luxury sedans of Jaguar brand were down 23% to 4,372 units, Land Rover sales were up by 8% at 14,747 units in July 2011 over July 2010. Total passenger vehicles sales fell 24% to 38,154 units in July 2011 over July 2010. Commercial vehicles sales were up by 16% to 47,238 units.

The company at the fag end of the trading session on Tuesday, 16 August 2011, had informed the stock exchanges that a committee of directors vide its Circular Resolution dated 12 August 2011 approved 13 September 2011 as the record date for the purpose of sub-division of the Ordinary Shares and 'A' Ordinary Shares (collectively the shares) both having face value of Rs 10 into 5 shares having face value of Rs 2 each.

India's largest bike maker by sales Hero MotoCorp rose 2.8%. The company recently unveiled a new brand. India's second largest bike maker by sales Bajaj Auto shed 0.14%.

India's largest private sector bank by net profit ICICI Bank fell 2.63% to Rs 910.55. The stock hit 52 week low of Rs 908.20 today. The bank, last week, raised its base rate upwards by 50 basis points to 10%. The bank had also announced an increase of 0.5% in its benchmark prime lending rate and in its Floating Reference Rate (FRR) for consumer loans (including home loans).

HDFC Bank gained 2.26%. The bank has hiked its lending rates by half a percentage point, in line with the rate hikes by other top lenders after the central bank raised its policy rate by the same margin in late July 2011. The bank has also raised interest rates on some deposits by between 25 basis points and 75 basis points

State Bank of India fell 1.07% reversing initial gains. The bank's consolidated net profit fell 25.34% to Rs 2512.47 crore on 20.3% rise in total income to Rs 39454.89 crore in Q1 June 2011 over Q1 June 2010. The company announced Q1 results on Saturday, 13 August 2011.

The government is reportedly unlikely to subscribe to State Bank of India's planned rights share issue this fiscal year to March 2012, as it struggles to narrow the fiscal deficit with its already stretched finances. SBI plans to raise up to Rs 20000 crore in fresh capital this year to help boost its capital adequacy ratio to meet loan demand, which is expected to grow 20% annually for next three years.

FMCG stocks edged higher. ITC, Hindustan Unilever, Dabur India and Britannia Industries gained by between 1.26% to 2.05%.

IT stocks rose for the second straight day on bargain hunting after recent sharp losses triggered by concerns that the debt crises in the US and Europe will hit technology spending by overseas clients. The US and Europe are the two biggest markets for Indian IT firms. India's largest software services exporter TCS gained 3.13%. India's second largest software services exporter Infosys rose 2.36% to Rs 2449.15. The stock had hit 52-week low of Rs 2,343.70 in intraday trade on Friday, 12 August 2011. India's third largest software services exporter Wipro rose 1.03% to Rs 344.25. The stock had hit 52 week low of Rs 337.35 in intraday trade on Tuesday, 16 August 2011.

Realty stocks extended recent losses on worries higher interest rates could dent demand for residential and commercial properties. Purchases of both residential and commercial property are largely driven by finance. D B Realty, Indiabulls Real Estate, Anant Raj Industries and HDIL shed by between 0.07% to 7.06%.

Unitech fell 0.72% to Rs 27.55. The stock hit 52-week low of Rs 26.60 today.

India's largest real estate developer by market capitalisation DLF fell 6.03% to Rs 177.60, extending Tuesday's 5.92% losses triggered by a hefty Rs 630-crore fine imposed on the realty major by the competition regulator for abusing dominant market position. The stock hit 52 week low of Rs 173.40 today. The Competition Commission of India's (CCI) verdict on Friday, 12 August 2011, came after an owners' association said DLF had imposed arbitrary, unfair and unreasonable conditions on them. The Belaire Owner's Association, representing the buyers of apartments in a DLF project in Gurgaon, New Delhi, alleged the developer had planned to build 19 floors in 36 months, but instead had built 29 floors, which disadvantaged existing buyers and led to delays.

The penalty of Rs 630 crore equates to 7% of DLF's average revenue in its last three financial years. In its complaint, the Belaire Owner's Association said the fall-out of the delay was that the hundreds of apartment allottees have to bear huge financial losses, as while on one hand, their hard-earned money is blocked, on the other hand, they have to wait indefinitely for occupation of their respective apartments.

CCI ruled DLF had carried out abusive practices with the object of undue economic gains and business profits. It asked DLF to desist from formulating and imposing unfair conditions in its agreements with buyers in Gurgaon and to modify the unfair conditions within three months.

DLF said during market hours today, 17 August 2011, that it is perusing the order and will examine all options in consultation with company's legal experts including but not limited to appealing against the order at the Competition Appellate Tribunal. The company said it believes that it has a strong case.

Metal stocks were mixed after LMEX, a gauge of six metals traded on the London Metal Exchange dropped 0.46% on Tuesday, 16 August 2011. Hindalco Industries fell 1.11% to Rs 142.75. The stock hit 52 week low of Rs 141.65 today. Nalco and JSW Steel fell by between 0.62% to 0.89%. Sail, Jindal Steel & Power, Hindustan Zinc and Sterlite Industries rose by between 0.08% to 1.47%.

India's largest steel maker by sales Tata Steel rose 0.74% to Rs 472.35. The stock recovered after hitting 52-week low of Rs 461.05 in intraday trade today, 17 August 2011. The company's consolidated net profit surged 192.91% to Rs 5346.55 crore on 35.33% rise in total income to Rs 36882.43 crore in Q1 June 2011 over Q1 June 2010. Tata Steel announced the first quarter results late last week.

Tata Steel's net profit zoomed due to 6445.71% jump in other income to Rs 3882.26 crore in Q1 June 2011 over Q1 June 2010. The other income includes profit of Rs 2879.29 crore on disposal of Tata Steel Global Mineral Holding's investment in Riversdale Mining. The other income also includes profit of Rs 511.01 crore on sale of part of investment in Tata Refractories. The other income also includes Rs 597.71 crore relating to arbitration with the Teeside Cast Products Consortium.

Reliance Communications fell 2.71% to Rs 75.30. The stock hit record low of Rs 74.10 today.

Bharti Airtel rose 0.18%. The stock turned ex-dividend today for dividend of Rs 1 per share for the year ended March 2011. Junior finance minister Namo Narain Meena on Tuesday, 16 August 2011, said that Enforcement Directorate, a unit of the finance ministry, has begun a probe into suspected foreign exchange violations by Bharti Airtel. Meena also said that the stock market regulator--the Securities and Exchange Board of India--has received complaints over an alleged increase in share holding by its founders to 67.15% from 60.91% in the company between June 2007 and September 2008, without extending an open offer to public shareholders.

Meena also said that the Central Board of Direct Taxes has received a reference containing allegations regarding improper accounting treatment of license fee and spectrum charges by the company. Bharti Airtel said in a statement on Tuesday, 16 August 2011, that it has always complied with all rules and regulations laid down by various agencies and the licensing authority, the Department of Telecommunications. "We will provide all relevant details to the concerned authorities as and when required and will offer full assistance to clarify any concern," the company said.

Tata Power Company dropped 0.44% to Rs 1075.35. The stock hit 52-week low of Rs 1,060 today. The company's consolidated net profit after statutory appropriations jumped 34% to Rs 418.57 crore on 12.33% growth in revenue to Rs 5824.51 crore in Q1 June 2011 over Q1 June 2010. The result was announced after trading hours on 10 August 2011.

India's largest engineering & construction firm by sales Larsen & Toubro rose 1.18%. The stock turned ex-dividend today, 17 August 2011, for dividend of Rs 14.50 per share for the year ended March 2011.

Shares of air carriers fell as a rise in crude oil prices raised concerns that high jet fuel prices may impact operating costs of these companies. Jet Airways India fell 13.12% to Rs 304.70. The stock hit a 52 week low of Rs 300 today. Kingfisher Airlines fell 5.08% to Rs 25.20. The stock hit a 52 week low of Rs 24.20 today. SpiceJet was down 6.04% at Rs 22.55. The stock hit a 52 week low of Rs 21.20 today.

Crude oil futures rebounded in electronic trading today, 17 August 2011, ahead of a closely watched US inventory report that's expected to reveal a decline in reserves. Crude for September delivery added $1.14 a barrel or 1.3%, to $87.79 a barrel. Oil had lost ground during the North American session on Tuesday, 16 August 2011, as lackluster quarterly German and Euro-zone growth readings dulled investment demand.

A rise in crude oil prices may result in higher prices of jet fuel, which accounts for over 50% of airlines' operating cost. Jet fuel prices are linked to crude oil prices. State-run oil marketing companies--Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation--revise jet fuel prices on the 1st and 16th of every month, based on the average international crude price in the preceding fortnight.

Worries about the strength of global economy and prospects for future energy demand has pushed crude prices more than 10% lower over the past month.

Cals Refineries clocked highest volume of 4.81 crore shares on BSE. K S Oils (2.83 crore shares), SpiceJet (85.83 lakh shares), Birla Cotsyn (72.39 lakh shares) and Karuturi Global (67.56 lakh shares) were the other volume toppers in that order.

Inventure Growth Securities clocked highest turnover of Rs 147.56 crore on BSE. SBI (Rs 110.24 crore), ICICI Bank (Rs 80.24 crore), BF Utilities (Rs 76.30 crore) and Jubilant FoodWorks (Rs 75.13 crore) were the other turnover toppers in that order.

In recent macroeconomic news, the wholesale price index (WPI) for the month of July 2011 came in at 9.22%, lower than 9.44% rise in June 2011. The government also raised May's inflation reading to 9.56% from a provisional 9.06%. Chief Economic Adviser Kaushik Basu on Tuesday, 16 August 2011, said he expects inflation to remain between 9% and 10% until December. Finance Minister Pranab Mukherjee on Tuesday said the government will take steps to cool inflation, although he didn't elaborate what these measures might include. The Reserve Bank of India (RBI) is scheduled to undertake a mid-quarter policy review on 16 September 2011.

Industrial production grew 8.8% in June 2011 from a year earlier, helped by strong growth in manufacturing output, data released by the government on Friday, 12 August 2011, showed. The reading was sharply higher than the upwardly revised 5.95% industrial output growth in May 2011. The June reading also beat market expectations by a wide margin.

Food Minister K.V. Thomas today, 17 August 2011, said that the government plans to introduce a food security bill, which promises to give cheap food grains to 70% of the country's population, in the winter session of parliament. Thomas told reporters that the bill won't be introduced in the ongoing session of parliament, as earlier planned, because the "consultation process with state governments and different ministries is still on." A ministerial panel had cleared the draft law last month.

Prime Minister Manmohan Singh today, 17 August 2011, made a strong statement in the Lok Sabha on the Anna Hazare standoff, defending the Delhi Police's decision to arrest the Gandhian and calling the social activist's attempts to impose his Jan Lokpal Bill on Parliament as "totally misconceived". Meanwhile, Hazare, his team and their ever-swelling supporters dug their heels in and outside the Tihar Jail, demanding the government give in to all conditions for their fast at Jai Prakash Narain Park in central Delhi. "All of us agree that the Lokpal Bill should be passed by Parliament. The question is who drafts the law and who passes the law," Singh said.

The Prime Minister detailed before members the sequence of events that had led up to Anna Hazare's arrest, saying his detention and that of his colleagues' was a "preventive measure" as they had rejected several key security suggestions by the Delhi Police. Singh said the government acknowledges the right of citizens to hold peaceful protests, but reiterated Hazare refuses to come out unless the government gives him an undertaking that he would be allowed to fast at Jai Prakash Narain park. Hazare is demanding a stronger anti-corruption legislation. Hazare and seven of his aides were picked up from an east Delhi apartment on Tuesday morning hours before he was to launch his protest fast at Jai Prakash Narain park after Delhi Police failed to persuade him to give it up.

European stock markets dropped Wednesday, 17 August 2011, after a meeting on Tuesday, 16 August 2011, between German Chancellor Angela Merkel and French President Nicolas Sarkozy failed to quell fears about euro zone leaders' ability to contain the region's sovereign debt woes. The key benchmark indices in UK, and Germany were down by 0.37% to 0.7%. France's CAC 40 rose 0.71%.

Merkel and Sarkozy late Tuesday proposed governance changes for the euro zone, but dismissed the idea of countries jointly issuing euro-zone bonds -- an idea that has gained traction in recent weeks as a way to tackle the crisis.

Most Asian stocks fell on Wednesday, 17 August 2011, as fresh concerns about Europe, including disappointing quarterly euro-zone and German growth reports, inflamed concerns about the global economy and as US stocks snapped a three-day winning streak on Tuesday, 16 August 2011. The key benchmark indices in China, Singapore, Japan, Indonesia and Taiwan fell by between 0.15% to 0.73%. The key benchmark indices in Hong Kong and South Korea rose by between 0.38% and 0.68%.

US index futures were volatile. Trading in US index futures indicated that the Dow could gain 28 points at the opening bell on Wednesday, 17 August 2011. US stocks fell on Tuesday after three days of gains when a meeting between the heads of France and Germany failed to quell fears about euro zone leaders' ability to contain the region's sovereign debt woes.

Fitch Ratings on Tuesday confirmed the United States' top-notch credit rating and, in blatant disagreement with rival Standard & Poor's. Fitch also kept a stable outlook on its US AAA rating, less than two weeks after S&P downgraded the United States to AA-plus with a negative outlook. The agency said, however, it will revisit its decision at the end of the year.