BSE Small-Cap, Mid-Cap indices in green

Key benchmark indices edged lower in a volatile trading session as data showing a slowdown in India's services sector growth in August 2011, US recession worries and the ongoing euro-zone debt crisis offset Moody's Investors Services' positive outlook on India's rupee-denominated bonds, a likely fall in inflation due to lower global commodity prices and also due to good monsoon rains and expectations of increase in rural income due to good rains. The 50-unit S&P CNX Nifty regained the psychological 5,000 level after falling below that level in intraday trade. The barometer index BSE Sensex shed 108.13 points or 0.64%, up close to 150 points from the day's low and off close to 50 points from the day's high.



The market today, 5 September 2011, snapped a three-day rally as world equities fell, with global-growth worries, European sovereign-debt concerns and a US mortgage lawsuit against 17 banks depressing investors' appetite for stocks. The market breadth, indicating the overall health of the market, turned positive from negative in late trade. BSE Small-Cap and Mid-Cap indices were in green.

The market had witnessed a strong rally last week that followed a sharp setback in August 2011. From a recent low of 15,848.83 on 26 August 2011, the Sensex had risen 972.63 points or 6.13% in three trading sessions to two-week closing high of 16,821.46 on Friday, 2 September 2011.

Coming back to today's trade, index heavyweight Reliance Industries (RIL) was down over 2% on profit booking to halt a three-day advance. Software pivotals extended Friday's fall on concerns that a likely economic slowdown in the US and Europe will hit technology spending by overseas clients. Two-wheeler makers extended Friday's (2 September 2011) gains, with Hero MotoCorp and Bajaj Auto scaling record highs on good August 2011 sales. Bank stocks recovered in volatile trade. Construction shares rallied on fresh buying.

A weak opening pulled the 50-unit S&P CNX Nifty was below the psychological 5,000 level. The market extended losses in morning trade. A bout of volatility was witnessed as the key benchmark indices trimmed losses after hitting fresh intraday lows, with news of Moody's Investors Services affirming its Baa3 rating for India's foreign currency government debt and its Ba1 rating for local currency debt triggering recovery. Volatility continued in early afternoon trade.

The market once again trimmed losses after sliding to fresh intraday low in afternoon trade. Volatility ruled the roost as the key benchmark indices weakened once again after staging a strong intraday rebound in mid-afternoon trade. The Nifty regained the psychological 5,000 level.

The BSE Sensex lost 108.13 points or 0.64% to settle at 16,713.33, its lowest closing level since 30 August 2011. The index lost 260 points at the day's low of 16,561.46 in afternoon trade. The index fell 61.39 points at the day's high of 16,760.07 in mid-afternoon trade.

The S&P CNX Nifty was down 22.80 points or 0.45% to 5,017.20, its lowest closing level since 30 August 2011. The Nifty hit a low of 4,964.45 in intraday trade. The Nifty struck high of 5,030.30 in intraday trade.

The BSE Mid-Cap index rose 0.51% and the BSE Small-Cap index gained 0.18%. Both these indices outperformed the Sensex.

The total turnover on BSE amounted to Rs 2266 crore, higher than Rs 2194.37 crore on Friday, 2 September 2011.

The market breadth, indicating the overall health of the market, turned positive in late trade. On BSE, 1,486 shares rose and 1,334 shares fell. A total of 112 shares remained unchanged. The breadth was negative for most part of the trading session.

Among the 30-share Sensex pack, 20 declined while the rest rose.

Index heavyweight Reliance Industries (RIL) lost 2.05% to Rs 788.90 on profit booking, halting a three-day 11.93% advance. Nevertheless, the stock recovered from day's low of Rs 783.35. RIL, last week, announced the completion of BP's acquisition of a 30% stake in 21 oil and gas production sharing contracts that RIL operates in India, including the producing KG D6 block.

BP will pay RIL an aggregate consideration of $7.2 billion subject to completion adjustments for the interests to be acquired in the 21 production sharing contracts, the two companies said in a joint statement. Further performance payments of up to $1.8 billion could be paid based on exploration success that results in development of commercial discoveries, the two companies said.

India's largest oil exploration firm by net sales ONGC lost 2.67%. As per reports, the government will today, 5 September 2011, announce a schedule for the about Rs 12000 crore follow on public offer of ONGC. Oil India declined 1.14%.

Two-wheeler makers extended Friday's (2 September 2011) gains triggered by good August 2011 sales while other auto stocks were off day's low. India's largest two wheeler maker by sales Hero MotoCorp jumped 5.16% to Rs 2174.35 after striking a record high of Rs 2183.40 in intraday trade today. It was the top gainer from the Sensex pack. The company's sales rose 19% to 5.03 lakh units in August 2011 over August 2010.

India's second largest two wheeler maker by sales Bajaj Auto rose 2.74% to Rs 1668.05 after scaling a record peak of Rs 1684.30 today. The company's total sales rose 16% to a record 3.82 lakh units in August 2011 over August 2010. Motorcycle sales jumped 17% to a record 3.38 lakh units in August 2011 over August 2010.

TVS Motor Company advanced 4.09%. The company's total vehicle sales rose 14% to 1.94 lakh units in August 2011 over August 2010.

India's largest truck maker by sales Tata Motors fell 0.17% to Rs 753.85, recovering from day's low of Rs 742. Tata Motors sold 64,078 vehicles in August 2011, 3% down on last year. Car sales fell 33% to 16,829 vehicles but sales of trucks and buses grew 21% to 43,045 units. Tata Motors sold 1,202 units of its Nano minicar in August 2011, down 85% on year, as its Gujarat factory remained shut for two weeks for routine maintenance. Exports also fell 18% to 4,204 vehicles.

India's largest small car maker by sales Maruti Suzuki India rose 0.45% to Rs 1085.95, off day's low of Rs 1061. Maruti's sales declined 13% to 91,442 vehicles in August 2011 over August 2010 hurt by disruption in production at Manesar plant caused by the labour unrest in end-August.

India's largest tractor maker by sales Mahindra and Mahindra rose 0.38% to Rs 769, after falling to day's low of Rs 755.50. The company's sales rose 30.38% to 37,684 units in August 2011 over August 2010. The maker of the Xylo, Scorpio and Bolero models exported 1,928 autos, up 18% on year.

Bank stocks recovered in volatile trade. India's largest bank by branch network and net profit State Bank of India (SBI) rose 0.31% to Rs 2000, after sliding to a day's low of Rs 1965.50. Bank of India (up 2.35%), PNB (up 1.88%), Bank of Baroda (up 1.57%), Canara Bank (up 3.43%), Axis Bank (up 3.63%), Yes Bank (up 1.27%), Federal Bank (up 5.35%), were the other gainers from the banking sector.

India's largest private sector bank by net profit ICICI Bank fell 0.66% to Rs 881.35, off day's low of Rs 865.95. India's second largest private sector bank by net profit HDFC Bank fell 0.51% to Rs 468.75, after declining to day's low of Rs 464.

Software stocks extended Friday's fall on concerns that a likely economic slowdown 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 third largest software services exporter Wipro slumped 3.65% and was the top loser from the Sensex pack.

India's second largest software services exporter Infosys lost 2.23%. The chief executive of Infosys said last month that the economic worries in the US and Europe were delaying decisions and clients may not spend all of their information-technology budgets for this year.

India's largest software services exporter TCS rose 0.6%, reversing intraday fall, after chief Executive N. Chandrasekaran said in TV interview today, 5 September 2011 that the company doesn't expect any cuts or delays in technology spending by companies in the banking, financial services and insurance businesses--sectors which contribute close to half TCS' revenue. He said clients aren't asking for any price cuts though the company doesn't expect any room in the next few quarters to raise prices for its services. Chandrasekaran said TCS will hire more than 60,000 people as planned in the current fiscal year through March

The company after market hours today announced that Westpac has selected TCS' BaNCS Insurance to assist the financial institution to upgrade and transform the life insurance software platform to drive growth in New Zealand.

Construction shares rallied on fresh buying. Jaiprakash Associates, Larsen & Toubro, NCC, IRB Infrastructure, Patel Engineering and Simplex Infrastructure rose by between 0.7% to 7.42%.

Ranbaxy Laboratories was flat. The company announced during market hours today that it has successfully launched esomeprazole 20 milligrams (mg) and 40 mg tablets, the first approved generic bio-equivalent version of the product NexiumTM, in the United Kingdom (UK).

Some realty stocks edged higher. Phoenix Mills, Orbit Corporation, HDIL, Indiabulls Real Estate rose by between 0.52% to 3.33%. Unitech was flat.

Metal stocks were mixed as LMEX, a gauge of six metals traded on the London Metal Exchange dropped 0.95% on Friday, 2 September 2011 Sterlite Industries, Bhushan Steel, Hindalco Industries, and Hindustan Zinc shed by between 0.62% to 4.58%. JSW Steel, Nalco, Tata Steel, Sail, and Jindal Steel & Power rose by between 0.72% to 3.24%.

Everonn Education hit 20% lower circuit, with the stock tumbling for the second straight day following the arrest of the company's founder and Managing Director P. Kishore last week as he allegedly bribed a tax official.

Cairn India fell 3.32% after crude oil declined for the second day in a row on Monday, 5 September 2011. Lower crude oil prices will result in lower realizations from crude sales for oil exploration firms such as Cairn India.

Crude futures for October 2011 delivery were down $1.67 or 1.97% at $84.78 a barrel in Asian electronic trading on Monday, 5 September 2011. The contract dropped $2.48, or 2.8%, to $86.45 on Friday, 2 September 2011.

India's largest power equipment maker by sales Bharat Heavy Electricals (Bhel) declined 1.32%. A cabinet panel has approved the sale of a 5% government stake in Bhel through a follow-on public offer. The sale will reduce the government's stake in Bhel to 62.72% from 67.72%. The offering is one of the many big-ticket stake sales in state-run companies that the government has planned this fiscal year as it looks to shore up its resources to fund its ambitious social spending plans and to keep its gaping fiscal deficit in check.

In the current financial year through March 2012, the government plans to raise Rs 40000 crore through share sales in state-run firms. It has managed to raise only Rs 1145 crore so far.

Anil Dhirubhai Ambani Group (ADAG) shares extended recent gains triggered by a reprieve in the 2G scam. Reliance Infrastructure (up 4.96%), Reliance Capital (up 5.52%), Reliance MediaWorks (up 2.35%), and Reliance Power (up 0.65%), edged higher.

The Central Bureau of Investigation (CBI) told the special court on Monday, 29 August 2011, that the three Anil Dhirubhai Ambani Group (ADAG) executives who are in judicial custody were not part of the main 2G conspiracy. But, Public prosecutor UU Lalit insisted there was credible evidence to frame charges of corruption and other penal offences against all 17 accused in the 2G spectrum scam and put them on trial. Following the day's arguments, the court said it would decide on 15 September 2011 whether to frame charges against A Raja, DMK MP Kanimozhi and 15 others on trial for their alleged role in the 2G spectrum allocation scam.

India's second largest listed cellular services provider by sales Reliance Communications (RCom) gained 4.09%. The company today said it is reorganizing its wireless operations to enhance its "market competitiveness" by appointing a single chief operating officer to run its three zonal businesses. The new structure will be "leaner and flatter" and the structure of three regional heads is being discontinued. RCom's wireless business was earlier run under three units based on geographical territories--North, South and East. The move by RCom follows market leader Bharti Airtel's July 2011 announcement of merging its mobile, satellite television, fixed-line and broadband businesses into a single entity.

Shares of Brooks Laboratories settled at Rs 60.20 on BSE, a discount of 39.80% to the initial public offer price of Rs 100. The stock debuted at Rs 110, a premium of 10% over the initial public offer (IPO) price.

Brooks Laboratories clocked highest volume of 3.03 crore shares on BSE. SpiceJet (1.99 crore shares), Shree Ashtavinayak Cine Vision (1.24 crore shares), Resurgence Mines (71.02 lakh shares) and Suzlon Energy (55.02 lakh shares) were the other volume toppers in that order.

Brooks Laboratories clocked highest turnover of Rs 182.68 crore on BSE. SBI (Rs 87.89 crore), BF Utilities (Rs 83.07 crore), Tata Steel (Rs 79.56 crore) and Lovable Lingerie (Rs 70.99 crore) were the other turnover toppers in that order.

Foreign institutional investors (FIIs) bought shares worth net Rs 1178.10 crore on Friday, 2 September 2011, compared with an inflow of Rs 678.20 crore on Tuesday, 30 August 2011, the latest data showed.

Moody's Investors Services affirmed its Baa3 rating for India's foreign currency government debt and its Ba1 rating for local currency debt in an annual credit analysis released on Monday, 5 September 2011. The ratings firm assigned a positive outlook to India's rupee-denominated bonds, saying it will consider a unified Baa3 rating for all bonds if India improves its fiscal position and its commitment to strengthening the domestic market. The outlook for foreign-currency debt is stable.

The report was upbeat about India's ability to weather a global economic downturn. "While it is not immune to an international growth slowdown, the strength of domestic demand and the diversity of the economy provides a buffer against a deceleration in globally exposed sectors," the report said. It noted that India's foreign currency reserves equal four times its foreign debt obligations.

A debt-to-GDP ratio of 71% is cause for concern, as interest on this debt eats up 25% of India's revenues annually. However, "Moody's expects that continued GDP growth and incremental fiscal consolidation efforts will continue to lower the government debt/GDP ratio," the report said.

India's services sector grew at its slowest pace in more than two years in August 2011, throttled by feeble expansion in new business as a faltering global economy and tight domestic monetary conditions weighed, a survey showed on Monday, 5 September 2011. The HSBC Markit Business Activity Index, based on a survey of around 400 companies, slumped to 53.8 in August from 58.2 in July, the index's biggest one-month decline since January 2009. It was also the weakest growth since June 2009, but the index has stayed above the 50 mark that separates growth from contraction for 28 consecutive months.

The new business sub-index fell to its lowest level in three months in August, at 54.9 from July's 59.3, as dampening global economic conditions knocked orders. Expectations for new business were also scaled back in August. The survey also showed a reduction in service sector employment levels for the second consecutive month as new business growth slowed while input costs and output prices continued to march ahead.

India's manufacturing activity in August 2011 slowed to a 29-month low as exports took a beating amid the lingering uncertainty in the global economic environment, a survey showed Friday, 2 September 2011. The seasonally adjusted HSBC Purchasing Managers' Index, prepared by Markit, fell to 52.6 in August from 53.6 in July. The pace of new order flows in August decelerated to the slowest in 29 months as export orders contracted at the sharpest rate since the series was started, HSBC said.

Production backlogs fell for the first time since March 2010 as pressure on operating capacity subsided. Also, inflationary pressures intensified as both input and output prices rose.

Food inflation firmed up to 10.05% in the week ended 20 August 2011, the highest in nearly six months and up from 9.8% rise in the previous week. The data highlights a prolonged battle against inflation that could prompt the Reserve Bank of India to raise its policy interest rate for the 12th time since March 2010 when it next meets to review monetary policy on 16 September 2011.

Exports surged 81.79% to $29.3 billion while imports jumped 51.5% to $40.4 billion in July 2011 over July 2010, leaving a trade deficit of $11 billion, data showed last week.

European equities traded sharply lower on Monday, 5 September 2011, with global-growth worries and euro-zone sovereign-debt concerns depressing investors' appetite for stocks, while Royal Bank of Scotland Group PLC and other banks fell hard after they were named in a US mortgage-related lawsuit. The key benchmark indices in France, UK and Germany fell by between 2.27% to 3.78%.

Financial stocks among were the worst performers after the US government sued several US and European banks on Friday, 2 September 2011, for billions of dollars in losses on over $200 billion in mortgage securities bought by US government controlled Fannie Mae and Freddie Mac during the housing bubble. The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, argues the banks misrepresented the quality of mortgage securities they put together and sold. It is seeking billions of dollars in compensation. The lawsuits were filed in federal court and announced after trading hours in the US on Friday, 2 September 2011.

The European Central Bank is expected to keep its key interest rate unchanged at 1.5% at its monthly policy meeting on interest rates on Thursday, 8 September 2011. On the same day, the Bank of England's Monetary Policy Committee is also expected to maintain its key benchmark rate at 0.5%, the thirty-first consecutive month at such a rate.

Jose Manuel Barroso, the president of the European Commission, said at a press conference in Canberra on Monday, 5 September 2011, that Greece has said that it will meet its commitments. Barroso added that he's not expecting a recession in Europe and sees modest growth in the European Union.

Asian stocks fell on Monday, 5 September 2011, with heavy losses for financial stocks and exporters, after a disappointing US jobs report on Friday, 2 September 2011, inflamed concerns about the health of the global economy. Asian shares edged lower on Monday as disappointing US jobs data stoked US recession fears. The ongoing sovereign euro-zone debt concerns also weighed on Asian shares. The key benchmark indices in Hong Kong, Taiwan, Japan, South Korea, Singapore and China were down by between 1.96% to 4.39%. Indonesia's Jakarta Composite rose 0.64%.

Hong Kong's Purchasing Managers' Index eased to 47.8 in August compared to a 51.4 print for the headline reading in July. The result was below the 50 level which divides contraction from expansion, marking the first time Hong Kong's private-sector economy has deteriorated in more than two years. Employment conditions for the month showed the first contraction since Dec. 2010, while output declined at a moderate pace, and new orders also showed a contraction, reversing from a slight rise in June. The PMI marked the worst deterioration in overall operating conditions in Hong Kong for 26 months, according to HSBC.

China will unleash a host of economic data on Friday, 9 September 2011, with the focus squarely on inflation. Any upside surprise, especially a number above the July inflation, would be negative for stocks in China, and would likely also hurt equities elsewhere in Asia. With food and fuel prices spiking, Chinese inflation hit a three-year high of 6.5% in July 2011, prompting some monetary tightening moves from the People's Bank of China.

US stocks tumbled on Friday, 2 September 2011, after a report showed the world's largest economy failed to add any new jobs in August. The US market remains closed today, 5 September 2011, for the Labour Day holiday.

US President Barack Obama is scheduled to give a speech on Thursday, 8 September 2011, to propose steps to stimulate hiring in the backdrop of US unemployment crisis