Sensex falls below 17,000 as food inflation accelerates

Key benchmark indices edged lower in choppy trade as the latest data showing acceleration of food inflation early this month raised prospects of more rate hikes from the central bank to tame inflation, which remains uncomfortably high. The barometer index BSE Sensex fell below the psychological 17,000 mark. Nevertheless, the market staged a strong intraday rebound as European shares moved off lows and as US index futures rose. The Sensex shed 148.45 points or 0.87%, up close to 190 points from the day's low and off about 25 points from the day's high. Index heavyweights Reliance Industries and L&T came off lows. Steel stocks recovered. IT stocks also came off lows on a weak rupee.



The market breadth was negative. Shares of housing finance companies (HFCs) fell after the the National Housing Bank (NHB) banned the levy of pre-payment penalty on floating rate home loans. Automobile stocks edged lower on profit taking after recent strong gains. Bajaj Auto fell in volatile trade after reporting good Q2 results. Interest rate sensitive realty stocks fell on profit taking after recent strong gains triggered by hopes a slowing economy could prompt the Reserve Bank of India (RBI) to pause on rate increases next week. IDBI Bank edged lower in a weak market after reporting good Q2 results.

The Sensex has risen 483.13 points or 2.93% in this month so far. The index has slumped 3,572.20 points or 17.41% in calendar 2011. From a 52-week high of 21,108.64 on 5 November 2010, the Sensex has lost 4,171.75 points or 19.76%. From a 52-week low of 15,745.43 on 4 October 2011, the Sensex has risen 1,191.46 points or 7.56%.

Intraday volatility was high today, 20 October 2011, as traders rolled over positions in the futures & options (F&O) segment from the near-month October 2011 series to November 2011 series. The near-month October 2011 derivatives contracts expire on Tuesday, 25 October 2011. The market edged lower amid initial volatility on weak Asian stocks. The market extended initial losses to hit fresh intraday low in morning trade. A bout of volatility was witnessed in mid-morning trade as the key benchmark indices hit fresh intraday lows.

Intraday volatility continued in early afternoon trade as the key benchmark indices hit fresh intraday lows. Key benchmark indices recovered after hitting the day's lows in early afternoon trade. Intraday volatility continued as the key benchmark indices weakened once again after staging a strong intraday rebound. Volatility was immense in late trade.

The BSE Sensex shed 148.45 points or 0.87% to settle at 16,936.89 its lowest closing level since 18 October 2011. The index fell 123.28 points at the day's high of 16,962.06 in late trade. The index declined 340.35 points at the day's low of 16,744.99 in early afternoon trade.

The S&P CNX Nifty lost 47.25 points or 0.92% to settle at 5,091.90, its lowest closing level since 18 October 2011. The Nifty hit a low 5,033.95 in intraday trade. The Nifty hit a high of 5,099 in intraday trade.

The BSE Mid-Cap index fell 0.66% and the BSE Small-Cap index declined 0.47%. Both these indices outperformed the Sensex.

BSE clocked turnover of Rs 2049 crore, lower than Rs 2448.33 crore on Wednesday, 19 October 2011.

The market breadth, indicating the overall health of the market, was negative. On BSE, 1,691 shares fell and 1,122 rose. A total of 113 shares were unchanged. The breadth was much weaker earlier in the day.

From the 30-share Sensex pack, 22 fell and the rest rose.

Index heavyweight Reliance Industries (RIL) fell 0.46% to Rs 838.40, extending recent losses triggered by weak Q2 operating performance. Nonetheless, stock came off the day's low of Rs 822.15. RIL's net profit rose 15.84% to Rs 5703 crore on 34.73% rise in turnover to Rs 80790 crore in Q2 September 2011 over Q2 September 2010. Operating profit rose just 5% to Rs 9844 crore in Q2 September 2011 over Q2 September 2010. The core operating profit margin (OPM) declined sharply to 12.5% in Q2 September 2011 from 16.3% in Q2 September 2010. The result was announced on Saturday, 15 October 2011. The company's gross refining margin (GRM) stood at $10.1 a barrel in Q2 September 2011, sharply higher than $7.9 a barrel in Q2 September 2010. The GRM was at $ 10.3 a barrel in Q1 June 2011.

RIL said its Infotel Broadband Services unit is in the process of setting up a 4G broadband wireless network and finalizing arrangements with global players.

RIL recently concluded a $7.2 billion deal with BP PLC under which it sold a 30% stake in 21 oil-and-gas exploration blocks to the British explorer. RIL said it has received all the payments that were due from BP, with the final installment of Rs 14690 crore received on 3 October 2011. It said all the production-sharing contracts under the deal with BP have been revised and submitted to the government for approval. "The integration process is currently under way, and the joint teams are evolving strategies to operate across the gas value chain in India from exploration, development, distribution and marketing," RIL said.

Meanwhile, RIL has neither confirmed nor denied media reports of a likely suspension of oil and gas drilling operations. RIL said on Monday 17 October 2011 that RIL has always communicated any material event to the stock exchanges first before disseminating to the media. Media reports had suggested recently that RIL may suspend oil and gas drilling operations for an unspecified time until an internal valuation of its exploration and production strategy.

Another index heavyweight L&T was down 1.04% to Rs 1385.05, off the day's low of Rs 1371.50. The company announces Q2 results tomorrow, 21 October 2011.

IT stocks recovered on a weak rupee. The rupee hit a three-week low against the dollar on Thursday 20 October 2011. The partially convertible rupee was at 49.66/67 per dollar, after touching a low of 49.7850, its weakest level since 26 September 2011, and weaker from Wednesday's close of 49.15/16. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.

India's largest IT company by sales, TCS, fell 0.38% to Rs 1044.70, off the day's low of Rs 1030.85. The stock had plunged 7.71% on Tuesday after disappointing Q2 results, which the company announced after market hours on Monday, 17 October 2011. TCS chief financial officer and executive director S Mahalingam on Tuesday, 18 October 2011, said that TCS will cut costs and focus on high-margin services to maintain its profitability in the traditionally weak October-December quarter.

TCS' consolidated net profit fell 4.7% to Rs 2301 crore on 7.7% growth in revenue to Rs 11633 crore in Q2 September 2011 over Q1 June 2011. The company's operating profit rose 11.4% to Rs 3143 crore in Q2 September 2011 over Q1 June 2011. Commenting on the results TCS Chief Executive Officer and Managing Director N Chandrasekaran said, "Our domain-rich solutions and disciplined execution helped us capture business across major markets and deliver stellar growth in international revenues. We see strong momentum for our full services strategy from customers who are looking for agility and growth. We have created a nimble organization on the ground to stay close and stay relevant to our customers as there are ambiguities in the external environment in the short term".

Commenting on the results Mahalingam had said on Monday that TCS continues to make the necessary investments to support the future business growth in different markets as the company remains in expansion mode. "We are also working to optimize our cost structure and keeping a close watch on economic signals. Given the breadth of our global operations across 45 countries, the recent unprecedented volatility in the foreign currency markets is fresh cause for concern," Mahalingam had said on Monday.

HCL Technologies rose 1.88% to Rs 415, off the day's low of Rs 400. The stock had plunged 8.58% on Tuesday on disappointing Q1 results. Consolidated net profit as per US accounting standards fell 2.7% to Rs 496.70 crore on 8.2% increase in revenue to Rs 4651.30 crore in Q1 September 2011 over Q4 June 2011. The company announced results before market hours on Tuesday.

Commenting on the results, Vineet Nayar, Vice Chairman and CEO, HCL Technologies said, "We have doubled our quarterly revenues in just three years to record a billion dollar quarter despite the tough economic environment. This tremendous momentum has been achieved thanks to our Employees First philosophy which has fuelled a high performance organization, ensured enhanced customer delight and created disruptive thought leadership which is today recognized globally. I want to thank all our 80,520 employees, more than 500 customers, investors and partners who have supported us in this journey".

Anil Chanana, CFO, HCL Technologies said, "We continue to see growth both in revenue and earnings. Our revenues grew 5.1% sequentially in constant currency and 25% YoY this quarter, accompanied by operating and net income growth of 38% YoY and 49% YoY, respectively. While the currency markets continue to be volatile, we at HCL follow layered hedging program to cover our foreign currency exposure".

Infosys rose 0.69% to Rs 2745.95, off the day's low of Rs 2686. The stock extended recent strong gains triggered by good Q2 results and upward revision in full year earnings guidance. Infosys' consolidated net profit as per International Financial Reporting Standards (IFRS) rose 10.68% to Rs 1906 crore on 8.2% growth in revenue to Rs 8099 crore in Q2 September 2011 over Q1 June 2011. The company announced the results on 12 October 2011.

Infosys has forecast 9.72% to 11.11% growth in non-annualized earnings per American Depositary Share at $0.79 to $0.80 in Q3 December 2011 over Q2 September 2011. It has forecast 3.2% to 5.3% growth in revenue at $1.802 to $1.84 billion in Q3 December 2011 over Q2 September 2011.

The company has for the second quarter in a row revised upwards its dollar earnings guidance for the year ending March 2012 (FY 2012). The company expects 15.3% to 16.8% growth in earnings per American Depositary Share at $3.02 to $3.06 in FY 2012 over the year ending March 2011 (FY 2011). However, the company has revised downwards dollar revenue growth guidance for FY 2012. The company expects 17.1% to 19.1% growth in revenue at $7.08 billion to $7.20 billion in FY 2012 over FY 2011.

India's third largest software services exporter Wipro declined 0.8%. The company announces its Q2 results on 31 October 2011.

Shares of housing finance companies (HFCs) fell after the National Housing Bank (NHB) banned the levy of pre-payment penalty on floating rate home loans. Housing Development Finance Corporation (HDFC), LIC Housing, Dewan Housing, GIC Housing, Lok Housing fell 1.93% to 6.37%

Sun Pharmaceuticals Industries rose 1.26%, extending Wednesday's 3.09% gains triggered by the company's announcement that it has sent a letter to its Israeli subsidiary Taro Pharmaceutical Industries' board of directors proposing acquisition by Sun Pharma, of all of the outstanding shares of Taro not held by Sun Pharma for per share consideration of $24.50 in cash, representing a 25.96% premium over the most recent closing price of Taro's common stock. This offer is subject to the approval of Taro board and such other authorities as may be required and subject to completion of necessary compliances/formalities as may be required, company added.

It may be recalled that Sun Pharma had acquired a controlling stake in Taro in September 2010 after completing an option agreement first entered into in 2007 with the controlling shareholders of Taro. Sun Pharma's subsidiaries subsequently increased their economic interest in Taro to 66%. Taro has an established franchise in dermatology and topical products in the US, in addition to other generic products. Taro has sales and marketing operations in Israel and Canada.

UltraTech Cements lost 0.96% after net profit tumbled 59.1% to Rs 278.90 crore on 10.4% decline in net sales to Rs 3909.75 crore in Q2 September 2011 over Q1 June 2011. The company announced during market hours today. The company said the year-on-year results were good due to lower base effect. However, on a sequential basis, the company's performance was subdued due to lower demand, lower realisation and substantial increase in costs.

UltraTech said the overall economic slowdown impacted its performance during the quarter. Variable cost rose by 14% because of the increase in input and energy costs. The 30% increase in the price of domestic coal, continuous rise in prices of imported coal, together with escalation of freight costs, due to the diesel price hike, have constrained the company's performance. In its outlook, UltraTech said that the surplus scenario is likely to continue over the next 2-3 years. At the same time, growing input costs will squeeze margins.

Biotech major Biocon fell 0.47%. The company announced after market hours on Wednesday that consolidated net profit from continuing operations rose 5% to Rs 86 crore on 23% growth in revenue to Rs 524 crore in Q2 September 2011 over Q2 September 2010. Earnings before interest, taxation, depreciation and amortization rose 9% to Rs 149 crore.

Commenting on the results, Kiran Mazumdar-Shaw, CMD, Biocon Group said, "I am pleased with good progress we have made in the first half of the year ending March 2012 (FY 2012). I am particularly encouraged that this growth has been attained across all our verticals. The performance in branded formulations and research services has been particularly strong. The branded formulations segment has delivered a solid 37% YoY growth while research services has grown by a robust 20%. The recent launch of INSUpen, our long-awaited device for insulin delivery, is expected to further propel sales in our branded formulations vertical. The global economic outlook is challenging at the moment. Nevertheless, I believe that the Biocon Group will continue to deliver broad-based growth in the second half of FY 2012".

Interest rate sensitive realty stocks fell on profit taking after recent strong gains triggered by hopes a slowing economy could prompt the Reserve Bank of India (RBI) to pause on rate increases next week. Purchases of both residential and commercial property are largely driven by finance. HDIL, DLF, Indiabulls Real Estate, Unitech, and Anant Raj Industries shed by between 1.73% to 3.34%.

Automobile stocks edged lower on profit taking after recent strong gains. Hero MotoCorp fell 1.84%, after jumping 4.13% on Wednesday on the back of good Q2 results. The company announced after market hours on Tuesday that net profit rose 19.38% to Rs 603.62 crore on 28.06% growth in total net operating income to Rs 5829.32 crore in Q2 September 2011 over Q2 September 2010. The company's core operating profit margin or OPM surged to 15.76% in Q2 September 2011 from 13.35% in Q2 September 2010.

The company said the total net operating income of Rs 5829.32 crore in Q2 September 2011 was a record quarterly figure. Hero MotoCorp said that with the company registering record sales of over 3 million units for six months period April-September 2011, it is comfortably placed to surpass the initial guidance of 6 million units for the year ending March 2012 (FY 2012).

Pawan Munjal, managing director and chief executive officer of Hero MotoCorp, said, "This performance has come despite the rising food inflation and fuel costs. These two areas remain a concern for the industry, as it might adversely impact consumer spending in the coming months. However, we remain confident of carrying forward the buoyancy in our sales. We expect our retail volumes to peak during the festive month of October, and in anticipation of rising market demand for our products in the coming months, we have been augmenting capacity at our existing plants".

India's largest tractor and utility vehicles maker Mahindra & Mahindra (M&M) shed 1.26% to Rs 800.20 on profit taking. From a recent low of Rs 777.90 on 4 October 2011, the stock had risen 4.17% in ten trading sessions to Rs 810.40 on 19 October 2011. M&M plans to raise monthly production of its new sport-utility vehicle--XUV500--by half to 3,000 units in January and more than double it to 5,000 units in June to meet robust local demand. The company currently produces 2,000 units of XUV500 a month. M&M recently said it has received more than 8,000 bookings for the vehicle in the first 10 days of the launch, forcing it to halt taking fresh orders.

M&M's total auto sales rose 25% to a record 44,137 units in September 2011 over September 2010. The company's domestic sales stood at 41,136 units during September 2011, as against 33,866 units during September 2010, an increase of 21%. M&M's Passenger Vehicles segment (which includes the Utility vehicles and Verito) registered a growth of 11%, having sold 19,447 units in September 2011, as against 17,537 units during September 2010. The 4-wheeler commercial segment which includes the passenger and load categories registered a phenomenal growth of 45%.

India's second largest bike maker by sales Bajaj Auto dropped 1.27% to Rs 1615.95, off the day's low of Rs 1556, after announcing Q2 results during market hours today. From a recent low of Rs 1492.85 on 4 October 2011, the stock had risen 9.64% in ten trading sessions to Rs 1636.80 on 19 October 2011. The company's net profit increased 6.41% to Rs 725.80 crore on 20.70% increase in net sales to Rs 5046.48 crore in Q2 September 2011 over Q2 September 2010. The company incurred a mark-to-market (MTM) loss of Rs 95.41 crore on forward derivative contracts in the foreign exchange market. The company said this is a notional loss, which would reverse over the contract period.

India's largest truck maker by sales, Tata Motors fell 1.9% to Rs 183.10. From a recent low of Rs 147.25 on 4 October 2011, the stock had risen 26.75% in ten trading sessions to Rs 186.65 on 19 October 2011. The company on Friday, 14 October 2011, said its global sales rose 24% to 1,07,258 units in Q2 September 2011 over Q2 September 2010. Global sales of Jaguar Land Rover were up 42% to 27,639 vehicles in September 2011 over September 2010. It said the total passenger vehicles sales stood at 55,539 units in September 2011, up 21% from the corresponding period last year. Commercial vehicles sales were up by 28% to 51,719 units in Q2 September 2011 over Q2 September 2010.

Maruti Suzuki India rose 0.97% after the company revived talks on Wednesday with striking workers at one of its plants. The strike at the Manesar plant, in northern Haryana state, continued for the 13th day Wednesday and the company's total vehicle output dropped from Tuesday's levels despite Maruti adding workers at the factory. The local unit of Suzuki Motor Corp. produced 1,850 vehicles at its Manesar and Gurgaon factories Wednesday, down from 2,100 Tuesday, it said in a statement, without giving any reason for lower production.

The number of workers at Manesar, however, rose to 600 from 400 Tuesday. Wednesday's production number includes 300 units of the Swift hatchback, for which Maruti has more than 1,00,000 pending orders, the New Delhi-based auto maker said. A strike by about 1,500 workers at Manesar has severely hit vehicle production at India's largest car maker by sales since Oct. 7. It has also extended the waiting period to several months for the Swift hatchback. The Manesar workers are demanding the reinstatement of 44 colleagues who weren't taken back after a 33-day dispute with management ended Oct. 1.

Exide Industries tumbled 7.46% after company announced during market hours today that net profit fell 75.98% to Rs 51.15 crore on 3.29% increase in total income to Rs 1183.99 crore in Q2 September 2011 over Q2 September 2010.

Bharti Airtel gained 1.29% to Rs 389.90, off the day's low of Rs 380.10.

Oil exploration stocks declined as crude oil prices fell. Oil India declined 0.33%. Lower crude oil prices will result in Lower realizations from crude sales for oil exploration firms.

Cairn India fell 1.94%. The company announced after market hours today that consolidated net profit fell 51% to Rs 763 crore on 1% fall in revenue to Rs 2652.20 crore in Q2 September 2011 over Q2 September 2010 as the company made a one-time provision for royalty payments on crude output from a key producing block in Rajasthan.

State-run oil exploration major ONGC shed 0.58%. The additional secretary in the department of disinvestment, Sidhartha Pradhan, on Wednesday, 19 October 2011, said that ONGC's follow-on public offer will likely take place next month. It may be recalled that the government had deferred ONGC FPO in September 2011 due to weak market conditions. The government plans to divest 5% stake in ONGC through FPO.

The government aims to raise Rs 40000 crore through the sale of stakes in state-run companies this fiscal year through March 2012 (FY 2012), but it has been able to raise only about Rs 1145 crore so far amid weak market conditions.

Shares of offshore oil services providers declined as oil prices fell. Aban Offshore, Dolphin Offshore, Great Offshore and Jindal Drilling shed by between 1.13% to 2.29%.

NYMEX crude for November delivery briefly touched a one-month high of $89.51 before reversing gains to close down more than 2% on Wednesday, 19 October 2011. Oil recovered from initial losses in Asian trade today. The contract was up 0.43% to $86.66 a barrel in Asian electronic trading. US government data on Wednesday showed crude stocks fell 4.73 million barrels last week, against expectations stockpiles would be higher. Gasoline stocks declined 3.32 million barrels and distillate inventories dropped 4.27 million barrels, the report from the US Energy Information Administration said.

PSU OMCs declined after oil minister S Jaipal Reddy ruled out either dual pricing or deregulation of diesel on the ground of practical and economic difficulties. Indian Oil Corporation (IOC), HPCL and BPCL fell by between 0.75% to 1.19%. The government has already freed pricing of petrol. State-run oil marketing companies (PSU OMCs) sell diesel, LPG and kerosene at government controlled prices.

FMCG stocks fell in a weak market. ITC, United Spirits, Dabur India, and Marico declined by between 0.59% to 2.83%.

Interest rate sensitive banking stocks, too, declined on profit taking after recent gains triggered by hopes a slowing economy could prompt the Reserve Bank of India (RBI) to pause on rate increases next week. India's largest private sector bank by net profit ICICI Bank fell 2.89% to Rs 878.45. From a recent low of Rs 778.95 on 5 October 2011, the stock had risen 16.13% in nine trading sessions to Rs 904.60 on Wednesday, 19 October 2011.

India's second largest private sector bank by net profit HDFC Bank fell 0.33% to Rs 489.50 on profit taking. The stock had risen 3% on Wednesday after company announced during market hours on Wednesday that its net profit rose 31.48% to Rs 1199.35 on 37.4% rise in total income to Rs 7929.38 crore in Q2 September 2011 over Q2 September 2010.

From a recent low of Rs 438.35 on 5 October 2011, the HDFC Bank stock had risen 12.93% in nine trading sessions to Rs 491.10 on Wednesday, 19 October 2011.

HDFC Bank's portfolio quality as of 30 September 2011 remained healthy, with gross non-performing assets (NPA) at 1% of gross advances and net non-performing assets at 0.2% of net advances (as against 1.2% gross NPAs and 0.3% net NPA ratios as on 30 September 2010). The bank's provisioning policies for specific loan loss provisions remained higher than the minimum regulatory requirements. The NPA provision coverage ratio (excluding write-offs, technical or otherwise) was at 81.3% as of 30 September 2011. Total restructured assets were 0.4% of the bank's gross advances as of 31 September 2011. Of these, restructured advances categorized as standard assets were 0.1% of the bank's gross advances.

HDFC Bank's CASA ratio stood at 47.3% as of 30 September 2011. The CASA (current and savings account) ratio is the ratio of deposits in the current and savings accounts of a bank to its total deposits. A high CASA ratio indicates that a higher portion of the banks' deposits come from current and savings accounts. This means that the bank is getting money at low cost, since no interest is paid on the current accounts and the interest paid on savings account is usually low.

The bank's total capital adequacy ratio (CAR) as at 30 September 2011 as per Basel II guidelines was at 16.5%, as against regulatory minimum of 9%. Tier I CAR was at 11.4% as at 30 September 2011.

India's largest bank by branch network State Bank of India (SBI) rose 0.8% to Rs 1934.45, off the day's low of Rs 1887.20. The stock extended recent strong gains triggered by hopes of capital infusion from the Government of India, its majority shareholder. From a recent low of Rs 1715.30 on 5 October 2011, the stock had risen 11.88% in nine trading sessions to Rs 1919.10 on Wednesday, 19 October 2011.

The finance ministry has ruled out a rights issue for SBI in this financial year. However, it assured the lender that its capital requirements would be met by March 31, 2012.

IDBI Bank fell 2.06%. The bank announced during market hours today that net profit rose 20.3% to Rs 515.91 crore on 24.1% rise in total income to Rs 6291.42 crore in Q2 September 2011 over Q2 September 2010. The figures of the current period are not comparable to that of the same period in last year since Q2 September 2011 results include working results of the two erstwhile wholly owned subsidiaries namely IDBI Home Finance and IDBI Gifts consequently on their merger with the Bank w.e.f 1 January 2011.

Among other state-run banks, Bank of Baroda, and Bank of India dropped by between 0.05% to 2.06%.

The finance ministry will have to opt for supplementary demand for grants to meet the capital needs of five-six public sector banks, including SBI, in the current financial year. This capital is pegged at Rs 10000 crore to Rs 20000 crore in this financial year, against Rs 6000 crore provided in the Union Budget 2011-2012.

The government last week approved amendments to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act and debt recovery acts to enable banks to effectively deal with the menace of bad loans and also encourage them to disburse credit freely to home and corporate loan seekers. The Cabinet approved the introduction of the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Bill, 2011, in the next Winter Session of Parliament.

Information and Broadcasting Minister Ambika Soni said that suggested amendments will strengthen the ability of banks to recover debts due from the borrowers, enhance the ability of banks to extend credit to both corporate and retail borrowers, reduce the cost of funds for banks and their customers and reduce the level of non-performing assets.

Most metal stocks fell as global commodity prices fell. Sesa Goa, Jindal Saw, NMDC, Nalco, JSW Steel, Sterlite Industries, Hindalco Industries, shed by between 0.66% to 3.43%. LMEX, a gauge of six metals traded on the London Metal Exchange dropped 2.25% on Wednesday, 19 October 2011.

The latest data showed China's annual economic growth eased to 9.1% in the third quarter. China is the world's largest consumer of aluminum and copper.

Hindustan Zinc fell 0.58% after gaining 2.11% on Wednesday on the back of strong Q2 results. The company announced during market hours on Wednesday that net profit rose 41.73% to Rs 1344.69 crore on 26.74% rise in total income to Rs 3023.60 crore in Q2 September 2011 over Q2 September 2010.

Steel stocks recovered. Tata Steel rose 1.47% to Rs 440.45, off the day's low of Rs 423.10. Sail rose 0.38% to Rs 106.95, off the day's low of Rs 103.95.

Jindal Steel & Power gained 1.32% to Rs 536.40, off the day's low of Rs 517.05. The stock extended Wednesday's 2.68% gains. The company's consolidated net profit before exceptional items rose 8% to Rs 965.97 crore on 43.5% growth in turnover to Rs 4423.20 crore in Q2 September 2011 over Q2 September 2010. Net profit after exceptional items declined 0.27% to Rs 891.80 crore in Q2 September 2011 over Q2 September 2010. The result was announced after trading hours on Tuesday. The company's power generation arm Jindal Power reported a net profit of Rs 409.84 crore on turnover of Rs 737.92 crore for Q2 September 2011.

M and B Switchgears clocked highest volume of 2.65 crore shares on BSE. Cals Refineries (69.76 lakh shares), Apollo Hospitals (41.07 lakh shares), Flexituff International (38.30 lakh shares) and Pipavav Defence (32.44 lakh shares) were the other volume toppers in that order.

M and B Switchgears clocked highest turnover of Rs 842.17 crore on BSE. Apollo Hospitals (Rs 210.84 crore), SBI (Rs 113.91 crore), Flexituff International (Rs 61.25 crore) and Onelife Capital (Rs 47.02 crore) were the other turnover toppers in that order.

Finance Minister Pranab Mukherjee on Wednesday, 19 October 2011, said that the government is concerned about the volatility of FII flows. Mukherjee said loose monetary policies adopted by central banks in advanced economies have added to global liquidity, driving investments into better off emerging economies and fueling inflation in these countries.

India's economy will grow at a rate less than the earlier government projection in 2011/12, Mukherjee said. "With the crude prices remaining where they are it will be a great challenge to maintain the fiscal deficit numbers to 4.6% this year," Mukherjee said.

Stock-specific activity may dominate trade in the near-term as earnings flow in. Investors will closely watch the management commentary at the time of announcement of Q2 September 2011 results, which will provide cues on futures earnings outlook.

Engineering & construction major L&T, Idea Cellular, paints major Asian Paints, JSW Steel and Godrej Consumer Products reveal Q2 results tomorrow, 21 October 2011. Axis Bank, Power Grid Corporation and Grasim unveil Q2 results on Saturday, 22 October 2011. Cigarette major ITC, Sterlite Industries and Titan Industries unveil Q2 results on 24 October 2011. NTPC, Kotak Mahindra Bank and Dr. Reddy's Lab unveil Q2 results on 25 October 2011. Indian Hotels unveils Q2 results on 28 October 2011. Maruti Suzuki and LIC Housing Finance report Q2 results on 29 October 2011. ICICI Bank, Wipro, Hindustan Unilever, Dabur India, Colgate Palmolive (India), Bank of Baroda, NMDC and BPCL unveil Q2 results on 31 October 2011

Cement majors ACC and Ambuja Cements, Punjab National Bank and Aditya Birla Nuvo unveil quarterly results on 1 November 2011. Sun TV Network and TVS Motor report Q2 results on 3 November 2011. Bharti Airtel and GlaxoSmithKline Pharmaceuticals unveil quarterly results on 4 November 2011.

Infrastructure Development Finance Company and ABB unveil results on 8 November 2011. Ranbaxy Laboratories and Power Finance Corporation unveil quarterly results on 9 November 2011. Hindalco unveils Q2 results on 10 November 2011. Jet Airways (India) and Tata Chemicals unveil Q2 results on 11 November 2011. Tata Motors, Mahindra & Mahindra and India Cements unveil Q2 results on 14 November 2011. Tata Power unveils Q2 results on 15 November 2011.

The market regulator Securities and Exchange Board of India recently set a minimum net worth of Rs 100 crore for companies that wish to issue structured products or market-linked debentures to raise funds. Sebi also set the minimum size for such issues at Rs 10 lakh. Market-linked debentures are hybrid products which have the features of usual debt securities, but offer market-linked returns like an exchange-traded derivative. The issuer company will have to appoint a third party, a credit-rating company registered with the regulator, which will provide the value of the security at least once a week, Sebi said in a circular.

The government last month raised the limit of overseas borrowing for companies to $750 million from $500 million. Indian companies can also now raise loans up to $1 billion in Chinese yuan.

Given the lackluster initial FII response to the government's sharply raising the ceiling of FII investment in long-term corporate bonds issued by the companies in the infrastructure sector in March 2011, the government on 12 September 2011, further relaxed the norms on FII investment in such bonds. Sebi had in early August 2011 allowed Qualified Foreign Investors (QFIs) to subscribe to Mutual Fund Debt Schemes which invest in the infrastructure sector subject to a total overall ceiling of $3 billion within the total ceiling of $25 billion.

Industrial output in the month of August 2011 rose a slower-than expected 4.1% from a year earlier, data released by the government on 12 October 2011 showed. Industrial output growth for July was revised upwards to 3.84% from a provisional reading of 3.28%. Manufacturing output, which constitutes about 76% of the industrial production rose an annual 4.5% in August versus 2.3% in July. The government also revised upwards the industrial production growth for May 2011 to 6.15% from 5.91% reported earlier.

The government recently raised its borrowing target for the current fiscal year by Rs 52800 crore, surprising the market and fueling worries that it may even overshoot the new estimate because of muted revenue growth amid a slowing economy and swelling subsidies. The government will borrow Rs 2.2 lakh crore during October 2011-March 2012 period, or the second half of the fiscal year, compared with the target of Rs 1.67 lakh crore announced in budget in February 2011. C. Rangarajan, Chairman of the Prime Minister's Economic Advisory Council on 29 September 2011 said it is going to be difficult to achieve fiscal deficit target of 4.6% of GDP for the year ending March 2012.

The government's new borrowing programme may crowd out private borrowers who come into the market in the second half of the year. Credit growth normally picks up after October every year when the busy season starts.

Atsi Sheth, a New York-based vice president and senior analyst at Moody's Investors Service said in a media interview recently that Moody's is unlikely to change its rating outlook on India for now, though the extent of the increase in the government's borrowing target is a surprise. The possibility of fiscal slippage is, however, already factored into the sovereign rating, Sheth said.

Standard & Poor's Ratings Services on 3 October 2011 said it is maintaining its view that India will struggle to meet its fiscal deficit target. Takahira Ogawa, director of Sovereign and International Public Finance Ratings at S&P said India must prove its intent to continue with the process of fiscal consolidation in the medium term.

The latest data showed that inflation in India remains uncomfortably high. Inflation, as measured by the wholesale price index (WPI), rose 9.72% in September 2011, compared with a 9.78% rise in August 2011, data released by the government on 14 October 2011, showed. WPI inflation for July 2011 was revised upwards to 9.36% from the provisional reading of 9.22%. Five out of nine economists polled by Capital Market before the latest WPI data expect a 25 basis points hike in repo rate from the Reserve Bank of India at its half-yearly review of the monetary policy on 25 October 2011. The rest four expect a status quo on rates.

The annual rate of inflation in the food space increased in early October while inflation in the fuel group also edged up, data released by the Government showed on Thursday, 20 October 2011. Annual inflation in the Food Articles group rose to 10.60% in the week ended October 8 from 9.32% in the preceding week, the Commerce & Industry Ministry said in a statement. It was at 15.72% in the corresponding period of last year. Inflation in the Primary Articles group increased to 11.18% in the week under review, from 10.60% in the week ended October 1. It was at 19.03% in the year-ago period. Inflation in the Fuel & Power group rose to 15.17% in the week ended October 8 from 15.10% in the previous week, the Government data showed. It was at 11.14% in the comparable week of the previous year.

Boosting farm output on a sustainable basis is the only long-term solution to address supply constraints and cool high commodity prices that have often hurt economic growth, Mukherjee said on Monday, 17 October 2011. Rangarajan on 14 October 2011 said that monetary policy has a role to play in containing demand pressures as long as inflation remains above 9%.

While its tolerance of inflation has gone up with rising income levels, the Reserve Bank of India (RBI) will raise rates further if high inflation persists, central bank deputy governor Subir Gokarn said on 12 October 2011. On the same day, RBI governor D Subbarao reiterated that controlling inflation is the main focus of monetary policy.

RBI said at a monetary policy review on 16 September 2011 that it is imperative to persist with the current anti-inflationary stance because a premature change in the policy stance could harden inflationary expectations, thereby diluting the impact of past policy actions. The RBI raised repo rate by 25 basis points on 16 September 2011.

Going forward, the stance of the monetary will be influenced by signs of downward movement in the inflation trajectory, to which the moderation in demand is expected to contribute, and the implications of global developments, RBI said in its 16 September 2011 policy statement. The overall tone of the RBI's September policy was softer than the previous policy announcement which was extremely hawkish.

RBI said on 16 September 2011 that corporate margins moderated across several sectors in Q1 June 2011 compared to levels in Q4 March 2011. However, barring a few sectors, significant pass-through of rising input costs is still visible, RBI said.

India's services sector contracted for the first time in more than two years as new business dried up and expectations weakened amid concern over a flagging world economy, a survey showed on 5 October 2011. The seasonally adjusted HSBC Markit Business Activity Index, based on a survey of around 400 firms, plunged in September to 49.8 -- its lowest reading since April 2009 -- and below the 50 mark which separates growth from contraction.

The slowdown in growth has continued to broaden with the service sector seeing a further slowdown in economic momentum, HSBC economist Leif Eskesen said. The new business sub-index sank to a 28-month low of 51.6 in September, down from 54.9 in August. The weak expansion in new business -- the main cause of the stagnation in activity -- meant employment levels fell for a third consecutive month. Despite harsh conditions firms were able to pass on rising input costs to customers, albeit at a slightly lower pace than in August.

The growth in manufacturing sector nearly stalled in September 2011, hitting its weakest spot since March 2009 on slowing output and orders growth following a series of interest rate hikes, data showed on 3 October 2011. The HSBC Markit India Manufacturing PMI fell more than two points to 50.4 in September 2011 from 52.6 in August 2011, very close to the 50 mark which divides growth and contraction. The output index plunged by its biggest amount in one month since November 2008, to 51.1 from 56.

European shares though in the red came off the day's lows on Thursday, 20 October 2011. Key benchmark indices in UK, France and Germany were down by 0.32% to 0.74%.

The spotlight remains on negotiations between European Union leaders on how to solve the debt crisis ahead of a summit in Brussels on Sunday, 23 October 2011. French President Nicolas Sarkozy traveled to Frankfurt Wednesday to meet German Chancellor Angela Merkel and other euro-zone officials for talks. Media reports say that Germany and France disagree on how to boost the firepower of the European Financial Stability Fund, the euro zone's rescue fund. Adding to worries, the Wall Street Journal reported that the European Commission and the International Monetary Fund disagree over whether Greece's debt burden is sustainable.

European Union leaders are meeting in Brussels this weekend for a closely watched summit. The leaders are expected to agree on a plan to recapitalise European banks. Plans to tackle the euro zone debt crisis have stalled with Paris and Berlin at odds over how to increase the firepower of the region's bailout fund, French President Nicolas Sarkozy said on Wednesday, 19 October 2011.

Greece parliament is expected to give a final green light late on Thursday, 20 October 2011, to a deeply unpopular austerity package needed to stave off bankruptcy.

Asian stocks fell on Thursday, 20 October 2011, as growing investor caution about taking risks ahead of a key European leaders' summit at the weekend weighed on riskier assets across the board and supported safe-haven government bonds. Key benchmark indices in China, Hong Kong, Indonesia, Japan, South Korea, Taiwan and Singapore fell by between 0.96% to 2.74%.

US index futures reversed initial losses. Trading in US index futures indicated that the Dow could gain 55 points at the opening bell on Thursday, 20 October 2011.

US stocks fell on Wednesday, 19 October 2011, as traders, after sitting on their hands for most of the day, jumped to sell in a hair-trigger reaction to fresh reports underscoring that Europe remains far from a solution to its debt crisis. On Tuesday, stocks had rallied on late news suggesting euro zone leaders had a big package in place for rescuing indebted nations. Economic data showed US consumer prices outside food and energy rose at their slowest pace in six months while groundbreaking on new homes rose at the fastest rate in 1-1/2 years.