Market corrects amid global volatility

The market corrected last week as the initial euphoria surrounding recent plan to contain the euro-zone debt crisis faded after Greek prime minister called a referendum on the bailout deal, risking a new euro-zone crisis. In Asia, data showed China's factory activity slowed to a near three-year low.

Situation, however, eased on Friday, 4 November 2011, after Greece shelved plans for a financial-bailout referendum. While a surprise interest-rate cut from the European Central Bank (ECB) also consoled investors.



The BSE Sensex fell 242.19 points or 1.36% to 17,562.61 in the week ended Friday, 4 November 2011. The 50-share S&P CNX Nifty fell 76.50 points or 1.42% to 5,284.20.

The BSE Mid-Cap index inched up 0.37% while the BSE Small-Cap index was almost flat with loss of just 0.02%. Both these indices outperformed the Sensex.

Foreign institutional investors (FIIs) stepped up buying in Indian equities. FII inflow in calendar 2011 totaled Rs 2172.60 crore while the inflow in November 2011 totaled Rs 786.90 (till 3 November 2011).

European Union members, on 27 October 2011, had agreed in a Summit to raise the euro-zone bailout fund to about Euro 1 trillion and also to recapitalize banks. The European Union struck a deal with private lenders to accept a 50% on their Greek bonds.

However, Greek Prime Minister George Papandreou late Monday (31 October 2011) unexpectedly called for a referendum on the bailout plan in the face of growing public anger over further austerity measures and a deepening recession.

Papandreou later abandoned his planned referendum on his country's bailout after it split his party, roiled financial markets and drew unprecedented warnings from euro leaders that it may cost Greece its membership in the 17-nation currency club.

Meanwhile, in Asia, two closely watched measures of Chinese manufacturing released on Tuesday, 1 November 2011, showed the sector growing in October, albeit at a slow rate. China's official manufacturing Purchasing Managers Index (PMI) fell to 50.4 in October, slowing from the prior month's reading of 51.2, but still above the 50 level that separates expansion from contraction. However, the result was well below market expectations. A privately compiled version of the PMI, published by HSBC, printed at 51, rising from a mildly contractionary 49.9 reading in September. Both PMI surveys showed a drop for input prices, easing concerns about Chinese inflation.

Back in India, trading for the week began on a weak note. Key benchmark indices snapped a four-day winning streak on Monday, 31 October 2011 on weak global stocks as the initial euphoria surrounding last week's plan to contain the euro-zone debt crisis faded. The BSE Sensex shed 99.79 points or 0.56% to settle at 17,705.01. The S&P CNX Nifty lost 34.10 points or 0.64% to settle at 5,326.60.

Key benchmark indices dropped for the second consecutive session on Tuesday, 1 November 2011 as softer-than-expected Chinese manufacturing data and fresh worries about the euro-zone debt crisis caused global risk aversion. The BSE Sensex fell 224.18 points or 1.27% to settle at 17,480.83. The S&P CNX Nifty shed 68.65 points or 1.29% to 5,257.95.

Caution ahead of emergency talks among European Union leaders to discuss Greece's call for a confidence vote and referendum on a European Union plan to stem euro-zone debt crisis pulled Indian shares off highs in a choppy trading session on Wednesday, 2 November 2011. The BSE Sensex lost 15.98 points or 0.09% to settle at 17,464.85. The S&P CNX Nifty was up 0.50 points or 0.01% to 5,258.45.

Key benchmark indices closed the volatile trading session with tiny gains on Thursday, 3 November 2011, after staging a sharp recovery in last one hour of trade tracking rebound in European shares. The BSE Sensex was up 17.08 points or 0.1% to 17,481.93. The S&P CNX Nifty was up 7.30 points or 0.14% to 5,265.75.

Key benchmark indices edged higher on Friday, 4 November 2011, as Greece moved closer to accepting a bailout and the European Central Bank cut interest rates, easing concern the region's debt crisis may spread. The BSE Sensex rose 80.68 points or 0.46% to 17,562.61. The S&P CNX Nifty rose 18.45 points or 0.35% to 5,284.20.

Among the 30 Sensex shares, 22 declined and the rest rose.

India's largest truck maker by sales Tata Motors was the biggest loser in the Sensex pack. The stock fell 8.83% to Rs 188. The company will announce its Q2 September 2011 results on 14 November 2011.

Tata Motors' 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. 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. The company unveils its Q2 results on 14 November 2011.

India's largest copper maker by sales Sterlite Industries (India) tumbled 7.34% to Rs 123.15. During market hours on Tuesday, 1 November 2011, the company clarified on a media report regarding increase in its stake in associate company, Vedanta Aluminium (VAL). Sterlite said it does not expect any change in its shareholding in VAL, which currently stands at 29.5%. As and when the capital structure of VAL is finalized, part of the loans/quasi-equity from Sterlite Industries would get converted to equity of VAL in order to achieve the target debt-equity ratio of VAL and maintain Sterlite's 29.5% shareholding in VAL. This situation remains unchanged, the company added.

During market hours on 24 October 2011, Sterlite reported 1.01% fall consolidated in net profit to Rs 997.78 crore on 67.57% rise total income to Rs 10195.70 crore in Q2 September 2011 over Q2 September 2010.

India's largest private sector bank by net profit ICICI Bank fell 5.12% to Rs 885.20. ICICI Bank's consolidated net profit rose 43% to Rs 1992 crore in Q2 September 2011 over Q2 September 2010. Standalone profit after tax increased 22% to Rs 1503 crore in Q2 September 2011 over Q2 September 2010. Net interest income increased 14% to Rs 2506 crore in Q2 September 2011 over Q2 September 2010. Fee income increased 7% to Rs 1700 crore in Q2 September 2011 over Q2 September 2010. Provisions decreased 50% to Rs 319 crore in Q2 September 2011 over Q2 September 2010. The result was announced during trading hours on Monday, 31 October 2011.

Tractor and SUVs maker Mahindra & Mahindra fell 3.85% to Rs 835.05 on reports that the finance ministry is exploring plans to raise excise duty on diesel cars and cigarettes to raise revenue. The company's total sales rose 20.3% to 41,506 units in October 2011 over October 2010. Domestic sales rose 21.1% to 39,352 units while exports rose 7.5% to 2,154 units in October 2011 over October 2010.

India's largest cigarette maker by sales ITC fell 2.23% to Rs 210.35 on reports the finance ministry is exploring plans to raise excise duty on cigarettes and diesel cars to raise revenue. ITC's net profit rose 21.46% to Rs 1514.31 crore on 18.22% rise in total income to Rs 6266.02 crore in Q2 September 2011 over Q2 September 2010. The company announced the results on 24 October 2011.

Index heavyweight Reliance Industries (RIL) fell 2.05% to Rs 879.60. The company is likely to use the towers and fibre optic cables of a telecom company, Reliance Communications controlled by Anil Ambani, to provide high-speed data services, marking the first major collaboration between the two Ambani brothers after they carved out the Reliance empire between themselves in 2005. In May 2010, the Ambani brothers terminated a non-compete agreement that had been in place for five years, allowing RIL's re-entry into telecom. RIL is controlled by Anil Ambani's elder brother Mukesh Ambani.

RIL early this week refuted speculation that it is considering acquiring Valero Energy, Inc. RIL said before trading hours on Tuesday that while it is the policy of RIL not to comment on market rumors, in light of the materiality of the rumored transaction, RIL wishes to dispel the rumors and announce that it is not in discussions with Valero nor otherwise considering an acquisition of Valero. Reliance undertakes no obligation to update this statement and intends to adhere to its "no comment" policy in the future, it said. Valero Energy is a Fortune 50 company based in San Antonio, and through its subsidiaries is the world's largest independent petroleum refiner and marketer.

RIL, last month, neither confirmed nor denied media reports of a likely suspension of oil and gas drilling operations. RIL said on 17 October 2011 that it 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.

FMCG major Hindustan Unilever (HUL) was the top gainer from the Sensex pack. The stock jumped 8.41% to Rs 378.85. HUL's net profit rose 21.69% to Rs 688.92 crore on 17.75% rise in total income to Rs 5610.48 crore in Q2 September 2011 over Q2 September 2010. The results was announced during trading hours on Monday, 31 October 2011. The stock hit a record high of Rs 393.20 on Tuesday, 1 November 2011.

India's largest bank by branch network State Bank of India (SBI) rose 3% to Rs 1964.25. The bank will announce its Q2 results on 9 November 2011.

India's largest state-run power equipment maker by sales Bhel rose 1.97% to Rs 333.65 on reports that the government is contemplating imposing 14% import duty on power equipments to curb the influx of cheaper products, primarily from China.

India's largest listed telecom operator by sales Bharti Airtel rose 1.56% to Rs 397.95. The telecom regulator proposed guidelines on Thursday, 3 November 2011, that would facilitate mergers between firms in India's crowded mobile phone sector.

Meanwhile, Bharti Airtel's consolidated net profit as per International Financial Reporting Standards (IFRS) fell 15.49% to Rs 1027 crore on 1.73% increase in total income to Rs 17276.40 crore in Q2 September 2011 over Q1 June 2011. The result was announced before trading hours on Friday, 4 November 2011.

Bharti Airtel said its overall customer base stood at 237 million, across 19 countries. The company reported a forex restatement losses of Rs 239 crore in Q2 September 2011 as against a gain of Rs 249 crore in Q2 September 2010.

Drug maker Sun Pharmaceutical Industries rose 0.54% to Rs 511.55. The company received approval from the US health regulator to market generic Diltiazem HCl extended-release capsules used for treating hypertension and angina in the American market.

The company's subsidiary was granted approval by the United States Food and Drug Administration (USFDA) for the abbreviated new drug application (ANDA) to market generic Diltiazem HCl extended-release capsules. These Diltiazem HCl extended release capsules are generic equivalent to Valeant International's Cardizem CD capsules in the strengths of 20 milligram (mg), 180 mg, 240 mg, 300 mg and 360 mg. Annual sale in the US for these strengths is approximately $300 million