Market edges higher amidst volatility

Key benchmark indices edged higher amidst volatility supported by gains in index heavyweight Reliance Industries (RIL), which jumped nearly 2%. News trickled in after market hours that China's central bank cut the reserve requirement ratio for its banks by 50 basis points for the first time in nearly three years to ease credit strains and shore up activity in the world's second-largest economy. The BSE Sensex was up 115.12 points or 0.72%, up close to 275 points from the day's low and off about 55 points from the day's high. The barometer index, BSE Sensex settled above the psychological 16,000 mark after alternately moving above and below that level earlier in the day. The market breadth was negative.



The Sensex has lost 1,581.55 points or 8.93% in November month. The Sensex has slumped 4,385.63 points or 21.38% in calendar 2011. From a 52-week high of 20,664.80 on 3 January 2011, the Sensex has lost 4,541.34 points or 21.97%. From a 52-week low of 15,478.69 on 23 November 2011, the Sensex has risen 644.77 points or 4.16%.

Coming back to today's trade, pharma stocks extended recent gains after reporting good Q2 results recently. IT stocks rose after the strong economic data in the US. FMCG stocks gained. Interest rate sensitive realty shares fell for the second straight day on profit taking after recent gains triggered by the latest data showed easing of food inflation. Sterlite Industries hit 52 week low. Auto and banking stocks were mixed.

The market trimmed losses after a weak start. It weakened once again after recovering sharply from the initial losses to hit fresh intraday high in morning trade. It extended recovery to hit fresh intraday high in mid-morning trade. It moved into the positive terrain to hit fresh intraday high in early afternoon trade. Market struck fresh intraday highs in afternoon trade. It slipped into the red after surging to hit fresh intraday high in mid-afternoon trade. It recovered in late trade.

The BSE Sensex was up 115.12 points or 0.72% to 16,123.46. The index gained 171.22 points at the day's high of 16,179.56 in mid-afternoon trade. The index fell 158.77 points at the day's low of 15,849.57 in early trade, its lowest level since 25 November 2011.

The S&P CNX Nifty was up 26.95 points or 0.56% to 4,832.05. The Nifty hit a high of 4,851.55 in intraday trade. The index hit a low of 4,754.80 in intraday trade, its lowest level since 25 November 2011.

The BSE Mid-Cap index fell 0.66% and the BSE Small-Cap index declined 0.73%. Both these indices underperformed the Sensex.

BSE clocked turnover of Rs 1936 crore higher than Rs 1895.70 crore on Tuesday, 29 November 2011.

The market breadth, indicating the overall health of the market, was negative. On BSE, 1524 shares declined and 1211 shares rose. A total of 123 shares were unchanged.

From the 30-member Sensex pack, 20 stocks gained and the rest of them declined.

India's largest oil & gas exploration firm by sales ONGC jumped 3.06% and was the second top gainer from the Sensex pack.

Index heavyweight Reliance Industries (RIL) rose 1.8% to Rs 778.80. The stock was volatile. The stock hit a high of Rs 784 and a low of Rs 753.75. The company after market hours on Monday said it has initiated arbitration proceedings against the government to seek an independent view of a tribunal on the issue of the company's entitlement of recovery of entire costs on KG-D6 gas blocks from the revenue generated from the blocks.

RIL said all the investments in the exploration, development and production of hydrocarbons from KG-D6 were made by RIL and its foreign partners at their own risk, and not by the Government of India (GoI). RIL and its partners are entitled under the production sharing contract (PSC) with the GoI to recover their full costs from the revenues generated by production from the block, RIL said in a statement.

The investment made in KG-D6 production facilities has been only partly recovered and the return on the investment so far is less than the cost of the capital, RIL said. The PSC contains no provision which entitles the GoI to restrict the costs recovered by the company by reference to factors such as the level of production or the extent to which field facilities are utilised, RIL said. RIL said it has initiated arbitration proceedings against the GoI in a bid to finally resolve the cost recovery issue so as not to hinder future investments in this block.

Interest rate sensitive auto shares were mixed ahead of the announcement of November month sales figures by auto firms starting Thursday, 1 December 2011. India's largest motorcycle maker by sales Bajaj Auto rose 1.42%. India's largest motorcycle maker by sales Hero MotoCorp fell 2.76%. India's largest truck maker by sales Tata Motors fell 2.76%. India's largest car maker by sales Maruti Suzuki India rose 1.15%. India's largest tractor maker by sales M&M fell 0.14%.

Banking stocks were mixed. India's largest private sector bank by net profit ICICI Bank fell 3.01%. India's second largest private sector bank by net profit HDFC Bank rose 1.62%. India's largest bank by net profit and branch network State Bank of India (SBI) dropped 0.36%.

Interest rate sensitive realty shares fell for the second straight day on profit taking after recent gains triggered by the latest data showed easing of food inflation. Another trigger for the recent rally in realty shares was the government's decision to liberalize foreign investment rules in retail sector which could throw open a big opportunity for domestic real estate developers. HDIL, Indiabulls Real Estate and Unitech shed by between 0.86% to 5.9%. But, Realty major DLF jumped 2.15%.

IT stocks gained after the strong economic data in the US. US is the largest outsourcing market for the Indian IT firms. India's third largest software services exporter Wipro rose 1.15%. India's largest software services exporter TCS gained 2.05%, with the stock gaining for the third straight day. Tata group holding firm, Tata Sons, last week named Cyrus Pallonji Mistry as the successor to Tata Group Chairman Ratan Tata. India's second largest software services exporter by revenue Infosys rose 0.06% in volatile trade.

A weak rupee also supported IT stocks. The partially convertible rupee was at 52.22/23 per dollar, compared with Tuesday's close of 52.0150/0250. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports. Falling rupee is good for exporters as they get more rupees for every dollar they earn.

Most organised retailers rose after Prime Minister Manmohan Singh strongly defended the Cabinet decision to allow foreign direct investment in retail sector and ruled out a rollback. Trent, Koutons Retail, V2 Retail, Shoppers Stop and Store One Retail gained by between 1% to 4.96%.

Prime Minister Manmohan Singh on Tuesday (29 November 2011) said he was confident that foreign direct investment (FDI) in India's retail sector would benefit all as it would bring modern technology to the country, improve rural infrastructure, reduce wastage of agricultural produce, enable farmers to get better prices for their crops and consumers will get commodities of daily use at reduced prices. The reforms have drawn howls of protest from opposition parties and from allies within Singh's Congress Party-led coalition.

Shares of organised retailers had surged on Friday, 25 November 2011, after the Union Cabinet on Thursday, 24 November 2011, cleared a proposal to allow 51% FDI in multi-brand retail and increase in FDI in single brand retail to 100% from current 51%, paving way for global chains like WalMart, Carrefour and Tesco to open mega stores in Indian cities.

FMCG gained on renewed buying. ITC and Hindustan Unilever rose 1.44% and 2.26% respectively.

Pharma stocks extended recent gains after reporting good Q2 results recently. Sun Pharmaceutical Industries and Cipla gained by 2.84% and 0.34% respectively.

India's top mobile phone operator by sales Bharti Airtel rose 3.17% after company said on Wednesday it has crossed 50 million customers in Africa, where it acquired mobile operations in 15 countries in a $9 billion deal in June last year. Bharti currently operates in total 19 countries across Asia and Africa and is the world's fifth-biggest mobile operator by subscribers.

PSU OMCs -- HPCL and Indian Oil Corporation (IOCL) fell by between 0.02% to 0.32% extending recent losses on reports the state-run refiners may cut petrol prices by about one rupee a litre or 1.5% as softening Singapore spot gasoline prices have offset the impact of a declining rupee. BPCL rose 0.83%. PSU OMCs cut petrol prices by about 3.2% earlier this month, the first reduction in retail prices in nearly three years and the first since prices were decontrolled in June 2010.

Metal stocks were mixed after LMEX, a gauge of six metals traded on the London Metal Exchange dropped 0.48% on Tuesday, 29 November 2011. Tata Steel, Jindal Saw, and Sail fell by between 0.56% to 4.1%.

India's largest non-ferrous metals maker by sales Sterlite Industries India lost 2.98% to Rs 99.30 after sliding to a 52-week low of Rs 98.20 in intraday trade today, 30 November 2011.

Hindustan Zinc, Nalco, Jindal Steel & Power, Hindalco Industries, and JSW Steel rose by between 0.04% to 3.07%.

Capital goods stocks fell on fears that their earnings will stay muted due to sluggish economic growth amid elevated interest rates and high inflation. Bhel, ABB, Thermax, Punj Lloyd, L&T and Suzlon Energy dropped by between 0.09% to 3.48%.

Avance Tech clocked highest volume of 9.07 crore shares on BSE. Shree Ashtavinayak Cine Vision (88 lakh shares), Cals Refineries (59.37 lakh shares), Suzlon Energy (54.03 lakh shares) and HDIL (33.55 lakh shares) were the other volume toppers in that order.

SBI clocked highest turnover of Rs 161.53 crore on BSE. ICICI Bank (Rs 74.12 crore), RIL (Rs 64.70 crore), Pantaloon Retail (Rs 52.87 crore) and Tata Motors (Rs 46.69 crore) were the other turnover toppers in that order.

A government statement in parliament has dashed hopes of a relief in securities transaction tax (STT). Junior finance minister S.S. Palanimanickam, last week, said the government has no proposal to lower the securities transaction tax (STT). There has been a speculation that the government will reduce STT in Union Budget 2012-2013 in a bid to revive sagging volumes on the bourses. Palanimanickam said in a written reply to Rajya Sabha that the securities transaction tax receipts had declined by around 18% to Rs 2960 crore during the first six months in the current fiscal year from a year ago period.

The Indian economy expanded at a substantially lower rate in the second quarter of the current fiscal year as a series of rate increases by the RBI and a global slowdown hurt local demand. India's economy grew 6.9% in Q2 September 2011, in line with expectations, after expanding by 7.7% in the first quarter, government data showed on Wednesday. The manufacturing sector grew an annual 2.7% during the July-September quarter while farm output rose an annual 3.2% the data showed. India's GDP growth in the first six months of FY12 stood at 7.3% versus 8.6% in the corresponding period of the last financial year, the CSO data showed today.

India's inflation rate will fall sharply over the next few months and the country's economy should hold up despite the global economic slowdown, Prime Minister Manmohan Singh said on Tuesday.

RBI announced a 25 basis points hike in its key policy rate viz. the repo rate to 8.5% after half-yearly review of the monetary policy on 25 October 2011. The central bank cut its GDP growth forecast for the current fiscal year through March 2012 to 7.6% from 8% earlier. But it retained its March-end inflation projection of 7%. RBI said the projected inflation trajectory indicates that the inflation rate will begin falling in December 2011 (January 2012 release) and then continue down a steady path to 7% by March 2012. It is expected to moderate further in the first half of 2012-13. This reflects a combination of commodity price movements and the cumulative impact of monetary tightening. Further, moderating inflation rates are likely to impact expectations favourably.

European stock markets reversed initial losses on Wednesday after China's central bank cut the reserve requirement ratio for its banks by 50 basis points on Wednesday. Key benchmark indices in France, Germany and UK rose by between 0.59% to 1.29%.

Euro zone officials agreed on Tuesday on two ways to leverage the firepower of their bailout fund, the 440-billion-euro European Financial Stability Facility (EFSF), using both an insurance scheme and a co-investment programme. They also agreed to extend further aid payments to Greece and Ireland. Hopes rose for more involvement from the IMF after Eurogroup President Jean-Claude Juncker said they have agreed to rapidly explore ways of boosting the IMF's resources through bilateral loans so it can match the leveraged EFSF's capabilities.

Asian stocks declined on Wednesday snapping the steepest two-day gain this month after Standard & Poor's cut credit ratings on lenders from Bank of America Corp. to Goldman Sachs Group Inc. Key benchmark indices in China, Hong Kong, Japan, South Korea and Taiwan were down by between 0.49% to 3.27%. Key benchmark indices in Indonesia and Singapore rose 0.74% and 0.53%.

Japanese factory output rose more than expected in October in a tentative sign that flooding in Thailand had a smaller impact on supply chains than initially feared. Industrial output rose 2.4% in October. Data today showed South Korea's industrial production rose in October at the slowest pace since August.

Trading in US index futures indicated that the Dow could gained 71 points at the opening bell on Wednesday, 30 November 2011. US stocks advanced for a second day on Tuesday as stronger-than-expected consumer confidence data and hopes for further progress on a solution to Europe's fiscal mess bolstered sentiment. The Conference Board, an industry group, said its index of consumer confidence jumped to its highest level since July.