Metal, cement stocks advance

Key benchmark indices edged higher amid intraday volatility after Pakistan on Friday, 4 November 2011, denied that it had backtracked on giving India Most Favoured Nation (MFN) trade status. Earlier, the market had slipped into the red for a brief period in afternoon trade soon after a news agency quoted an unnamed senior Indian government source as saying that Pakistan had backtracked since announcing earlier this week that it had granted India the status of Most Favoured Nation (MFN) in trade The BSE Sensex jumped 80.68 points or 0.46%, off about 140 points from the day's high and up close to 90 points from the day's low. The market breadth was positive. Index heavyweight Reliance Industries (RIL) edged lower in volatile trade. ONGC fell ahead of Q2 results.



The Sensex has lost 142.40 points or 0.8% this month so far. The Sensex has slumped 2,946.48 points or 14.36% in calendar 2011. From a 52-week high of 21,108.64 on 5 November 2010, the Sensex has lost 3,546.03 points or 16.79%. From a 52-week low of 15,745.43 on 4 October 2011, the Sensex has risen 1,817.18 points or 11.54%.

Coming back to today's trade, metal stocks rose as global metal prices edged higher. Interest rate sensitive realty and banking stocks rose triggered by the Reserve Bank of India (RBI) recently indicating pause on rate increases. Cement stocks also gained on expectations of pick-up in post-monsoon demand. Except the BSE Oil & Gas index, all the other 12 sectoral indices on BSE rose.

The market jumped in early volatile trade as euro-zone debt worries eased after Greece on Thursday, 3 November 2011, shelved plans for a financial-bailout referendum and after a surprise interest-rate cut from the European Central Bank (ECB) on that day. The market pared gains in morning trade. The market regained strength in mid-morning trade. Key benchmark indices trimmed gains amid intraday volatility in early afternoon trade.

The market hit a fresh intraday low in afternoon trade after a news agency quoted an unnamed senior Indian government source as saying that Pakistan had backtracked since announcing earlier this week that it had granted India the status of Most Favoured Nation (MFN) in trade. The market soon regained positive zone after a Pakistani foreign office spokeswoman said that Pakistan is not backtracking on MFN trade status for India.

Pakistan's foreign office spokeswoman Tehmina Janjua on Friday, 4 November 2011, denied that the country had backtracked on giving India Most Favoured Nation (MFN) trade status. The MFN status would help normalise trade relations between India and Pakistan by ending heavy restrictions on what India is allowed to export across the border. New Delhi granted its neighbour such a status in the mid-nineties.

The week ahead is a truncated one as the stock market remains closed on Monday, 7 November 2011 on account of Bakri-Id and again on Thursday, 10 November 2011 on account of Gurunanak Jayanti.

The BSE Sensex jumped 80.68 points or 0.46% to settle at 17,562.61, its highest closing level since 31 October 2011. The index fell 7.54 points at the day's low of 17,474.39 in mid-afternoon trade. The index jumped 220.33 points at the day's high of 17,702.26 in early trade.

The S&P CNX Nifty rose 18.45 points or 0.35% to settle at 5,284.20, its highest closing level since 31 October 2011. The Nifty hit a high of 5,326.45 in intraday trade. The index hit a low of 5,256.80 in intraday trade.

The BSE Mid-Cap index rose 0.75% and outperformed the Sensex. The BSE Small-Cap index gained 0.38% and underperformed the Sensex.

BSE clocked turnover of Rs 2379 crore, higher than Rs 2202.43 crore on Thursday, 3 November 2011.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,588 shares rose and 1,247 fell. A total of 151 shares were unchanged. The breadth was much stronger earlier in the day.

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

Index heavyweight Reliance Industries (RIL) was down 0.57% to Rs 879.60, off the day's high of Rs 902. The stock had risen recently on reports that 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.

Bharat Heavy Electricals (Bhel) rose 1.34%, extending Thursday's 4.18% surge triggered by reports that the government is contemplating imposing 14% import duty on power equipment to curb the influx of cheaper products, primarily from China. The Union Heavy Industries Ministry has reportedly sought the government's approval for a proposal to impose a 14% import duty on power equipment. There seems to be a consensus for ensuring a level-playing field for the domestic power equipment manufacturers like Bhel and L&T vis-à-vis Chinese imports.

India's largest engineering & construction firm by order book, L&T rose 0.87%. The company announced during market hours on Thursday that L&T (Oman), a subsidiary of the company won Rs 875 crore orders in urban infrastructure segment. The company had announced during trading hours on Wednesday, November 2011, that its construction division has bagged new orders valued over Rs 1620 crore in the buildings and factories segment.

Metal stocks rose across the board as LMEX, a gauge of six metals traded on the London Metal Exchange, gained 0.49% on Thursday, 3 November 2011. JSW Steel, Hindalco Industries, Jindal Steel & Power, Hindustan Zinc, NMDC, Nalco, Tata Steel, and Sterlite Industries gained by between 0.45% to 6.5%.

Sesa Goa ended flat after intraday volatile trade after the company said it would acquire 100% stake in Goa Energy from Videocon Industries and other shareholders for Rs 53.72 crore.

Cement stocks edged higher in a firm market. ACC, Jaiprakash Associates and Ambuja Cements rose by between 1.09% to 2.45%.

Interest rate sensitive realty stocks extended recent gains triggered by the Reserve Bank of India (RBI) recently indicating pause on rate increases. Purchases of both residential and commercial property are largely driven by finance. HDIL, DLF, Indiabulls Real Estate, Orbit Corporation and Sobha Developers rose by between 0.67% to 3.48%.

Oil exploration stocks rose along with crude oil prices. Cairn India and Oil India gained by between 0.52% to 2.07%. Higher crude oil prices will result in higher realizations from crude sales for oil exploration firms. India's largest state-run oil & gas exploration firm by sales, ONGC, fell 0.11% reversing initial gains ahead of its Q2 results today.

PSU OMCs reversed initial gains as crude oil prices rose. BPCL, HPCL and Indian Oil Corporation fell by between 0.42% to 1.17%. Higher crude oil prices will increase under-recoveries of state-run oil marketing companies (PSU OMCs) on domestic sale of diesel, LPG and kerosene at controlled prices. PSU OMCs raised petrol prices by Rs 1.80 per litre to Rs 1.91 per litre from Thursday midnight. This is the 13th increase in petrol prices since the fuel was decontrolled in June last year, and second since the middle of last month when prices were raised by more than Rs 3 a litre.

Oil traded near a three-month high in Asian electronic trading today as signs that Europe will reach an agreement with Greece on its debt reduced concern that faltering global economic growth will limit fuel demand. Crude oil futures for December delivery were up 0.67% to $94.70 a barrel today in Asia after climbing 1.7% yesterday, 3 November 2011.

Interest rate sensitive banking stocks rose, with the Reserve Bank of India (RBI) recently indicating pause on rate increases. India's largest private sector bank by net profit ICICI Bank gained 0.8%. 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.

ICICI Bank's current and savings account (CASA) ratio stood at 42.1% as on 30 September 2011. Net non-performing asset ratio decreased to 0.8% as at 30 September 2011 from 1.37% as at 30 September 2010 and 0.91% as at 30 June 2011.

India's second largest private sector bank by net profit HDFC Bank gained 0.27%. The bank's 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. The result was announced during market hours on 19 October 2011.

India's largest bank by branch network State Bank of India (SBI) gained 1.54%, with the stock gaining for the third straight day. The bank announces Q2 results on 9 November 2011. SBI today, 4 November 2011, said its customer services may be disrupted on Nov. 8 and Nov. 9 due to a countrywide strike planned by an employees' union. The All India State Bank Officers Federation has served notice that its members plan to strike work for two days "in pursuance of certain demands," the bank said in an advertisement issued in a business daily. It didn't specify the union's demands, but said that it is making "conciliatory efforts" to avert the strike. The has bank advised customers to complete transactions before Nov. 8, pointing out also that Nov. 7 and Nov. 10 are public holidays in some states.

Interest rate sensitive auto stocks were mixed. India's largest motorcycle maker by sales Hero MotoCorp gained 2.19%. Hero MotoCorp on Tuesday reported 1.3% growth in its October sales at 5.12 lakh units. The company had sold 5.05 lakh units in the corresponding month last year.

Maruti Suzuki India fell 0.51% after said a spokesman for the country's largest car maker by sales said that thirty workers at the company who were suspended for disciplinary reasons during a recent labor unrest, have resigned from the company. The latest strike by about 1,500 workers ended Oct. 21 after lasting two weeks. It led to a revenue loss of about Rs 2000 crore ($407.3 million) as the company cut car production and also shut the Manesar plant as well as the one at Gurgaon, also in Haryana, for a few days.

Maruti had clarified on Thursday that the decision to purchase land in Gujarat is towards building additional capacity. It had also said that the board of directors approved the purchase of land in Gujarat for future capacity requirements of the company. The logistics for reaching the finished cars to the large domestic markets in West and South India and the close proximity of the Mundra port for future exports, played an important role in the decision. The company also clarified that its investment plans for Haryana stay on course. These include installation of the 2.5 lakh units capacity assembly line in Manesar (Manesar C), a world class R&D center and test course in Rohtak. The company has lined up a direct investment of over Rs 3400 crores towards these facilities In addition to company's investment, its vendors and joint venture partners will continue to appropriately invest in Haryana for the future expansion.

Maruti's total sales slumped 53.2% to 55,595 units in October 2011 over October 2010. Domestic sales fell 52.2% to 51,458 units while exports tumbled 63.6% to 4,137 units in October 2011 over October 2010. Labour unrest at Maruti's Manesar unit during October 2011 adversely impacted the company's sales. The firm lost production of 40,000 units during the month. Maruti announced the monthly sales data on 1 November 2011.

Bajaj Auto rose 1.03%, with the stock gaining for the third straight day. The company announced during market hours on Wednesday that its total sales rose 7% to 3.95 lakh unit in October 2011 over October 2010. The company said that there was production loss of 25,000 motorcycles at Pantnagar plant as curfew imposed in the region in early October constrained sales.

India's largest commercial vehicle maker by sales Tata Motors fell 0.37%, with the stock falling for the fifth straight day. Tata Motors' total sales (including exports) of Tata commercial and passenger vehicles in October 2011 were 68,009 vehicles, higher by 5% over October 2010. The company's domestic sales of Tata commercial and passenger vehicles for October 2011 were 63,838 units, higher by 9% over 58,806 units, sold in October last year.

Tractor and SUVs maker Mahindra & Mahindra fell 0.39%, reversing initial gains. 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.

IT stocks rose on recent slew of positive economic data in the US, the biggest outsourcing market for the Indian IT firms. India's third largest software services exporter Wipro rose 0.36%. The company announced before market hours on Monday, 31 October 2011 that non-GAAP adjusted net profit as per International Financial Reporting Standards (IFRS) rose 2% to Rs 1306 crore on 18% rise in total revenue to Rs 9094 crore in Q2 September 2011 over Q2 September 2010. The company expects 7.91% to 10.07% growth in revenue from IT services business at between $1.5 billion to $1.53 billion in Q3 December 2011 over Q2 September 2011.

Wipro said that in the current macro-economic environment, corporations across the globe are looking to maximize the potential of technology deployments and are increasingly relying on business models and technologies to variabilize their IT spends, enabling more differentiating investment for IT based innovation.

Wipro said it is seeing traction with clients on cloud and variabilized business model offerings. State Street Corporation, one of the world's leading providers of financial services to institutional investors, has entered into a multi-year agreement with Wipro to provide application maintenance and support services Wipro will deploy pioneering lean methodologies delivered through its award winning CIGMA platform for this IT transformation engagement.

India's second largest software services exporter Infosys rose 0.96%. The company's 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 largest software services exporter TCS fell 0.29%.

Telecom stocks rose after the Telecom Regulatory Authority of India (TRAI) on Thursday, 3 November 2011, proposed a relaxation of guidelines for mergers and acquisitions (M&A) in the telecom sector. The proposal if implemented by the government will facilitate a long-awaited consolidation in the crowded 15-player Indian telecom sector. MTNL, and Idea Cellular rose by between 1.03% to 1.63%. Reliance Communications fell 0.12%, reversing initial gains.

India's largest mobile services provider by sales Bharti Airtel rose 1.38%, reversing initial losses. The company announced during market hours today that consolidated net profit as per International Financial Reporting Standards (IFRS) fell 38.17% to Rs 1027 crore on 13.42% rise in total income to Rs 17276.40 crore in Q2 September 2011 over Q2 September 2010.

In a statement, Mr. Sunil Bharti Mittal, Chairman & Managing Director, Bharti Airtel said, "This year is progressing well for Bharti Airtel. India has achieved double digit growth fueled by non voice businesses. The arrest of continuously declining prices in India augurs well for the telecom industry. We look forward to constructive deliberations on the draft National Telecom Policy 2011 and TRAI recommendations, for promoting the Government's broadband vision and viability of the sector. Africa has notched up strong revenue growth of 23%. The company has launched 3G services in Congo B and airtel money in Zambia and Kenya. We continue to expand our footprint across Africa, with our recent acquisition of a 2G and 3G license in Rwanda."

Tata Teleservices (Maharashtra) lost 0.28% after reporting net loss of Rs 130.21 crore in Q2 September 2011, higher than a net loss of Rs 97.90 crore in Q2 September 2010.

TRAI has proposed that companies should be allowed to merge if their combined subscriber or revenue market share does not exceed 60 percent, although its consent would be required for any merger that would create a company with a market share of between 35 and 60 percent. Under current rules, two companies can merge only if their combined market share does not exceed 40 percent. TRAI also proposed implementing within the next four years a uniform licence fee of 6 percent of the firms' annual revenue, from a variable fee of 6 to 10 percent currently. It also proposed allowing companies to share spectrum for five years, and allow renewal of a subsequent five-year period.

Earlier this year, the TRAI proposed steep increases in spectrum prices and a one-time fee on spectrum beyond 6.2 megahertz, drawing howls of protest from carriers. TRAI chairman J.S. Sarma on Thursday, 3 November 2011, said there is no change in the pricing proposals, which will be finalised by the government.

Cals Refineries clocked highest volume of 81.24 lakh shares on BSE. Sujana Towers (42.05 lakh shares), Nu Tek India (39.12 lakh shares), Delta Corp (37.10 lakh shares) and Tata Motors (36.04 lakh shares) were the other volume toppers in that order.

SBI clocked highest turnover of Rs 101.16 crore on BSE. JSW Steel (Rs 80.70 crore), Tata Motors (Rs 67.77 crore), Infosys (Rs 67.09 crore) and Tata Steel (Rs 57.78 crore) were the other turnover toppers in that order.

Stock-specific activity may dominate trade in the near-term with the earnings season as its peak. 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.

Infrastructure Development Finance Company, ABB, Bank of India, Reliance Infrastructure and Reliance Power unveil results on 8 November 2011. State Bank of India, Ranbaxy Laboratories, Indian Oil Corporation, GMR Infrastructure, Power Finance Corporation and Bhushan Steel unveil quarterly results on 9 November 2011. DLF, Tata Steel, Hindalco, Pantaloon Retail (India), Mahindra Satyam and CEAT unveil quarterly results on 10 November 2011.

Jet Airways (India), GE Shipping, Reliance Capital, Housing Development & Infrastructure and Tata Chemicals unveil Q2 results on 11 November 2011. Coal India, National Aluminium Company and Shipping Corporation of India report Q2 results on 12 November 2011. Sun Pharma unveils Q2 results on 13 November 2011. Tata Motors, Mahindra & Mahindra, Tata Power, Bhel, JSW Steel and India Cements unveil Q2 results on 14 November 2011.

Exports rose 36.36% to $24.82 billion in September 2011 over in September 2010. The cumulative value of exports for the first half of the current fiscal has risen 52.08% at $160.04 billion against $105.24 billion during the like period last year. Meanwhile, imports grew 17.2% to $34.58 billion in September 2011 over September 2010, resulting in a monthly trade deficit of $9.67 billion. The total imports in the current fiscal till September went up to $233.5 billion, a rise of 32.41% against $176.36 billion in the first six months of 2010-11. The trade deficit for the April-September period now stands at $73.46 billion.

India's service sector contracted for a second straight month in October, as new business grew at its weakest pace since May 2009, dragged by sagging global demand and tight monetary policy, a survey showed on Thursday, 3 November 2011. The seasonally adjusted HSBC Markit Business Activity Index, based on a survey of around 400 firms, slumped to 49.1 in October, its lowest reading in two-and-a-half years and below the 50-mark which separates growth from contraction. It was at 49.8 in September.

India's manufacturing activity in October expanded--though modestly--indicating an improvement in business conditions from a month ago as growth in new orders accelerated, a survey showed Tuesday, 1 November 2011. The seasonally adjusted HSBC Purchasing Managers' Index, prepared by Markit, rose to 52 in October from 50.4 in September. A figure above 50 indicates expansion.

The food price index rose 12.21%, its highest in 9 months, and the fuel price index climbed 14.50% in the year to October 22, government data on Thursday, 3 November 2011, showed. In the previous week, annual food and fuel inflation stood at 11.43% and 14.70% respectively. The primary articles price index was up 12.08% compared with an annual rise of 11.75% a week earlier.

India needs to guard against imported inflationary pressure as the euro-zone continues to reel under the debt crisis, Prime Minister Manmohan Singh said on Wednesday, 2 November 2011. "In an increasingly interdependent world, we have to be wary of contagion effects," Mr. Singh said in a statement before his departure to attend a conference of the Group of 20 industrial and developing economies in Cannes, France. The euro-zone debt problem is the principal concern for the global economy, Mr. Singh said. Swift and difficult decisions are needed in Europe to address the issue, he added.

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.

Mr. Sudipto Mundle, a member of the Reserve Bank of India's technical advisory committee on monetary policy, on Thursday, 3 November 2011, said he expects inflation to ease in the January-March quarter as global commodity prices will begin to cool by then, helped by a favorable base. However, it will still overshoot the RBI's March-end projection of 7%, possibly ending the fiscal year at as high as 8%, he added. Mr. Mundle expects the economy to grow 7%-7.5% this fiscal year, below the RBI's 7.6% forecast.

European stocks edged higher Friday, as investors continue to cheer Greek Prime Minister Papandreou's U-turn on a referendum over the European Union bailout, and as the European Central Bank's 25-basis-point rate cut Thursday props up sentiment. Key benchmark indices in France, Germany and UK rose by between 0.16% to 0.92%.

Greek Prime Minister George Papandreou backed away from his referendum proposal that could have derailed last week's long-awaited agreement to cut Greek debt and shore up European banks. Market sentiment was also supported by the European Central Bank's surprise rate cut of 25 basis points on Thursday, the first meeting under new President Mario Draghi. Draghi said the euro zone could enter a "mild recession" later this year.

Asian stocks rallied on Friday, 4 November 2011, with exporters and resource firms among the notable gainers, following a surprise interest-rate cut by the European Central Bank and after Greece shelved plans for a financial-bailout referendum. Key benchmark indices in China, Hong Kong, Indonesia, Japan, South Korea, Taiwan and Singapore rose by between 0.81% to 3.13%.

Trading in US index futures indicated the Dow could gain 13 points at the opening bell on Friday, 4 November 2011. US stocks rallied for a second day on Thursday, 3 November 2011, as Greece backed away from a proposed referendum that threatened its membership in the euro, which could destabilize global markets. Data on Thursday showed fewer Americans filed new claims for jobless benefits last week, a sign the US economy's growth is steady.

The influential US non-farm payroll data for October 2011 is set for release on today, 4 November 2011. The report is expected to show non-farm payrolls rose by just 90,000 in October, after a rise of 103,000 in September. The unemployment rate is expected to remain at 9.1%.

Meanwhile, leaders of the Group of 20 industrialized and developing countries are meeting for a second day in Cannes, France, with the European debt crisis dominating discussions.