BSE Small-Cap, Mid-Cap indices outshine Sensex

Key benchmark indices registered small gains to attain their highest level in more than 4-1/2 weeks. The market breadth was strong. The barometer index, BSE Sensex, rose 10.77 points or 0.07%, off close to 70 points from the day's high and up close to 45 points from the day's low. BSE Mid-Cap index and Small-Cap index outperformed the Sensex.

The Sensex has jumped 720.94 points or 4.66% so far in this month. From a 52-week high of 19,811.14 on 6 April 2011, the Sensex has lost 3,635.28 points or 18.34%. From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 1,040 points or 6.87%.



Coming back to today's trade, index heavyweight Reliance Industries (RIL) extended Tuesday's rally. Interest rate sensitive realty and banking stocks rose on expectations that the Reserve Bank of India (RBI) will start cutting interest rates in the coming months to prop up slowing economy. Metal stocks rose amid continued anticipation of further monetary policy easing from China. IT stocks fell as rupee hovered near one-month closing high. Shares of organised retailers surged after the government on Tuesday, 10 January 2012, enacted an order fully opening the country's single-brand retail sector to foreign investment.

The market regained positive terrain after slipping into the red after hitting one-month high at the onset of the trading session. The key benchmark indices alternately moved between the positive and negative terrain in morning trade. The market trimmed gains after strengthening in mid-morning trade. The 50-unit S&P CNX Nifty trimmed gains after hitting fresh one-month high in mid-morning trade. The market regained strength as key benchmark hit fresh one-month highs in early afternoon trade.

A bout of volatility was witnessed in afternoon trade as key benchmark regained positive zone after reversing direction after surging to fresh one-month high in early afternoon trade. Intraday volatility continued as key benchmark regained positive zone after slipping into the red again in mid-afternoon trade. The market regained positive zone after slipping into the red to hit fresh intraday low in late trade.

The BSE Sensex rose 10.77 points or 0.07% to settle at 16,175.86 its highest closing level since 9 December 2011. The index rose 79.61 points at the day's high of 16,244.70 in early afternoon trade. The index fell 37.32 points at the day's low of 16,127.77 in mid-afternoon trade.

The S&P CNX Nifty advanced 11.40 points or 0.24% to settle at 4,860.95, its highest closing level since 9 December 2011. The index hit a high of 4,877.20 and a low of 4,841.60 in intraday trade.

The BSE Mid-Cap index rose 1% and the BSE Small-Cap index rose 1.32%. Both these indices outperformed the Sensex.

BSE clocked turnover of Rs 2611 crore, higher than Rs 2555.43 crore on Tuesday, 10 January 2012.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1,880 shares rose and 951 shares fell. A total of 110 shares were unchanged.

Among the 30-member Sensex pack, 16 rose and rest of stocks fell.

Index heavyweight Reliance Industries (RIL) gained 1.8%. The stock extended Tuesday's near 4% rally. RIL last week said it has scheduled a planned maintenance turnaround of one of the crude distillation unit of its SEZ Refinery at Jamnagar complex for a period of approximately three weeks starting mid February 2012. This maintenance turnaround is planned for the first time after its commissioning during the Financial Year 2008-09, RIL said. This opportunity would also be utilised to take up productivity improvement related jobs in other secondary processing units as necessary, RIL said. During this period, other three crude distillation units at Jamnagar refining complex are expected to sustain normal operations, RIL added.

RIL had announced early last week that it is divesting a part of the interest in ETV channels in favour of TV18 Broadcast, a Network18 Group firm. RIL said that as a part of the deal with TV18 Broadcast, Infotel Broad Band Services (Infotel), a subsidiary of RIL, has entered into a Memorandum of Understanding with TV18 Broadcast and Network18 Media and Investments for preferential access to all content of the latter for distribution through the 4G Broadband Network being set up by RIL.

Shares of organised retailers surged after the government on Tuesday, 10 January 2012, enacted an order fully opening the country's single-brand retail sector to foreign investment. Pantaloon Retail, Shoppers Stop, Trent, Provogue India, V2 Retail, Brandhouse Retail, Store One Retail and Koutons Retail rose by between 1.31% to 9.87%.

As per the notification issues by the government allowing 100% foreign direct investment (FDI) in single-brand retail, foreign retailers that want to invest beyond the previous cap of 51% ownership will need to source 30% of their goods from small and village industries, said the government, which faces five state elections in the next few months.

IT stocks fell as rupee hovered near one-month closing high. India's second largest software services exporter by revenue Infosys fell 1.29%. The company announces Q3 December 2011 results tomorrow, 12 January 2012.

India's third largest software services exporter by revenues Wipro declined 0.47%. The company unveils Q3 results on 20 January 2012.

India's largest software services exporter by revenues Tata Consultancy Services (TCS) fell 2.54%. The company unveils Q3 results on 17 January 2012.

The rupee was hovering at 51.63/65 to the dollar, stronger than Tuesday's close of 51.70/71, which was its strongest close since 8 December 2011. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports.

Metal stocks rose amid continued anticipation of further monetary policy easing from China. China is the world's largest consumer of copper and aluminum. Nalco, JSW Steel, Sail, Tata Steel, Hindalco Industries, Hindustan Zinc, and Sterlite Industries gained by between 0.09% to 5.69%.

Meanwhile, US aluminium major Alcoa at the time of announcing its Q4 results on Monday said it has bullish view of the global aluminum market. The aluminum company's results were in line with expectations overall. It swung to a fourth-quarter loss as prices slumped and costs rose but it has a bullish view of the global aluminum market.

NMDC rose 2.16% after the company said it has signed the contract for By Product Plant (BPP) Package for the upcoming 3 million tonnes per annum (MTPA) integrated steel plant at Nagarnar, with the consortium led by Shriram EPC on January 10, 2012. The total cost of the package is Rs 509 crore. The BPP unit is an important installation in integrated steel making, which processes valuable raw Coke Oven gas from coke ovens to yield by products like TAR, Naphthalene and Sulphur besides clean coke oven gas used in the fuel gas network of the integrated steel plant, NMDC said.

Interest rate sensitive realty stocks gained for the second straight day on expectations that the RBI will start cutting interest rates in the coming months to prop up slowing economy. Lower interest rates may help revive demand for properties. Purchases of both residential and commercial property are largely driven by finance. DLF, Indiabulls Real Estate, Sunteck Realty and HDIL rose by between 3.41% to 13.49%.

The government's notification to allow 100% FDI in single brand retail could positively influence demand for commercial real estate market.

India's property investments by private-equity firms rose 69% last year, according to Venture Intelligence, a research company that tracks private equity, and mergers and acquisitions. Private equity made $2.68 billion of real-estate investments through 53 transactions in the

Interest rate sensitive banking stocks rose on expectations that the Reserve Bank of India will start cutting interest rates in the coming months to prop up slowing economy. India's largest private sector bank by branch network ICICI Bank rose 0.66%, extending Tuesday's 3.85% surge.

India's largest commercial bank by net profit and branch network State Bank of India (SBI) rose 1.39% extending Tuesday's 3.93% jump. The bank early last week said it has cancelled the negotiations for establishing a joint venture entity with Visa Inc and Elavon Inc for conducting the merchant acquiring business. In terms of the bank's earlier letter dated 4 May 2010, a joint venture was proposed between SBI Payment Services, the wholly owned subsidiary of SBI and Visa Inc and Elavon Inc.

The government will infuse Rs 5000 crore ($942 million) to Rs 6000 crore ($1.13 billion) in State Bank of India by the end of the current fiscal year in March, the bank's chairman Pratip Chaudhuri said on Thursday, 5 January 2012. After the capital infusion, the government's share [in the bank] will increase to 64%, Chaudhuri told media reporters. The government currently owns 59% of India's largest lender by assets. Mr. Chaudhuri also said that the bank may raise further capital next fiscal year through a follow-on share sale or a private sale of shares to institutional investors.

India's second largest private sector bank by branch network HDFC Bank gained 0.61%.

IndusInd Bank rose 4.5%, extending Tuesday's 6.19% rally triggered by strong Q3 results. Net profit jumped 33.86% to Rs 205.96 crore on 48.97% growth in total income Rs 1654.86 crore in Q3 December 2011 over Q3 December 2010.

In its draft guidelines on Basel III capital regulation norms for banks unveiled recently, the RBI has suggested that Common Equity Tier 1 (CET1) capital must be at least 5.5% of risk-weighted assets (RWAs). Tier 1 capital must be at least 7% of RWAs and total capital must be at least 9% of RWAs, according to the draft guidelines. RBI has suggested capital conservation buffer in the form of Common Equity of 2.5% of RWAs.

The RBI said the implementation period of minimum capital requirements and deductions from Common Equity will begin from January 1, 2013 and be fully implemented as on March 31, 2017. Capital conservation buffer requirement is proposed to be implemented between March 31, 2014 and March 31, 2017. Instruments which no longer qualify as regulatory capital instruments will be phased-out during the period beginning from January 1, 2013 to March 31, 2022.

For OTC derivatives, in addition to the capital charge for counterparty default risk under Current Exposure Method, banks will be required to compute an additional credit value adjustments (CVA) risk capital charge. The parallel run for the leverage ratio will be from January 1, 2013 to January 1, 2017, during which banks would be expected to strive to operate at a minimum Tier 1 leverage ratio of 5%. The leverage ratio requirement will be finalized taking into account the final proposal of the Basel Committee.

Shares of Reliance Anil Dhirubhai Ambani (ADA) group companies extended recent gains. Reliance Capital, Reliance Infrastructure, Reliance MediaWorks, Reliance Communications and Reliance Power rose by between 0.16% to 1.69%.

Auto stocks were mixed. Tata Motors fell 0.15%, after gaining 2.24% on Tuesday. The company's total sales of commercial and passenger vehicles jumped 22% to 82,278 units in December 2011 over December 2010. The domestic sales of the vehicles in both categories for the month stood at 76,663 cars, a 24% jump compared to 61,685 in December 2010, the company said in a statement. However, exports declined 3% to 5,615 units compared to 5,809 in December 2010.

Ashok Leyland gained 0.21%, extending Tuesday's 2.35% gains. The company reported sales of 9,088 units for December 2011 including 1,099 units of the recently launched LCV for cargo transportation -- Dost. Adjusting for Dost, which was launched in October 2011, sales came in at 7,989 units, up 6% year-on-year.

Mahindra & Mahindra (M&M) fell 1.6% on profit taking after gaining 5.63% on Tuesday. M&M on Monday introduced a hydrogen-powered three-wheeled vehicle that it jointly developed with the United Nations Industrial Development Organization and the Indian Institute of Technology, New Delhi, for $1 million. The project, called DelHy 3W, took three years to complete, the Indian auto maker said, adding that the UNIDO International Centre for Hydrogen Energy Technologies funded half the costs. US-based Air Products Inc. has set up a hydrogen station for the three-wheeler project in New Delhi. The vehicles will be operated at Pragati Maidan, which is the venue for several trade fairs including the ongoing auto show.

M&M's total automobile sales jumped 26% to 42,761 units in December 2011 over December 2010.

M&M's president for automotive and farm equipment Pawan Goenka Thursday, 5 January 2012, said that the company plans to start assembling SsangYong vehicles in China, Brazil and Russia in the next two years. M&M last year picked up a 70.03% stake in South Korean auto maker SsangYong Motor Co. for 522.5 billion Korean won. It is slated to launch SsangYong's sport-utility vehicle Rexton in India in the second half of 2012 and the Korando C SUV in 2013.

Maruti Suzuki India rose 0.29%, reversing initial losses. Maruti on Friday, 6 January 2012, unveiled India's first compact multi purpose vehicle Ertiga at the auto expo. Ertiga's compact dimensions make it easy to park ad maneuver, Maruti said. Maruti had on Thursday, 5 January 2012 unveiled XA Alpha -- a concept for a compact sports utility vehicle (SUV).

Maruti's total vehicle sales fell 7.1% to 92,161 units in December 2011 over December 2010. Domestic sales dropped 13.4% to 77,475 units. Exports surged by 50.5% to 14,686 units.

Fiat India Automobiles said early last week that it expects to conclude shortly discussions with Maruti Suzuki India for the supply of diesel engines for cars, a step that will allow the local unit of Suzuki Motor Corp. cut the waiting period on its Swift model. Maruti currently sources all its diesel engines from Suzuki Powertrain, a joint venture between Maruti and Suzuki. These engines are made using Fiat's technology.

Two-wheeler makers gained on bargain hunting after recent slide triggered by concerns of increased competition as global two-wheeler makers launched new models and announced expansion plans at the ongoing India auto show to attract more buyers in the world's second-largest market for motorcycles and scooters, Bajaj Auto rose 1.64%. The firm unveiled an ultra-low-cost car early last week, its first foray into the four-wheel market. The compact "RE60" boasts of high fuel efficiency and low carbon dioxide emissions, but the firm did not release a price tag.

Bajaj Auto's total sales rose 10% to 3.05 lakh units in December 2011 over December 2010. Motorcycle sales rose 8% to 2.63 lakh units and commercial vehicle sales rose 27% to 41,991 units. Exports jumped 25% to 1.19 lakh units. The company announced the monthly sales data at the beginning this month.

India's largest two-wheeler maker Hero MotoCorp rose 1.97%, extending Tuesday's 2.7% surge. Hero MotoCorp expects double-digit percentage growth in sales for the fiscal year starting in April, Managing Director Pawan Munjal said at the New Delhi Auto Expo. The company on Friday, 6 January 2012 unveiled its first concept hybrid scooter.

The company last week launched two motorcycle models and one scooter model. The company will start retail sales of the 110-cubic-centimeter scooter model Maestro later this month, while that of the 110cc motorcycle model Passion X Pro and 125cc motorcycle Ignitor will happen in the remainder of the year.

TVS Motor Company rose 0.93%, extending Tuesday's 2.88% gains. TVS Motor on Tuesday said it will launch four two-wheeler models this year and may make investments to raise output as it seeks to grow its market share amid growing competition from rivals such as Honda Motor Company. The Chennai-based company will introduce a motorcycle with a 125-cubic-centimeter engine in June and follow it with another in December, which will witness the reintroduction of the Victor brand. TVS will also introduce a 125cc scooter in December, the company said.

Car sales in India rose 8.5% to 1.59 lakh units in December 2011 over December 2010, the Society of Indian Automobile Manufacturers (SIAM) said. Sales of trucks and buses, a key pointer to the country's economic activity, rose 14.50% in December from a year previous to 72,192 vehicles, said SIAM. Total two-wheeler sales in December 2011 increased by 8.52% to 10,91,982 units from 10,06,289 units in the same period of previous year.

FMCG stocks fell on profit taking after recent gains. Marico, Hindustan Unilever, Dabur India, ITC and Britannia Industries declined by between 0.72% to 0.9%.

Airline stocks jumped after Civil Aviation Minister Ajit Singh said that a panel of secretaries has recommended allowing foreign airlines to hold up to a 49% stake in Indian carriers. Kingfisher Airlines and SpiceJet rose by between 4.27% to 5.48%. The panel's recommendation is a step forward from the 26% stake recently proposed for foreign carriers by the Department of Industrial Policy and Promotion. Indian laws currently allow up to 49% foreign direct investment in airlines, but foreign carriers are barred from investing in the sector

Jet Airways surged 6.96% after company today clarified that the Jet Airways group complies with all global and domestic aviation norms. The company said that the carrier accords the highest priority to the safety of its guests, and all its cockpit and cabin crew alike. It said that the airline takes all the necessary precautions to ensure on-board safety and security at all times.

Shares related to education business surged for the second straight day. Zee Learn, ACE EduTrend, Edserv Softsystems, and Aptech jumped by between 2.1% to 6.27%.

Consumer durables stocks extended recent gains. Rajesh Exports, Titan Industries and Blue Star rose by between 0.18% to 1.42%.

Cals Refineries clocked highest volume of 1.29 crore shares on BSE. HDIL (73.72 lakh shares), Suzlon Energy (69 lakh shares), K S Oils (58.32 lakh shares) and SpiceJet (56.30 lakh shares) were the other volume toppers in that order.

SBI clocked highest turnover of Rs 90.97 crore on BSE. DLF (Rs 79.66 crore), Lovable Lingerie (Rs 75.20 crore), RIIL (Rs 75 crore) and JSW Steel (Rs 72.47 crore) were the other turnover toppers in that order.

Foreign institutional investors (FIIs) bought shares worth Rs 324.32 crore on Tuesday, 10 January 2012, as per provisional data from the stock exchanges. FIIs have bought shares worth a net Rs 951.57 crore so far in January 2012, as per provisional data from the stock exchanges.

Moody's has upgraded India's rating for short-term foreign currency bank deposits from speculative to investment grade after finance ministry sought clarity from the global rating agency. Moody's has lifted the short-term country ceiling on foreign currency bank deposit from NP (not prime) to Prime (P-3), suggesting acceptable ability to repay short-term obligations. The upgrade will help the country attract overseas deposits to fill up the void created by the sharp slowdown in equity inflows. Moody's last month unified India's local and foreign currency bond ratings at Baa3 and said the outlook on the ratings was stable.

Meanwhile, state governments in India have reportedly given their in-principle approval to a proposed national goods and service tax (GST), raising hopes that the ambitious tax reform could be included in the upcoming budget. Finance ministers from different states agreed to the central government's GST proposal, but specified a list of services, such as luxury and entertainment, that would remain taxed at the state level. The GST will cut business costs and boost government tax revenue, but has missed several deadlines for implementation due to resistance from states that fear a loss of fiscal autonomy and the main opposition Bharatiya Janata Party.

The next major trigger for the market is Q3 December 2011 corporate earnings, which will start trickling in from tomorrow, 12 January 2012. The focus will be on guidance from the company managements on outlook for the remaining part of the year and for the next year. Analysts expect weak Q3 December 2011 results due to lower volume growth in a slowing economy, higher raw material costs and higher interest charges.

IT bellwether Infosys and housing finance major HDFC report Q3 results tomorrow, 12 January 2012. TCS and HCL Tech unveil quarterly results on 17 January 2012. Jindal Steel & Power announces Q3 results on 18 January 2012. HDFC Bank, Hero MotoCorp and Bajaj Auto unveil Q3 results on 19 January 2012. Wipro, ITC, Axis Bank and Jet Airways (India) unveil Q3 results on 20 January 2012. JSW Steel reports its Q3 standalone results on 20 January 2012.

UltraTech Cement, Asian Paints, Zee Entertainment Enterprises and Godrej Consumer Products unveil Q3 results on 21 January 2012. L&T, Maruti Suzuki and Kotak Mahindra Bank unveil Q3 results on 23 January 2012. Cairn India and Biocon unveil Q3 results on 24 January 2012. Sesa Goa and Rural Electrification Corporation unveil Q3 results on 25 January 2012. Dabur India unveils Q3 results on 31 January 2012. Dr. Reddy's Laboratories reports Q3 results on 3 February 2012. India Cements announces Q3 results on 6 February 2012. Mahindra & Mahindra unveils Q3 results on 7 February 2012. BPCL unveils Q3 results on 10 February 2012. Aditya Birla Nuvo announces Q3 results on 11 February 2012.

The government has decided to allow Qualified Foreign Investors (QFIs) to directly invest in the Indian equity market from 15 January 2012. A QFI is an individual, group or association resident in a foreign country that is compliant with Financial Action Task Force (FATF) standards. QFIs include pension funds which normally tend to stay invested for a longer period of time. QFIs do not include FIIs/sub accounts. In August last year, the government allowed foreign investors to directly invest up to $13 billion in equity and debt schemes of mutual funds.

Qualified foreign investors, or QFIs, will now be able to invest individually up to 5% of the capital of the Indian company. Cumulatively, QFIs can invest up to 10% of the capital of the company being invested in. These limits are over and above the FII and NRI investment ceilings prescribed under the PIS route for foreign investment in India, a government statement said.

Food inflation plunged into the negative territory in the fourth week of December mainly due to base effect, data released by the Government showed on Thursday, 5 January 2011. Fuel inflation edged up though. Food inflation shrank by 3.36% in the week ended December 24, after rising by 0.42% in the preceding week. Inflation in the Primary Articles group fell to 0.1% in the week under review, from 2.7% in the week ended December 17. Inflation in the Fuel & Power group stood at 14.60% in the week ended December 24, versus 14.37% in the previous week.

At its mid-quarterly monetary policy review meet on 16 December 2011, the RBI left its main lending rate unchanged in order to support faltering economic growth as inflation shows signs of cooling. While inflation remains on its projected trajectory, downside risks to growth have clearly increased, RBI had said in a statement on 16 December 2011. From this point on, monetary policy actions are likely to reverse the cycle, responding to the risks to growth, RBI had said.

RBI had said inflation risks remain high and inflation could quickly recur as a result of both supply and demand forces. RBI also said that the rupee remains under stress. The timing and magnitude of further actions will depend on a continuing assessment of how these factors shape up in the months ahead, RBI said. The RBI has raised rates 13 times since March 2010.

Data on industrial production for November 2011 on Thursday, 12 January 2012, and data on inflation for December 2011 on Monday, 16 January 2012, could provide cues on the central bank's likely policy stance at the third quarter review of Monetary Policy 2011-12 scheduled on 24 January 2012. Industrial production is seen rising 2.1% in November 2011 as per the median estimate of a poll of economists carried out by Capital Market. Industrial production had declined 5.1% during October 2011, snapping consistent growth for the preceding 29 months in a row.

Inflation based on wholesale price index (WPI) is seen easing to 7.4% in December 2011 from 9.1% in November 2011, per the median estimate of a poll of economists carried out by Capital Market.

The budget for 2012/13 ending March will be presented after elections scheduled in five states, Finance Minister Pranab Mukherjee said on Monday, 2 January 2012. State elections are scheduled between the end of January and early March. The annual budget is usually presented on the last working day of February. The Election Commission on 24 December 2011 announced the dates for the assembly polls in Uttar Pradesh, Punjab, Uttarakhand, Manipur and Goa. Uttar Pradesh will have polling on February 4, 8, 11, 15, 19, 23 and 28, while Uttarakhand and Punjab will go to polls on January 30. Manipur will have polls on January 28 and Goa on March 3.

European stocks were mixed on Wednesday. Key benchmark indices in UK and Germany fell by between 0.13% to 0.17%. France's CAC 40 rose 0.21%.

Italy faces a "significant chance" of a credit-rating downgrade by Fitch Ratings, which is reviewing all European sovereign ratings and will make a decision by the end of the month.

On Thursday, 12 January 2012, the European Central Bank is slated to issue an interest-rate decision.

Asian stocks advanced for a third day on Wednesday as optimism about the US economy offset a warning from Fitch Ratings that it may downgrade Italy's credit rating. Key benchmark indices in Hong Kong, Japan, Singapore, and Taiwan rose by between 0.13% to 1%. Key benchmark indices in China, Indonesia and South Korea fell by between 0.41% to 0.74%.

Trading in US index futures indicated a flat opening of US stocks on Wednesday, 11 January 2012. US stock rallied to a 5-month high on Tuesday on optimism that China may begin monetary easing and after Alcoa kicked off the earnings season on a positive note. China's reported a drop in import growth triggering speculation that monetary easing is right around the corner adding to the worldwide stock rally.