BSE Small-Cap, Mid-Cap indices advance over 1% each

Strong cues from European market aided rally in Indian stocks on the first day of February 2012. Good auto sales in January 2012 and data showing strong manufacturing sector growth in the month just gone by boosted sentiment. The barometer index, BSE Sensex, and the 50-unit S&P CNX Nifty attained 12-week closing highs. The Sensex rose 107.03 points or 0.62%, up about 239 points from the day's low and off close to 27 points from the day's high. The market breadth was strong. BSE Small-Cap and Mid-Cap indices rose over 1% each, outperforming the Sensex.



The Sensex has surged 1845.66 points or 11.94% in calendar 2012 so far. The barometer index jumped 1,738.63 points or 11.25% in January 2012 on the back of heavy buying of Indian stocks by foreign institutional investors (FIIs). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 2164.72 points or 14.30%. From a 52-week high of 19,811.14 on 6 April 2011, the Sensex has lost 2510.56 points or 12.67%.

Coming back to today's trade, index heavyweight Reliance Industries (RIL) rose nearly 2% as the company's share buyback programme starts. Some telecom pivotals fell after Communications Minister Kapil Sibal said that the telecom department has asked five of the country's largest mobile operators to state their case against an allegation by Comptroller and Auditor General of India that they under-reported revenue so as to pay lower license fees. Capital goods stocks rose. Bank stocks recovered. Realty stocks also reversed initial losses. Auto stocks rose after auto companies reported decent sales in January 2012.

The market slipped into the red after moving into positive terrain for a brief period after a lower opening. A bout of volatility was witnessed as key benchmark indices trimmed losses after hitting fresh intraday lows in mid-morning trade after a private survey showed manufacturing sector grew at its fastest pace in eight months in January 2012. The intraday recovery was short-lived. The market weakened to hit fresh intraday low in early afternoon trade. The market once again pared losses after hitting fresh intraday low in early afternoon trade. The market moved into positive zone to hit fresh intraday high in mid-afternoon trade. The market extended gains in late trade.

The BSE Sensex rose 107.03 points or 0.62% to 17,300.58, its highest closing since 9 November 2011. The index surged 133.66 points at the day's high of 17,327.21 in late trade. The index fell 132 points at the day's low of 17,061.55 in early afternoon trade.

The S&P CNX Nifty rose 36.45 points or 0.70% to 5,235.70, its highest closing since 8 November 2011. The index hit a high of 5,244.60 in intraday trade. The index hit a low of 5,159 in intraday trade.

The BSE Mid-Cap index rose 1.12% and the BSE Small-Cap index rose 1.71%. Both these indices outperformed the Sensex.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1,868 shares rose and 980 fell. A total of 113 shares were unchanged.

BSE clocked turnover of Rs 4832 crore, much higher than Rs 2806.50 crore on Tuesday, 31 January 2012.

Among the 30-member Sensex pack, 19 rose while the rest fell. Jindal Steel & Power (up 6.43%), Tata Power (up 6.02%), Hindalco Industries (up 4.23%), Tata Steel (up 4.11%) and Hero MotoCorp (up 3.45%), edged higher from the Sensex pack. Coal India (down 2.61%), ICICI Bank (down 1.53%), ONGC (down 1.32%), HDFC (down 1.28%) and Bharti Airtel (down 1.04%), edged lower from the Sensex pack.

Index heavyweight Reliance Industries (RIL) rose 1.82% to Rs 830.30, with the stock extending Tuesday's 2.51% gains as company's share buyback programme starts. RIL said after market hours on Monday, 30 January 2012, that it proposes to buy-back its shares from the existing shareholders/beneficial owners other than the promoters/persons who are in control of the company from the open market. The company proposes to buy-back up to a maximum of twelve crore shares and a minimum of three crore shares. The buyback programme starts on 1 February 2012 and ends on 19 January 2013.

The maximum price for buyback has been set at Rs 870 per share. The company has set aside Rs 10440 crore for share buyback, which represents approximately 7.22% of the company's total paid-up equity capital and free reserves as on 31 March 2011.

Auto stocks rose after auto companies reported decent sales in January 2012. India's largest car maker by sales Maruti Suzuki India gained 2.21% after the company announced during market hours today that its total sales rose 5.2% to 1.15 lakh units in January 2012 over January 2011. Domestic sales rose 0.6% to 1.01 and exports jumped 54.3% to 14,386 units in January 2012 over January 2011.

Maruti Suzuki India today, 1 February 2012, introduced a shorter, cheaper version of its Swift Dzire sedan as part of efforts to retain its position as the country's largest car maker by sales. The new Dzire is 3.95 meters in length, qualifying it for a lower federal excise tax, compared with the current 4.1 meter-long model. The government imposes a 10% tax on cars measuring up to 4 meters in length. These cars can have a diesel engine of only up to 1.5 liters or a gasoline engine of up to 1.2-liters. An excise tax of 22% is imposed on cars beyond 4 meters in length.

India's largest utility vehicles and tractors maker Mahindra & Mahindra (M&M) gained 2.33% after company said that its total automotive sales rose 22% at 44,717 in January 2012 over January 2011. The company's domestic sales stood at 41,369 units during January 2012, as against 34601 units during January 2011, an increase of 20%. Exports jumped 95% at 3,348 units while the 4-wheeler commercial segment which includes the passenger and load categories registered a growth of 35% at 13,725 units in January 2012 over January 2011

Speaking on the numbers, Arun Malhotra, Senior VP, Sales & Customer Care, Automotive Division, Mahindra & Mahindra said, "We are happy to achieve all time high sales of 44,717 units and a strong growth of 22% thanks to the good performance of all our brands. The XUV500 continues to create excitement in the market and the second round of bookings has evoked an overwhelming response".

The company's tractors sales, however, registered a decline. Domestic tractor sales in January 2012 stood at 17,950 units, as against 19430 units during January 2011. Total tractor sales (domestic plus exports) in January 2012 stood at 19,354 units, as against 20,499 units for the same period last year. Exports for the month stood at 1404 units, having registered a growth of 31%, M&M said in a statement.

India's largest commercial vehicle maker by sales Tata Motors gained 2.03% after the company's total sales rose 16% to 87,465 units in January 2012 over January 2011.

Motorcycle maker TVS Motor Company rose 0.29% after company registered a 5% growth in total sales to 1,73,514 units in January 2012 January 2011.

Another motorcycle maker, Bajaj Auto inched up 0.51%. India's largest motorcycle maker by sales Hero MotoCorp jumped 3.45%.

HDFC fell as a number of block deal were executed in the counter on BSE at the onset of the trading session at a discount to Tuesday's closing price of Rs 696.75. The stock fell 1.28% at Rs 687.80. A large block deal of 1.68 crore shares was executed on BSE in the counter at Rs 677 at 9:18 IST. Six more block deals for a total of about 31.18 lakh shares were executed on BSE at prices ranging from Rs 676.80 to Rs 681 in the counter. US private equity investor Carlyle Group is rumoured to be the seller of shares in the block deal.

Metal stocks rose after data showed a mixed picture of manufacturing activity in China. China is the world's largest consumer of copper and aluminum. Nalco (up 4.37%), Hindalco Industries (up 4.23%), Tata Steel (up 4.11%), Sterlite Industries (up 3.16%), Sail (up 2.85%), Sesa Goa (up 2.21%), JSW Steel (up 1.74%), Bhushan Steel (up 1.55%) and Hindustan Zinc (up 1.11%), edged lower.

NMDC gained 3.52% after the company announced after market hours on Tuesday that net profit rose 22.44% to Rs 1858.81 crore on 14.79% rise in total income to Rs 3347.34 crore in Q3 December 2011 over Q3 December 2010.

Jindal Steel & Power jumped 6.43% on reports that the company is looking to buy a majority stake in Gopalpur Ports to foray into the ports sector. The company is set to buy a majority 60% stake for an undisclosed sum in Gopalpur Ports, a company building a new port at Gopalpur in Orissa. Jindal is looking for a maritime gateway to ship the raw materials required for its steel and power plant coming up in Orissa, reports suggest.

State-run Coal India (CIL) fell 2.61% on reports company has signed a pact with its trade unions to increase wages by 25%, which would put an additional burden of Rs 6500 crore on the public sector unit.

Some telecom pivotals fell after Communications Minister Kapil Sibal said that the telecom department has asked five of the country's largest mobile operators to state their case against an allegation by Comptroller and Auditor General of India that they under-reported revenue so as to pay lower license fees. India's largest listed telecom operator by sales Bharti Airtel fell 1.04% and India's third largest listed telecom operator by sales Idea Cellular fell 1.58%. India's second largest listed telecom operator by sales Reliance Communications rose 1.41%.

The demands--in the form of show-cause notices--have been sent to Bharti Airtel, Reliance Communications, Vodafone India and two other companies, Mr. Sibal said. This comes after a 2010 check by the Comptroller and Auditor General of India of the companies' accounting practices, based on a complaint from a lawmaker in May 2009.

IT firm Mahindra Satyam rose 3.81% ahead of its Q3 results today, 1 February 2012.

PTC India declined 0.10% after net profit declined 74.9% to Rs 9.52 crore on 24.3% fall in net sales to Rs 1330.02 crore in Q3 December 2011 over Q3 December 2010.

Indian Oil Corporation tumbled 5.81% after the company said it is in the process of ascertaining financial implications of an interim court order on entry tax on crude oil brought into Mathura, Uttar Pradesh. Indian Oil Corporation said that the High Court of Allahabad has dismissed the company's Writ Petition and upheld the U.P. Entry Tax Act 2007 whereby the Uttar Pradesh (UP) state government was entitled to levy entry tax on crude oil brought into the state for refining at the company's Mathura refinery. Indian Oil filed a Special Leave Petition in Supreme Court wherein Interim Order has been pronounced on 17 January 2012 stating that the operation of the judgement of Allahabad High Court is stayed subject to Indian Oil depositing 50% of the accrued tax liability/arrears under the U.P. Entry Tax Act 2007 and furnish bank guarantee for the balance amount.

The amount so deposited/paid and the bank guarantees furnished is, however, subject to result of the appeal, the company said. The matter is being examined legally for further course of action, Indian Oil said.

Bank stocks recovered. India's largest private sector bank by branch network ICICI Bank was down 1.53% to Rs 888.20, off the day's low of Rs 878.45. The stock had surged 5.87% on Tuesday on the back of strong Q3 results. Net profit rose 20.26% to Rs 1728.10 crore on 24.14% increase in total income to Rs 10483.73 crore in Q3 December 2011 over Q3 December 2010. The result was announced during trading hours on Tuesday, 31 January 2012.

ICICI Bank said advances increased by 19% year-on-year to Rs 246157 crore as on 31 December 2011 from Rs 206692 crore as on 31 December 2010. The bank said its Current and savings account (CASA) ratio increased to 43.6% at 31 December 2011, from 42.1% as on 30 September 2011. Net non-performing asset ratio decreased to 0.7% at 31 December 2011 from 0.8% at 30 September 2011 and 1.16% as at 31 December 2010. The bank had strong capital adequacy ratio of 18.88% and Tier-1 capital adequacy of 13.13% as on 31 December 2011.

India's largest commercial bank by net profit and branch network State Bank of India (SBI) rose 0.78%, extending Tuesday's 3.53% rally triggered by the government's capital infusion plan. SBI said that the Government of India has agreed to inject approximately Rs 7900 crore into bank by way of preferential allotment of equity shares to help SBI achieve minimum 8% Tier I CAR by 31 March 2012. The country's biggest lender by assets didn't say when the government would infuse the capital. The government currently owns 59.40% of SBI.

India's second largest bank by net profit HDFC Bank rose 1.18% to Rs 496.70, off the day's low of Rs 481.80. HDFC Bank reported 31.4% growth in net profit to Rs 1429.70 crore on 35.6% increase in total income to Rs 8622.64 crore in Q3 December 2011 over Q3 December 2010. The result was announced on 19 January 2012.

HDFC Bank said its core CASA deposit ratio, adjusted for one-off current account balance of about Rs 4000 crore, was at 47.7% of total deposits as on 31 December 2011. The private sector bank said its asset quality remains healthy. The bank's capital adequacy ratio (CAR) remained strong at 16.3% as on 31 December 2011, against the regulatory minimum of 9%. The bank's Tier-I CAR was 11.2% as on 31 December 2011.

Punjab National Bank (PNB) rose 2.41% after the bank announced during market hours today that it revised upward interest rates on FCNR deposit schemes across various maturities for new deposits effective 1 February 2012.

UCO Bank rose 3.71% after net profit rose 10.39% to Rs 332.55 crore on 27.83% growth in total income to Rs 3973.62 crore in Q3 December 2011 over Q3 December 2010.

IDBI Bank fell 1.23% after the state-run bank announced after market hours on Tuesday that net profit fell 9.74% to Rs 409.81 crore on 21.73% rise in total income to Rs 6281.04 crore in Q3 December 2011 over Q3 December 2010. The figures of the current period include working results of the two erstwhile wholly owned subsidiaries viz. IDBI Homefinance and IDBI Gilts consequent to their merger with the bank with effect from 1 January 2011. Accordingly the figures of the previous period are not strictly comparable.

The Reserve Bank of India (RBI) has decided to allow all private sector banks to undertake Central and state government business, which is still a forte of public sector banks and three large private players, ICICI Bank, HDFC Bank and Axis Bank. Banks earn a fee while working as an agent of the central bank for collecting revenues as well as disbursing the payments under various schemes. At present, the three private banks are allowed to undertake government business in a limited way but RBI now said all the private lenders will be treated at par with their public sector counterparts.

According to the regulator, the move is aimed to enhance the quality of customer service in Government business through more competition, improving customer convenience by increasing the number of customer service outlets and broad basing the revenue collection and payments mechanism of governments.

India's largest engineering and construction firm by sales, L&T, rose 2.64%. The company's recurring profit after tax (PAT) rose 22% to Rs 992 crore on 23% growth in gross revenue to Rs 14155 crore in Q3 December 2011 over Q3 December 2010. The company said that order inflow rose 28% to Rs 17129 crore in Q3 December 2011 over Q3 December 2010. The company's order book stood at Rs 145768 crore as on 31 December 2011. The company announced the 3rd quarter results early last week.

Among other capital goods stocks, Crompton Greaves (up 8.07%), Punj Lloyd (up 5.97%), Lakshmi Machine Works (up 5.12%), Alstom Projects (up 3.75%), BGR Energy Systems (up 2.7%), SKF India (up 2.4%), Bhel (up 1.74%), Pipavav Defence (up 1.53%), BEML (up 0.87%), Havells India (up 0.57%) and ABB (up 0.34%), edged higher.

Realty stocks reversed initial losses. Unitech (up 3.65%), Anant Raj Industries (up 1.56%), Sunteck Realty (up 1.12%), Parsvnath Developers (up 1.02%), Prestige Estates (up 0.99%), D B Realty (up 0.97%), Oberoi Realty (up 0.96%), Godrej Properties (up 0.85%), HDIL (up 0.57%), DLF (up 0.53%) and Sobha Developers (up 0.23%), edged higher.

Suzlon Energy rose 5.54% after the company said its S9X suite of wind turbines has surpassed 1 gigawatt in global orders.

ABG Shipyard jumped 8.23% after the company bagged an order worth approximately Rs 500 crore from Shipping Corporation of India for construction of six new vessels.

Housing Development Finance Corporation (HDFC) clocked a highest turnover of Rs 1669.89 crore on BSE. State Bank of India (Rs 168.18 crore), Tata Motors (Rs 122.84 crore), Reliance Industries (Rs 111.81 crore) and ICICI Bank (Rs 99.42 crore), were the other turnover toppers on BSE in that order.

HDFC reported a highest volume of 2.46 crore shares on BSE. Avance Technologies (94.99 lakh shares), Suzlon Energy (92.10 lakh shares), IFCI (89.33 lakh shares) and Cals Refineries (73.96 lakh shares), were the other volume toppers on BSE in that order.

India's manufacturing sector grew at its fastest pace in eight months in January 2012 as factory output surged the most on record on increased domestic and foreign demand, a business survey showed on Wednesday. The HSBC manufacturing purchasing managers' index (PMI), compiled by Markit, jumped to 57.5 from 54.2 in December. The factory output sub-index jumped to 62.9 in January from 55.8 in December, the biggest rise from one month to the next on record. Both the output and the new orders indexes rose to their highest level since May last year.

India's trade deficit widened to $12.7 billion in December from $8.0 billion a year earlier as export growth slowed due to falling global demand. But imports, specially in the non-oil segments, continued to grow. For the April-December period, the trade gap was $133.2 billion, compared with $96.2 billion a year earlier. India's merchandise exports in December grew 6.7% from a year earlier to $25.0 billion while imports rose 19.8% to $37.7 billion.

Foreign institutional investors (FIIs) bought shares worth Rs 624.10 crore on Tuesday, 31 January 2012, as per provisional data from the stock exchanges. FIIs bought shares worth a net Rs 9440.48 crore in January 2012, as per provisional data from the stock exchanges.

The 3rd quarter earnings season is at its peak. Marico, RCF and Corporation Bank announce Q3 results tomorrow, 2 February 2012. Dr. Reddy's Laboratories, Power Finance Corporation and Hindustan Copper report Q3 results on Friday, 3 February 2012. Hindustan Unilever, National Aluminium Company and India Cements announce Q3 results on 6 February 2012.

Mahindra & Mahindra and GMR Infrastructure unveil Q3 results on 7 February 2012. ONGC, Power Grid Corporation of India and Tech Mahindra unveil Q3 results on 8 February 2012. Tata Steel, Hindalco, ACC, Ambuja Cements and HPCL unveil quarterly results on 9 February 2012. Tata Power, BPCL, Britannia Industries, Sun TV Network and Neyveli Lignite Corporation unveil Q3 results on 10 February 2012. JSW Steel announces consolidated Q3 results on 10 February 2012. The company has already announced its stand-alone results.

Aditya Birla Nuvo and Ashok Leyland announce Q3 results on 11 February 2012. Indian Oil Corporation, Sun Pharmaceuticals Industries and Steel Authority of India (Sail) unveil Q3 results on 13 February 2012. Tata Motors and Shipping Corporation of India unveil Q3 results on 14 February 2012. Ranbaxy Laboratories announces Q4 December 2011 results on 23 February 2012.

The Supreme Court on Tuesday said that Janata Party chief Subramanian Swamy had the locus standi to seek sanction from the Prime Minister for prosecution of disgraced former Telecom Minister A. Raja in 2G scam. Sanction by competent authority for prosecution of a public servant has to be granted within a time frame, the apex court said. The Supreme Court left it to the Parliament to frame guidelines for prosecution in the 2G scam. But, the court added that sanction for the prosecution in the 2G scam should come in three months.

The government on Tuesday, 31 January 2012, lowered slightly its estimate of the country's growth in gross domestic product for the last fiscal year ended 31 2011, to 8.4% from 8.5%.

The growth rate of eight core industries has slowed down to 3.1% in December last year from 6.3% in the same month previous year, as per latest data. These eight core sectors have a combined weight of 37.9% in the Index of Industrial Production (IIP).

The Reserve Bank of India (RBI), last week, took liquidity easing measures by cutting the cash reserve ratio (CRR) requirement for banks by 50 basis points to 5.5% from 6% at Third Quarter Review of Monetary Policy 2011-12. The central bank said that as a result of the reduction in the CRR by 50 basis points, around Rs 32000 crore of primary liquidity will be injected into the banking system. The central bank said the large structural deficit in the system presents a strong case for injecting permanent primary liquidity into the system.

The RBI kept its key lending rate viz. the repo rate unchanged at 8.5%. RBI has cut the baseline projection of GDP growth for 2011-12 to 7% from 7.6%. The growth-inflation balance of the monetary policy stance has now shifted to support growth, while at the same time ensuring that inflationary pressures remain contained, the central bank said.

The reduction in CRR can be viewed as a reinforcement of the guidance that future rate actions will be towards lowering interest rates, RBI said. However, the timing and magnitude of future rate actions is contingent on a number of factors, RBI said. In the absence of credible fiscal consolidation, the Reserve Bank of India will be constrained from lowering the policy rate in response to decelerating private consumption and investment spending, it said. The forthcoming Union Budget must exploit the opportunity to begin this process in a credible and sustainable way, the RBI said.

The budget for 2012/13 ending March will be presented after elections scheduled in five states, Finance Minister Pranab Mukherjee said on 2 January 2012. Polling for assembly elections in five states concludes in early March 2012. The annual budget is usually presented on the last working day of February.

Seven-phase polling for assembly elections in Uttar Pradesh begins on Saturday, 4 February 2012.

European stocks surged on Wednesday after manufacturing data from Germany and the euro zone came in slightly better than expected. Key benchmark indices in France, Germany and UK rose by between 1.42% to 1.97%.

Asian stocks were mixed on Wednesday, 1 February 2012, after data showed a mixed picture of manufacturing activity in China. Key benchmark indices in China, Hong Kong, and Singapore fell by between 0.07% to 1.07%. Key benchmark indices in Indonesia, Japan, South Korea, and Taiwan rose by between 0.08% to 0.59%.

HSBC's Chinese manufacturing survey remained stuck in contraction in January 2012, while the government version indicated the sector is now growing.

Data from South Korea showed its exports to the European Union for the January 1-20 period fell 44.8% from a year earlier, while preliminary trade data showed the country's exports fell 6.6% in January from a year earlier, against a rise of 0.7% forecast.

Trading in US index futures indicated that the Dow could gain 92 points at the opening bell on Wednesday, 1 February 2012. Wall Street closed its best month since October on a flat note on Tuesday as weaker-than-expected economic reports surprised investors after a stream of positive data in recent months. The latest data showed US home prices and business activity in the US Midwest missed expectations and consumer confidence fell unexpectedly.