Market snaps three-day winning streak

Key benchmark indices snapped a three-day winning streak as weak global stocks weighed on sentiment. The barometer index, BSE Sensex, was down 48.42 points or 0.27%, off close to 30 points from the day's high and up about 110 points from the day's low. Index heavyweight Reliance Industries (RIL) dropped nearly 3%, with the stock falling for the second day in a row on reports of a likely decline in gas output from the company's D6 block. Auto and banking stocks were mixed.

From a recent low of 17,748.69 on 10 February 2012, the Sensex rose 453.72 points or 2.55% in three trading sessions to a more than 28 weeks closing high of 18202.41 on 15 February 2012. The Sensex has jumped 960.44 points or 5.58% in February 2012 so far. The barometer index has surged 2,699.07 points or 17.46% in calendar 2012 so far. From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 3,018.13 points or 19.94%. From a 52-week high of 19,811.14 on 6 April 2011, the Sensex has lost 1,657.15 points or 8.36%.



Coming back to today's trade, private sector HDFC Bank retreated after striking record high today, 16 February 2012. Cairn India hit a record high as crude oil traded near a five-week high. Coal India dropped over 5% after Prime Minister Manmohan Singh on Wednesday, 15 February 2012, directed the state-run coal giant to sign fuel supply agreements (FSAs) with power plants that have entered into long-term PPAs with power distribution companies and have been commissioned/would get commissioned on or before 31 March 2015. The market breadth was positive.

Key benchmark indices edged lower in early trade on weak Asian stocks. The market trimmed losses after hitting fresh intraday low in morning trade. The Sensex cut losses after sliding to fresh intraday low in mid-morning trade. Volatility ruled the roost as key benchmark indices weakened once again after trimming intraday losses in early afternoon trade as European stocks fell. Volatility ruled the roost in late trade as key benchmark indices weakened again after staging a strong intraday recovery.

The BSE Sensex was down 48.42 points or 0.27% to 18,153.99. The index shed 19.63 points at the day's high of 18,182.78 in late trade. The index lost 159.09 points at the day's low of 18,043.32 in mid-morning trade.

The S&P CNX Nifty was down 10 points or 0.18% to 5,521.95. The Nifty hit a high of 5,531.40 and low of 5,483.75 in intraday trade.

The BSE Mid-Cap index rose 1.04% and the BSE Small-Cap index gained 0.96%. Both these indices outperformed the Sensex.

The total turnover on BSE amounted to Rs 3604 crore, lower than Rs 4139.38 crore clocked on Wednesday, 15 February 2012.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,640 shares rose and 1,292 shares fell. A total of 112 shares were unchanged.

Among the 30-share Sensex pack, 16 rose while the rest declined.

Index heavyweight Reliance Industries (RIL) fell 2.86% to Rs 812.15 after oscillating between Rs 805.10 and Rs 830.05. The stock had lost 1.43% on Wednesday, 15 February 2011, on reports that gas output from RIL's D6 block is expected to fall by about 10% to 34 million standard cubic metres a day (mmscmd) by April 2012 due to the entry of sand or water in the wells. The D6 block currently produces about 37 mmscmd of gas. This includes 30 mmscmd from D1 and D3 gas fields, where output has been declining for months, and 7 mmscmd from the MA oilfield that also produces natural gas.

ONGC rose 0.54%. The stock extended Wednesday's 1.03% gains. Oil Minister S. Jaipal Reddy told the media on Wednesday that a panel of ministers has approved divestment in ONGC through an auction. Reddy, however, said no timeline has been set for the share sale. The government holds 74.14% stake in ONGC and it reportedly plans to sell 5% stake.

Cairn India rose 3.29% to Rs 390.70 as crude oil traded near a five-week high after reports that Iran halted shipments to Europe and as crude inventories declined for the first time in 4 weeks in the US. The stock hit a record high of Rs 398.30 today, 16 February 2012.

Essar Oil rose 2.4% after the company said it has filed a petition in the Supreme Court seeking a review of the apex court's decision relating to repayment of deferred sales tax. On 17 January 2012, the Supreme Court had set aside a Gujarat High Court judgement permitting Essar Oil to avail of a sales tax deferral benefit from the state government of Gujarat. The Gujarat High Court in an earlier order had extended time to Essar Oil for commencing commercial production at the Vadinar Refinery, thus making the company eligible to avail of Gujarat state's capital investment incentive to Premier/Prestigious Unit Scheme, 1995-2000, the company said in a statement.

Coal India dropped 5.44% after Prime Minister Manmohan Singh on Wednesday, 15 February 2012, directed the state-run coal giant to sign fuel supply agreements (FSAs) with power plants that have entered into long-term PPAs with power distribution companies and have been commissioned/would get commissioned on or before 31 March 2015. Singh has directed Coal India to guarantee supplies to the private power sector in a bid to alleviate the nation's chronic energy shortages. It was the top loser from the Sensex pack.

For power plants that have been commissioned up to 31 December 2011, Coal India will sign FSAs before 31 March 2012. The FSAs will be signed for full quantity of coal mentioned in the Letters of Assurance (LoAs) for a period of 20 years with trigger level of 80% for levy of disincentive and 90% for levy of incentive. In case of any shortfall in fulfilling its commitment under the FSAs from its own production, Coal India will arrange for supply of coal through imports or through arrangement with State/Central PSUs who have been allotted coal blocks. The proposed course of action has been approved by the Prime Minister.

A statement from the Prime Minister's office on Wednesday, 15 February 2012, said that these arrangements will provide relief to power plants with estimated capacity of more than 50,000 megawatts (MW). The proposed set of arrangements is being seen as a major step forward in solving the problems of power sector in the country and is likely to boost investors' confidence in India's power sector, the statement added. It will help not only in achieving power generation capacity targeted in the 12th Plan but also assist in achieving the targeted growth of GDP, according to the statement.

Power generation stocks rose for the second day in a row as Prime Minister Manmohan Singh on Wednesday, 15 February 2012, initiated clearance of coal supplies to power generation firms. Tata Power Company, Adani Power, NTPC, and Reliance Power rose by between 0.16% to 3.69%.

Metal shares declined as global commodities prices fell after European leaders delayed a decision on Greece's bailout. Hindalco Industries, Sail, JSW Steel, and Tata Steel fell by between 0.89% to 4.71%. LMEX, a gauge of six metals traded on the London Metal Exchange, fell 0.52% to $3,637.10 on Wednesday, 15 February 2012.

India's largest non-ferrous metals maker by capacity Sterlite Industries lost 4.16%. The stock had jumped 4.34% on Wednesday, 15 February 2012. Sterlite Industries said during market hours on Wednesday a US bankruptcy court has rejected its claim for a refund of $50 million it had paid as part of a process to acquire US-based miner Asarco LLC. With the rejection of the claim, Sterlite will have to pay a total of $132.75 million in damages to Asarco for its unsuccessful takeover bid in 2009. Sterlite lost a bidding war for Asarco after a Texas bankruptcy court approved a rival restructuring plan for the company proposed by Asarco's parent, Grupo Mexico SAB.

Banking stocks were mixed. India's largest private sector bank by branch network ICICI Bank declined 1.15%.

India's second largest bank by net profit HDFC Bank fell 1.27% to Rs 526.20. The stock hit a record high of Rs 537.50 in intraday trade today, 16 February 2012.

India's largest commercial bank by net profit and branch network State Bank of India (SBI) surged 4.38% to Rs 2349.05, off sharply from day's low of Rs 2228.50. During market hours on Monday, 13 February 2012, SBI reported 15.38% growth in net profit to Rs 3263.04 crore on 20.46% growth in total income to Rs 29787.37 crore in Q3 December 2011 over Q3 December 2010. SBI's provisioning for non-performing assets jumped 84.16% to Rs 3006.12 crore in Q3 December 2011 over Q3 December 2010.

The bank's ratio of net non-performing assets rose to 2.22% as on 31 December 2011 from 2.04% as on 30 September 2011 and 1.61% as on 31 December 2010. The ratio of gross non-performing assets rose to 4.61% as on 31 December 2011 from 4.19% as on 30 September 2011 and 3.17% as on 31 December 2010.

On a consolidated basis, SBI posted 16.37% growth in net profit to Rs 4318.08 crore on 16.74% rise in total income to Rs 43155.95 crore in Q3 December 2011 over Q3 December 2010.

Auto stocks were mixed. India's largest truck maker by sales Tata Motors declined 3.67% to Rs 275.90 on profit taking after recent strong gains. The stock hit a record high of Rs 292 in intraday trade on Wednesday, 15 February 2012. Tata Motors' global vehicle sales rose 21% to 1.19 lakh units in January 2012 over January 2011. Sales of its Jaguar Land Rover brands, rose 44% to 29,293 units in January 2012 over January 2011. The marquee brands, which Tata Motors bought from Ford Motor Co. in 2008, are now the biggest contributors to the company's revenue.

Robust demand for Jaguar Land Rover vehicles helped Tata Motors post a 26% growth in worldwide passenger vehicle sales to 66,785 units in January 2012 over January 2011. Tata Motors' global sales of trucks and buses increased 15% to 53,014 units in January 2012 over January 2011. Tata Motors announced the global sales data for January 2012 during trading hours on Wednesday, 15 February 2012.

Tata Motors' consolidated net profit jumped 40.5% to Rs 3405.55 crore on 44.6% growth in net sales to Rs 45199.29 crore in Q3 December 2011 over Q3 December 2010. The result was announced during trading hours on Tuesday, 14 February 2012. Tata Motors said revenue grew on the back of growth in volumes, improved product and market mix.

India's largest utility vehicles maker Mahindra & Mahindra (M&M) declined 1.35%. India's largest car maker by sales Maruti Suzuki India advanced 4.1%. Commercial vehicles maker Ashok Leyland advanced 2.56%.

Two-wheeler makers surged. India's largest motorcycle maker by sales Hero MotoCorp jumped 4.57%. India's second largest motorcycle maker by sales Bajaj Auto gained 3.81%.

India's largest pharma company by market capitalization Sun Pharmaceutical Industries fell 2.49% after the company said Pfizer Inc.'s Wyeth Pharmaceuticals Inc. unit has claimed damages of $960 million in a patent dispute over a generic version of the US company's Protonix heartburn drug. Sun Pharma made the announcement was made after market hours on Wednesday, 15 February 2012. A US court had in 2010 turned down Sun Pharmaceutical's plea seeking to deem Pfizer's Protonix patent invalid. This had opened the way for damage claims against the two generic producers of the drug -- Sun Pharma and Israel's Teva Pharmaceutical Industries. Sun Pharma said it has "sound reasons to disagree with these overstated claims of Wyeth."

Sun Pharma said it will now provide its own assessment on the purported damages, following which the court will decide on whether there has been patent misuse and determine the appropriate level of damages. Protonix was a top-selling drug for Wyeth, which was acquired by Pfizer in 2009. Wyeth and Nycomed--the company from which it licensed the Protonix patent--had filed patent-infringement suits against Teva and Sun Pharma in 2004, seeking to block their attempts to sell generic Protonix before patent protection expired in January 2011. Sun Pharma and Teva had launched generic Protonix "at risk" but subsequently stopped sales of the drug.

Telecom stocks reversed initial gains in volatile trade after the government on Wednesday, 15 February 2012, unveiled some points of a new telecommunications policy, including separating licenses from bandwidth and easing mergers and acquisition rules. Idea Cellular (down 0.75%) and Tata Teleservices (Maharashtra) (down 0.58%), edged lower.

Bharti Airtel rose 0.16% to Rs 350.25 after striking an intraday high of Rs 356.65.

Communications Minister Kapil Sibal on Wednesday, 15 February 2012, said that the government has decided to allow mergers and acquisitions where the resultant entity won't have a market share of more than 35% or over 25% of bandwidth in a telecom service area. Operators will also now have to pay a unified license fee across all telecommunication services at 8% of adjusted gross revenue. Telecom operators currently pay 6%-10% of their revenue as license fees for basic mobile services, depending on the areas they operate in.

The new telecom policy comes as the government tries to clean up the telecom sector following allegations of large-scale rigging in a sale of licenses and bandwidth in 2008. The Supreme Court recently canceled all the 122 licenses allotted without auction since 2008.

Reliance Communications (RCom) declined 1.24%. During market hours today, 16 February 2012, RCom said it has received RBI approval for the refinancing being provided by ICBC, CDB and EXIM for redemption of its outstanding FCCBs. The outstanding FCCBs of $ 1.182 billion (approximately Rs 5825 crore at the prevailing US dollar exchange rate of Rs 49.30), will be redeemed on the due date of 1 March 2012. RCom said it will benefit from extended loan maturity of 7 years and attractive interest rate of about 5%.

L&T fell 0.14% after gaining 9.12% in previous two trading sessions.

Bhel gained 2.85%, with the stock extending Wednesday's 4.53% surge.

Among other capital goods stocks, Thermax, BEML, ABB and SKF India rose by between 1.24% to 2.82%.

Shares of aviation firms rose after state-owned oil marketing companies on Wednesday, 15 February 2012, reduced jet fuel prices. Jet Airways (India) (up 2.32%), Kingfisher Airlines (up 0.75%) and SpiceJet (up 1.59%), edged higher. The price of aviation turbine fuel (ATF), or jet fuel, in Delhi was cut by Rs 350.70 per kilolitre (kl), or 0.5%, to Rs 62,557.12 per kl. The latest reduction comes on back of a 3% cut in rates effected from 1 February 2012. Jet fuel or aviation turbine fuel (ATF) typically makes up almost half of an airline's operating cost. PSU OMCs revise jet fuel prices on the 1st and 16th of every month, based on the average international price in the preceding fortnight.

Marico fell 1.73%. The company said it acquired the personal care brands of Paras Pharmaceuticals from the UK consumer products giant Reckitt Benckiser for an undisclosed sum. The stock hit a record high of Rs 174 today, 16 February 2012. The announcement was made after market hours on Wednesday, 15 February 2012.

HCL Technologies rose 1.05%. The company said after market hours on Wednesday, 15 February 2012, that it has entered into a strategic partnership with Great American Insurance Group (GAIG) to provide IT, back office and infrastructure management services to GAIG and its affiliates.

Lanco Infratech clocked highest volume of 1.68 crore shares on BSE. IFCI (1.56 crore shares), Cals Refineries (1.22 crore shares), Indiabulls Power (1.02 crore shares) and Suzlon Energy (77.19 lakh shares) were the other volume toppers in that order.

SBI clocked highest turnover of Rs 243.86 crore on BSE. RIL (Rs 77.50 crore), Reliance Communications (Rs 77.21 crore), Reliance Power (Rs 75.11 crore) and IFCI (Rs 73.14 crore) were the other turnover toppers in that order.

Foreign institutional investors (FIIs) bought shares worth a massive Rs 1838.85 crore on Wednesday, 15 February 2012, as per provisional data from the stock exchanges. FIIs have bought shares worth a net Rs 11427.53 crore in first 11 trading sessions this month, as per provisional data from the stock exchanges. The inflow this month comes on the top of heavy purchases last month. FIIs bought shares worth a net Rs 10357.70 crore in January 2012, as per data from Securities & Exchange Board of India (Sebi).

The wholesale price index (WPI) rose a slower-than-expected 6.55% in January 2012 from 7.47% rise in December 2011, government data showed on Tuesday, 14 February 2012. The annual reading for November 2011 was revised upwards to 9.46% from 9.11% reported earlier.

Finance Minister Pranab Mukherjee will present the annual budget for 2012/13 on 16 March 2012, while the railways budget will be presented on 14 March 2012. The budget session of parliament will start on 12 March 2012. The government will present on March 15 the Economic Survey for 2011/12, a document on the state of economy prepared by the economic division in the ministry of finance. The annual budget is usually presented on the last working day of February. However, the budget has been delayed this time due to the ongoing assembly polls. Polling for assembly elections in five states concludes in early March 2012.

Reports indicate that the finance ministry is considering a proposal to increase excise duty from 10% to 12%, although still lower than the level before the 2008 financial crisis. The move is aimed at helping the government improve its fiscal situation but it is expected to push up the cost of almost all manufactured goods from food products to consumer durables and automobiles.

European stocks dropped on Thursday, with investor sentiment hit by further hurdles in the Greek bailout deal and by the prospects of more ratings downgrades for the region's financial institutions. The key benchmark indices in UK, Germany and France were down by between 0.42% to 0.99%.

Global ratings firm Moody's warned on Thursday it could downgrade the credit ratings of 17 global banks and securities firms due to more fragile funding conditions, increased regulatory burdens and a more difficult operating environment. The announcement came shortly after Moody's said it was taking ratings action on 114 financial institutions in 16 European countries to reflect the impact of the continent's debt crisis and the deteriorating creditworthiness of governments in the region.

Gross domestic product across the 17-nation euro zone contracted by 0.3% in the final three months of 2011 compared to the previous quarter, the European Union statistics agency Eurostat said in a preliminary estimate released Wednesday.

Asian stocks declined on Thursday as European officials on Wednesday, 15 February 2012, delayed a decision on a 130-billion euro ($169 billion) bailout for Greece until at least 20 February 2012. Key benchmark indices in Taiwan, China, South Korea, Hong Kong, Indonesia, Singapore and Japan were down by between 0.24% to 1.69%.

Trading in US index futures indicated that the Dow could fall 25 points at the opening bell on Thursday, 16 February 2012. US stocks fell on Wednesday after the release of minutes of the Federal Reserve's meeting last month showed policy makers were divided on additional asset purchases to spur economic growth. The Dow Jones industrial average dropped 97.33 points, or 0.76%, to 12,780.95. The Standard & Poor's 500 Index lost 7.27 points, or 0.54%, to 1,343.23 and the Nasdaq Composite index fell 16 points, or 0.55%, to 2,915.83.