BSE Mid-Cap, Small-Cap indices outshine Sensex

The key benchmark indices posted strong gains on the first trading session of the month on firm global cues. A slew of recent strong economic data and heavy bidding by foreign funds in the initial public offer of the state-run manganese producer MOIL, boosted investor sentiment. The market gained for the straight third trading session in this week. The BSE 30-share Sensex was up 328.75 points or 1.68%, up close to 325 points from the day's low and off close to 40 points from the day's high. European markets was trading higher while most Asian markets bounced off their earlier lows. US index futures were sharply higher.



From a 2-1/2-month closing low of 19,136.61 on Friday, 26 November 2010, the Sensex has jumped 713.39 points or 3.72% in the last three trading sessions.

The market breadth was strong. Metal and mining shares saw an across the board surge after strong investor response to the MOIL issue. Banking stocks gained on fresh buying on expectations of a strong credit offtake in a growing economy. Auto stocks, barring Maruti Suzuki India, edged higher on higher November 2010 sales. Telecom pivotals saw divergent trend. Software stocks saw mixed trend and underperformed the Sensex.

NSE's volatility index, India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, shed 7.29% to 19.20. The index had lost 2.82% to 20.71 on Tuesday, 30 November 2010. The index had lost 5.62% to 21.31 on Monday, 29 November 2010. The index had risen 4.39% to 22.58 on Friday, 26 November 2010, a day after it had plunged 12.36% to 21.63 on Thursday, 25 November 2010. India VIX is calculated based on the S&P CNX Nifty options prices. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days.

The market edged higher in early trade. Stocks soon extended gains. The Sensex surged to a fresh intraday high in mid-morning trade on strong manufacturing data for the month just gone. The market pared gains in early afternoon trade. The market regained strength in afternoon trade. The market struck a fresh intraday high in mid-afternoon trade on positive global cues. The market pared gains later. The market surged to a fresh intraday high in late trade.

The initial public offer (IPO) of state-run MOIL, the largest manganese ore producer in India, was subscribed a massive 53.84 times by 16:00 IST on the last day of the bidding for the issue today, 1 December 2010. Bidding for the issue by institutional investors ended on Tuesday, 30 November 2010.

Meanwhile, the Lok Sabha today, 1 December 2010, approved a $9.8-billion additional spending bill to cover various payments including outstanding government debt, food and fertiliser subsidies, and government pensions. The bill was passed by a voice vote in parliament, a type of vote allowing the government to bypass a three-week deadlock between the ruling Congress party-led coalition and opposition parties caused by rows over a series of corruption scandals.

India's merchandise exports rose 21.3% to $18 billion in October 2010 over October 2009, boosting hopes that the country may be able to reach the $200 billion target fixed for the current fiscal. Imports during the period grew by 6.8% to $ 27.68 billion, leaving a trade deficit of $9.72 billion, data released today, 1 December 2010 showed.

India's manufacturing activity strengthened further in November 2010 and the strong growth momentum is showing up in rising inflation pressures, according to an HSBC survey released on Wednesday, 1 December 2010. The HSBC Manufacturing Purchasing Managers' Index rose to 58.4 in November from 57.2 in October, the survey said.

November marked the 20th straight month that the PMI stayed above the 50-point level, which separates expansion from contraction in the level of activity at local factories. "A spike in the backlog of works confirms that capacity is tight, which together with rising input and output prices strengthens the case for continued tightening by the Reserve Bank of India," HSBC said, adding that rate hikes are expected to resume in early 2011.

The data on Business Activity Index, indicating the performance of the services sector, is due for release in the coming days.

The next major trigger for the equity market is the advance tax payment of corporates for the third installment, which falls due on 15 December 2010. The advance tax figures will provide a cue on Q3 December 2010 corporate earnings.

But, year-end profit taking may cap upside on the domestic bourses in the near term. Funds based in US and Europe follow calendar year as their accounting year.

European stocks edged higher on Wednesday, 1 December 2010, after a rebound in Asian markets, with banking and insurance stocks among the main beneficiaries. The key benchmark indices in UK, Germany and France were up by between 0.3% to 1.57%.

The cost of insuring Portuguese, Spanish and other euro-zone government debt against default fell sharply Wednesday morning, retreating from record levels.

Global rating agency Standard & Poor's on Tuesday put Portugal's credit rating on review for a possible downgrade, saying the country may have to turn to the European Union and the International Monetary Fund (IMF) for funding.

Asian stocks ended mostly higher after a choppy session Wednesday, as a fall in the US dollar against several major currencies helped improve investors' appetite for risk, while commodity shares pushed higher. The key benchmark indices in South Korea, China, Japan, Singapore, Hong Kong, Taiwan and Indonesia were up by between 0.12% to 2.49%.

Chinese stocks recovered from lower level, shrugging off policy tightening fears. China's manufacturing activity expanded at a faster pace in November than in October, and input prices rose sharply, raising concerns that further tightening measures are needed to contain inflation.

US stocks declined on Tuesday, 30 November 2010, on continued worries about the European sovereign-debt crisis. The Dow Jones Industrial Average lost 46.47 points, or 0.42%, to 11006.02. The Nasdaq Composite Index shed 26.99, or 1.07%, to 2498.23 and the Standard & Poor's 500-stock index slipped 7.21, or 0.61%, to 1180.55.

Meanwhile, the US consumer confidence rose to a five-month high in November 2010, data on Tuesday showed. The Conference Board said its index of consumer confidence rose to 54.1 in November, the highest reading since June and up from a revised 49.9 in October. Meanwhile, the Chicago Purchasing Managers' Index rose to 62.5 in November from 60.6 in October.

Trading in US index futures indicated that the Dow could jump 99 points at the opening bell on Wednesday, 1 December 2010. US index futures reversed initial fall.

Closer home, the Indian economy grew a robust 8.9% year-on-year in Q2 September 2010, maintaining the same pace of expansion as the previous quarter, boosted by farm output and manufacturing, government data released Tuesday, 30 November 2010 showed. The manufacturing sector grew an annual 9.8% and farm output grew an annual 4.4% in Q2 September 2010. The government revised upwards the Q1 June 2010 GDP growth to 8.9% from 8.8% earlier.

Finance Minister Pranab Mukherjee on Tuesday said GDP growth would be between 8.5% to 8.75% in the current fiscal that ends in March 2011 (FY 2011). Chairman of the Prime Minister's Economic Advisory Council C. Rangarajan said the economy is expected to grow 9% in the year to March 2012 (FY 2012). Rangarajan also said the government may reassess FY 2011 growth expectations and that it was "not impossible" to reach 9% growth in the financial year.

The output of key infrastructure industries surged by a robust 7% in October 2010, against a 3.9% growth recorded in the same month last year, helped by a strong showing by the electricity, crude oil and the finished steel sectors. The latest data for the six core sector showed a sharp rebound from the output in September 2010, when growth in these sectors had slipped to 2.7%.

The Reserve Bank of India on Monday, 29 November 2010, decided to extend its liquidity support facility to banks to further ease the funds crunch. The second LAF, which will be conducted daily at 16:15 IST, will be available till 28 January 2011, against 16 December 2010 announced earlier. The RBI has also further eased Statutory Liquidity Ratio (SLR) requirements as a temporary measure. Banks can now maintain a lower SLR that is two percentage points less than the current requirement. Earlier, they were allowed a one percentage point relief.

A bribe-for-loan scandal spooked the banking sector and the stock market recently. Chiefs of some of the top rung public sector banks and financial institutions were arrested by the Central Bureau of Investigation (CBI) on 24 November 2010, for allegedly sanctioning loans in return for bribes. The Securities & Exchange Board of India (Sebi) is reportedly examining the possibility of insider trading in shares of at least nine companies. The Sebi has joined the CBI to probe the possibility of insider trading in shares of these companies, named by the investigator as involved in the loan scandal, recent reports suggest.

The CBI has reportedly sent notices to 21 medium-to-large sized Indian companies regarding the ongoing probe into a financial bribery scandal. The cases are limited to individuals and unlikely to create a large fallout, a news agency report said, late last week, citing an unnamed senior CBI official. The CBI is not currently considering widening its probe into bribery over loans to corporates, the report added.

Finance Minister Pranab Mukherjee, last week, asked all banks, financial institutions and insurance firms to look into their exposures to firms named by the Central Bureau of Investigation in a loans bribery scandal. A ministry statement quoted Pranab Mukherjee as calling on regulatory and other institutions to further improve safeguards.

The BSE 30-share Sensex jumped 328.75 points or 1.68% to 19,850. The Sensex rose 366.01 points at the day's high of 19,887.26 in late trade. The index rose 3.9 points at the day's low of 19,525.15 in early trade.

The S&P CNX Nifty was up 98.20 points or 1.67% at 5,960.90.

The BSE Mid-Cap index rose 2.83% and the BSE Small-Cap index rose 3.14%. Both these indices outperformed the Sensex.

Except BSE Teck index, all the other sectoral indices on BSE rose. BSE Metal index (up 3.39%), PSU index (up 3.18%), Realty index (up 3.11%), Bankex (up 2.96%), Capital Goods index (up 2.88%), Auto index (up 1.9%), outperformed the Sensex.

BSE Teck index (down 0.03%), IT index (up 0.11%), FMCG index (up 0.18%), Oil & Gas index (up 1.48%), Healthcare index (up 1.53%), Power index (up 1.61%), Consumer Durables index (up 1.61%), underperformed the Sensex.

The market breadth, indicating the health of the market, was strong. On BSE, 2428 shares advanced while 587 shares declined. A total of 65 shares remained unchanged.

The total turnover on BSE amounted to Rs 4593 crore, lower than Rs 4680.27 crore on Tuesday, 30 November 2010.

Among the 30-member Sensex pack, 24 gained while the rest slipped.

Index heavyweight Reliance Industries (RIL) rose 0.33% to Rs 990.10 after gyrating in band of Rs 983.40-997.40 so far during the day. As per reports, the natural gas production from RIL's East Coast block has dropped by about 15% to about 45-46 million standard cubic metres per day (mscmd) from 53-54 mscmd. The production from D-1 and D-3 gas fields in the KG-D6 block has dropped due to reservoir complexities.

India's state-run oil & gas explorer Oil and Natural Gas Corporation jumped 3.23% after chairman R.S. Sharma told the media the company expects to launch its $3 billion follow-on public offer in March 2011 and the government will soon decide on the company's stock split.

Indian Oil Corporation (IOC) jumped 10.96% to Rs 384.10 after the company's chairman BM Bansal was quoted today as saying that the company is likely to sell its shares at Rs 450 each through a follow on public offer. The issue is likely to happen in the third or fourth week of January 2011.

Metal and mining shares saw an across the board surge after strong investor response to the MOIL issue. Tata Steel, Hindalco Industries, Hindustan Zinc, National Aluminium Company, Bhushan Steel, Sterlite Industries, JSW Steel and Steel Authority of India rose by between 1.76% to 9.43%.

But, Sesa Goa fell 2.81% after the company said it would stop mining operations at Thakurani mine in Orissa from Wednesday, 1 December 2010. The announcement was made after market hours on Tuesday, 30 November 2010.

Banking stocks gained on fresh buying on expectations of a strong credit offtake in a growing economy. India's largest bank by net profit and branch network State Bank of India gained 3.71%. India's second largest private sector bank by net profit HDFC Bank advanced 3.21%.

India's largest private sector bank in terms of operating income ICICI Bank rose 2.04% on reports the bank has withdrawn a special housing loan scheme with immediate effect. The schemes have been under the Reserve Bank of India's scrutiny on concerns about asset quality in the housing loan sector.

India's top mortgage lender by total income Housing Development Finance Corporation rose 1.46% after the company said it would not extend a special housing loan scheme that was available until Tuesday, 30 November 2010.

Telecom pivotals saw divergent trend. India's largest listed cellular services provider by sales Bharti Airtel lost 2.51%, on profit booking after surging 6.45% on Tuesday, 30 November 2010.

India's second largest listed cellular services provider by sales Reliance Communications gained 3.94%, extending Tuesday's, 30 November 2010 3.40% advance.

India's top small car maker by sales Maruti Suzuki India slipped 0.77% to Rs 1412.80 on profit booking after striking day's high of Rs 1447.60. Total sales rose 28.20% to 1.12 lakh vehicles in November 2010 over November 2009. The figures were announced during market hours today.

India's largest truck maker by sales Tata Motors jumped 4.13%. The company's total vehicle sales rose 1% to 54,622 units in November 2010 over November 2009. The figures were announced during market hours today.

India's largest tractor and utility vehicles maker Mahindra & Mahindra (M&M) surged 4.53% after two-wheeler sales grew 125% in November to 15,854 units.

Two wheeler makers Hero Honda Motors and Bajaj Auto fell 2.28% and 0.35%, respectively.

India's largest realty stock by sales DLF jumped 3.79%, extending Tuesday's, (30 November 2010) 7% surge. Earlier, the stock had slumped 9.8% in the preceding five trading days to 29 November 2010 following the outbreak of a bank loans bribery scandal last week, mainly involving realty and infrastructure firms

Among other realty stocks, Unitech, Indiabulls Real Estate, HDIL and Omaxe rose by between 1.52% to 4.04%.

North India's largest cement company by sales ACC rose 1.02% as the company's cement dispatches rose 4.81% to 1.74 million tonnes in November 2010 over November 2009. The company announced its November 2010 dispatches figures during market hours today, 1 December 2010.

Software stocks saw mixed trend and underperformed the Sensex. India's largest software company by sales TCS fell 0.07%. India's second largest software company by sales Infosys rose 0.17%. India's third largest software company by sales Wipro declined 1.34%

Consumer durables stocks rose on renewed buying. Videocon Industries, Titan Industries and Gitanjali Gems rose by between 2.47% to 5.76%.

Cals Refineries clocked the highest volume of 24.07 crore shares on BSE. Karuturi Global (1.37 crore shares), Birla Power Solutions (1.34 crore shares), FCS Software (1.16 crore shares) and Sanraa Media (1.07 crore shares) were the other volume toppers in that order.

State Bank of India clocked highest turnover of Rs 236.78 crore on BSE. Tata Motors (Rs 127.82 crore), LIC Housing Finance (Rs 125.24 crore), Gravita India (Rs 101.58 crore) and Jubilant Food Organosys (Rs 101.55 crore) were the other turnover toppers in that order.