Sensex regains 19,000; Nifty above 5,700

The key benchmark indices edged higher in choppy trade, shrugging off weak global stocks, with interest rate sensitive banking stocks reversing initial losses after the latest data showed easing of food inflation in early January 2011. Expectations of decent-to-strong Q3 results also aided intraday rebound in banking stocks. IT major TCS struck record high-day trade. Other IT stocks, too, edged higher. Oil & gas stocks declined. Index heavyweight Reliance Industries pared intraday losses ahead of its Q3 result on Friday, 21 January 2011.



Realty and FMCG stocks fell. The BSE 30-share Sensex was up 68.22 points or 0.36%, up close to 250 points from the day's low and off close to 50 points from the day's high. The BSE Sensex regained the psychological 19,000 mark. The S&P CNX Nifty regained 5,700 level. The market breadth was negative.

NSE's volatility index, India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, eased a bit to 21.01% from Wednesday's (19 January 2011) close of 21.09%. 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.

Intraday volatility was high as traders rolled positions in the derivatives segment from January 2011 series to February 2011 series ahead of the expiry of the near-month January 2011 contracts next week. The market edged lower in early trade on weak Asian stocks. The key benchmark indices trimmed losses in morning trade. The market weakened once again after recovering sharply to hit fresh intraday high in mid-morning trade. The market extended losses in early afternoon trade. The market hit a fresh intraday low in afternoon trade. Bank stocks led a sharp intraday rebound in mid-afternoon trade.

Foreign institutional investors (FIIs) sold shares worth a net Rs 208.10 crore on Wednesday, 19 January 2011, as against an inflow of Rs 176.40 crore on Tuesday, 18 January 2011. FII outflow in January 2011 totaled Rs 2649.90 crore (till 19 January 2011). FIIs had bought equities worth Rs 2049.60 crore in December 2010.

The initial Q3 earnings have been a mixed bag. After disappointing Q3 results from IT bellwether Infosys, which also gave a muted guidance for Q4 March 2011, IT giant TCS reported stronger-than-expected results. Bajaj Auto reported good Q3 results. Housing finance major HDFC came out with decent Q3 results, which also showed asset quality remain strong. Engineering & construction major L&T expects revenue growth to remain strong over the medium term on a healthy order book. The company also said while it is facing a substantial increase in the cost of raw materials such as steel and copper, margins are expected to remain healthy. Private sector bank Axis Bank has reported strong Q3 results, with asset quality remaining healthy.

Food inflation moderated for the second week in a row in the early part of January after spiking to nearly a two-year peak in late December, providing some more relief to both policymakers and consumers alike. Annual rate of inflation in the sensitive Food Articles space decreased in the week ended 8 January 2011, data released by the government showed on Thursday. This was the second decline in food inflation after rising for five consecutive weeks.

Inflation in the Food Articles group fell to 15.52% in the week ended 8 January 2011 from 16.91% in the week ended 1 January 2011, the Union Commerce & Industry said today. Inflation in the Primary Articles group also declined to 17.03% in the week under review from 17.58% in the preceding week. Inflation in the Fuel & Power group remained unchanged at 11.53% in the week ended 8 January, the Commerce & Industry said today.

High food inflation is being driven by supply bottlenecks and rising incomes, Finance Minister Pranab Mukherjee said in a statement on Wednesday. Mukherjee has also asked state governments to review their local taxes on food products.

European shares extended losses on Thursday as concerns persisted that China could tighten monetary policy after stronger-than-expected economic growth data, with banks reversing earlier session gains.. The key benchmark indices in UK, Germany and France fell 0.43% to 1.36%.

Chinese stocks led decline in Asian stocks on Thursday, weighed by policy-tightening concerns by Chinese policy makers after the latest data showed the Chinese economy accelerated more than expected in the fourth quarter. The key benchmark indices in China, Hong Kong, Indonesia, Japan, Singapore, South Korea and Taiwan fell by between 0.43% to 2.89%.

China's gross domestic product expanded 9.8% in the fourth quarter from a year earlier, faster than the third quarter's 9.6% increase. The consumer price index rose 4.6% in December, down from November's 5.1% and lower than the 4.7% increase expected by economists.

US stocks skidded on Wednesday, 19 January 2011 after disappointing results by Goldman Sachs Group Inc and Wells Fargo & Co. Groundbreaking for new U.S. homes fell more than expected in December to the lowest in over a year, the Commerce Department said.

Trading in US index futures indicated that the Dow could fall 19 points at the opening bell on Thursday, 20 January 2011.

Back home, on the political front, a reshuffle of the Union cabinet on Wednesday saw no major change in the key ministries of finance, home, defence and foreign affairs. Oil Minister Murli Deora was replaced as also Roads Minister Kamal Nath, who was seen as moving slow on boosting infrastructure. S Jaipal Reddy is the new oil minister. Ashwani Kumar is new Ministers of State, Planning and Parliamentary Affairs and Science and Technology and Earth Sciences. K C Venugopal is new Ministers of State, Power.

While petroleum minister Murli Deora has been moved to the less-glamorous corporate affairs, civil aviation minister Praful Patel, after being elevated to the cabinet rank, was sent to heavy industries. Overseas Minister Vayalar Ravi has been given additional charge of civil aviation.

M S Gill has been moved from Sports and Youth Affairs Ministry to Statistics and Programme Implementation. Virbhadra Singh has been shifted from Steel to Micro, Small and Medium Enterprises while Vilasrao Deshmukh has been shifted from Heavy Industries and Public Enterprises to Rural Development with additional charge of Panchayati Raj.

On the macro front, high food prices have raised fears of further hike in policy rates by the central bank. As per a poll by Capital Market, economists widely expect 25 basis points increase each in repo rate and reverse repo rate at 25 January 2010 policy review. Reserve Bank of India governor Duvvuri Subbarao said on Monday, 17 January 2011, that the country is facing surging inflation and that the RBI needs to calibrate monetary policy in order to manage inflation and also support growth.

The wholesale price index (WPI) rose an annual 8.43% in December 2010 on higher food prices, government data showed on Friday, 14 January 2011. The annual reading for October 2010 was revised upwards to 9.12% from 8.58%.

The BSE 30-share Sensex was up 68.22 points or 0.36% to 19,046.54. The index jumped 121.94 points at the day's high of 19,100.26 in mid-afternoon trade. The index declined 183.59 points at the day's low of 18,794.73 in afternoon trade.

The S&P CNX Nifty was up 20.55 points or 0.36% at 5,711.60.

The market breadth, indicating the health of the market, was negative. On BSE, 1,479 shares declined while 1,370 shares advanced. A total of 98 shares remained unchanged. The breadth was much weaker earlier in the day.

Among the 30-member Sensex pack, 17 advanced while the rest fell

The BSE Mid-Cap index rose 0.14% and the BSE Smal-Cap index gained 0.04%. Both these indices underperformed the Sensex.

Sectoral indices on BSE were mixed. Banking sector index Bankex (up 1.66%), and IT index (up 1.13%), outperformed the Sensex. The BSE Consumer Durables index (up 0.27%), PSU index (up 0.27%), Metal index (up 0.21%), Healthcare index (up 0.18%), Power index (up 0.13%), Capital Goods index (down 0.02%), Auto index (down 0.03%), Realty index (down 0.24%), FMCG index (down 1.19%) and Oil & Gas index (down 1.5%), underperformed the Sensex.

BSE clocked turnover of Rs 3104 crore, lower than Rs 3476.86 crore on Wednesday, 19 January 2011.

Index heavyweight Reliance Industries (RIL) lost 1.2% to Rs 969.75, extending five-day 4.76% decline. Nonetheless, the stock came off the day's low of Rs 954.20. The company announces its Q3 December 2010 result on Friday, 21 January 2011. RIL and US-based Atlas Energy are reportedly exploring options for expanding their shale gas joint venture to new geographies including Canada and Australia.

Shares from oil & gas sector slipped on uncertainties over the pace of reforms in the sector after the reshuffle of the Union Cabinet on Wednesday, 19 January 2011. In one of the significant changes, Sudini Jaipal Reddy replaced Murli Deora as the Oil Minister.

State-run oil marketing companies (OMCs) -- HPCL (down 2.09%) and BPCL (down 1.6%) declined. Indian Oil Corporation was flat.

Oil exploration firms ONGC (down 2.02%) and Oil India (down 2.03%), also fell. Gas transmission and distribution major GAIL (India) slumped 3.37%.

The new Oil Minister reportedly said he is nervous about rising petrol prices. Frequent upward revision of petrol prices by oil companies have added to the woes of the common man already suffering due to high food inflation.

India's top engineering and construction firm by sales Larsen & Toubro rose 0.59% on bargain hunting after recent losses triggering by pressure on operating margin in the third quarter. The operating profit margin declined to 10.8% from 12.4% in Q3 December 2009. Profit after tax, excluding exceptional and extra-ordinary items, rose 16% to Rs 811 crore in Q3 December 2010 over Q3 December 2009. The company announced the results during market hours on Monday, 17 January 2011.

The order book of Rs 114882 crore at end December 2010 is 3.13 times the company's year ended March 2010 sales of Rs 36675.15 crore, giving strong revenue visibility.

Other capital goods stocks declined. Bhel, Crompton Greaves and Thermax fell by between 0.1% to 4.01%.

Interest rate sensitive banking stocks reversed initial losses after the latest government data showed easing of food inflation. India's largest bank by net profit and branch network State Bank of India (SBI) rose 1.04% to Rs 2534.85, off the day's low of Rs 2468.80. The bank announces Q3 result on Saturday, 22 January 2011. India's second largest private sector bank by net profit HDFC Bank rose 1.94% to Rs 2118, off the day's low of Rs 2052.

India's largest private sector bank by market capitalisation ICICI Bank gained 2.67% to Rs 1050.80, off the day's low of Rs 1006.60. State-run Air India has given ICICI Bank the mandate to refinance loans to purchase 21 Airbus A 320 aircraft worth Rs 5500 crore.

Some interest rate sensitive realty shares edged lower on worries higher interest rates could dent demand for residential and commercial properties. Unitech, DLF, and Ackruti City declined by between 0.25% to 1.69%.

FMCG stocks edged lower. Hindustan Unilever, ITC, Dabur India and United Spirits fell by between 0.05% to 3.32%.

TCS rose 1.53%. The stock hit record high of Rs 1,219.50 today. The stock had jumped 5.48% on Tuesday, 18 January 2011, after reporting forecast-beating Q3 result. On a consolidated basis, net profit rose 9.25% to Rs 2369.83 crore on 5.35% increase in total income to Rs 9857.56 crore in Q3 December 2010 over Q2 September 2010. The result was announced after trading hours on Monday, 17 January 2011.

India's third largest IT exporter by sales Wipro rose 0.61% ahead of its Q3 December 2010 results on Friday, 21 January 2011.

IT bellwether Infosys gained 1.14%. Consolidated net profit rose 2.5% to Rs 1,780 crore on 2.3% rise in revenues to Rs 7106 crore in Q3 December 2010 over Q2 September 2010 as per International Financial Reporting Standards. The result was announced on Thursday 13 January 2011.

Telecom stocks fell as mobile number portability services will be unveiled by the Prime Minister Manmohan Singh across the country today. The facility allows mobile users to change their operator without having to change the phone number. Idea Cellular, and Bharti Airtel shed by between 0.07% to 1.09%. Reliance Communications rose 1.72%, reversing initial losses.

Some consumer durables stocks edged higher. Gitanjali Gems, Videocon Industries and Titan Industries rose by between 0.45% to 0.89%.

Auto shares were mixed. India's largest truck maker by sales Tata Motors rose 0.18%, reversing initial losses. The company's global sales surged 21% to 90,294 units in December 2010 over December 2009. While Jaguar sales declined 10% to 4,332 units, Land Rover sales posted 4% growth to 17,021 units. Meanwhile, as per media reports, Tata Motors has bagged an order to sell 4,000 Jaguar and 36,000 Land Rover in China in 2011.

India's largest carmaker by sales Maruti Suzuki India shed 0.66%. India's leading tractor maker by sales Mahindra & Mahindra gained 1.24%. The $7.1 billion Mahindra Group recently announced a new brand position -- Rise. This is the first time that Mahindra as a group, which spans from aerospace to automotive, from farm equipment to IT and logistics, will communicate with one brand voice, one face and one 'Mahindra' fore purpose, M&M said.

Bajaj Auto fell 1.75%, reversing initial gains. The stock had risen 1.96% on Wednesday, 19 January 2011, on good Q3 results. Net profit rose 40.40% to Rs 667.11 crore on 28.40% increase in total income to Rs 4276.54 crore in Q3 December 2010 over Q3 December 2009. The result was announced during trading hours on Wednesday, 19 January 2011. India's top bike maker by sales Hero Honda Motors rose 0.54%.

Metal stocks fell as LMEX, a gauge of six metals traded on the London Metal Exchange declined 1.33% on Wednesday, 19 January 2011. Hindustan Zinc, Sterlite Industries, JSW Steel, National Aluminum Company and Steel Authority of India shed by between 0.09% to 0.86%.

Tata Steel declined 0.76%. The company's follow-on public offer (FPO) received bids for 2.19 crore shares compared with 4.86 crore shares on offer, by 16:00 IST on the second day of bidding for the issue, data on NSE showed. The FPO closes tomorrow, 21 January 2011. The price band for the FPO has been set at Rs 594-610 a share.

The company on Tuesday, 18 January 2011, finalised allocation of 83.25 lakh equity shares to anchor investors at Rs 610 per share, the top end of the Rs 594-610 price band for a follow-on public offer (FPO).

C Mahendra Exports settled at Rs 110.85 on BSE, a 0.77% premium over the initial public offer (IPO) price of Rs 110. The stock debuted at Rs 111, a 0.9% premium over its IPO price.

C Mahendra Exports clocked highest volume of 1.98 crore shares on BSE. Kohinoor Broadcasting Corp (1.59 crore shares), Cals Refineries (1.12 crore shares), Lloyd Steel Industries (93.02 lakh shares) and BAMPSL Securities (73.86 lakh shares) were the other volume toppers in that order.

C Mahendra Exports clocked highest turnover of Rs 219.50 crore on BSE. State Bank of India (Rs 200.30 crore), Tata Coffee (Rs 194.17 crore), Reliance Industries (Rs 185.69 crore) and SKS Microfinance (Rs 116.72 crore) were the other turnover toppers in that order.