TCS, Bajaj Auto climb in volatile market

The market moved higher last week as 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. The market was, however, volatile throughout the week on account of expectation of a hike in interest rates by the central bank later this month. Amid intense volatility, the 50-unit S&P CNX Nifty dipped below 5,700 mark. Third quarter results announced so far have been mixed.



The BSE Sensex rose 147.09 points or 0.78% to 19,007.53 in the week ended Friday, 21 January 2011. The S&P CNX Nifty rose 41.95 points or 0.74% to 5,696.50. The BSE Mid-Cap index fell 0.44% and the BSE Small-Cap index fell 0.53%.

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. 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 on Thursday.

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

Foreign investors continued to press sales. Foreign institutional investors (FII) have pulled out Rs 2649.90 crore since the start of the New Year (till 19 January 2011). FII inflow in the calendar year 2010 totaled Rs 133266 crore. The annual inflow in 2010 was at record level.

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. 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 October-December 2010 results announced so far have been mixed. The combined net profit of 228 companies rose 22.5% to Rs 23116 crore on 27% increase in sales to Rs 159909 crore in the quarter ended December 2010 over December 2009.

Trading for the week began on a positive note. Bargain hunting helped the market recover from a 4-month low struck in early trade on Monday, 17 January 2011. The BSE 30-share Sensex was up 21.81 points or 0.12% to 18,882.25. The S&P CNX Nifty was almost unchanged at 5,654.75.

The key benchmark indices extended gains for the second straight day on Tuesday, 18 January 2011, tracking firm global stocks. The barometer index BSE Sensex settled above the psychological 19,000 mark, having alternatively moved above and below that level during the day. The 50-unit S&P CNX Nifty surged past 5,700 level. The BSE 30-share Sensex jumped 209.80 points or 1.11% to 19092.05. The S&P CNX Nifty was up 69.30 points or 1.23% at 5,724.05.

The key benchmark edged lower in volatile trade on Wednesday, 19 January 2011, weighed down by weak European stocks and lower US index futures. The BSE 30-share Sensex was down 113.73 points or 0.6% to 18,978.32. The S&P CNX Nifty was down 33 points or 0.58% at 5,691.05.

The key benchmark indices edged higher in choppy trade on Thursday, 20 January 2011, 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. The BSE 30-share Sensex was up 68.22 points or 0.36% to 19,046.54. The S&P CNX Nifty was up 20.55 points or 0.36% at 5,711.60.

The key benchmark indices ended a choppy trading session lower on Friday, 21 January 2011, as investors digested a number of third quarter corporate results, prominent being that of ITC, Bharat Heavy Electricals and Punjab National Bank. Firm European stocks helped Indian stocks recoup intraday losses in late trade. The BSE 30-share Sensex was down 39.01 points or 0.2% to 19007.53. The S&P CNX Nifty was down 15.10 points or 0.26% at 5,696.50.

Among the 30 Sensex shares, 16 rose while the rest declined.

India's largest information technology (IT) company by sales Tata Consultancy Services (TCS) spurted 8.39% to Rs 1212.6. It was the biggest Sensex gainer last week. TCS' consolidated net profit rose 9.24% to Rs 2369.83 crore on 4.05% growth in net sales to Rs 9663.35 crore in Q3 December 2010 over Q2 September 2010. The result was announced on Monday, 17 January 2011.

Strong growth from the UK and Asia-Pacific along with the US, West Asia and Africa, made India's largest information technology service provider by sales TCS report better than expected quarter, both in terms of profitability and margin improvement.

TCS managed to deliver better margins despite a volatile dollar and pound. TCS said it expects strong demand for outsourcing services. TCS chief executive N. Chandrasekaran said that the macroeconomic condition continues to be very dynamic. He said that despite those conditions, customers are planning growth. He added that the company expects the demand environment and momentum forward to be pretty good.

India's largest private sector bank by market capitalisation ICICI Bank jumped 5.47% to Rs 1065.85. It was the second biggest Sensex gainer last week. The bank will announce its Q3 December 2010 results on 24 January 2011.

India's second largest motorcycle maker by sales Bajaj Auto climbed 5.18% to Rs 1311.55. It was the third biggest Sensex gainer last week. 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 on 19 January 2011.

Earnings before interest taxes depreciation and amortization (EBITDA) margin for the quarter stood at 20.3%. The company expects EBITDA margin at 20% for the year ending March 2011 (FY 2011). Bajaj said the quarter witnessed an all round increase in input cost. In such environment, the company's focus on high end motorcycles enabled it to maintain record high margins in excess of 20%.

Mahindra & Mahindra (up 4.33%), Cipla (up 4.11%), State Bank of India (up 3.82%), Jindal Steel & Power (up 2.82%) and Hindalco Industries (up 2.33%), were the other major Sensex gainers.

Anil Ambani controlled infrastructure developer Reliance Infrastructure was the biggest Sensex loser last week. The stock slumped 7.66% to Rs 737.10. The steep slide in the stock materialised after the stock market regulator Securities & Exchange Board of India (Sebi) on Friday, 14 January 2011, passed a consent order with regard to its probe into possible violation of securities market norms by Anil Dhirubhai Ambani group (ADAG) companies -- Reliance Infrastructure (R-Infra) and Reliance Natural Resources (RNRL). The case relates to a probe by Sebi in dealings in the shares of another ADAG firm Reliance Communications and investigations related to alleged violation of foreign investment norms.

As per the conditions of the settlement, the two companies would not be able to invest in any listed shares in the secondary market, other than mutual funds, until December 2012 and the individuals named in the case, which includes ADAG chairman Anil Ambani, cannot invest in secondary market untill December 2011. However, this condition will not apply to primary market issuances, buybacks and open offers. RNRL has been merged with Reliance Power.

In the consent order, ADAG chairman Anil Ambani, R-Infra's vice-chairman Satish Seth, director SC Gupta, whole-time director Lalit Jalan and director JP Chalasani, have remitted Rs 25 crore to Sebi and RNRL and Anil Ambani have remitted Rs 25 crore, without admitting or denying the charges.

State-run oil explorer ONGC was the second biggest Sensex loser. The stock declined 6.25% to Rs 1105.05. According to media reports, a leakage was detected in a pipeline at ONGC's off-shore operations about 80 kilometres off Mumbai coast.

India's largest motorcycle maker by sales Hero Honda Motors was the third biggest Sensex loser. The stock fell 3.79% to Rs 1750. The company will consider its Q3 December 2010 results on 2 February 2011.

India's largest engineering and construction company by revenue Larsen & Toubro tumbled 3.53% to Rs 1649.05. The company's operating margin declined to 10.8% in Q3 December 2010 from 12.4% in Q3 December 2009. The company said profit after tax, excluding exceptional and extra-ordinary rose 16% to Rs 811 crore in Q3 December 2010 over Q3 December 2009. The Q3 result was announced on 17 January 2011.

Reliance Communications (down 1.66%), Maruti Suzuki India (down 1.67%), Bharti Airtel (down 1.78%), Jaiprakash Associates (down 2.08%), DLF (down 2.57%) and Tata Power Company (down 3.50%), were the other major Sensex losers.

India's third largest software firm by sales Wipro fell 1.51% to Rs 456.05. Wipro surprised markets with the resignations of the joint-CEOs of its information technology (IT) business at the time of announcing the third quarter results on Friday, 21 January 2011. Both, Girish Paranjpe and Suresh Vaswani have resigned. The company has appointed T. K. Kurien as CEO (IT Business) & executive director with effect from 1 February 2011.

Wipro's net profit as per International Financial Reporting Standards rose 10% to Rs 1319 crore on 12% increase in total revenue to Rs 7829 crore in Q3 December 2010 over Q3 December 2009. Wipro's IT services revenue in dollar terms rose 5.6% to $1.34 billion in Q3 December 2010 over Q2 September 2010. Revenue from consumer care and lighting business rose 21% and earnings before interest and taxation from this segment grew 14% in Q3 December 2010 over Q3 December 2009.

India's largest cigarette maker by sales ITC fell 0.76% to Rs 168.95. Net profit rose 21.41% to Rs 1389.08 crore on 18.72% increase in total income to Rs 5706.78 in Q3 December 2010 over Q3 December 2009. The result was announced during trading hours on Friday, 21 January 2011.

India's largest power equipment maker by sales Bharat Heavy Electricals (Bhel) rose 1.01% to Rs 2217.5. Net profit rose 30.83% to Rs 1403.23 crore on 23.63% increase in total income to Rs 9176.26 crore in Q3 December 2010 over Q3 December 2009. The result was announced during trading hours on Friday, 21 January 2011.

Index heavyweight Reliance Industries (RIL) fell 1.46% to Rs 986.5. Net profit rose 28.14% to Rs 5136 crore on 5.52% increase in total income to Rs 60530 crore in Q3 December 2010 over Q3 December 2009. The result was announced after trading hours on Friday, 21 January 2011.