Broad market depicts weakness

The key benchmark indices closed flat after witnessing intraday volatility as European stocks and US index futures edged lower. The BSE Sensex lost 9.67 points or 0.06%, off close to 120 points from the day's high and up close to 60 points from the day's low. The broad market depicted weakness--the market breadth was weak. Data showing substantial selling by foreign funds over the past few days and weather office's forecast of below normal rains in 2011 weighed on the sentiment.

Index heavyweight Reliance Industries (RIL) edged lower amid late volatility. FMCG shares declined after the weather office on Tuesday forecast below normal monsoons rains for 2011. Consumer durables stocks declined on profit taking. IT stocks gained after an overnight rally for the Nasdaq. Maruti Suzuki India and Unitech hit 52 week lows. Interest rate sensitive realty stocks extended recent losses on worries higher interest rates could dent demand for residential and commercial property. Most metal stocks declined on concerns about global economic recovery.



Stocks were volatile. The market pared gains after a firm start triggered by higher Asian stocks. Volatility ruled the roost as the key benchmark indices swung between gains and losses in morning trade. The market regained positive zone in mid-morning trade. Intraday volatility continued as the key benchmark indices swung between positive and negative terrain in early afternoon trade. The market pared gains after recovering from lower level in afternoon trade as European stocks declined at the onset of the trading session. The market reversed gains and hit fresh intraday low in mid-afternoon trade. The market recovered from lower level in late trade.

The BSE Sensex shed 9.67 points or 0.06% to 17,55.63. The Sensex gained 118.56 points at the day's high of 17,678.86 in early trade. The Sensex fell 68.11 points at the day's low of 17,492.19 in mid-afternoon trade, its lowest level since 20 June 2011.

The S&P CNX Nifty rose 2.45 points or 0.05% to 5,278.30.

The BSE Mid-Cap and BSE Small-Cap indices fell 0.84% each, underperforming the Sensex.

BSE clocked turnover of Rs 1998 crore, lower than Rs 2351.32 crore on Tuesday, 21 June 2011.

The market breadth, indicating the health of the market, was weak. On BSE, 1,813 shares declined while 1,037 shares advanced. A total of 111 shares remained unchanged. The breadth was positive at the onset of the trading session.

Among the 30-member Sensex pack, 16 stocks fell while the rest of them rose.

Index heavyweight Reliance Industries (RIL) fell 0.28% to Rs 846.10. The stock was volatile. The scrip hit a high of Rs 858 and a low of Rs 834.10. The RIL stock has witnessed a sell-off recently following reports a government watchdog has accused the Oil Ministry for favouring RIL by allowing it to double the development cost of its KG-D6 gas field. The stock had hit a 52-week low of Rs 829 in intraday trade on Monday, 20 June 2011.

As per recent reports, a draft report of the Comptroller and Auditor General of India (CAG) has questioned the decision of the oil ministry and its technical arm, the Director General of Hydrocarbons (DGH), to allow RIL to raise the development cost of RIL's KG-D6 field. RIL had said last week it has fully complied with the requirements in its production sharing contract at all times in conducting petroleum operations

RIL's advance tax payment reportedly jumped 38.46% to Rs 900 crore in Q1 June 2011 over Q1 June 2010. Higher advance tax payment normally indicates higher profit for the period under review.

India's largest oil exploration firm by sales ONGC rose 2.05% on reports the company is in talks with UK-based BG Group and Italy's Eni to sell up to 30% in its gas block off the east coast. The block has in-place gas reserves of 3.42 trillion cubic feet (tcf) and of this, 1.904 tcf is recoverable.

India's top small car maker by sales Maruti Suzuki India fell 2.39% to Rs 1,119.05, extending recent losses triggered by concerns arising from intense competition in the small-car segment. The stock hit 52-week low of Rs 1,116 today. Toyota Motor Corp.'s India unit today, 22 June 2011, said it will introduce its Etios Liva small car on 27 June 2011. The Etios Liva will be "competitively priced" and has been positioned in the premium hatchback segment, Toyota Kirloskar Motor said. The company had earlier postponed the introduction of the Etios Liva to June 2011 from April 2011 due to capacity constraints at its factories.

The Etios Liva and the Etios sedan share a common platform. The company introduced the Etios sedan in December last year, which received a better-than-expected response. It deferred the introduction of the Etios Liva to make more units of the Etios sedan and to cut long waiting periods for the model.

India's largest truck and bus maker, Tata Motors fell 0.23%, extending recent losses triggered by reports of lower advance tax payment by the auto major. Tata Motors' advance tax reportedly fell 4.61% to Rs 62 crore in Q1 June 2011 over Q1 June 2010. Tata Motors' global vehicle sales rose 11% to 88,251 units in May 2011 over May 2010. Jaguar and Land Rover sales rose 17% to 22,296 units, driven by a 30% rise in Land Rover sales. The company announced the sales data last week.

Tata Motors has reportedly decided to challenge in court the West Bengal government's decision to reclaim land in Singur. The auto major had abandoned plans in 2008 to build a plant on the land to manufacture its budget car Nano after violent protests by farmers. The company instead decided to set up a unit to manufacture Nano in Gujarat.

India's second largest bike maker by sales Bajaj Auto rose 1.68%, with the stock gaining for the second straight day. The company's advance tax reportedly rose 13.63% to Rs 125 crore in Q1 June 2011 over Q1 June 2010. India's largest bike maker by sales Hero Honda Motors gained 0.69%.

Tractor and utility vehicles maker Mahindra & Mahindra (M&M) gained 2.39%, with the stock gaining for the second straight day. The company's advance tax reportedly rose 42.85% to Rs 90 crore in Q1 June 2011 over Q1 June 2010.

HDFC rose 0.22%. The stock turned ex-dividend today, 22 June 2011, for dividend of Rs 9 per share for the year ended March 2011.

India's top engineering and construction firm by sales Larsen & Toubro (L&T) rose 0.42% after the company during market hours today said that its building and factories unit, a part of company's construction division, has secured new orders worth Rs 4100 crore in Q1 June 2011.

Earlier in the day, the company said a special purpose vehicle L&T Infrastructure Development Projects (L&TIDPL) has signed a concession agreement worth Rs 2600 crore with the NHAI for the four-laning of a 244-kilometre stretch on the National Highway 14 between Beawar and Pindwara in Rajasthan. With this project, L&T currently has 16 projects in its BOT road portfolio with a total project book size of Rs 15800 crore, L&T said in a statement.

Metal stocks fell on concerns about global economic recovery. Hindalco Industries, Hindustan Zinc, Sail, JSW Steel, Jindal Steel & Power and Nalco fell by between 0.48% to 1.46%. LMEX, a gauge of six metals traded on the London Metal Exchange rose 0.89% on Tuesday, 21 June 2011

Tata Steel fell 0.21%. The company during market hours today said it had received about $130 million as part of an arbitration settlement between its subsidiary Tata Steel UK and certain third parties relating to the Teesside Cast Products business. The company said following the partial final award a commercial settlement to all disputes relating to offtake agreements was reached and company completed a full and final settlement of claims with the consortium of offtakers.

Earlier this year, the company signed a $469 agreement to sell some assets of Teesside Cast Products (TCP) to Thailand's SSI. TCP, based in the northeast of England, was mothballed a year ago after a consortium of offtakers withdrew from a 10-year supply agreement.

Most FMCG shares edged lower after the weather office on Tuesday forecast below normal monsoons rains for 2011. Britannia Industries, Marico, Hindustan Unilever and Dabur India fell by between 1.82% to 3.42%. FMCG firms derive substantial revenue from rural markets.

Consumer durables stocks declined on profit taking. Titan Industries, Videocon Industries, Gitanjali Gems and Blue Star shed by between 0.73% to 6.23%.

IT stocks gained after an overnight rally for the Nasdaq. Infosys, Wipro and Tech Mahindra rose by between 0.61% to 2.51%. Financial Technologies, TCS, HCL Tech and Patni Computer Systems fell by between 0.02% to 1.86%. As per reports, Infosys, Tata Consultancy Services (TCS) and HCL Technologies are among potential bidders interested in acquiring the banking product business of UK-based Misys.

Interest rate sensitive realty stocks extended recent losses on worries higher interest rates could dent demand for residential and commercial property. Purchases of both residential and commercial property are largely driven by finance. HDIL, DLF and Indiabulls Real Estate declined by between 1.03% to 4.32%. Unitech fell 3.7% to Rs 29.90. The stock hit 52-week low of Rs 29.40 today.

Telecom pivotals saw divergent trend. India's largest listed cellular services provider by sales Bharti Airtel lost 2.32% to Rs 381.75. The stock declined on profit booking after advancing 5.39% in prior three trading sessions.

India's second listed cellular services provider by sales Reliance Communications (RCom) rose 0.11%. The RCom stock had slumped 7.89% in a single trading session on Monday, 20 June 2011, after the Bombay Stock Exchange (BSE) announced its decision to remove the stock from the BSE 30-share Sensex pack. The stock had ended almost unchanged on Tuesday, 21 June 2011.

Bank stocks were mixed. India's largest commercial bank by branch network State Bank of India (SBI) declined 0.4% to Rs 2,141.05, with the stock falling for the third straight day. The stock had hit a 52-week low of Rs 2,123 in intraday trade on Monday, 20 June 2011. The bank's advance tax reportedly rose 29.41% to Rs 1100 crore in Q1 June 2011 over Q1 June 2010.

India's largest private sector bank by net profit ICICI Bank rose 0.51%. The bank's advance tax reportedly rose 11.42% to Rs 390 crore in Q1 June 2011 over Q1 June 2010. India's second largest private sector bank by net profit HDFC Bank shed 0.58%. The bank's advance tax reportedly rose 26.98% to Rs 400 crore in Q1 June 2011 over Q1 June 2010.

Sun Pharmaceutical Industries gained 1.38% after the company said its subsidiary has got approval for a abbreviated new drug application to market a generic version of Sumatriptan Succinate injection. Annual sales of Sumatriptan Succinate injections in the US is approximately $190 million.

Fertiliser shares edged lower after the weather office on Tuesday forecast below normal monsoon rains for 2011. GSFC, GNFC, Tata Chemicals, Rashtriya Chemicals & Fertiliser and Chambal Fertiliser and Chemicals declined by between 1.01% to 4.34%.

Cals Refineries clocked highest volume of 5.22 crore shares on BSE. Timbor Home (3.53 crore shares), GTL (1.03 crore shares), GTL Infra (84.19 lakh shares) and HFCL (53.41 lakh shares) were the other volume toppers in that order.

Timbor Home clocked highest turnover of Rs 322.67 crore on BSE. Titan Industries (Rs 160.77 crore), GTL (Rs 120.49 crore), State Bank of India (Rs 76.25 crore) and RIL (Rs 63.38 crore) were the other turnover toppers in that order.

Foreign institutional investors (FIIs) sold shares worth a net Rs 551.20 crore on Tuesday, 21 June 2011, higher than an outflow of Rs 427.10 crore on Monday, 20 June 2011. FIIs turned sellers in June 2011. FII outflow in June 2011 totaled Rs 243.80 crore (till 21 June 2011). FIIs had offloaded shares worth a net Rs 6614.40 crore in May 2011. FII outflow in calendar 2011 totaled Rs 2145.60 crore (till 21 June 2011).

The India Meteorological Department (IMD) after trading hours on Tuesday, 21 June 2011, revised downwards the forecast for the vital monsoon rains this year to slightly below normal from the normal forecast given in April 2011. On the flip side, crop output may not be adversely affected significantly due to the onset of the monsoon on time and expectations that the rains will be well distributed.

The IMD said this year's monsoon rains would be 95% of the long-term average overall, down from its earlier forecast of 98% and just short of the 96-104 percent range which counts as normal monsoon. India, one of the world's largest producers and consumers of crops such as rice, sugar and corn, relies heavily on the June to September monsoon for agricultural output.

Monsoon rains in July 2011 are likely to be 27 centimetres compared with 29 centimetres average over a 50-year period. For August 2011, rains are forecast to be 24 centimetres compared with a long-term average of 26 centimetres.

The monsoon season brings about 70% of India's annual rainfall and is crucial for summer-sown crops such as rice, sugarcane, pulses, cotton and oilseeds as about 60% of the country's farmland is rain-fed. The rainfall forecast has been lowered because of weakening La Nina conditions, neutral temperatures over the Indian Ocean region and unfavorable North Atlantic pressure.

The seasonal rain was 11% above normal until 20 June. Most regions have so far received normal or above-normal rains except Gujarat, the largest cotton producer, and the northeastern region. In northern India, known as the country's grain-bowl region, the seasonal rainfall has so far touched only its peripheral parts in Uttar Pradesh state. The monsoon has advanced to half of the country and is expected to cover most regions by the first week of July.

On the political front, the parliament will reportedly reopen two weeks later than usual for the monsoon session, giving the embattled government more time to reach an agreement with civil society over drafting a tough anti-graft "Jan Lokpal" bill and head off any more national protests.

European markets edged lower on Wednesday with investors wary of taking on fresh positions despite the Greek government's successful navigation of a confidence vote late Tuesday. The key benchmark indices in UK, and France fell by between 0.07% to 0.38%. Germany's DAX rose 0.07%.

Late Tuesday, the Greek government won a key confidence vote, paving the way for the country to approve additional austerity measures and receive additional financial aid. The government managed to win the confidence vote with a narrow margin with 155 votes in favour and 143 against it. The country faces votes next week again on the austerity measures and putting it into law before a deadline in mid-July to secure a new bailout from the European Union and IMF.

Asian stocks rose on Wednesday after Greece's government on Tuesday survived a confidence vote crucial to avoiding a sovereign default. The key benchmark indices in China, Hong Kong, Indonesia, South Korea, Japan, and Taiwan rose by between 0.04% to 1.79%. Singapore's Straits Times index fell 0.35%.

Trading in US index futures indicated that the Dow could fall 25 points at the opening bell on Wednesday, 22 June 2011. The Federal Open Market Committee began a two-day policy meeting on Tuesday. The Fed is widely expected to repeat its commitment to keeping interest rates low for an extended period.

The Federal Reserve's second round of quantitative easing or QE2, a temporary policy designed to increase the money supply, keep interest rates low and stimulate the economy, ends on 30 June 2011. A section of the market has been speculating about the possibility of a third quantitative easing program by the Fed after the current one expires in June 2011.