Market scales 3-week high; Sensex vaults 5.3% in 4 days

Key benchmark indices advanced for the fourth straight day to attain 3-week closing highs as the latest data showed that foreign institutional investors (FIIs) had stepped up buying of Indian stocks. The BSE Sensex rose 80.04 points or 0.43%, up close to 170 points from the day's low and off close to 35 points from the day's high. The market breadth was positive, having swung between positive and negative zone earlier in the day. The BSE Mid-Cap and Small-Cap indices outperformed the Sensex.

Auto stocks rose for the second straight day as the recent hike in diesel price of Rs 3 per litre was lower than market expectations of a hike of Rs 4 per litre. Capital goods, pharma and consumer durables stocks also gained. Index heavyweight Reliance Industries (RIL) edged lower in volatile trade.



The market opened on a firm note as the latest data showed that foreign institutional investors (FIIs) had stepped up buying of Indian stocks. The barometer index BSE Sensex and the 50-unit S&P CNX Nifty hit 3-week highs. The market slipped into the red to hit fresh intraday low in morning trade as many Asian markets reversed initial gains. The market regained positive terrain in early afternoon trade. The market held positive zone in afternoon trade as European stocks rose at the onset of the trading session. The market retained positive zone in mid-afternoon trade. The market regained strength after trimming gains in late trade.

Foreign institutional investors (FIIs) bought shares worth a net Rs 1790.90 crore on Monday, 27 June 2011, higher than an inflow of Rs 1021.80 crore on Friday, 24 June 2011. FII inflow in June 2011 totaled Rs 2784.30 crore (till 27 June 2011). FIIs had offloaded shares worth a net Rs 6614.40 crore in May 2011. FII inflow in calendar 2011 totaled Rs 882.50 crore (till 27 June 2011).

The market may remain volatile in the near term as traders roll over positions in the derivatives segment from June 2011 series to July 2011 series. The near-month June 2011 derivatives contracts expire on Thursday, 30 June 2011.

The BSE Sensex jumped 80.04 points or 0.43% to settle at 18,492.45, its highest closing level since 7 June 2011. The Sensex jumped 115.04 points at the day's high of 18,527.45 in early trade. The index fell 88.97 points at the day's low of 18,323.44 in mid-morning trade.

The S&P CNX Nifty was up 18.70 points or 0.34% to 5,545.30, its highest closing level since 7 June 2011. The Nifty hit high of 5,558.30 in intraday trade.

The BSE Mid-Cap index rose 0.78% and the BSE Small-Cap index gained 0.6%. Both these indices outperformed the Sensex.

BSE clocked turnover of Rs 2805 crore, higher than Rs 2566.18 crore on Monday, 27 June 2011.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,456 shares advanced while 1,389 shares declined. A total of 123 shares remained unchanged. The breadth swung between positive and negative zone earlier in the day.

Among the 30-member Sensex pack, 21 rose while the rest of them fell.

Index heavyweight Reliance Industries (RIL) was down 0.11% to Rs 870.55. The stock was volatile. The scrip hit high of Rs 877.90 and low of Rs 862.25. 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.

The RIL stock had 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 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 clarified that it has fully complied with the requirements in its production-sharing contract at all times in conducting petroleum operations.

Cairn India fell 0.58% after UK-listed India-focused miner Vedanta Resources and Cairn Energy on Monday, 27 June 2011, announced that they had tweaked the terms of the deal for Vedanta's acquisition of stake in Cairn India from Cairn Energy that has resulted in a lower deal price. Vedanta and Cairn Energy have agreed to remove a non-compete provision and related non-compete fee of Rs 50 per share on the deal, which will reduce Vedanta's total payment for a 40% stake in Cairn India to $6.02 billion from $6.65 billion.

The deal will be carried out in two tranches. Vedanta will buy a 10% stake in Cairn India on or before 11 July 2011 and purchase the remaining 30% stake at a later stage, pending necessary consents and approvals from the government of India. The first tranche purchase will increase Vedanta's stake in Cairn India to 28.5% and reduce Cairn Energy's stake to 52.2%.

Anil Agarwal, chairman of Vedanta, said the company "believes this initial 10% purchase is a further demonstration of its commitment to India. We look forward to the successful completion of the proposed transaction." Bill Gammell, CEO of Cairn Energy said "Cairn is pleased to have secured this adjustment to the agreement with Vedanta. Cairn continues to believe the necessary approvals to complete the Vedanta transaction will be received and is working with the Government of India in a positive and constructive manner."

Oil & Natural Gas Corporation (ONGC) rose 0.12% on reports the firm's board will clear the prospectus for the company's upcoming follow-on public offer (FPO) at a meeting today, 28 June 2011. The Indian government, which holds 74% of ONGC, plans to sell 5% of its stake to raise funds. The FPO is expected to be launched in July 2011. The ONGC stock had surged 4.16% on Monday after the government removed the 5% customs duty on crude oil.

Shares of three PSU OMCs -- Bharat Petroleum Corporation, Hindustan Petroleum Corporation and Indian Oil Corporation fell by between 1.68% to 1.84% on profit booking after Monday's rally that was triggered by a hike in fuel prices by the government. Shares of these state-run oil marketing companies (PSU OMCs) had rallied by between 3.10% to 5.80% on Monday, 27 June 2011, after the government after market hours on Friday, 24 June 2011, announced a hike in the price of diesel by Rs 3 a litre, kerosene Rs 2 a litre and cooking gas by a steep Rs 50 a cylinder. The hike was effective midnight Friday, 24 June 2011.

Pharma stocks rose in a firm market. Cipla, Pfizer, Sun Pharmaceutical Industries and Dr Reddy's Laboratories rose by between 0.15% to 2.5%.

Consumer durables also gained on renewed buying. Titan Industries, Videocon Industries, Gitanjali Gems and Rajesh exports rose by between 0.52% to 3.39%.

India's largest engineering and construction firm by sales Larsen & Toubro rose 0.79%, extending recent gains triggered by strong flow of orders for the firm. The company during market hours on Friday, 24 June 2011, said it has bagged orders worth Rs 1610 crore in metallurgical and material handling segment.

Among other capital goods stocks, Siemens, Thermax, Punj Lloyd, BEML, Bhel, Alstom Projects, and ABB rose by between 0.09% to 6.5%.

Auto stocks rose for the second straight day as the recent hike in diesel price of Rs 3 per litre was lower than market expectations of a hike of Rs 4 per litre. The government after market hours on Friday, 24 June 2011, announced a hike in the price of diesel by Rs 3 a litre, kerosene Rs 2 a litre and cooking gas by a steep Rs 50 a cylinder.

Tractor and utility vehicles maker Mahindra & Mahindra (M&M) rose 0.06%, with the stock gaining for the sixth straight day. The company's advance tax reportedly rose 42.85% to Rs 90 crore in Q1 June 2011 over Q1 June 2010.

India's largest truck and buses maker, Tata Motors gained 0.61%, reversing initial losses. As per reports, Tata Motors will approach the Supreme Court to seek a stay on the West Bengal state government's move to return to farmers a piece of land, which was earlier allocated to the company to set up a minicar-manufacturing plant. Tata Motors' decision to move Supreme Court comes after the Calcutta High Court refused to stay a law enacted by the West Bengal state government to take over 997.17 acres allotted to build a facility to manufacture the Nano, the world's cheapest passenger car.

The Tata Motors stock has been under pressure recently on 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.

India's top small car maker by sales Maruti Suzuki India rose 0.42%, reversing initial losses. The stock had been under selling pressure recently on concerns arising from intense competition in the small-car segment. The stock had hit 52-week low of Rs 1,087.15 in intraday trade on Friday.

Toyota Motor Corp. on Monday entered India's small-car market with the Etios Liva. The new car will supplement the Etios sedan, which was introduced in December, and will compete with industry leader Maruti Suzuki India's Swift, Ford's Figo, Volkswagen's Polo and Hyundai's i20 hatchback models.

India's second largest bike maker by sales Bajaj Auto rose 2.87%. The company's advance tax reportedly rose 13.63% to Rs 125 crore in Q1 June 2011 over Q1 June 2010.

Hero Honda Motors fell 0.31%, with the stock falling for the second straight day. The stock had surged 6.07% on Friday, 24 June 2011, after the company said its promoter group firm Hero Investments revoked 3.46 crore pledged shares. Hero Honda Motors said Hero Investments revoked 3.46 crore pledged shares in three tranches on 7, 8 and 10 June 2011. The promoter group firm revoked 1.19 crore shares each from IL&FS Trust Company and IDBI Trusteeship Services and 1.07 crore shares from Axis Trustee Services. Post the revocation, only about 6% of Hero Investments' stake in Hero Honda, which is 52 lakh shares, remain pledged. This works out to 2.6% of Hero Honda's equity.

Tyre makers gained for the second straight day after natural rubber prices tumbled on Monday, 27 June 2011. Apollo Tyres, CEAT and MRF rose by between 2.95% to 16.35%.

Metal stocks were mixed as LMEX, a gauge of six metals traded on the London Metal Exchange fell 0.37% on Monday, 27 June 2011. Sterlite Industries, Hindalco Industries, and Nalco rose by between 0.06% to 4.15%. Sesa Goa, Hindustan Zinc, Jindal Steel & Power, Sail and JSW Steel fell by between 0.04% to 1.16%.

India's largest steel maker by sales Tata Steel fell 0.15% on profit taking after recent rally. Tata Steel, last week, said it has 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.

Telecom services major Bharti Airtel rose 1.07% to Rs 400.10. The stock hit 52-week high of Rs 404.90 today, 28 June 2011.

NTPC rose 0.63%, reversing initial losses, after the company said a unit of 660 megawatt (MW) of Sipat Super thermal power project was commissioned on 28 June 2011. With this, the total capacity of NTPC group has become 34,854 MW. This is the first super-critical 660 MW unit of NTPC which has been added to the capacity . With the coming of this unit, the total installed capacity of Sipat super thermal power project has become 1,660 MW.

Bank stocks extended recent gains. India's largest commercial bank by branch network State Bank of India (SBI) rose 0.58%. 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 gained 0.45%, with the stock gaining for the fifth straight day. The bank aims to grow its loan book by 18%-20% in the current financial year, its chief financial officer N.S. Kannan, said in an interview on Monday, 27 June 2011.

India's second largest private sector bank by net profit HDFC Bank added 0.27%, with the stock gaining for the fourth straight day. The bank's advance tax reportedly rose 26.98% to Rs 400 crore in Q1 June 2011 over Q1 June 2010.

IT stocks fell on weak economic data in the US, the key market for Indian IT firms. Wipro, Patni Computer Systems, Infosys and HCL Tech shed by between 0.06% to 0.76%. TCS rose 0.19%.

FMCG stocks reversed initial losses. ITC, Hindustan Unilever, Marico and Godrej Consumer Products gained by between 0.03% to 2.75%.

Realty stocks fell 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. DB Realty, Ackruti City, Indiabulls Real Estate and DLF fell by between 0.08% to 2.21%.

Shree Ashtavinayak Cine Vision clocked highest volume of 1.21 crore shares on BSE. Cals Refineries (1.11 crore shares), Birla Cotsyn (98.41 lakh shares), Lanco Infratech (81.48 lakh shares) and Timbor Home (75.79 lakh shares) were the other volume toppers in that order.

ABG Shipyard clocked highest turnover of Rs 147.66 crore on BSE. Jubilant FoodWorks (Rs 104.27 crore), Tata Coffee (Rs 86.32 crore), State Bank of India (Rs 80.92 crore) and Dr Reddy's Laboratories (Rs 69.83 crore) were the other turnover toppers in that order.

The BSE Sensex has risen 941.82 points or 5.36% in four trading sessions from a recent low of 17,550.63 on 22 June 2011.

Expectations for Q1 June 2011 results will start building as the first quarter draws towards a close. Housing finance major HDFC kicks off the results season on 8 July 2011. IT bellwether Infosys Technologies will unveil Q1 results on 12 July 2011.

A hike in transportation costs will add to cost pressure of India Inc. As per reports, freight rates have gone up by 8% to 9% with immediate effect on all routes across India following the latest hike in diesel prices.

The latest hike in diesel and LPG prices will also add to inflationary pressure in the economy. The food price index rose 9.13% and the fuel price index climbed 12.84% in the year to 11 June 2011, data released by the government on Thursday 23 June 2011 showed. In the previous week, annual food and fuel inflation stood at 8.96% and 12.84% respectively. The primary articles price index was up 12.62% compared with an annual rise of 12.86% a week earlier.

Crucial monsoon rains have advanced to the remaining regions of cane-growing Uttar Pradesh and some parts of pulses-growing Rajasthan ahead of schedule, the India Meteorological Department (IMD) on Monday, 27 June 2011. The monsoon has also reached remaining parts of wheat-growing Punjab and Haryana, the weather office said.

The IMD recently 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 rains on time this year and expectations that the rains will be well distributed.

Rainfall in July is considered crucial. Sowing of a number of crops starts in June and good July rains determine the soil moisture and ensure proper development of the crops planted in June.

The government on Monday reportedly allowed foreign individual investors to buy local mutual fund units in equity schemes, as Asia's third-largest economy seeks to attract overseas capital and widen its investor base for the mutual fund sector. The total ceiling on qualified foreign investors in India will be $10 billion, reports suggest.

US Treasury Secretary Timothy Geithner on Monday urged India to push ahead with reforms, particularly in the finance sector, to realize the "enormous potential'' in economic ties between the two countries. He said that India's economy had outgrown its finance sector. The United States was looking particularly for changes to provide more liquid markets for corporate debt financing and for India to allow greater access for American companies to that sector, Geithner said.

Geithner was speaking alongside Indian Finance Minister Pranab Mukherjee at a conference in Washington hosted by the Confederation of Indian Industry ahead of high-level economic talks. Mukherjee described reform of fiscal policies as a constant exercise. He said key legislation for reform of the banking, insurance and pension fund sectors had been introduced in parliament, and the government was seeking consensus among political parties for its passage.

Meanwhile, New Zealand on Monday said it expects to conclude the negotiations for a Free Trade Agreement (FTA) with India by March next year with the target of trebling bilateral commerce to $3 billion by 2015. New Zealand Prime Minister John Key, who is on a three-day visit to India, said both the sides have already completed about five rounds of negotiations.

European stocks gained on Tuesday, with financials in the lead, as investors took heart from a French proposal to aid Greece. The key benchmark indices in UK and France were up by 0.44% to 0.63%. Germany's DAX fell 0.24%.

Investors are hoping the Greek parliament this week will pass an unpopular austerity program needed for the country to get the next bailout payment. Also helping to ease worry, French President Nicolas Sarkozy said his government had an agreement with French banks on rolling over Greek debt into new 30-year bonds.

The Greek parliament will conduct a vote on Wednesday, 29 June 2011, and Thursday, 30 June 2011, on austerity measures and investors are watching the outcome as a key next stage in resolving euro-zone debt issues. Greece is required to slash spending in order to receive its next round of assistance funds.

Asian stocks rose in volatile trade on hopes the Greek parliament will vote in favor of more austerity measures, which would pave they way for the debt-stricken nation to secure its tranche of aid. The key benchmark indices in Hong Kong, China, Japan, South Korea and Taiwan were down by between 0.04% to 0.74%. The key benchmark indices in South Korea and Taiwan were down by between 0.25% to 0.36%

Trading in US index futures indicated that the Dow could fall 20 points at the opening bell on Tuesday, 28 June 2011. The US Federal Reserve has decided to end its $600 billion bond-buying program at the end of this month, as per schedule.