Sensex, Nifty near one-week closing highs

The key benchmark indices extended gains for the second straight day to attain their highest closing levels in nearly one week as index heavyweights Reliance Industries (RIL) and Infosys Technologies rose. Gains in European shares and US index futures underpinned sentiment. Realty stocks gained. Metal stocks rose as metal prices gained on London Metal Exchange on Monday. Capital goods stocks fell. The BSE Sensex was up 75.51 points or 0.41%, up close to 145 points from the day's low, off close to 50 points from the day's high. The market breadth was positive.



The market pared losses after a lower opening. A bout of volatility was witnessed as the key benchmark indices slipped into the red after reversing initial losses to hit fresh intraday highs in morning trade. The market alternately moved between positive and negative terrain in mid-morning trade. The Sensex hit a fresh intraday high in early afternoon trade. The market extended gains in afternoon trade as European stocks rose in early trade. The uptrend continued in mid-afternoon trade. The market pared gains from the day's high in late trade.

The BSE Sensex was up 75.51 points or 0.41% to 18,495.62, its highest closing level since 1 June 2011. The Sensex rose 125.84 points at the day's high of 18,545.95 in mid-afternoon trade. The index fell 68.87 points at the day's low of 18,351.24 in early trade.

The S&P CNX Nifty was up 24.10 points or 0.44% to 5,556.15, its highest closing level since 1 June 2011. The Nifty hit a high of 5,570.10 in intraday trade.

The market breadth, indicating the health of the market, was positive. On BSE, 1540 shares advanced while 1263 shares declined. A total of 111 shares remained unchanged.

BSE clocked turnover of Rs 2493 crore, higher than Rs 2434.61 crore on Monday, 6 June 2011.

Among the 30-member Sensex pack, 18 stocks rose while the rest of them declined.

Index heavyweight Reliance Industries (RIL) rose 1.93% after chairman Mukesh Ambani at the company's annual general meeting last week said RIL will become debt free in the current year ending March 2012 (FY 2012). Ambani added that RIL has robust financial position and a sound balance sheet. He said RIL has to confront challenges arising out of higher commodity and input prices and inflationary trends. Ambani said

Ambani said the BP-RIL partnership will jointly assess and address the technical issues in ramping up gas production from the KG D6 block once the government approves the BP-Reliance partnership. Ambani said RIL is best positioned to capture top quartile margins in petroleum refining business as a result of its crude sourcing strategies, low operating costs and production of cleanest fuels. With regard to the petrochemicals division, Ambani said, " As we diversify our portfolio from commodities to specialities, we will accomplish in the next five years what we have achieved in the past thirty years in terms of earnings from this segment."

With regard to RIL's organized retail business, Ambani said Reliance Retail will soon launch a cash and carry format that is built on the principle of offering inclusive growth to all retail partners of the firm. With regard to the broadband wireless business, Ambani said the company is currently in the process of conceptualizing its products and services.

Metal stocks gained as LMEX, a gauge of six metals traded on the London Metal Exchange, rose 0.41% on Monday, 6 June 2011. Hindalco Industries, Jindal Steel & Power, Nalco, Sterlite Industries, Tata Steel, JSW Steel, and Hindustan Zinc rose by between 0.11% to 1.37%.

NMDC rose 3.74% after the company said during market hours on Monday that it has signed a non-binding memorandum of Understanding (MoU) with Australian stock exchange listed Minemakers to establish the roadmap for its participation in development of the Wonarah phosphate deposit located in northern territory Australia. Under the MoU, NMDC and Minemakers will undertake a joint feasibility study into the agreed aspects of the development of the Wonarah deposit.

Upon successful completion of the feasibility study, NMDC proposes to acquire 50% equity in the Wonarah project and participate in the development of the project. This acquisition will enable NMDC's entry in Australia's largest known undeveloped phosphate deposit and contribute towards securing supplies of this critical raw material for the Indian fertilizer industry. The acquisition is subject to the results of the feasibility study and all statutory and mandatory approvals.

IT stocks were mixed. IT major Infosys gained 1.91% after company said after market hours on Monday that The Housing Bank for Trade & Finance (HBTF) has selected Infosys' Financle core banking solution to drive HBTF's innovation and customer experience-led growth agenda. The stock gained for the third straight day.

India's largest software services exporter TCS gained 1.06%, with the stocks gaining for the second straight day. The company last week said Ahli Brokerage QSC has selected the company's TCS BaNCS product to extend its brokerage footprint in the Middle East.

India's third largest software exporter Wipro fell 0.97%. The company, last week, said that the Jammu and Kashmir state government has selected the company for automating its state power distribution department.

Realty stocks edged higher on bargain hunting. Unitech, DLF, Indiabulls Real Estate, HDIL and Anant Raj Industries gained by between 0.75% to 5.87%.

Capital good stocks fell on profit taking. ABB, BEML, Thermax, Bhel, L&T and Siemens declined by between 0.08% to 1.11%.

Auto stocks were mixed ahead of a meeting of a government panel on Thursday, 9 June 2011, to decide on raising prices of diesel and cooking gas. India's second largest commercial vehicle maker by sales Ashok Leyland declined 0.69%, with the stock falling for the third straight day hit by weak sales in May 2011. The company's total sales fell 12% to 5,725 units in May 2011 over May 2010. Domestic sales fell 14.91% to 5,082 units, though exports jumped 22% to 643 units.

India's top truck maker by sales Tata Motors rose 0.22%, with the stock snapping four-day losses triggered by weak sales in May 2011. Tata Motors' domestic passenger car sales declined 8.25% to 21,549 units in May 2011 over May 2010. The passenger car sales include Tata and Fiat vehicles. Sales of commercial vehicles in the domestic market rose 19% to 37,361 units in May 2011 over May 2010. Tata Motors' total sales including exports of commercial and passenger vehicles rose 9.7% to 62,296 vehicles in May 2011 over May 2010. The company announced the monthly sales data on 1 June 2011.

Mahindra & Mahindra (M&M) gained 0.88%. The company announced a 20% rise in its auto sales to 34,323 units in May 2011 over May 2010. The figures were announced on 1 June 2011. Speaking on the May 2011 sales numbers, Rajesh Jejurikar, CEO, Automotive Division, M&M said, "We are happy with the 20% growth that we have clocked in May 2011. All our brands have been doing well, with the recently launched Verito having sold 1,290 vehicles, almost three times last May".

Bajaj Auto fell 0.3%, with the stock falling for the second straight day. The company's total sales rose 20% to 3.58 lakh units in May 2011 over May 2010. Exports rose 32% to 1.26 lakh units. Motorcycle sales rose 18% to 3.17 lakh units. Commercial vehicle sales rose 36% to 40,860 units. The company announced the monthly sales data on 2 June 2011.

Car maker Maruti Suzuki India rose 1.06%, reversing initial losses triggered by reports that the strike at the company's Manesar plant continued for the third day on Monday, 6 June 2011. The estimated production loss from the strike, which started on Saturday, 4 June 2011, over the recognition of a rebel union, is Rs 100 crore and the figure is expected to escalate if the stalemate continues.

Banking pivotals were mixed ahead of the Reserve Bank of India's (RBI) mid-quarter monetary policy review on 16 June 2011. India's largest private sector bank by net profit ICICI Bank fell 0.2%. India's second largest private sector bank by net profit HDFC Bank rose 0.19%.

India's largest commercial bank by branch network State Bank of India (SBI) gained 0.21%. Among other PSU banks, Bank of India, Bank of Baroda and Punjab National Bank rose by between 0.53% to 1.36%.

Ambuja Cements fell 0.49%. The company said after market hours on Monday that it has acquired 85% equity shares of Dang Cement Industries, Nepal for a consideration of Rs 19.13 crore. With this acquisition, Dang Cement Industries has become a subsidiary of the company. The company is also in the process of acquiring further 5% shares of Dang Cement for a consideration of Rs 1.13 crore. Dang Cement holds limestone mining lease in Nepal. At present, Dang is not carrying out any business activity.

Dr Reddy's Laboratories fell 0.17%, reversing initial gains. The company said after trading hours on Monday that it has launched three generic products in the US market. The company has launched Donepezil Hydrochloride tablets, Venlafaxine Hydrochloride extended release capsules and Letrozole tablets USP in the US market.

Among other pharma shares, Ranbaxy Laboratories, Sun Pharmaceutical Industries, Lupin and Cipla rose by between 0.06% to 2.61%.

Some FMCG stocks fell on profit taking. United Spirits, Hindustan Unilever and Britannia Industries fell by between 0.41% to 2.14%.

Delta Corp clocked highest volume of 94.01 lakh shares on BSE. Aanjaneya Lifecare (70.56 lakh shares), SpiceJet (58.58 lakh shares), Shree Ashtavinayak Cine Vision (59.32 lakh shares) and Standard Chartered PLC (57.36 lakh shares) were the other volume toppers in that order.

Aanjaneya Lifecare clocked highest turnover of Rs 236.90 crore on BSE. Delta Corp (Rs 89.55 crore), Sun TV Network (Rs 84.71 crore), State Bank of India (Rs 68.74 crore) and Standard Chartered PLC (Rs 56.27 crore) were the other turnover toppers in that order.

Prime Minister Manmohan Singh said on Monday he had no alternative but to send police to forcibly end a peaceful anti-graft protest by popular yoga guru Swami Ramdev and thousands of his followers, hours after the Supreme Court called on the government to justify its actions. Around 600 police used batons and tear gas early on Sunday to break up a mass hunger strike led by Ramdev in New Delhi, detaining the TV star before putting him on a plane to Dehradun. Dozens of followers and police were injured. Ramdev's campaign was the latest embarrassment for a Congress-led coalition hit by graft scandals, including allegations of kickbacks at the Commonwealth Games and a telecoms scam that may have cost the government up to $39 billion in revenues.

In macro news, the services sector expanded at its slowest pace in 20 months in May 2011 as soaring prices and interest rate hikes gnawed at new business growth and reduced the level of optimism, a survey showed last week. The seasonally adjusted HSBC Markit Business Activity Index, based on a survey of over 400 Indian firms, slipped to 55 in May 2011 from 59.2 in April 2011, marking its twenty-fifth successive month above the 50 level that divides growth from contraction.

Growth in India's manufacturing sector eased slightly in May as the pace of new orders slowed, but factories' input and output prices continued to rise sharply. The HSBC Markit Purchasing Managers' Index, based on a survey of around 500 companies, edged down to 57.5 in May from 58.0 in April, weighed down by a slower expansion rate for new orders and a labour shortage, data showed last week.

European stock markets moved higher on Tuesday, 7 June 2011, helped by gains for miners and utility companies. The key benchmark indices in UK, France and Germany were up by 0.17% to 0.52%.

Asian stocks were mixed on Tuesday, 7 June 2011. The key benchmark indices in Japan, Singapore, Indonesia, Taiwan and China were up by between 0.07% to 0.64%. The key benchmark indices in Hong Kong and Seoul were down by between 0.35% to 0.65%.

Trading in US index futures indicated that the Dow could gain 42 points at the opening bell on Tuesday, 7 June 2011.

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. Federal Reserve Chairman Ben Bernanke is slated to make a speech on the US economy later in the global trading day on Tuesday, 7 June 2011.