BSE Mid-Cap, Small-Cap indices outshine Sensex

Volatility ruled the roost as the barometer index BSE Sensex fell below the psychological 19,000 level, a day after regaining that mark on Thursday, 7 July 2011. Investors were cautions ahead of the onset of the Q1 June 2011 earnings season.

The Sensex rose 95.24 points or 0.51% to 18,858.04 in the week ended Friday, 8 July 2011. The 50-unit S&P CNX Nifty rose 33.45 points or 0.59% to 5660.65. The BSE Mid-Cap index jumped 94.64 points or 1.37% to 6,996.31. The BSE Small-Cap index rose 150.73 points or 1.83% to 8,375.14. Both the BSE Small-Cap, Mid-Cap indices outperformed the Sensex.



Foreign institutional investors (FIIs), who have been waiting in the sidelines so far this year, seem to be coming back to Indian markets. FII inflow in July 2011 totaled Rs 5003.90 crore (till 6 July 2011). FIIs had bought shares worth a net Rs 4572.20 crore in June 2011. FII inflow in calendar 2011 totaled Rs 7674.30 crore (till 6 July 2011).

Meanwhile, the reports have not been encouraging from the weather department. India's key monsoon rains were 25% below normal in the week to 6 July 2011, slowing from the 10% above average rains in the previous week. The slowing rains reflect a weakness in the monsoon over rice, cotton and oilseeds growing areas of east, west and central India. But the weekly rains were above normal over the cotton and rice growing areas of southern Andhra Pradesh state. India's June to September monsoon rains are crucial to crop production in 60% of the country.

Trading for the week began on a positive note. After taking a breather on Friday, 1 July 2011, the market regained its winning streak on Monday, 4 July 2011, as data showing sustained buying by foreign funds over the past few days boosted investor sentiment. The BSE Sensex rose 51.68 points or 0.29% to 18,814.48. The S&P CNX Nifty was up 23.30 points or 0.41% to 5,650.50.

Index heavyweight Reliance Industries (RIL) and state-run power equipment major Bharat Heavy Electricals (Bhel) led decline on the domestic bourses on Tuesday, 5 July 2011. The selling was triggered by political worries caused by nine ruling Congress party MPs from Andhra Pradesh resigning on Monday, 4 July 2011, to press their demands for a separate state of Telangana, reducing the government's majority in parliament. The BSE Sensex lost 69.92 points or 0.37% to settle at 18,744.56. The S&P CNX Nifty was down 18.40 points or 0.33% to 5,632.10.

A slide in European stocks pushed Indian shares to one-week lows on Wednesday, 6 July 2011, as investors awaited first quarter corporate results. The BSE Sensex lost 17.59 points or 0.09% to settle at 18,726.97. The S&P CNX Nifty shed 6.65 points or 0.12% to settle at 5,625.45.

Key benchmark indices rallied on frenzied buying in index pivotals on Thursday, 7 July 2011, ahead of the commencement of the first quarter corporate earnings season. The BSE Sensex jumped 351.33 points or 1.88% to settle at 19,078.30. The S&P CNX Nifty was up 103.50 points or 1.84% to settle at 5,728.95.

After Thursday's splendid bounce, Sensex was unable to hold on to 19,000 mark on Friday, 8 July 2011. The BSE Sensex lost 220.26 points or 1.15% to settle at 18,858.04. The S&P CNX Nifty shed 68.30 points or 1.19% to settle at 5,660.65.

Among the 30-Sensex shares, 17 rose and the rest declined.

India's largest mortgage lender by market capitalisation HDFC rose 1.45% to Rs 711.95. The company reported 21.58% rise in net profit to Rs 844.53 crore on 35.87% rise in income from operations to Rs 3800.67 crore in Q1 June 2011 over Q1 June 2010. The company announced the result during trading hours on Friday, 8 July 2011.

Reliance Anil Dhirubhai Ambani (ADA) group infrastructure developer Reliance Infrastructure (R-Infra) topped the Sensex gainers last week. The stock rose 7.56% to Rs 582.60 on reports that the Maharashtra state government has issued orders to allot the Rs 4301-crore Worli-Haji Ali Sea Link project to Reliance-Hyundai consortium. The consortium will collect toll for a period of 40 years. The toll rates, with the base year as 2008, will be revised every three years. Maharashtra State Road Development Corporation (MSRDC) will reportedly pay the viability gap funding (VGF) of Rs 1392 crore.

India's top real estate developer by sales DLF jumped 7.49% to Rs 236.85 after reports indicated the company plans to sell its shareholding in two IT special economic zones in Pune and Noida for Rs 1300 crore. It was the second biggest gainer from the Sensex pack.

India's largest truck maker by sales Tata Motors jumped 5.91% to Rs 1053.30 on bargain hunting.

India's largest listed cellular services provider by sales Bharti Airtel advanced 3.82% to Rs 398.10. The company has decided to merge its mobile, satellite television, fixed-line and broadband businesses into a single entity. "The new structure... is aimed at driving greater business and functional synergies, providing a common interface to customers, and creating a de-layered and more agile organization," Bharti Airtel Chairman and Managing Director Sunil Mittal said in a statement. The business units jointly make up 90% of the company's revenue.

India's largest tractor maker by sales Mahindra & Mahindra rose 3.70% to Rs 716.85. The company, last week, reported 29.11% jump in its total sales at 35,584 units in June 2011 over June 2010. Mahindra & Mahindra (M&M)'s domestic sales grew 28.69% to 33,772 units and exports surged 37.38% to 1,812 units in June 2011 over June 2010.

India's largest car maker by sales Maruti Suzuki India gained 3.56% to Rs 1184.25. The company, last week, said its total vehicle sales dropped 8.8% to 80,298 units in June 2011 over June 2010. Domestic sales declined 3.8% to 70,020 units and exports sales plunged 32.7% to 10,278 units in June 2011 over June 2010.

India's second largest private sector bank by net profit HDFC Bank rose 2.60% to Rs 2561.80. The stock struck a record high of Rs 2582.50 on Friday, 8 July 2011, on expectations of a more than 30% growth in net profit in Q1 June 2011. Meanwhile, the bank has fixed 16 July 2011 as the record date for 5-for-1 stock split.

India's second largest motorcycle maker by sales Bajaj Auto rose 2.56% to Rs 1456.95. The company's total sales rose 16% to 3.66 lakh units in June 2011 over June 2010. Bajaj Auto's motorcycle sales rose 14% to 3.22 lakh units and commercial vehicle sales jumped 34% to 43,830 units in June 2011 over June 2010. Exports rose 25% to 1.42 lakh units in June 2011 over June 2010. The company said premium bikes such as Pulsar and Discover contributed 66% of total motorcycle sales in June 2011. Bajaj Auto announced the monthly sales data during trading hours on 4 July 2011.

India's largest commercial bank by branch network State Bank of India (SBI) rose 2.38% to Rs 2478.65 as a further hike in lending rates may help the bank in mitigating the pressures arising from rise in cost of funds. After market hours on Thursday, 7 July 2011, the bank informed that it has revised the base rate upwards by 25 basis points (bps) from 9.25% per annum to 9.50% per annum effective from 11 July 2011. The bank has revised the Benchmark Prime Lending Rate upwards by 25 bps from 14% to 14.25% effective from July 11, 2011. The bank has also revised upwards deposit rates on some maturities by up to 100 basis points.

IT bellwether Infosys rose 1.49% to Rs 2977.90 ahead of its Q1 June 2011 earnings on Tuesday, 12 July 2011. Analysts expect Infosys to revise upwards its revenue and earnings growth forecast for the year ending March 2012 (FY 2012) in rupee terms, with the company seen beating its own guidance for Q1 June 2011 and due to higher pricing.

Salary hike and increase in tax rates due to the expiry of Software Technology Parks of India (STPI) tax benefits is seen pulling Infosys' net profit lower in Q1 June 2011 even as a good revenue growth is expected from the IT bellwether on the back of volume growth and uptick in pricing. A total of 8 brokerages expect a between 1.1% to 7.1% fall in Infosys' consolidated net profit as per International Financial Reporting Standards (IFRS) at between Rs 1689 crore to Rs 1797.20 crore in Q1 June 2011 over Q4 March 2011. Revenue is seen rising 2.6% to 4.67% at between Rs 7435 crore to Rs 7589.20 crore in Q1 June 2011 over Q4 March 2011.

India's largest copper maker by sales Sterlite Industries tumbled 3.94% to Rs 163.40. It was the top Sensex loser. Metal shares edged lower as sentiment for the mining industry turned weak on reports a panel of ministers has approved the draft Mining Bill, which calls for miners to give to local communities an amount equivalent to royalties to compensate people displaced by such projects.

India's largest electric equipment maker by sales Bharat Heavy Electricals (Bhel) lost 3.22% to Rs 1983.75. The stock dropped on worries the company's follow-on public offer (FPO) will be priced at a discount to the ruling market price. A large FPO is normally priced at a discount to the ruling market price to attract investors to the issue. Reportedly the Union Cabinet is likely to approve disinvestment of 5% of the government's equity in the state-run power equipment company next week.

In May 2011, Bhel's board of directors had recommended divestment of 5% government stake. The government plans to raise Rs 40000 crore from disinvestment in the current financial year.

India's largest private sector bank in terms of net profit ICICI Bank fell 3.17% to Rs 1060. After trading hours on 1 July 2011, ICICI Bank announced that it raised its base rate by 25 basis points to 9.5% per annum with effect from 4 July 2011. The private sector bank has also raised its benchmark prime lending rate (BPLR) and its floating reference rate (FRR) for consumer loans, including home loans. BPLR and FRR are used for determining interest rates on loans and advances sanctioned up to 30 June 2010.

Jaiprakash Associates (down 1.97%), Jindal Steel & Power (down 1.92%), Tata Power Company (down 1.28%), Tata Steel (down 1.25%), TCS (down 1.25%), Hindustan Unilever (down 0.82%), ITC (down 0.72%), Hero Honda Motor (down 0.34%) and ONGC (down 0.04%), edged lower from the Sensex pack.

Index heavyweight Reliance Industries (RIL) lost 0.90% to Rs 854.40. Reports on Thursday, 7 July 2011, indicated that the petroleum ministry had on Wednesday, 6 July 2011, recommended the $7.2 billion RIL-BP deal to the Cabinet Committee on Economic Affairs (CCEA) for an unconditional approval. The deal gives the British energy major a 30% stake in 23 oil and gas fields in India including RIL's gas-producing KG-D6. Reports added that the Cabinet will take up the issue for a decision next week.