Market snaps two-day winning streak

Key benchmark indices edged lower after hitting one-week highs as data showing selling by foreign funds continuously over the past few days hurt sentiment adversely. The BSE Sensex was down 74.66 points or 0.47%, off 172.53 points from the day's high and up 67.42 points from the day's low. Index heavyweight Reliance Industries (RIL) lost over 1% in choppy trade. IT stocks were mixed after strong economic data in the US, the biggest outsourcing market for IT services exporters.

The market today, 23 December 2011, snapped a two-day advance. The Sensex had jumped 638.28 points or 4.2% in the preceding two trading sessions to one-week closing high of 15,813.36 on Thursday, 22 December 2011, from a 28-month closing low of 15,175.08 on 20 December 2011. The Sensex has fallen 384.76 points or 2.38% so far this month. The Sensex has slumped 4,770.39 points or 23.25% in calendar 2011. From a 52-week high of 20,664.80 on 3 January 2011, the Sensex has lost 4,926.10 points or 23.83%. From a 52-week low of 15,135.86 on Tuesday, 20 December 2011, the Sensex has risen 602.84 points or 3.98%.



Coming back to today's trade, telecom stocks extended Thursday's (22 December 2011) losses triggered by comments from Telecom Secretary R. Chandrashekhar that the telecommunications department has decided that the agreements signed by some telecom operators for third-generation mobile-roaming services are illegal. Metal and banking stocks edged lower in volatile trade. Interest rate sensitive auto stocks extended recent gains after data released on Thursday showed food inflation eased to four-year low, cementing expectations of a steady easing in overall price pressures. FMCG major Hindustan Unilever scaled record high. Capital goods pivotals were mixed. The market breadth was positive.

The market slipped into the red after a firm opening triggered by higher Asian stocks. The market regained positive zone later. The market retained positive zone in mid-morning trade. Key benchmark indices moved in an extremely narrow range in positive zone in early afternoon trade. The market retained positive zone in afternoon trade. Volatility ruled the roost as key benchmark indices reversed direction to slip into the red in mid-afternoon trade. The market cut losses after hitting fresh intraday low in late trade.

Data showing selling by foreign funds continuously over the past few days hurt sentiment adversely. As per provisional data from the stock exchanges, foreign funds sold equity shares worth Rs 236.39 crore on Thursday, 22 December 2011. FII outflow totaled Rs 3278.59 crore in ten trading sessions from 9 to 22 December 2011, as per provisional data from the stock exchanges.

The BSE Sensex shed 74.66 points or 0.47% to settle at 15,738.70, its lowest closing level since 21 December 2011. The index jumped 97.87 points at the day's high of 15,911.23 in early trade, its highest level since 16 December 2011. The index lost 142.08 points at the day's low of 15,671.28 in late trade.

The S&P CNX Nifty shed 19.85 points or 0.42% to settle at 4,714, its lowest closing level since 21 December 2011. The Nifty hit a high of 4,763.45 in intraday trade, its highest level since 16 December 2011. The Nifty hit a low of 4,693.20 in intraday trade.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,574 shares advanced and 1,240 shares declined. A total of 133 shares were unchanged.

The BSE Mid-Cap index rose 0.07% and the BSE Small-Cap index gained 1.07%. Both these indices outperformed the Sensex.

The total turnover on BSE amounted to Rs 1790 crore, lower than Rs 2039.32 crore on Thursday, 22 December 2011.

Among the 30-member Sensex pack, 19 declined while the rest of them gained. NTPC (down 3.27%), Cipla (down 0.59%), and ONGC (down 1.23%), edged lower in Sensex pack.

Index heavyweight Reliance Industries (RIL) shed 1.16% to Rs 746. The stock was volatile. The scrip hit a high of Rs 769.40 and low of Rs 742.55. The director general of hydrocarbons S.K. Srivastava on Wednesday, 21 December 2011, said that RIL is planning workover operations to revive sick wells at its D6 block in the Krishna-Godavari basin, off India's east coast. Srivastava said production at the KG-D6 block may increase post the workover program. Oil secretary G. C. Chaturvedi on Wednesday, 21 December 2011, said RIL is currently producing 38-39 million metric standard cubic meters per day of gas at KG-D6.

RIL late last month said that it has initiated arbitration proceedings against the government to seek an independent view of a tribunal on the issue of the company's entitlement of recovery of entire costs on KG-D6 gas blocks from the revenue generated from the blocks. RIL said it has initiated arbitration proceedings against the Government of India (GoI) in a bid to finally resolve the cost recovery issue so as not to hinder future investments in this block.

RIL said its investment in KG-D6 production facilities has been only partly recovered and the return on the investment so far is less than the cost of the capital. The production sharing contract (PSC) with the Government of India (GoI) contains no provision which entitles the GoI to restrict the costs recovered by the company by reference to factors such as the level of production or the extent to which field facilities are utilised, RIL said.

Meanwhile, RIL has reportedly acquired a minority stake in US-based nuclear design and engineering company Terra Power LLC for an undisclosed sum. Washington-based Terra Power is founded by former Microsoft executive Nathan Myhrvold's high-profile invention and patenting firm Intellectual Ventures.

Telecom stocks extended Thursday's (22 December 2011) losses triggered by comments from Telecom Secretary R. Chandrashekhar that the telecommunications department has decided that the agreements signed by some telecom operators for third-generation mobile-roaming services are illegal. Idea Cellular (down 3.67%), MTNL (down 2.06%), Reliance Communications (down 2.63%), and Tata Teleservices (Maharashtra) (down 0.53%), declined.

India's largest listed cellular services provider by subscribers Bharti Airtel dropped 1.13%. The stock extended Thursday's 1.71% fall.

The government, last year, sold 3G airwaves in an auction that saw bids coming at much higher levels than initially expected and no single firm managed to get spectrum in all of the country's 22 zones. Bharti Airtel, Idea Cellular and Vodafone's India unit currently provide 3G services beyond their licensed zones through roaming pacts.

Interest rate sensitive auto stocks extended recent gains after data released on Thursday showed food inflation eased to four-year low, cementing expectations of a steady easing in overall price pressures. Easing of inflation pressure may prompt the central bank to cut interest rates to revive sagging economic growth. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.

India's biggest sport utility vehicle maker by sales Mahindra & Mahindra (M&M) rose 0.3%. The company plans to raise prices of its vehicles by up to 3% in January 2012 to offset the effects of rising raw-material costs. The company's total auto sales jumped 52.7% to 40,722 units in November 2011 over November 2010. The company plans to unveil new models from its recently acquired South Korean unit Ssangyong Motor Co at the New Delhi Auto Expo 2012 next month.

India's largest small car maker by sales Maruti Suzuki India advanced 0.38%. Maruti plans to launch a new multi-utility vehicle Ertiga at the auto expo. It will also display two small cars based on the K-car platform that are sold in Japan.

India's largest passenger vehicle maker by sales Tata Motors rose 0.54%, with the stock gaining for the third straight day. Tata Motors' American depository receipt, or ADR surged 5.37% to settle at $17.46 on the New York Stock Exchange on Thursday, 22 December 2011.

India's largest bike maker by sales Hero MotoCorp rose 0.07%. India's second largest motorcycle maker by sales Bajaj Auto shed 1.47%.

Banking stocks edged lower in volatile trade. India's largest private sector bank by branch network ICICI Bank slipped 0.78% to Rs 721.45 on profit booking. The stock had gained 11.45% in the prior two trading sessions.

India's second largest private sector bank by branch network HDFC Bank shed 1.23%. The bank will raise interest rates on non-resident savings deposits to 9% from 3.82% from Friday, 23 December 2011, taking advantage of recent deregulation to attract dollars.

India's largest bank by net profit and branch network State bank of India (SBI) fell 1.33% to Rs 1646.25.

Metal stocks declined. Sterlite Industries (India) (down 0.22%), Nalco (down 1.37%), Hindustan Zinc (down 1.14%), Hindalco (down 0.69%), and JSW Steel (down 0.98%), edged lower.

India's largest private sector steel maker by sales Tata Steel declined 2.02% to Rs 346.50. The stock had fallen to a 52-week low of Rs 341.55 on Thursday, 22 December 2011.

IT stocks were mixed after strong economic data in the US, the biggest outsourcing market for IT services exporters. India's third largest software services exporter by revenues Wipro advanced 2.29% to Rs 405.80 and was the top gainer from the Sensex pack. India's largest software services exporter by revenues Tata Consultancy Services (TCS) rose 0.53%. TCS early this week announced that it will expand its operations in the state of Maharashtra by building a new software development campus in Nagpur with an investment of Rs 600 crore in the first phase. India's second largest software services exporter by revenues Infosys fell 0.84%.

Capital goods pivotals were mixed. India's largest power equipment maker by sales Bhel gained 1.87% to Rs 242.10. The stock had hit a 52-week low of Rs 225 on Tuesday, 20 December 2011.

Engineering and construction major L&T shed 0.08% to Rs 1008.50. The stock had slipped to a 52-week low of Rs 971 on Wednesday, 21 December 2011. L&T early this week said it bagged new orders valued at Rs 1000 crore across various business segments in Q3 December 2011.

India's largest dam builder by sales Jaiprakash Associates shed 2.01% to Rs 53.65. The stock had hit a 52-week low of Rs 51.25 on Wednesday, 21 December 2011.

ABB jumped 3.46% after the company said that the ABB Group has booked an order worth more than Rs 4000 crore from Power Grid Corporation of India to deliver an ultrahigh-voltage direct current transmission system. The announcement was made before trading hours today, 23 December 2011.

Punj Lloyd rose 1.50% after the company said its joint venture with Kenyan firm Intex Construction had won a Rs 285-crore road project in the African nation. The announcement was made after market hours on Thursday, 22 December 2011.

Suzlon Energy rose 2.41% after the company said it has secured cumulative orders aggregating Rs 935 crore in India during the period from 22 October 2011 and 22 December 2011. The company made this announcement before trading hours today, 23 December 2011.

Lanco Infratech jumped 2% on reports the company has filed an insurance claim of around Rs 200 crore under the advanced loss of profit policy for delay in Anpara power project in Uttar Pradesh.

Areva T&D India rose 2.39% after the company said it has delivered a National Load Dispatch Center as part of Rs 17.20 crore contract with Bhutan Power Corporation. The company made this announcement during trading hours today, 23 December 2011.

India's largest FMCG company by sales Hindustan Unilever rose 0.83% to Rs 412.15 after striking a record high of Rs 414.40 today, 23 December 2011.

SBI was the top traded counter on the BSE with turnover of Rs 147.50 crore followed by L&T (Rs 71.01 crore), RIL (Rs 63.40 crore), ICICI Bank (Rs 62.88 crore), and Tata Steel (Rs 54.64 crore).

Sujana Towers was the volume topper on the BSE with volume of 1.37 crore shares followed by Cals Refineries (54.44 lakh), ICSA (India) (43.65 lakh), VIP Industries (39.31 lakh), Rockon Fintech (35.63 lakh).

Advance tax collection from the country's top 100 companies, as per the final numbers, declined by 1.4% to Rs 30763 crore in the third quarter of 2011-12, indicating sluggishness in economy. Advance taxes are collected in four installments -- 15% by 15 June; 40% by 15 September; 75% by 15 December and 100% by 15 March.

Prime Minister Manmohan Singh said on Thursday he was disappointed to hear negative comments from industry leaders that the government's policies were leading to a slowdown. Singh, who met members of his Trade and Industry Council, said such comments strengthened negative forces who had no stake in the country's development. The UPA government has been battling criticism over its handling of the economy and the perception of policy paralysis in the aftermath of a string of scandals which hit the headlines since last year. Several top industrialists had written to the government expressing frustration at the slow pace of reforms and the gloomy atmosphere.

Credit rating agency Moody's Investors Service on 14 December 2011 said that the recent sharp decline in the value of the Indian rupee against the dollar is generally exerting only a moderate impact on rated Indian companies. Risks for companies holding large amounts of dollar denominated debt are also manageable in the near term, given that debt maturities are limited for this time frame, Moody's said in a new report. This means Indian companies rated by Moody's do not have a significant dollar outflow at a time when the Indian rupee is losing ground.

The food inflation eased sharply to 1.81% in the year to 10 December 2011, from an annual 4.35% rise in the previous week, government data showed on Thursday, 22 December 2011. The fuel inflation remained unchanged at 15.24% in the latest week compared with the prior week, data showed, while the primary articles price index rose 3.78%, compared with an annual rise of 5.48% in the previous week.

At its mid-quarterly monetary policy review meet on Friday, 16 December 2011, the Reserve Bank of India (RBI) left its main lending rate unchanged in order to support faltering economic growth as inflation shows signs of cooling. While inflation remains on its projected trajectory, downside risks to growth have clearly increased, RBI said in a statement. From this point on, monetary policy actions are likely to reverse the cycle, responding to the risks to growth, RBI said.

RBI said inflation risks remain high and inflation could quickly recur as a result of both supply and demand forces. RBI also said that the rupee remains under stress. The timing and magnitude of further actions will depend on a continuing assessment of how these factors shape up in the months ahead, RBI said. The RBI has raised rates 13 times since March 2010.

India may face the risk of stagflation if the government doesn't take urgent steps to tame inflation and stimulate growth, a parliamentary panel on finance warned on Thursday, 22 December 2011. The Standing Committee on Finance blamed the Reserve Bank of India's 13 interest-rate increases over the past 21 months for stalling economic growth. "Measures taken by the government and the RBI so far have squarely failed to rescue the economy from unabated inflation. Instead, monetary measures initiated for this purpose have only resulted in worsening the condition of the economy further," the report said.

A government statement in parliament last month dashed hopes of a relief in securities transaction tax (STT). Junior finance minister S.S. Palanimanickam has said that the government has no proposal to lower the securities transaction tax (STT). There has been a speculation that the government will reduce STT in Union Budget 2012-2013 in a bid to revive sagging volumes on the bourses. Palanimanickam said in a written reply to Rajya Sabha that the securities transaction tax receipts had declined by around 18% to Rs 2960 crore during the first six months in the current fiscal year from a year ago period.

The government on Thursday, 22 December 2011, introduced landmark anticorruption legislation viz. the Lokpal Bill in Parliament amid protests from opposition parties and anticorruption activists, setting the stage for another showdown in the legislature. The Lokpal Bill proposes setting up an independent ombudsman at the national level with parallel antigraft agencies in states with powers to prosecute politicians and civil servants suspected of graft. The government also proposed a bill that calls for amending the country's Constitution to grant legal status to the agencies.

European stock markets traded higher on Friday, 23 December 2011, with BP PLC up as oil prices rose and drug news lifting shares of Roche Holding AG, but volumes were expected to be light ahead of the long holiday weekend. Key benchmark indices in UK, Germany and France were up by between 0.46% to 1.18%. Markets in London will close around midday local time and most European markets are closed the following Monday for the Christmas holiday.

On Thursday, Italy's Senate gave final approval to a $40 billion emergency austerity and growth package after a lengthy debate, according to media reports. Prime Minister Mario Monti had called for a confidence vote on the measures.

Asian stocks rose on Friday, 23 December 2011, with commodity-linked firms notable gainers, as an improving US economic picture boosted sentiment. Key benchmark indices in China, Taiwan, Indonesia, Singapore, Hong Kong, and South Korea were up by between 0.44% to 2.07%. Japan's markets were closed for a holiday.

Moody's Investors Service said in its latest annual report on South Korea that the outlook for Korea's A1 local and foreign government bond ratings remains stable, given the country's very high degree of economic strength, as well as high degree of institutional and government financial strengths. At the same time, geopolitical risks, as currently assessed, do not constrain Korea's ratings, even after factoring in the death of Kim Jongil on 17 December.

Trading in US index futures indicated that the Dow could gain 42 points at the opening bell on Friday, 23 December 2011. US stocks rose for third straight day in a row on Thursday after robust economic data lifted investor sentiments. US consumer sentiment improved in December to its highest level in six months as Americans felt better about the economy's prospects. The Dow Jones Industrial Average was up 61.91 points, or 0.50%, at 12,169.65. The Standard & Poor's 500 Index was up 10.28 points, or 0.83%, at 1,254 and the Nasdaq Composite index was up 21.48 points, or 0.83%, at 2,599.45.

Leading the US economic data was a healthier reading on the jobs market. Initial jobless claims decreased 4,000 to a seasonally adjusted 364,000 in the week ended 17 December 2011 according to the US Labor Department. It was the lowest weekly claims figure since mid-April 2008. The data points, however, overshadowed the US Commerce Department's downward revision of the estimate of third-quarter US economic growth, to an annualized 1.8%, below economists' forecast of 2%.

Fitch Ratings on Wednesday warned again that the United States' rising debt burden was not consistent with maintaining the country's top AAA credit rating, but said there would likely be no decision on whether to cut the rating before 2013. Last month, Fitch changed its US credit rating outlook to negative from stable, citing the failure of a special congressional committee to agree on at least $1.2 trillion in deficit-reduction measures.