Sensex scales 3-week closing high

The benchmark indices edged higher in a volatile trading session today, 7 December 2011, on firm global cues. Both Sensex and Nifty ended at their highest closing levels since 15 November 2011. The BSE Sensex rose 71.73 points or 0.43%, up close to 95 points from the day's low and off about 127 points from the day's high. Market breadth was positive. Both mid-cap and small-cap indices on BSE underperformed the Sensex.

Index heavyweight Reliance Industries (RIL) edged higher in volatile trade. However, another index heavyweight ICICI Bank declined. Auto stocks were mixed. Most IT stocks rose on hopes euro zone will take concrete steps to resolve the region's debt crisis. Interest rate sensitive realty stocks extended recent gains on hopes a slowing economy could prompt the Reserve Bank of India (RBI) to pause on rate increases this month. Most of the metal stocks gained. Pharma stocks declined.



The market edged higher after hovering between the positive and negative terrain in early trade. It trimmed gains after surging to hit three-week highs in morning trade. It remained firm in mid-morning trade. It pared gains in early afternoon trade. Key benchmark indices firmed up in afternoon trade. It trimmed gains after hitting fresh 3 week high in mid-afternoon trade. It gave up almost all the intraday gains in late trade.

The resumption of buying by the foreign funds recently aided sentiment. Foreign institutional investors (FIIs) bought shares worth Rs 146.73 crore on Monday, 5 December 2011, as per the provisional data from the stock exchanges. FIIs had bought shares worth Rs 1318.27 crore in three trading sessions from 30 November 2011 to 2 December 2011.

The BSE Sensex rose 71.73 points or 0.43% to 16,877.06, its highest closing level since 15 November 2011. The index rose 198.38 points at the day's high of 17,003.71 in mid-afternoon trade. The index fell 23.71 points at the day's low of 16,781.62 in early trade.

The S&P CNX Nifty rose 23.45 points or 0.47% to 5,062.60, its highest closing level since 15 November 2011. The Nifty hit a high of 5,099.25. The index hit a low of 5032.25 in intraday trade.

The BSE Mid-Cap index rose 0.20% and the BSE Small-Cap index rose 0.20%. Both these indices underperformed the Sensex.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,451 shares rose and 1,362 shares fell. A total of 113 shares were unchanged.

BSE clocked turnover of Rs 3083 crore higher than Rs 1823.04 crore on Monday, 5 December 2011.

From the 30-member Sensex pack, 21 stocks rose and the rest declined. Jaiprakash Associates (up 1.89%), HDFC (up 1.82%), ONGC (up 1.64%), Sterlite Industries (up 1.58%) and State Bank of India (up 1.47%), edged higher from the Sensex pack. Bharti Airtel (down 3.33%), NTPC (down 3.21%), Sun Pharmaceuticals Industries (down 2.58%), Coal India (down 2.44%) and Cipla (down 1.34%), edged lower from the Sensex pack.

Index heavyweight Reliance Industries (RIL) rose 0.23% to Rs 809.20. The stock was volatile. The stock hit a high of Rs 819 and a low of Rs 803.65. The company said last week 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 all the investments in the exploration, development and production of hydrocarbons from KG-D6 were made by RIL and its foreign partners at their own risk, and not by the Government of India (GoI). RIL and its partners are entitled under the production sharing contract (PSC) with the GoI to recover their full costs from the revenues generated by production from the block, RIL said in a statement.

The investment made 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, RIL said. The PSC 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. RIL said it has initiated arbitration proceedings against the GoI in a bid to finally resolve the cost recovery issue so as not to hinder future investments in this block.

Another index heavyweight ICICI Bank fell 1.64% to Rs 767.75, off the day's high of Rs 785.85.

Engineering and construction giant L&T gained 1.26% to Rs 1331 after company announced during marker hours today that the L&T Construction has bagged new orders valued at Rs 2700 crore across various businesses during October-November 2011.

Metal stocks rose on credit rating agency, S&P's stable rating outlook of China. China is the world's largest consumer of copper and aluminum. Sterlite Industries (up 1.58%), Sail (up 1.46%), JSW Steel (up 1.33%), Tata Steel (up 1.20%), Hindalco Industries (up 0.95%), Jindal Steel & Power (up 0.84%) and Nalco (up 0.37%), rose.

IT stocks rose on hopes the euro zone will take concrete steps to resolve the region's debt crisis. Europe is the second largest outsourcing market for Indian IT firms after US. India's second largest software services exporter by revenue Infosys rose 1.95% to Rs 2752.80, off the day's high of Rs 2769.

India's third largest software services exporter by revenue Wipro rose 3.31% to Rs 403.75 after company announced during market hours today that Wipro Infrastructure Engineering, the global hydraulics business of Wipro signed a joint venture contract with Kawasaki Heavy Industries in India to set up a large manufacturing facility for the manufacture of hydraulic pumps for excavators. The joint venture will be called Wipro Kawasaki Precision Machinery and will invest Rs 500 crore with an initial capacity of 4,000 pumps which would be augmented to 15,000 pumps by 2015.

India's largest software services exporter TCS was almost flat at Rs 1179.10, with the stock snapping a six day winning streak. Tata group holding firm, Tata Sons, recently named Cyrus Pallonji Mistry as the successor to Tata Group Chairman Ratan Tata. Among other IT shares, HCL Technologies (up 1.83%) and MphasiS (up 0.46%), rose.

Interest rate sensitive realty stocks extended recent gains on hopes a slowing economy could prompt the Reserve Bank of India (RBI) to pause on rate increases this month. Purchases of both residential and commercial property are largely driven by finance. Anant Raj Industries, Prestige Estates, Parsvnath Developers, HDIL, Godrej Properties and Peninsula Land rose 0.30% to 6.98%.

Realty major DLF rose 1.15% to Rs 224.85 after company said that DLF Hotel Holdings (DHHL), a wholly owned subsidiary of the company, currently holding 74% equity shares in the joint venture company - DLF Hotels & Hospitality (DLF Hotels) has acquired additional 26% equity shares of 'DLF Hotels' from Aro Participation and Splendid Property Company, affiliates of Hilton International Co. Consequently, DLF Hotels has become a wholly owned subsidiary of DHHL.

Auto stocks were mixed. India's largest truck maker by sales Tata Motors fell 0.18% reversing initial gains. The company's total sales rose 41% to 76,823 vehicles in November 2011 over November 2010.

India's largest tractor maker by sales Mahindra & Mahindra rose 0.99%. The company's total auto sales jumped 52.7% to 40,722 units in November 2011 over November 2010. Mahindra & Mahindra's (M&M) domestic sales jumped 51.63% to Rs 38,159 units, while exports surged 70.90% to 2,563 units in November 2011 over November 2010. The 4-wheeler commercial segment, which includes the passenger and load categories, has registered an impressive growth of 74% at 13,362 units.

India's largest car maker by sales Maruti Suzuki India rose 0.17% with the stock gaining for the third straight day on reports that it is considering an increase in prices of its products from January next year to offset the impact of rupee depreciation. The company's total sales fell 18.5% to 91772 units in November 2011 over November 2010.

Ashok Leyland gained 1.13% extending Monday's 5.59% surge after company reported 53.36% jump in commercial vehicle sales at 7,878 units in November 2011. The company had sold 5,137 units in the same month of 2010. Domestic sales were 6,477 units in November 2011, as against 3,885 units in the same month of the previous year, up 66.72%, Ashok Leyland said. Exports increased 11.90% to 1,401 units last month from 1,252 units in the year-ago period.

India's largest motorcycle maker by sales Bajaj Auto gained 1.42%. Bajaj Auto's total vehicle sales were up 25% at 374,477 units in November 2011 over November 2010. India's largest motorcycle maker by sales Hero MotoCorp fell 0.73%. The company's sales rose 27.4% to 536,772 units in November 2011 over November 2010. TVS Motor Company fell 0.34%. The company's total sales rose 12% to 175,535 units in November 2011 over November 2010.

Pharma stocks declined in a firm market. Lupin, Sterling Biotech, Sun Pharmaceuticals Industries, Glenmark Pharmaceuticals, Aurobindo Pharma, Dr Reddy's Laboratories, Cipla, Dishman Pharmaceuticals & Chemicals, Divis Laboratories, Ipca Laboratories, Wockhardt, GlaxoSmithKline Pharmaceuticals and Piramal Healthcare fell by 0.14% to 4.03%.

Muthoot Finance advanced 1.80% to Rs 175.25 after the company's board of directors at their meeting held on 5 December 2011 decided to raise funds by public issue of secured non convertible debentures aggregating up to Rs 600 crore

Pennar Industries rose 4% to Rs 39 after the company said its subsidiary secured orders worth Rs 50 crore in November 2011.

Cairn India clocked the highest turnover of Rs 947.72 crore on BSE. GAIL (India) (Rs 163.45 crore), State Bank of India (Rs 129.66 crore), Pantaloon Retail (India) (Rs 92.08 crore) and ICICI Bank (Rs 58.26 crore), were the other turnover toppers on BSE in that order.

Cairn India clocked the highest volume of 2.91 crore shares on BSE. Indiabulls Real Estate (1.02 crore shares), Cals Refineries (64.47 lakh shares), Pantaloon Retail (India) (48.39 lakh shares) and Avance Technologies (45 lakh shares), were the other volume toppers on BSE in that order.

The Indian government's recent steps to boost investment are a credit positive as they could increase foreign investment and improve the business climate, Moody's Investors Service said in a report Monday. Recent government steps to draw more funds into the country include a proposal to allow majority foreign ownership in the retail sector and steps to reduce regulatory hurdles for national manufacturing zones, Moody's noted. Other recent measures include the easing of rules on foreign investment in infrastructure debt funds and modernizing of corporate investment laws.

Finance Minister Pranab Mukherjee has reportedly conveyed to the opposition parties that the decision to allow FDI in multi-brand retail has been put in abeyance till there is consensus among all the political parties. Mukherjee had called an all-party meeting on Wednesday morning prior to the resumption of Parliament to inform about the change in the Centre's stance on FDI in retail. He is also expected to make a statement in the Parliament today on the Government's stand on FDI in multi-brand retail. The Government seems to be pulling out all steps to ensure smooth functioning of the Parliament in the remaining part of the winter session after no business was done till Friday, 2 December 2011 on political deadlock over FDI in retail. The parliament, which observed a four-day break, is scheduled to resume business on Wednesday. The winter session kicked off on November 22 and is slated to end on December 21. The change in the Government's stance on the issue came after key ally Mamata Banerjee made it clear that she will not support FDI in retail.

A government statement in parliament has dashed hopes of a relief in securities transaction tax (STT). Junior finance minister S.S. Palanimanickam, recently said 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 Indian economy expanded at a substantially lower rate in the second quarter of the current fiscal year as a series of rate increases by the RBI and a global slowdown hurt local demand. India's economy grew 6.9% in Q2 September 2011, in line with expectations, after expanding by 7.7% in the first quarter, government data showed on 30 November 2011. The manufacturing sector grew an annual 2.7% during the July-September quarter while farm output rose an annual 3.2% the data showed. India's GDP growth in the first six months of FY12 stood at 7.3% versus 8.6% in the corresponding period of the last financial year, the CSO data showed on 30 November 2011.

The output of the eight infrastructure industries dropped to an over six-year low of 0.1% in October, data released on 30 November 2011 showed, suggesting further slowdown in already wobbly industrial growth. The eight infrastructure industries together have a 38% weight in the index of industrial production (IIP), which makes the infrastructure index a good leading indicator of industrial production.

India's manufacturing sector expansion slowed in November as factory output grew at its slowest pace in nearly three years although export demand should provide some cheer for factories, a survey showed on 1 December 2011. The HSBC Markit India Manufacturing PMI fell to 51.0 from 52.0 in October, but has stayed above the 50 mark that divides growth from contraction for 32 months. The PMI was 50.4 in September.

On the flip side, India's services sector expanded in November for the first time in two months as new business accelerated despite persistent inflationary pressures, a survey showed on Monday. The seasonally adjusted HSBC Markit Business Activity Index -- based on a survey of around 400 firms -- stood at 53.2 in November, above the 50-mark that separates growth from contraction. It had fallen to 49.1 in October after contracting for the first time in more than two years in September to 49.8. Despite tight monetary conditions, the sub-index for new business accelerated to 52.3 in November from 51.0 in October, driving the turnaround in the service sector.

India's merchandise exports in October rose by 10.8% to $19.87 billion, while imports during the same month climbed by 22% to $39.51 billion, data released by the Government showed on 1 December 2011. As a result, the trade deficit for October 2011 stood at $19.64 billion versus $14.53 billion in the corresponding month a year earlier.

Food inflation tumbled in the third week of November but fuel inflation increased marginally, data released by the Government showed on Thursday, 1 December 2011. Food inflation declined to 8% in the week ended November 19 from 9.01% in the preceding week, the Commerce & Industry Ministry said. Food inflation stood at 9.03% in the corresponding week last year. Inflation in the Primary Articles group fell to 7.74% in the week under review, from 9.08% in the week ended November 12, according to the Commerce Ministry statement. It was at 14.32% in the year-ago period. Inflation in the Fuel & Power group stood at 15.53% in the week ended November 19 versus 15.49% in the previous week, the Government data showed. It was at 10.07% in the comparable week of the previous year.

The Reserve Bank of India (RBI) announced a 25 basis points hike in its key policy rate viz. the repo rate to 8.5% after half-yearly review of the monetary policy on 25 October 2011. The central bank cut its GDP growth forecast for the current fiscal year through March 2012 to 7.6% from 8% earlier. But it retained its March-end inflation projection of 7%. RBI said the projected inflation trajectory indicates that the inflation rate will begin falling in December 2011 (January 2012 release) and then continue down a steady path to 7% by March 2012. It is expected to moderate further in the first half of 2012-13. This reflects a combination of commodity price movements and the cumulative impact of monetary tightening. Further, moderating inflation rates are likely to impact expectations favourably. RBI unveils mid-quarter monetary policy review on 16 December 2011.

European stocks rose on speculation that euro-area leaders will agree on a bigger bailout package for indebted nations and stricter rules for budget control at a summit this week. Key benchmark indices in France, Germany and UK gained by between 0.23% to 0.80%.

Investors await results of meetings this week of the European Union and European Central Bank (ECB). The idea of a much stronger bailout fund will be proposed along with the plan on revising existing treaties to strengthen budget rules across the euro area when leaders from 27 European Union countries meet on 9 December 2011.

US Treasury Secretary Timothy Geithner yesterday backed a German-French push for closer European cooperation, urging policy makers to work with central banks to erect a stronger firewall to end the crisis. He welcomed progress toward a fiscal compact for the euro zone.

The ECB is likely to reduce its benchmark rate to 1% from 1.25% on 8 December 2011 as per market expectations.

Greek lawmakers have approved a 2012 budget pledging tough fiscal goals demanded by European Union partners in return for fresh loans. The budget was passed as clashes broke out between protesters and police outside parliament. A broad majority of the parties backing Lucas Papademos' caretaker administration secured the economic blueprint's passage by 258 votes to 41, the assembly said.

Asian stocks rose on Wednesday on speculation the European leaders meeting this week in Brussels will step up efforts to fight the debt crisis to stave off lower national credit ratings that will make funding bailouts more costly. Key benchmark indices in China, Hong Kong, Indonesia, Japan, South Korea, Singapore and Taiwan were up by between 0.29% to 1.71%.

Standard & Poor's Ratings Services today affirmed the 'AA-' long-term and 'A-1+' short-term sovereign credit rating on the People's Republic of China. The outlook is stable. In line with this, Standard & Poor's also affirmed its Greater China credit scale rating at 'cnAAA/cnA-1+'. The transfer and convertibility assessment for China also remains at 'AA-'. The stable rating outlook reflects Standard & Poor's view that China can absorb potential balance sheet losses with little damage to its credit standing, given its substantial foreign exchange reserves and strong fiscal position.

Trading in US index futures indicated that the Dow could gain 51 points at the opening bell on Wednesday, 7 December 2011. U.S. stocks were mostly lower on Tuesday as cautious investors continued to digest the S&P's recent downgrade warning for the euro zone. Rating agency Standard & Poor's said Monday it may cut the sovereign credit rating of 15-euro zone countries.