Market drifts lower amid initial volatility

A bout of volatility was witnessed in early trade as key benchmark alternately swung between gains and losses. The barometer index, BSE Sensex, was down 24.54 points or 0.15%, up about 10 points from the day's low and off close to 35 points from the day's high. The market breadth was positive. Cement stocks extended recent gains triggered by Prime Minister's thrust on infrastructure sector. Index heavyweight Reliance Industries (RIL) edged higher in early trade. At 09:30 IST, the BSE Sensex was down 24.54 points or 0.15% to 16,838.26. The index fell 34.49 points at the day's low of 16,828.31 in early trade. The index rose 12.23 points at the day's high of 16,875.03 in early trade. The S&P CNX Nifty was down 3.75 points or 0.07% to 5,112.15. The index hit a low of 5,106.20 and a high of 5,122.45 in intraday trade. The market breadth, indicating the overall health of the market, was positive. On BSE, 359 shares rose and 200 shares rose. A total of 23 shares were unchanged. From 30-share Sensex pack, 20 stocks rose and rest of them fell. Maruti Suzuki India, M&M and Tata Motors fell by between 0.95% to 1.68%. Bharti Airtel, GAIL (India) and Hindustan Unilever rose by between 0.73% to 1.15%. Index heavyweight Reliance Industries (RIL) rose 0.09%. RIL chairman Mukesh Ambani said at the company's Annual General Meeting in Mumbai last week that the company has cumulatively bought back a total of 2.7 crore shares under the share buyback programme, which is 22.5% of share buyback target. Ambani said the company's buyback programme represents highly accretive use of cash by the company and it will supplement earnings growth from operations, for higher EPS (earnings per share), in the near future. Ambani said RIL will invest about Rs 1 lakh crore over the five years in expanding its business in India. Ambani said RIL is targeting to double its operating profit in about five years. Infosys rose 0.03%. Dansk Supermarked A/S, a leading retailer in the Nordics, has engaged Infosys as its strategic partner to transform its cross-channel commerce program, Infosys said in a release on Tuesday. Through this engagement, Dansk Supermarked A/S which has over 1,300 stores across Denmark, Sweden, Germany and Poland will provide its consumers a seamless and convenient cross-channel shopping experience, Infosys said. Infosys was selected by Dansk Supermarked A/S for its capabilities in delivering end-to-end digital commerce programs for global retailers, Infosys said. This transformation program will start with Bilka.dk, one of Dansk Supermarked's store chains and is expected to help increase Bilka.dk's sales to 2.4 Billion Danish kroner by 2016, Infosys said. Cement stocks extended recent gains triggered by Prime Minister's thrust on infrastructure sector. Jaiprakash Associates, Ambuja Cements, India Cements and UltraTech Cements gained by between 0.19% to 0.86%. But, ACC fell 0.15%. Prime Minister Manmohan Singh last week laid out ambitious infrastructure development plans for the current fiscal year, in an effort to counter criticism over a perceived policy paralysis that has led India into its worst slowdown in nearly a decade. Foreign institutional investors (FIIs) sold shares worth a net Rs 56.60 crore on Tuesday, 12 June 2012, as per provisional figures from the stock exchange. Data on first installment of the advance tax payment due on Friday, 15 June 2012 could provide cues on Q1 June 2012 corporate earnings. Housing finance major HDFC announces Q1 June 2012 results on 11 July 2012. Finance Minister Pranab Mukherjee on Tuesday, 12 June 2012, said that the government is taking several measures to kick-start the economy. The government is committed to ensure faster project clearances, attracting new investments, both domestic and foreign, fixing regulatory issues, etc to boost investors' confidence, he said. Mukherjee on Monday, 11 June 2012, said the government hopes to introduce a bill for a direct tax code (DTC) during the monsoon session of parliament. The monsoon session usually runs from July to August. The code, which will replace the existing Indian Income Tax Act 1961, intends to cut tax rates to bring more people and companies under the tax net, phase out profit-linked exemptions for companies and replace them with investment-linked incentives. Industrial production in April rose a dismal 0.1% from a year earlier as manufacturing output remained weak and mining output shrank, deepening worries of a slowdown in the economy. Manufacturing output, which has a 75.5% weight in the index of industrial production, grew a mere 0.1% from a year earlier in April, government data showed Tuesday. Capital goods production in April shrank 16.3% while mining output contracted 3.1%. The government slightly revised upwards March industrial output data to a contraction of 3.2% from a contraction of 3.5% reported earlier. Data on inflation for May 2012 due at 11:30 IST tomorrow, 14 June 2012 could provide cues on the central bank's likely policy stance at mid-quarter monetary policy review on 18 June 2012. The annual rate of inflation, based on monthly wholesale price index (WPI), is projected at 7.4% for May 2012, as per the median estimate of a poll of economists carried out by Capital Market. The annual rate of inflation, based on monthly wholesale price index (WPI), stood at 7.23% (provisional) for the month of April 2012. Global rating agency Standard & Poor's on Monday warned that India could become the first BRIC nation to lose its investment-grade rating if the South Asian country doesn't revive its growth and push the pedal on reforms. Setbacks or reversals in India's path toward a more liberal economy could hurt its long-term growth prospects and therefore its credit quality, Joydeep Mukherji, S&P's credit analyst, stated in a report titled 'Will India Be the first BRIC Fallen Angel?'. S&P currently rates India BBB-minus, just one notch above junk. The other three BRIC group of emerging nations--Brazil, Russia and China--are also rated investment-grade. S&P had in April this year cut the outlook on India's long-term credit rating to negative from stable and warned that the country could lose its investment-grade status if the government fails to bring its fiscal house in order. Data released on 31 May 2012 showed India's economic growth slowed to its weakest pace in nine years in the January-March quarter, when it expanded 5.3% from a year earlier. For the fiscal year ended March 31, the economy grew 6.5%, below the 6.9% expansion the government had projected. US Treasury Secretary Timothy Geithner will meet India's finance minister in Delhi in June to strengthen economic and financial ties between the two countries, the US Treasury Department said on Monday. Developing countries should brace for a long period of financial market volatility and weaker growth as tensions rise over a worsening euro zone debt crisis, the World Bank said on Tuesday. Warning the situation in Europe could worsen, the World Bank said in a report that developing nations should prepare for tougher times by reducing short-term debt, cutting budget deficits and moving to a more neutral monetary stance so that policies can be loosened quickly if needed. The Global Economic Prospects report forecast that growth in developing countries is likely to slow to 5.3% in 2012 from 6.1% last year. The World Bank said it expects it to strengthen to 5.9% in 2013 and to 6% in 2014. The forecast was little changed from January. The World Bank said the global economy, which grew 2.7% last year, would likely expand 2.5% this year, accelerating to 3% in 2013 and 3.3% in 2014 -- unchanged from its January outlook. Most Asian stock markets rose on Wednesday on hopes that policy makers around the globe would step in to limit the fallout from Europe to the global economy. Key benchmark indices in China, Hong Kong, Japan, South Korea, Taiwan and Indonesia rose by between 0.05% to 0.79%. Singapore's Straits Times fell 0.24%. Japan's machinery orders increased more than economists expected in April, signaling that reconstruction spending is helping companies cope with the yen's strength and the euro area's debt crisis. China's bank lending and the money supply expanded more than expected in May, with households and corporations showing a strong appetite for loans of medium and longer-term duration, indicating that Beijing's policy easing was beginning to find traction. Chinese financial institutions issued 793.2 billion yuan ($125.6 billion) in May, compared with 682 billion yuan in April, according to data released by the People's Bank of China early this week. Greek voters return to the polls on 17 June 2012 after the splintered results of a May 6 parliamentary election left no party able to put together a government. The poll could potentially decide whether the nation will remain in the euro zone. Fitch Ratings on Tuesday downgraded 18 Spanish banks less than a week after the agency cut the country's sovereign debt rating, underscoring the potential for lenders' assets to deteriorate further. Fitch, which already cut Santander and BBVA on Monday, cut the ratings for CaixaBank, Bankia, Banco Popular Espanol and others. Last week Fitch slashed Spain's rating by three notches to BBB. Spain on Saturday, 9 June 2012, agreed to receive euro 100 billion ($125 billion) in financial aid for its struggling banking sector from the European Union. The request made Spain the fourth euro-zone country to require international assistance. Trading in US index futures indicated that the Dow could fall 17 points at the opening bell on Wednesday, 13 June 2012. Chicago Fed President Charles Evans on Tuesday said the central bank would be in favor of moves to spur more rapid job growth in the US, the world's biggest economy. The Federal Open Market Committee holds its next policy meeting on June 19-20. It remains to be seen if the Fed extends Operation Twist -- a plan expiring this month that lengthens the average duration of bonds in the Fed's portfolio. The Fed launched Operation Twist in September 2011 to lower long-term borrowing costs. The Organization of Petroleum Exporting Countries (OPEC), which supplies about 40% of the world's crude, may maintain its official daily production ceiling at 30 million barrels a day when the group meets in Vienna tomorrow, 14 June 2012. The 7th Group of 20 industrial and developing nations summit is scheduled to be held in Los Cabos, Mexico on 18 and 19 June 2012.