BSE Small-Cap, Mid-Cap indices outshine Sensex

Key benchmark indices eked out small gains as traders refrained from building large positions ahead of the beginning of the Q1 June 2012 earnings season next week. The 50-unit S&P CNX Nifty attained its highest closing level in 10-1/2 weeks. The barometer index, BSE Sensex, advanced 26.73 points or 0.15%, off about 101.11 points from the day's high and up close to 74 points from the day's low. The market breadth was strong. BSE Small-Cap and Mid-Cap indices outperformed the Sensex. Index heavyweight Reliance Industries (RIL) edged lower in volatile trade. IT stocks were mostly lower after weak economic data in the US, the biggest outsourcing market for the Indian IT firms. The Sensex has jumped 1,970.79 points or 12.75% in calendar 2012 so far (till 3 July 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 2,289.85 points or 15.12%. From a 52-week high of 19,131.70 on 8 July 2011, the Sensex has lost 1705.99 points or 8.91%. Coming back to today's trade, realty shares extended their recent gains triggered by the Competition Commission of India directing cement firms last month to cease and desist from indulging in any activity relating to agreement, understanding or arrangement on prices, production and supply of cement in the market. Banks stocks also extended their recent gains, with HDFC Bank hitting a record high. Telecom stocks gained across the board. Metal stocks were mostly higher on hopes of further monetary policy easing from China. The market opened on firm note on higher Asian shares. The barometer index, BSE Sensex, hit its highest level in more than 10-1/2 weeks. The 50-unit S&P CNX Nifty hit 10-1/2-week high. The market trimmed gains in morning trade. The market further pared gains to hit fresh intraday low in mid-morning trade. The market was hovering near intraday low in early afternoon trade. The market was range bound in afternoon trade. A bout of volatility was witnessed as key benchmark indices recovered after reversing intraday gains to hit fresh intraday lows in mid-afternoon trade. The BSE Sensex rose 26.73 points or 0.15% to settle at 17,425.71, its highest closing level since 29 June 2012. The index jumped 127.04 points at the day's high of 17,526.82 in early trade, its highest level since 19 April 2012. The index fell 47.48 points at the day's low of 17,351.50 in mid-afternoon trade, its lowest level since 29 June 2012. The S&P CNX Nifty rose 9.35 points or 0.18% to settle at 5,287.95, its highest closing level since 20 April 2012. The index hit a high of 5,317 and a low of 5,265.95 in intraday trade. The BSE Mid-Cap index rose 0.48% and the BSE Small-Cap index rose 0.8%. Both these indices outperformed the Sensex. The market breadth, indicating the overall health of the market, was strong. On BSE, 1,728 shares gained and 1,139 shares declined. A total of 98 shares were unchanged. BSE clocked turnover of Rs 2053 crore higher than Rs 1934 crore on Monday, 2 July 2012. From the 30-share Sensex pack, 16 stocks fell and the rest rose. Index heavyweight Reliance Industries (RIL) fell 0.20% to Rs 736. The stock hit a high of Rs 742.90 and a low of Rs 731.30. RIL last week said it has bought back 3 crore shares for Rs 2144.73 crore till 22 June 2012. Under the ongoing share buyback program, RIL has set a maximum buyback price of Rs 870. The company has set aside Rs 10440 crore for share buyback. The buyback program opened on 1 February 2012 and closes on 19 January 2013. Last month, RIL chairman Mukesh Ambani said at the company's Annual General Meeting in Mumbai that the company's buyback program represents a 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. Metal stocks were mostly higher on hopes further monetary policy easing from China, the world's largest consumer of copper and aluminum. JSW Steel (up 2.29%), Hindalco Industries (up 2.27%), Sesa Goa (up 1.85%), Sail (up 1.54%), Sterlite Industries (up 1.06%), NMDC (up 1.05%), Nalco (up 0.5%), Hindustan Zinc (up 0.12%) and Bhushan Steel (up 0.06%), edged higher. Tata Steel declined 0.3%. Jindal Steel & Power fell 1.46% on reports the Odisha state government is probing the company's purchase of iron ore at a discounted price in violation of mining norms by the supplier at the iron ore mine located in Keonjhar district. Telecom stocks gained across the board. Idea Cellular (up 5.41%), Bharti Airtel (up 3.11%), Reliance Communications (up 2.42%) and Tata Teleservices (Maharashtra) (up 0.35%), edged higher. The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) has reportedly given a split verdict on Tuesday on a petition filed by wireless operators challenging the telecommunication department's order banning them from forming alliances to offer third-generation roaming services in areas where they don't hold bandwidth. The tribunal's chairman, S.B. Sinha, on Tuesday said the telecom department's December order didn't follow the principles of natural justice and these wireless operators can continue to offer the services. However, the other member of the two-judge bench, P.K. Rastogi, said operators can't provide communications services in areas where they don't hold 3G bandwidth. Bharti Airtel, Idea Cellular and the local unit of UK's Vodafone Group PLC in July 2011 signed agreements to provide 3G roaming services. In late December, the telecom department asked the companies to stop such services, saying they violated rules by signing the roaming agreements. Bharti, Idea and Vodafone India then went to the tribunal, which stayed the ban. Bharti has 3G bandwidth in 13 of India's 22 telecom service areas, while Idea has access in 11 and Vodafone India in nine. TDSAT is a quasi-judicial body which decides on disputes in the telecom and media sectors. MTNL gained 2.51% after the company said after market hours on Monday that Income Tax Department has issued a refund order to MTNL in the matter of deduction under Section 80IA of the Income Tax Act, 1961 for the Assessment Year 2004-05. The total amount received from Income tax Department amounts to Rs 152.46 crore out of which Rs 46.34 crore has been received towards interest on refunds. From the above refund an amount of Rs 35.08 crore has been adjusted against the demand for the Assessment Year 2006-07 and a net cheque amounting to Rs 117.38 crore has been received, MTNL said. Realty shares extended their recent gains triggered by the Competition Commission of India directing cement firms last month to cease and desist from indulging in any activity relating to agreement, understanding or arrangement on prices, production and supply of cement in the market. Cement is a key raw material in housing construction. DLF (up 4.28%), Godrej Properties (up 3.24%), Peninsula Land (up 2.92%), Phoenix Mills (up 2.25%), Sobha Developers (up 1.88%), Unitech (up 1.7%), D B Realty (up 1.6%), HDIL (up 0.23%) and Sunteck Realty (up 0.14%), edged higher. Banks stocks extended their recent gains. India's largest private sector bank by net profit ICICI Bank gained 0.84%. The country's biggest commercial bank in terms of branch network State Bank of India fell 0.20%, with the stock reversing initial gains. The bank has raised interest rate by 25 basis points to 9% on fixed deposits for the tenure of three years to less than five years with effect from Sunday, 1 July 2012. This is applicable for deposits below Rs 15 lakh. India's second biggest private sector bank in terms of branch network HDFC Bank rose 0.17% to Rs 574.80. The hit a record high of Rs 580.30 in intraday trade today, 3 July 2012. The bank has reduced lending rates by 20 basis points with effect from Friday, 30 June 2012. The bank has cut base rate to 9.8% from 10% and the benchmark prime lending rate (PLR) to 18.3% from 18.5%. Yes Bank (up 2.11%), Punjab National Bank (up 2.01%), IndusInd Bank (up 1.49%), Axis Bank (up 1.47%), Canara Bank (up 1.19%), Bank of India (up 1.16%), IDBI Bank (up 1.1%), Union Bank of India (up 0.86%) and Kotak Mahindra Bank (up 0.62%), edged higher. IT stocks were mostly lower after weak economic data in the US, the biggest outsourcing market for the Indian IT firms. India's largest IT company by revenue, Tata Consultancy Services (TCS), fell 1.43%. India's second largest software services exporter by revenues, Infosys, declined 0.21%. India's third largest software services exporter by revenue, Wipro, rose 0.1% in volatile trade Mahindra Satyam fell 1.87%. The company said during market hours today that Mr. Edward 'Ted' Pretty has been appointed as the Chairman for its Australia and New Zealand operations. He will also be supporting the company's Asian region for telecom business expansion. Ted will be driving the strategy for Mahindra Satyam and Tech Mahindra across network engineering and operations, business intelligence & analytics, cloud, mobility and security. Ted's experience will also facilitate expansion plans in the region as the organization explores opportunities to offer a higher service suite to businesses in the region. A firm rupee also weighed on IT stocks. The rupee rose to a one-and-a-half-month high on Tuesday as custodian banks sold dollars that could be funnelled into domestic shares or debt investments, following improved foreign investor sentiment. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports. State Bank of India reported a highest turnover of Rs 92.23 crore on BSE. Reliance Capital (Rs 62.52 crore), JSW Steel (Rs 40.21 crore), ICICI Bank (Rs 38.42 crore) and Housing Development & Infrastructure (HDIL) (Rs 37.70 crore), were the other turnover toppers on BSE in that order. Cals Refineries reported highest volumes of 1.39 crore shares on BSE. Kingfisher Airlines (79.69 lakh shares), SpiceJet (67.87 lakh shares), Lanco Infratech (64.02 lakh shares) and Shree Ashtavinayak Cine Vision (63.33 lakh shares), were the other volume toppers on BSE in that order. Farm Minister Sharad Pawar today, 3 July 2012, said that the two-week delay in the monsoon rains' progress across India is not cause for concern and sowing of summer crops is likely to pick up from this month as rainfall improves. The amount of monsoon rain was 31% below the long-term average at this point in the June-September season, Mr. Pawar said. The progress of the monsoon, which reached the mainland four days later than scheduled, has been erratic this year. The delay has affected sowing of summer crops in five states, Mr. Pawar said. Sowing has been affected as the rains have failed to advance from the central region to the grain-bowl northern states in the last few days. The rains usually cover most of the country by July 1. The monsoon rains--which make up around 70% of India's annual rainfall--are crucial to the nation's agriculture sector and broader economy. More than 60% of the country's farmland is rain-fed. India's factories in June stepped up production and hired workers at the fastest rate in more than two years, but sagging demand abroad took a toll on growth in new export orders, a survey showed on Monday. The HSBC manufacturing Purchasing Managers' Index (PMI) rose to 55 in June, a four-month high, from 54.8 in May. It has kept above the 50 mark that divides growth and contraction for more than three years. The services purchasing managers' index for June 2012 is expected to be released tomorrow, 4 July 2012. The services sector grew at its fastest pace in three months during May. HSBC's services purchasing managers' index, compiled by Markit, rose almost two points to 54.7 in May from 52.8 in the previous month. India's merchandise exports fell 4.16% to $25.68 billion in May, while imports fell 7.36% to $41.9 billion, government data showed on Monday. May's trade deficit was $16.3 billion, while oil imports rose 14.02% year-on-year to $14.99 billion, data showed. The next major trigger for the stock market is Q1 June 2012 corporate earnings, which will start trickling from the second week of July 2012. Investors and analysts will closely watch the management commentary that would accompany the result which could cause revision in their future earnings forecast of the company for the current year or the next year. A deceleration in top line growth of India Inc amid economic slowdown and slowdown in investment cycle will weigh on bottom line growth in Q1 June 2012 as the core operating profit margin could be negatively impacted by deceleration in top line growth. HDFC announces Q1 results on 11 July 2012. Infosys announces its Q1 results on 12 July 2012. HDFC Bank declares its Q1 results on 13 July 2012. Axis Bank announces Q1 results on 17 July 2012. Bajaj Auto reports Q1 results on 18 July 2012. Kotak Mahindra Bank and Dr Reddy's Laboratories unveil Q1 results on 19 July 2012. European shares rose on Tuesday as investors bet on further policy action from the region's central bank to spur growth after Monday's weak manufacturing data in the euro zone. Key benchmark indices in UK, France and Germany were up by 0.29% to 0.61%. Weak manufacturing data in the euro zone unveiled on Monday has supported market expectations of possible easing measures from the region's central bank to spur growth. The European Central Bank (ECB) at a policy meeting on interest rates on Thursday, 5 July 2012, is expected to cut its benchmark rate by 25 basis points to an all time low of 0.75% from 1%. The Bank of England's monetary policy committee is expected to ease monetary policy further by expanding its debt-purchase program at scheduled meeting on Thursday, 5 July 2012. Asian stocks rose for a fifth day on Tuesday on expectations that central banks from Washington to Frankfurt may ease monetary policy to spur economic growth. Key benchmark indices in China, Hong Kong, Indonesia, Japan, South Korea, Singapore and Taiwan rose by between 0.14% to 1.51%. China's services sector expanded at its fastest pace in three months in June, an official survey showed on Tuesday, but left intact market expectations that Beijing will deliver more policy measures to support growth in the near future. The latest survey by the National Bureau of Statistics and the China Federation of Logistics and Purchasing (CFLP) showed the purchasing managers' index for the country's non-manufacturing sector rose to 56.7 from 55.2 in May, the best reading since a 10-month high of 58.0 recorded in March. A reading above 50 indicates expanding activity and one below 50 signals contraction, according to the survey methodology. Important Chinese economic data is due over the next few days. During a five-day period from 9 to 13 July 2012, China will unveil data on second quarter gross domestic product, data for June 2012 on fixed-asset investment, inflation, industrial production and bank lending. Australia's central bank left its policy interest rates unchanged at 3.5% on Tuesday, taking a pause after slashing them by 0.75 percentage points in the past two months. The decision, which was in line with expectations, followed the board's assessment that inflation and growth were likely to remain in line with historical trends. Gov. Glenn Stevens said that while recent economic data suggested the pace of growth was somewhat stronger than had been earlier indicated, European debt troubles remained a potential source of adverse shocks for some time. Trading in US index futures indicated a slightly lower opening of US stocks on Tuesday, 3 July 2012. US stocks put in a subdued performance on Monday, as data showing manufacturing activity dropped into contraction territory for the first time in three years dragged the Dow Jones Industrial Average into the red. US manufacturing unexpectedly shrank in June for the first time since the economy emerged from a recession three years ago, indicating a mainstay of the expansion may be faltering. This week is a truncated trading week for US stock markets. US market remains closed on Wednesday, 4 July 2012, for Independence Day holiday. Important US economic data is due for release this week. On Tuesday, 3 July 2012, the US Commerce Department will release US factory orders data for May 2012. On the same day, US car makers will release their US sales figures for June. On Thursday, 5 July 2012, Automated Data Processing (ADP) will release employment report on US private-sector payroll growth in June 2012. On the same day, ISM will release US services-sector index for June. On Friday, 6 July 2012, the US Labor Department will release the influential US non-farm payroll figures and the unemployment rate for June 2012.