A number of small-cap and mid-cap stocks fell, with some of these stocks witnessing a heavy drubbing. The key benchmark indices moved between the positive and negative terrain in early afternoon trade. Index heavyweight Larsen & Toubro edged higher after winning a large order in United Arab Emirates. The BSE 30-share Sensex was up 8.54 points or 0.04%, off close to 70 points from the day's high and up close to 50 points from the day's low. Banking and metal stocks fell. Index heavyweight Reliance Industries (RIL) pared gains in volatile trade.
The BSE Sensex was just a tad above the psychological 20,000 mark after alternatively moving above and below that mark earlier in the day's trade. The S&P CNX Nifty, too, was just a tad above the psychological 6,000 mark after moving above and below that mark earlier in the day. The market breadth was weak. The BSE Mid-Cap and Small-Cap indices underperformed the Sensex as a number of small-cap and mid-cap stocks on profit taking after recent strong gains. Asian stocks pared initial gains on caution ahead of the influential US non-farm payroll data due later in the global day. US index futures edged lower.
A bout of volatility was witnessed at the onset of the trading session as the key benchmark indices swung between gains and losses. The market edged higher to hit a fresh intraday high in morning trade. Volatility continued in mid-morning trade as the key benchmark indices once gain slipped into the red after hitting a fresh intraday high. The Sensex moved between positive and negative terrain near the flat line in early afternoon trade.
NSE's volatility index, India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, was up 1.43% at 19.07. The index had lost 2.08% to 18.80 on Thursday, 2 December 2010. The index had lost 7.29% to 19.20 on Wednesday, 1 December 2010. India VIX is calculated based on the S&P CNX Nifty options prices. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days.
The Securities and Exchange Board of India (Sebi) on Thursday barred founders and related entities of four firms from trading on the stock exchanges as these firms had indulged in fraudulent and unfair trade practices. The founders of Murli Industries , Ackruti City Ltd , Welspun Corp and Brushman India have been directed not to deal in any securities of their group companies, it said. Sebi also prohibited Sanjay Dangi and his group entities from dealing in any securities on charges of manipulation of share prices.
Foreign funds have resumed buying in recent trading sessions. Foreign funds bought shares worth a net Rs. 386.12 crore on Thursday, 2 December 2010, as per the provisional data from the stock exchanges. The inflow in the first two trading days this month reached Rs. 878 crore, as per data from the stock exchanges. Domestic funds sold shares worth a net Rs. 225.04 crore on Thursday, as per the provisional figures.
Business activity in India's services sector surged to a four-month high in November 2010, driven by robust growth in new orders, a survey showed on Friday. The HSBC Markit Business Activity Index, based on a survey of 400 firms, rose to 60.1 in November from 56.2 in October. It was the best showing for the index since July, and the 19th straight month it has remained above the 50 mark that divides growth from contraction.
Asian stocks pared gains after a firm start on Friday, 3 December 2010, on caution ahead of the influential US non-farm payroll data due later in the global day. The key benchmark indices in Hong Kong, Japan, Indonesia, Singapore, South Korea and Taiwan were up by between 0.2% to 0.45%. China's Shanghai Composite fell 0.13% on lingering concerns about further tightening to cool inflation.
China's purchasing managers index for the non-manufacturing sector fell to a nine-month low of 53.2 in November from 60.5 in October, the China Federation of Logistics and Purchasing (CFLP) said on Friday
As per the market buzz, the European Central Bank (ECB) has stepped up buying of stressed euro-zone government bonds. Meanwhile, rating agency Standard & Poor's said Thursday it may downgrade Greece's long-term debt if new European bailout rules prove onerous to private holders of the country's bonds. S&P said it will decide whether to downgrade Greece within three months, by which time the new debt-crisis rules will be clear. S&P issued a similar warning about Portugal this week.
Trading in US index futures indicated that the Dow could fall 16 points at the opening bell on Friday, 3 December 2010.
The latest data showed a gauge of US jobless benefits hit a new two-year low last week and pending home sales in the world's biggest economy unexpectedly rose in October 2010.
The US government will release the data on non-farm payroll later in the global day today, 3 December 2010. The non-farm payrolls number is forecast to increase by 144,000 in November from October, when it climbed by 151,000. The jobless rate, meanwhile, may stand unchanged at 9.6%, as per economists' expectations. A strong US jobs report may lead investors to expect that the Federal Reserve could scale back its latest quantitative easing measures.
Closer home, Chief Economic Adviser to the finance ministry, Kaushik Basu on Thursday, 2 December 2010, said the government will upwardly revise its economic growth forecast for the fiscal year that ends in March 2011. Basu also said he expected headline inflation in November, due for release on 14 December 2010 to ease further.
The latest data showed a continuation of the recent trend of easing of food inflation. The food price index rose 8.60% while the fuel price index climbed 9.99% in the year to 20 November 2010, government data on Thursday showed. In the prior week, annual food and fuel inflation stood at 10.15% and 10.57% respectively. The primary articles price index was up 12.72% in the latest week compared with an annual rise of 13.38% a week earlier.
India's merchandise exports rose 21.3% to $18 billion in October 2010 over October 2009, boosting hopes that the country may be able to reach the $200 billion target fixed for the current fiscal. Imports during the period grew by 6.8% to $ 27.68 billion, leaving a trade deficit of $9.72 billion, data released on 1 December 2010, showed.
India's manufacturing activity strengthened further in November 2010 and the strong growth momentum is showing up in rising inflation pressures, according to an HSBC survey released on Wednesday, 1 December 2010. The HSBC Manufacturing Purchasing Managers' Index rose to 58.4 in November from 57.2 in October, the survey said.
The Indian economy grew a robust 8.9% year-on-year in Q2 September 2010, maintaining the same pace of expansion as the previous quarter, boosted by farm output and manufacturing, government data released Tuesday, 30 November 2010 showed. The manufacturing sector grew an annual 9.8% and farm output grew an annual 4.4% in Q2 September 2010. The government revised upwards the Q1 June 2010 GDP growth to 8.9% from 8.8% earlier.
Finance Minister Pranab Mukherjee on Tuesday said GDP growth would be between 8.5% to 8.75% in the current fiscal that ends in March 2011 (FY 2011). Chairman of the Prime Minister's Economic Advisory Council C. Rangarajan said the economy is expected to grow 9% in the year to March 2012 (FY 2012). Rangarajan also said the government may reassess FY 2011 growth expectations and that it was not impossible to reach 9% growth in the financial year.
The output of key infrastructure industries surged by a robust 7% in October 2010, against a 3.9% growth recorded in the same month last year, helped by a strong showing by the electricity, crude oil and the finished steel sectors. The latest data for the six core sector showed a sharp rebound from the output in September 2010, when growth in these sectors had slipped to 2.7%.
A bribe-for-loan scandal spooked the banking sector and the stock market recently. Chiefs of some of the top rung public sector banks and financial institutions were arrested by the Central Bureau of Investigation (CBI) on 24 November 2010, for allegedly sanctioning loans in return for bribes. The Securities & Exchange Board of India (Sebi) is reportedly examining the possibility of insider trading in shares of at least nine companies. The Sebi has joined the CBI to probe the possibility of insider trading in shares of these companies, named by the investigator as involved in the loan scandal, recent reports suggest.
The CBI has reportedly sent notices to 21 medium-to-large sized Indian companies regarding the ongoing probe into a financial bribery scandal. The cases are limited to individuals and unlikely to create a large fallout, a news agency report said, late last week, citing an unnamed senior CBI official. The CBI is not currently considering widening its probe into bribery over loans to corporates, the report added.
Finance Minister Pranab Mukherjee, last week, asked all banks, financial institutions and insurance firms to look into their exposures to firms named by the Central Bureau of Investigation in a loans bribery scandal. A ministry statement quoted Pranab Mukherjee as calling on regulatory and other institutions to further improve safeguards.
The next major trigger for the equity market is the advance tax payment of corporates for the third installment, which falls due on 15 December 2010. The advance tax figures will provide a cue on Q3 December 2010 corporate earnings.
But, year-end profit taking may cap upside on the domestic bourses in the near term. Funds based in US and Europe follow calendar year as their accounting year.
At 12:20 IST, the BSE 30-share Sensex was up 8.54 points or 0.04% to 20001.24. The Sensex rose 75.11 points at the day's high of 20,067.81 in morning trade. The index fell 40.27 points at the day's low of 19,952.43 in early trade.
The S&P CNX Nifty was down 10.50 points or 0.18% at 6,000.85. The Nifty hit a high of 6,025.40 and low of 5,991.30 so far during the day.
The BSE Mid-Cap index fell 1.5% and the BSE Small-Cap index fell 1.76%. Both these indices underperformed the Sensex.
The market breadth, indicating the health of the market, was weak. On BSE, 1877 shares fell while 865 shares rose. A total of 79 shares remained unchanged. The breadth alternatively swung between positive and negative zone in early trade.
Among the 30-member Sensex pack, 17 fell while the rest rose. DLF, Reliance Infrastructure and Jaiprakash Associates fell by between 2.31% to 3.02%.Hindustan Unilever, Cipla and Bharti Airtel rose by between 1.59% to 2.18%.
Index heavyweight Reliance Industries (RIL) rose 0.45% to Rs. 1014. The stock hit high of Rs. 1022.50 and low of Rs. 1003.35 so far during the day. As per recent reports, the natural gas production from RIL's East Coast block has dropped by about 15% to about 45-46 million standard cubic metres per day (mscmd) from 53-54 mscmd. The production from D-1 and D-3 gas fields in the KG-D6 block has dropped due to reservoir complexities.
India's largest engineering and construction firm by sales Larsen & Toubro rose 0.24%, reversing initial losses after the company said during market hours today that it won a Rs. 716-crore order in United Arab Emirates.
Metal shares fell on profit taking. Tata Steel, Hindalco Industries, Hindustan Zinc, Bhushan Steel, Sterlite Industries, JSW Steel and Steel Authority of India fell by between 0.41% to 2.42%.
LMEX, a gauge of six metals traded on the London Metal Exchange rose 1.61% on Thursday, 2 December 2010.
Welspun Corp slumped 20.31% after the Securities and Exchange Board of India (Sebi) on Thursday barred founders and related entities from trading on the stock exchanges as the firm had indulged in fraudulent and unfair trade practices.
Banking stocks stocks fell across the board on profit taking. The Reserve Bank of India (RBI) Governor Duvvuri Subbarao said on Friday there was a strong case to review and recast banking legislation. India's second largest private sector bank by net profit HDFC Bank fell 0.7%.
India's largest private sector bank in terms of operating income ICICI Bank fell 0.84%. The private sector bank has recently withdrawn a special housing loan scheme. The schemes have been under the Reserve Bank of India's scrutiny on concerns about asset quality in the housing loan sector.
India's largest bank by net profit and branch network State Bank of India fell 0.57%. The bank is planning to launch a rights issue in January-March, Chairman O.P. Bhatt said today. Among other PSU stocks, Bank of Baroda, Bank of India and Punjab National Bank fell by between 0.64% to 2.57%.
The government on Wednesday, 1 December 2010, approved additional capital infusion of Rs. 6000 crore in 10 public sector banks with an objective to raise its holding to a minimum 58% in all state-run banks.
India's top mortgage lender by total income Housing Development Finance Corporation fell 0.52%. The company on Wednesday, 1 December 2010, said it would not extend a special housing loan scheme that was available until Tuesday, 30 November 2010.
Great Eastern Shipping rose 0.6%, after the company said it has taken delivery of a 1991-built general purpose product tanker with a capacity of about 28,600 deadweight tonnage.
Pratibha Industries rose 2.35% after the company secured its maiden overseas construction contract worth Rs. Rs 350 crore from a civil authority in Dubai
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