Key benchmark indices regained positive zone, halting five-day fall, as battered pivotals staged a comeback on bargain hunting. The BSE 30-share Sensex was up 5.16 points or 0.03%, up 159.28 points from the day's low and off 12.93 points from the day's high. Also better-than-expected earnings from Reliance Industries, ITC and Maruti Suzuki India and firm US index futures aided recovery.
Weak global cues had played the spoilsport in early trade. US stocks tumbled in their worst three-day slide in 10 months on Friday, pulling Asian stocks lower today, 25 January 2010. European markets, too, opened lower. Following the recovery, the S&P; CNX Nifty, which crashed below the psychological 5,000 mark in opening trade, regain that level. The market breadth was negative after a positive start. IT stocks played a lead role in the market pullback.
Aggregate results of 634 Indian companies showed 49% advance in net profit on 19.6% rise in sales in quarter ended December 2009 over the quarter ended December 2008.
Meanwhile reports indicated the government is considering an across-the-board increase in excise duty in Budget 2010-11, as it faces pressure to withdraw fiscal stimulus measures in the wake of a 16-year high fiscal deficit of 6.8% in the current financial year. One option being considered is an increase in Cenvat rate by 2% while leaving the service tax rate unchanged at 10%, reports citing an unnamed finance ministry official indicated. Cenvat refers to the median excise duty, tax on manufacture of goods, levied on nearly 90% of the goods made in the country.
Also more services could be brought under the tax net to allow the government to keep service tax rates unchanged. An alternative proposal is also under consideration which seeks an increase in excise rates in sectors that are doing well such as automobiles, instead of an across-the-board hike.
Equities are likely to remain volatile in a truncated week as traders roll positions in the derivative segment from January 2010 series to February 2010 series ahead of the expiry of the near-month January 2010 contracts on Thursday, 28 January 2010. The market remains closed on Tuesday, 26 January 2010, on account of Republic Day.
The Reserve Bank of India (RBI) will hold its quarterly monetary policy review on 29 January 2010 and is widely expected to increase the cash reserve ratio (CRR) requirements for banks, but economists are divided on when it will raise interest rates. CRR is the level of cash that banks must keep in deposit with the central bank.
A CRR increase would have little impact on market, as investors have mostly factored in at least a 25 basis points increase in banks' reserve requirement and steady interest rates. Increases in both the CRR and interest rates could however weigh on shares of banks as well as sectors such as auto and property on concerns loan demand may slow.
The food price index rose 16.81% in the 12 months to 9 January 2010, while the fuel index was up 6.34%, the government said on Thursday. The rise in food price index was lower than an annual rise of 17.28% in the previous week.
The annual wholesale inflation rose to 7.31% in December 2009, compared with 4.78% in November and 6.15% a year ago. Finance minister Pranab Mukherjee said on Wednesday the government was taking steps to contain inflation. The situation is constantly under review, he said. He also promised more measures to check the rise in the prices of essential commodities.
European shares declined in opening trade today, 25 January 2010 weighed by banking stocks. Key benchmark indices in UK, Germany and France were down by between 0.23% to 0.81%.
Asian stocks fell for the sixth straight day as concern mounted that a US government plan to limit risk-taking at financial companies will reduce profits and derail a global economic recovery. Key benchmark indices in China, Taiwan, Hong Kong, South Korea, Japan, Singapore were down by between 0.38% and 1.09%.
US stocks tumbled in their worst three-day slide in 10 months on Friday, 22 January 2010, on fears the White House's plan to curb bank risk-taking would cut profits and a drop in tech shares after Google Inc's disappointing results.
The Dow Jones industrial average dropped 216.90 points, or 2.09%, to 10,172.98. The Standard & Poor's 500 Index slid 24.72 points, or 2.21%, to 1,091.76. The Nasdaq Composite Index fell 60.41 points, or 2.67%, to 2,205.29.
In the three day selloff, the Dow lost 5.1%, the S&P; lost 5.1% and the Nasdaq lost 5%.
Uncertainty about the Senate's confirmation of Ben Bernanke for another term as the Federal Reserve's chairman also rattled investors in a week when political squabbles helped erase stocks' gains for 2010.
Aside from worrying about how the Obama administration's proposals might hurt bank profits, investors also fretted about the likely impact of China's efforts to prevent the world's third-largest economy from overheating. Since China has led the nascent global economic recovery, any curbs it puts on lending threatens to slow demand that other economies, including the United States, had relied upon to spur their own growth.
Fears that China will get more aggressive in reducing the risk of asset bubbles sent investors bailing from China-focused stock funds for an 18th consecutive week, research firm EPFR Global said on Friday. Investors pulled $348 million from China equity funds in the week ended 20 January 2010, the biggest outflow in 18 weeks.
Though global emerging market equity funds attracted $748 million in fresh money in the week of Jan. 20, Asia ex-Japan equity funds took in only $29 million because of the China-related outflows. Net inflows to emerging market bond funds hit the highest in eight weeks and US bond funds extended a streak of inflows to 55 weeks.
Trading in US index futures showed the Dow could rise 55 points at the opening bell on Monday, 25 January 2010.
Back home, as per provisional figures on NSE, the foreign funds sold shares worth Rs 2415.49 crore and domestic funds bought shares worth Rs 1953.97 crore on Friday, 22 January 2010.
At 14:20 IST, the BSE 30-share Sensex was up 5.16 points or 0.03% to 16,864.84. The Sensex opened 11.98 points lower at 16,847.70. At the day's low of 16,705.56 the Sensex declined 154.12 points in mid-morning trade. Sensex rose 18.09 points at the day's high of 16,877.77 in mid-afternoon trade.
However the S&P; CNX Nifty was down 5.25 points or 0.10% to 5030.75. The Nifty crashed below the psychological 5,000 mark to hit a low of 4983.05 in opening trade.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1604 shares declined as compared with 1174 that rose. A total of 77 shares remained unchanged. Breadth was positive in morning session.
The total turnover on BSE amounted to Rs 3617 crore by 14:25 IST
Among the 30-member Sensex pack, 18 declined while the rest gained.
Hindustan Unilever (up 2.09%), Sun Pharmaceuticals (up 1.52%), and Grasim (up 0.48%), edged higher from the Sensex pack
ACC (down 1.14%), HDFC (down 0.60%), and DLF (down 2.12%), edged lower from the Sensex pack
Telecom shares saw divergent trend. India's largest cellular services provider by sales Bharti Airtel gained 2.26% to Rs 328.55 and was the top gainer from the Sensex pack. On consolidated basis, the company's net profit rose 13.2% to Rs 2236.90 crore on a 6.6% increase in total income to Rs 10327.57 crore in Q3 December 2009 over Q3 December 2008. The result was announced during trading hours on 22 January 2010.
However India's second largest cellular services provider by sales Reliance Communications lost 0.69%. The company will declare its Q3 December 2009 earnings on 30 January 2010.
Metal stocks declined, extending Friday's fall on profit booking. The fall came despite LMEX, a gauge of six metals traded on the London Metal Exchange, rising 0.25% on Friday, 22 January 2010.
Tata Steel (down 1.91%), Jindal Stainless (down 2.11%), Sail (down 3.23%), Sesa Goa (down 0.66%), and National Aluminum Company (down 3.77%), edged lower.
Sterlite Industries (down 0.77%), and Hindalco Industries (down 0.77%), declined ahead of their Q3 earnings today, 25 January 2010.
Index heavyweight Reliance Industries (RIL) fell 0.66% to Rs 1046.50. The company's net profit rose 15.77% to Rs 4008 crore on 89.77% surge in total income to Rs 57364 crore in Q3 December 2009 over Q3 December 2008. RIL said the results had been reworked and restated to include figures from Reliance Petroleum, which it absorbed last year. The company announced the Q3 result during market hours on 22 January 2010.
State-run oil marketing stocks declined on recent reports the Government has no plans to raise fuel prices as of now. HPCL (down 0.18%), BPCL (down 0.80%), and Indian Oil Corporation (down 0.78%), edged lower.
Fall in crude oil prices will result in lower realisation from crude sales for oil exploration firms. Crude oil for March 2010 delivery was at $74.51 a barrel, down 3 cents, in after-hours electronic trading on the New York Mercantile Exchange in Singapore.
Shares related to the infrastructure sector declined as investors continued to dump them on concerns of high valuation and poor financials. India's largest dam builder by sales Jaiprakash Associates slumped 2.54% to Rs 143.10 and was the top loser from the Sensex pack.
However India's largest engineering & construction firm by sales Larsen & Toubro (L&T;) rose 1.39% to Rs 1492.75, recovering from day's low of Rs 1456. The stock halted a two-day slide triggered after the company cut its revenue growth target to 10% from 15% at the time of announcing Q3 results on Thursday. L&T; said profit after tax from ordinary activities rose 15% to Rs 696 crore in Q3 December 2009 over Q3 December 2008. Gross sales revenue declined 6% to Rs 8139 crore.
Rate sensitive realty shares declined ahead of the RBI's quarterly monetary policy review meet on 29 January 2010. DLF (down 2.26%), Unitech (down 2.02%), HDIL (down 2.24%), Indiabulls Real Estate (down 3.09%), and Parsvnath Developers (down 1.32%), declined from the realty pack.
India's largest power generation firm by total capacity NTPC rose 0.45%. The company FPO remains open between 3 and 5 February 2010. The pricing has not yet been announced by the company. Speaking in an interview to a news agency, the company's chairman last week said he expects an upcoming sale of its shares by the government to raise up to Rs 12,000 crore.
India's largest private sector utility firm by sales Reliance Infrastructure (R-Infra) declined 0.23%. On Friday, the company announced winning an estimated Rs 11,000 crore project for Mumbai Metro Line II from the Maharashtra government.
Private sector banking shares declined as investors turned cautious on rate sensitive sstocks ahead of the Reserve Bank of India's monetary policy review meet on 29 January 2010.
India's second largest private sector bank by net profit HDFC Bank fell 1.81% following a 3.49% slide in its ADR on Friday. India's largest private sector bank by net profit ICICI Bank lost 0.79%.
However India's largest bank by net profit and branch network State Bank of India rose 0.74% ahead of its Q3 December 2009 results today.
Bargain hunting aided recovery in IT stocks. Earlier they had slipped following Google Inc's disappointing results and on fears the Obama administration's bank plan will crimp outsourcing demand.
India's largest IT exporter by sales Tata Consultancy Services fell 0.13% to Rs 754.15, off day's low of Rs 740.50.
India's second largest IT exporter by sales Infosys fell 1.13% to Rs 2544.10 after sliding to day's low of Rs 2517.10.
India's third largest software services exporter Wipro lost 0.66% to Rs 659.30 staging a rebound from low of Rs 685 in early trade.
India's top small car maker by sales Maruti Suzuki India gained 0.88%. The company reported higher than expected earnings in the third quarter. Its net profit surged 221.92% to Rs 687.53 crore on a 62.50% rise in sales to Rs 7372.65 crore in Q3 December 2009 over Q3 December 2008. The result was announced on Saturday, 23 January 2010.
India's largest tractor maker by sales Mahindra and Mahindra (down 0.22%), and Hero Honda Motors (down 0.86%), edged lower ahead of their Q3 December 2009 results today.
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