The key benchmark indices extended initial gains in morning trade, with the barometer index BSE Sensex registering a fresh seven-week high, tracking mostly higher Asian stocks. The 50-unit S&P; CNX Nifty scaled 1-1/2-month high. Index heavyweight Relaiance Industries (RIL) extended initial gains. Bank and capital goods stocks edged higher. Except the BSE IT index, all the other sectoral indices on BSE were in green. The market breadth was strong. The BSE 30-share Sensex was up 118.51 points or 0.58%, off close to 10 points from the day's high and up close to 95 points from the day's low. The BSE Mid-Cap and Small-Cap indices outperformed Sensex.
The market edged higher in early trade, tracking higher Asian stocks. Stocks extended gains in morning trade.
Foreign funds bought shares worth a massive Rs 2186.44 crore on Thursday, 30 December 2010, as per the provisional data from the stock exchanges. Domestic funds sold shares worth Rs 848.29 crore on that day.
Foreign funds have sold shares worth a net Rs 1172.87 crore this month, as per the data from the stock exchanges. Domestic funds have sold shares worth a net Rs 360.12 crore this month, as per data from the stock exchanges.
Asian stocks rose on Friday, 31 December 2010, on positive economic data in the US, the world's biggest economy. The key benchmark indices in China, Hong Kong and Taiwan rose by between 0.2% to 0.8%. Singapore's Straits Times fell 0.7%. Stock markets in Japan and South Korea were closed.
Taiwan's central bank raised its policy rate on Thursday by 12.5 basis points to 1.625%, as expected.
US stocks closed slightly lower on Thursday, 30 December 2010, as better-than-expected economic data wasn't enough to entice buyers to take on much risk in a market sitting on strong gains just before the new year.
Upbeat US data on the jobs market and manufacturing sector on Thursday buttressed the view the economy gained momentum as the year ended, setting the stage for a stronger performance in 2011. New applications for unemployment benefits dropped 34,000 last week to 388,000, the lowest level since July 2008, while factory activity in the Midwest expanded in December at its fastest pace in more than 22 years.
Trading in US index futures indicated a flat opening of US stocks on Friday, 31 December 2010.
Back home, the Reserve Bank of India on Thursday warned that sudden reversal of overseas portfolio investments that have been flooding in this year could create problems for the economy. A potentially worrying feature of capital flows to India has been the dominance of portfolio flows which are prone to sudden stops and reversals, the RBI said in a report on assessment of the health of financial sector.
The second financial stability report by the central bank also warned that at present, stressed liquidity conditions warrant caution and a watchful management in the coming months. With both financial and real sectors still under stress in advanced economies, the report said, India will have to guard against vulnerabilities arising from risks to global growth and financial stability.
The report said that the other soft spots in the financial sector include widening current account deficit, deteriorating external sector ratios and tight liquidity position, in addition to inflationary pressures. The report also said that recent concerns regarding microfinance institutions (MFIs) warrant closer examination.
Inflation in the food articles group climbed to 14.44% in the week ended 18 December 2010 from 12.13% in the previous week, the latest government data showed. This was the fourth instance of an increase in food inflation after easing for seven consecutive weeks. Inflation in the Primary Articles group jumped to 17.24% in the week under review from 15.35% in the week ended 11 December 2010, the latest data showed. Inflation in the Fuel & Power group inched higher to 11.63% in the week ended 18 December from 10.74% in the week ended 11 December.
The output of six key infrastructure sectors grew 2.3% in November 2010 from a year ago, the slowest pace in the last 21 months, raising the prospects of a drop in industrial growth for the month. The six core industries -- crude oil, petroleum refining, coal, electricity, cement and finished steel, have a combined weight of 26.7% in the index of industrial production and are considered an advance indicator of industrial activity. These sectors had grown an upwardly revised 8.6% in October 2010.
The Reserve Bank of India (RBI) announced measures to ease liquidity crunch in the banking system while keeping the key policy rates unchanged at a mid-quarter policyreview on 16 December 2010. The RBI said the underlying growth momentum of the Indian economy remains strong. Even as inflation has moderated, it remains significantly above the comfort level of the RBI, the RBI said in a statement. Moreover, risks to inflation remain on the upside, both from domestic demand and higher global commodity prices, the RBI said. There is, therefore, a need for continued vigilance on the inflation front against the build-up of demand side pressures. The RBI had earlier projected 5.5% inflation by March 2011.
A major challenge for the RBI in the recent period has been liquidity management. It is the RBI's endeavor to alleviate the liquidity pressure in a manner consistent with the monetary policy stance of containing inflation and anchoring inflationary expectations, the RBI said.
Meanwhile, the combined advance tax payment by top 100 corporate taxpayers rose 18.7% to Rs 27,531 crore in Q3 December 2010 over Q3 December 2009, indicating better corporate performance in the third quarter this year. Advance tax is paid in four installments in June, September, December and March and is based on taxpayers' projected earnings, thus giving an indication of industry's performance in the months to come.
At 10:20 IST, the BSE 30-share Sensex was up 118.51 points or 0.58% to 20,507.58. The Sensex rose 130.78 points at the day's high of 20,519.85 in morning trade, its highest level since 12 November 2010. The index gained 23.69 points at the day's low of 20,412.76 in early trade.
The S&P; CNX Nifty was up 26.35 points or 0.43% to 6,128.20. The Nifty hit high of 6,138.15 in morning trade, its highest since 16 November 2010.
The BSE Mid-Cap index rose 1% and the BSE Small-Cap index advanced 1.17%. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1771 shares rose while 523 shares declined. A total of 57 shares remained unchanged.
Among the 30-member Sensex pack, 26 rose while the rest declined. Jaiprakash Associates, Reliance Communications and Reliance Infrastructure rose by between 1.9% to 2.92%. Sterlite Industries, NTPC and Hero Honda Motors fell by between 0.42% to 0.53%.
Index heavyweight Reliance Industries (RIL) rose 0.58%, with the stock gaining for the third straight day. RIL's advance tax payment reportedly surged 42.8% to Rs 1191 crore in Q3 December 2010 over Q3 December 2009.
India's largest engineering and construction firm by sales Larsen & Toubro rose 0.75%, with the stock gaining for the second straight day after company announced during market hours on Thursday that it has bagged orders worth Rs 1164 crore from metallurgical and water sectors.
Among other capital goods stocks, ABB, Bhel, Thermax and BEML rose by between 0.44% to 1.23%.
Bank stocks rose as some prominent banks paid higher advance tax in the third quarter, indicating good Q3 December 2010 result. India's largest commercial bank in terms of branch network State Bank of India (SBI) gained 0.7% after the bank said on Thursday its board approved raising Rs 10000 crore via Tier II bonds. The bank's advance tax rose 4.8% to Rs 1850 crore in Q3 December 2010 over Q3 December 2009.
India's second largest private sector bank by market capitalization HDFC Bank gained 0.47%.
India's largest private sector bank by market capitalisation ICICI Bank rose 0.46%, with the stock gaining for the third straight day. The private sector bank's advance tax payment reportedly surged 49.5% to Rs 450 crore in Q3 December 2010 over Q3 December 2009.
Sun Pharmaceutical Industries rose 1.05% after the company received a tentative approval from the US drug regulator for a generic version of Roche's Boniva.
JSW Energy gained 2.58% after the company said it successfully commissioned second unit of 300 megawatt of the 1200 megawatt power project at Jaigad in Ratnagiri, Maharashtra.
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