The key benchmark indices extended gains in early afternoon trade, with the BSE Sensex hitting a fresh seven-week high and the 50-unit S&P; CNX Nifty registering 1-1/2-month high on mostly higher Asian markets. US index futures also edged higher. Index heavyweight Reliance Industries (RIL) extended initial gains. FMCG, auto and cement stocks edged higher. Reliance Communications surged more than 4%.
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 131.77 points or 0.55%, off close to 20 points from the day's high and up close to 105 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. The Sensex extended gains in morning trade. The market pared gains later. The market regained strength in mid-morning trade. The market extended gains in early afternoon 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 0.16% to 1.42%. Singapore's Straits Times fell 0.7%. Stock markets in Japan, Indonesia 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 that the Dow could gain 10 points at the opening bell 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 12:20 IST, the BSE 30-share Sensex was up 131.77 points or 0.55% to 20,520.84. The Sensex rose 148.71 points at the day's high of 20,537.78 in early afternoon 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 35.15 points or 0.58% to 6,137. The Nifty hit high of 6,143.95 in early afternoon trade, its highest since 16 November 2010.
The BSE Mid-Cap index rose 1.05% and the BSE Small-Cap index advanced 1.25%. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,900 shares rose while 828 shares declined. A total of 93 shares remained unchanged.
Among the 30-member Sensex pack, 24 rose while the rest declined.
Index heavyweight Reliance Industries (RIL) rose 1.19%, 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.
Telecom stocks were mixed. Reliance Communications jumped 4.05% on reports the company can restart providing video calls in the new year as part of its 3G services. The stock was the top gainer from the Sensex pack. Idea Cellular rose 1.61%. Bharti Airtel fell 0.27%.
FMCG stocks extended recent gains. Nestle India, Hindustan Unilever, ITC, United Spirits and Nestle India rose by between 0.2% to 1.73%.
Auto stocks edged higher ahead of the release of the monthly sales data for December 2010 starting from 1 January 2011. Bajaj Auto, Ashok Leyland, Maruti Suzuki India, M&M;, Hero Honda Motors and Tata Motors rose by 0.54% to 3.27%.
Cement stocks gained ahead of the release of monthly cement sales data for December 2010 from 1 January 2011. ACC, UltraTech Cement and Jaiprakash Associates rose by between 0.68% to 3.31%.
Sujana Towers was locked at 5% upper limit after the company fixed 11 January 2011 as the record date for a 5-for-1 stock split.
RPP Infra Projects rose 1.65%, after the company said it plans to set up a five megawatt solar power plant at Kamudhi in Ramanathapuram district in Tamil Nadu, with a total investment of Rs 80 crore.
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