Banking, automobile and realty stocks helped market regain strength amid a bout of volatility in mid-afternoon trade. Index heavyweight Reliance Industries (RIL) held firm. Barring the BSE IT index, all the other sectoral indices on BSE were in positive zone. The barometer index BSE Sensex and the 50-unit S&P; CNX Nifty today, 31 December 2010, scaled 7-week highs. Sugar stocks declined.
The market breadth was strong. Mid and small-cap indices on BSE outperformed the Sensex. The BSE 30-share Sensex was up 111.87 points or 0.55%, off close to 50 points from the day's high and up close to 90 points from the day's low.
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. The market pared gains in afternoon trade after hitting a fresh intraday high. Banking, automobile and realty stocks helped market regain strength amid a bout of volatility in mid-afternoon trade.
The fiscal deficit from April to November was Rs 186000 crore ($41.6 billion), or 48.9% of the full-year target, the government said in a statement on Friday. In February 2010, the government had forecast a fiscal deficit of Rs 381000 crore, or 5.5% of gross domestic product, for the current financial year.
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.
European bourses opened mixed on the last session of the year. France's CAC 40 declined 0.39% and UK's FTSE 100 rose 0.1%. German markets were closed ahead of New Year celebrations. London and the rest of European markets will close around midday.
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 1.76%. Singapore's Straits Times fell 0.70%. 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 5 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 policy review 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 14:20 IST, the BSE 30-share Sensex was up 111.87 points or 0.55% to 20,500.94. The Sensex rose 162.96 points at the day's high of 20,552.03 in 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 28.95 points or 0.47% to 6,130.80. The Nifty hit high of 6,147.30 in afternoon trade, its highest level since 12 November 2010.
The BSE Mid-Cap index rose 0.97% and the BSE Small-Cap index advanced 1.16%. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,951 shares rose while 930 shares declined. A total of 100 shares remained unchanged.
Among the 30-member Sensex pack, 20 rose while the rest declined. Reliace Communications, Jaiprakash Associates and Reliance Infrastructure rose by between 3.01% to 3.84%.
Index heavyweight Reliance Industries (RIL) rose 0.99%, 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.
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, M&M;, Hero Honda Motors and Tata Motors rose by 0.4% to 3.05%.
Bank stocks rose as some prominent banks paid higher advance tax in the third quarter, indicating good Q3 December 2010 result. India's second largest private sector bank by market capitalization HDFC Bank gained 2.2%.
India's largest commercial bank in terms of branch network State Bank of India (SBI) gained 1.35%. State Bank of India is planning to mop up Rs 10000 crore in various tranches in the remaining period of the current fiscal year that ends in March 2011 and the next fiscal year that will end in March 2012 through public issue of subordinated bonds (lower tier-II bonds).
The first tranche of the new public issue of bonds will have a core issue size of Rs 1000 crore with an option to retain oversubscription up to Rs 1000 crore. Besides, the bank will also have the option to retain any amount of oversubscription under the retail category beyond Rs 2000 crore but up to the rated amount of Rs 10000 crore.
SBI's advance tax rose 4.8% to Rs 1850 crore in Q3 December 2010 over Q3 December 2009.
India's largest private sector bank by market capitalisation ICICI Bank rose 0.17%, 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.
Realty stocks edged higher for the second day in a row. Anant Raj Industries, DLF, HDIL and Indiabulls Real Estate rose by between 0.19% to 3.28%.
Sugar stocks fell on reports the government will slap 60% import duty on sugar from 1 January 2011. Bajaj Hindutha, Balrampur Chini and Shree Renuka Sugars declined by between 1.26% to 1.6%.
The government had dropped 60% import duty on sugar in early 2009 to overcome an acute domestic supply shortage, triggered by the worst drought in four decades. The duty free notification lapses on 31 December 2010.
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