Key benchmark indices pared gains in mid-morning trade as index heavyweight Reliance Industries, telecom services major Bharti Airtel and FMCG giant Hindustan Unilever (HUL) dropped. Though HUL dropped, many other FMCG stocks rose, extending their recent gains triggered by expectations that a strong monsoon will boost demand from rural areas and also reduce input prices. Construction stocks also rose on renewed buying. The BSE Sensex was up 53.44 points or 0.28%, off close to 132 points from the day's high and up close to 11 points from the day's low.
The market extended its winning streak into the seventh day, with data showing heavy buying by foreign funds on Thursday, 30 June 2011, and firm Asian stocks boosting sentiment. Foreign institutional investors (FIIs) bought shares worth a massive Rs 1591.34 crore on Thursday, 30 June 2011, as per the provisional data released by the stock exchanges. FII inflow totaled Rs 2662.74 crore in June 2011, as per the data from the stock exchanges.
The barometer index BSE Sensex pared gains after a firm start took it to 8-1/2-week high above the psychological 19,000 level. The market came off lows later. The market pared gains in mid-morning trade as index heavyweight Reliance Industries (RIL) declined.
At 11:16 IST, the BSE Sensex was up 53.44 points or 0.28% to 18,899.31. The index rose 42.04 points at the day's low of 18,887.91 in early trade. The Sensex jumped 185.51 points at the day's high of 19,031.38 in early trade, its highest level since 2 May 2011.
The S&P; CNX Nifty was up 8.75 points or 0.15% to 5,656.15. The Nifty hit high of 5,705.80 in intraday trade, its highest level since 3 May 2011.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,682 shares advanced while 742 shares declined. A total of 89 shares remained unchanged.
Among the 30-member Sensex pack, 20 stocks rose while the rest of them fell.
Hindalco Industries (up 3.04%), Reliance Communications (up 2.61%), Sterlite Industries (up 1.70%), Infosys (up 1.58%) and Reliance Infrastructures (up 1.46%), edged higher from the Sensex pack.
Real estate developer DLF rose 3.02% to Rs 216.90 on reports the company plans to sell its shareholding in two IT special economic zones in Pune and Noida for Rs 1300 crore.
Oil and Natural Gas Corporation (ONGC) rose 1.83% to Rs 278.95 as the firm's earnings will get a boost if Cairn Energy and Vedanta Resources accept the conditions set by the government for the Cairn India deal. The Cabinet Committee on Economic Affairs (CCEA) on Thursday, 30 June 2011, granted conditional approval to Vedanta Resources' plan to buy British oil explorer Cairn Energy's Indian assets. CCEA approved the deal subject to the condition that Cairn India has to equally and retroactively share royalty payments with Oil and Natural Gas Corporation (ONGC) on crude-oil production from its main oil-producing block in Rajasthan, reports suggest.
ONGC, which holds a 30% stake in the block, currently pays the entire royalty under rules that had been meant to attract foreign investment in the oil-and-gas sector. Cairn India with the remaining 70% stake is the operator of the block.
Bharti Airtel (down 2.40%), Hindustan Unilever (down 1.53), Cipla (down 0.83%), Mahindra & Mahindra (down 0.54%) and Tata Steel (down 0.34%), edged lower in the Sensex pack.
India's largest car maker by sales Maruti Suzuki fell 1.77% after its total sales declined 8.8% to 80,298 units in June 2011 over June 2010. The company said production was adversely impacted due labour strike at Manesar plant in June 2011. There was no production for 10.5 days due to the strike. Another reason for lower production was planned shutdown at its units.
Index heavyweight Reliance Industries (RIL) fell 0.93% to Rs 889.25, off the day's high of Rs 906. RIL's advance tax payment reportedly jumped 38.46% to Rs 900 crore in Q1 June 2011 over Q1 June 2010. Higher advance tax payment normally indicates higher profit for the period under review.
The RIL stock had witnessed a sell-off recently following reports a government watchdog has accused the Oil Ministry for favouring RIL by allowing it to double the development cost of its KG-D6 gas field. The stock had hit a 52-week low of Rs 829 in intraday trade on 20 June 2011. As per recent reports, a draft report of the Comptroller and Auditor General of India (CAG) has questioned the decision of the oil ministry and its technical arm, the Director General of Hydrocarbons (DGH), to allow RIL to raise the development cost of RIL's KG-D6 field.
RIL had clarified that it has fully complied with the requirements in its production-sharing contract at all times in conducting petroleum operations.
FMCG stocks rose, extending their recent gains triggered by expectations that a strong monsoon will boost demand from rural areas and also reduce input prices. Nestle India, Dabur India, Britannia Industries, Colgate-Palmolive India, Tata Global Beverages, Godrej Consumer Products, United Breweries, Marico, Ruchi Soya Industries and United Spirits rose by 0.33% to 4.96%. But, FMCG giant Hindustan Unilever was down 1.53% on profit taking.
Cigarette maker ITC rose 0.99% to Rs 204.45. The stock came off from the day's high of Rs 205.50, which is also a record high for the counter.
Construction shares rose on fresh buying. C & C Constructions, NCC, Pratibha Industries, IVRCL Infra, Unity Infraprojects, Gammon India, Hindustan Construction Company, PBA Infrastructure, Valecha Engineering, Simplex Infrastructures and Era Infra Engineering rose by 0.03% to 7.13%.
The market soon enters the crucial period of corporate earnings. Investors will closely watch the post-Q1 June 2011 result management commentary to gauge the future earnings outlook at a time when firms are witnessing costs pressures amid rising interest rates and staff costs. A hike in transportation costs will add to cost pressure of India Inc. As per reports, freight rates have gone up by 8% to 9% on all routes across India following the latest hike in diesel prices.
Housing finance major HDFC unveils Q1 June 2011 results on Friday, 8 July 2011. IT bellwether Infosys Technologies will unveil Q1 results on 12 July 2011.
The manufacturing sector lost steam last month with marked declines in output indicating taut monetary conditions may be taking hold even as prices remained at elevated levels, a survey showed on Friday, 1 July 2011. The HSBC Markit Purchasing Managers' Index, based on a survey of around 500 companies, showed a sharp fall to 55.3 in June from 57.5 in May, its lowest level since September last year and the steepest monthly fall since November 2008.
The India Meteorological Department (IMD) on Thursday, 30 June 2011, said widespread rainfall is expected over Uttar Pradesh, the largest sugarcane growing state, in the next three to five days. The IMD said a slight increase in rainfall activity is also expected in the southern regions, while scattered rains are likely over central parts. Rainfall from the start of the monsoon season until 30 June 2011 was 182 millimeters, 11% above the long-term average.
According to reports, there could be a lull in the rains in the first week of July 2011 and that may continue until mid-July 2011. Rainfall in the month of July is considered crucial as sowing of a number of crops starts in June and good July rains determine the soil moisture and ensure proper development of the crops planted in June.
Asian stocks rose on Friday on optimism Greece will avoid default after Greece's austerity program cleared the final hurdle in parliament on Thursday, 30 June 2011. The key benchmark indices in China, Japan, Indonesia, South Korea, Singapore and Taiwan were up by between 0.28% to 1.31%. Stock markets in Hong Kong and Thailand were closed for a holiday.
Two surveys showed that China's manufacturing activity slowed more than expected in June 2011
Trading in US index futures indicated a slightly weaker opening of US stocks on Friday, 1 July 2011. Data out Thursday showed the Chicago PMI rose to 61.1%, up from 56.6%, well above economists' forecasts. US markets are closed on Monday, 4 July 2011, for Independence Day holiday.
The UK and continental Europe are also due to release manufacturing data later in the global day.
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