Market snaps six-day losing streak on higher global stocks

The key benchmark indices closed with small gains in what was a choppy trading session, halting last six days' steep losses. Firm global stocks supported domestic bourses. Volatility was the order of the day as traders rolled over positions in the derivatives segment ahead of the expiry of the near-month January 2010 futures & options contracts today, 28 January 2010. The BSE 30-share Sensex rose 17.05 points or 0.1%, off close to 220 points from the day's high and up close to 125 points from the day's low. Capital goods stocks fell. But, healthcare, banking, realty and metal stocks rose. The market breadth was weak.

The key benchmarks moved in an erratic manner. The market pared gains after a firm start triggered by higher Asian stocks. The market regained strength in morning trade. The market pared gains again in mid-morning trade after hitting fresh intraday high in morning trade. The market further trimmed gains in early afternoon trade after the government released the weekly inflation data. The market recovered from lower level in afternoon trade. The market moved between positive and negative zone for a while. Volatility surged in mid-afternoon trade.

India VIX, a volatility index based on the S&P CNX Nifty index option prices, declined after a steep rise on Wednesday. It declined 6.78% to 26.96. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days

The US Federal Reserve on Wednesday, 27 January 2010, said conditions in the world's largest economy are showing signs of improvement. The Fed said it intended to end some emergency lending and asset-buying programs while sounding more upbeat on the economy overall. The Fed also left its benchmark interest rate in a range between zero and 0.25% and renewed its pledge to keep the rate near zero to promote economic recovery.

World stocks rose after US President Obama moderated his tone on bank restrictions. In his annual State of the Union address on Wednesday, Obama pledged to slap tough new regulation on Wall Street but said he was "not interested in punishing banks." Obama said he would continue financial reform to fight against excessive speculation and also vowed he would veto any finance bill that does not contain "real reform." Investors will now pay attention to Treasury Secretary Timothy Geithner's speech in Minnesota later in the global day for fresh cues about bank regulation plans. The US earlier this month proposed plans that would limit banks' risk-taking capability.

Obama pledged to double exports in five years to help create jobs, prompting some market players to think the US government may seek a weak dollar to promote exports

Meanwhile, the Fed and other major central banks around the world on Wednesday decided to end emergency dollar lending operations on 1 February 2010 due to improvement in financial markets. The decision marks the first unified retraction by central banks around the world of extraordinary support measures to boost lending after credit markets seized up in late 2007, causing the global economic downturn.

The Fed announced in December 2007 that it had authorized so-called liquidity swap lines with the European Central Bank and the Swiss National Bank. The agreement was extended to include several other central banks in April 2009. Under the arrangements, central banks around the world provided each other with foreign currency - the Fed made US dollar liquidity available elsewhere, with the ECB providing euros and the Bank of England providing sterling. The agreements added up to hundreds of billions of dollars.

The aim was to improve liquidity conditions in US and foreign financial markets after banks became nervous of lending to each other amid concerns about the state of balance sheets across the industry.

Equities worldwide fell sharply over the past few days following reports China has directed banks to pull back lending activity in a bid to stave off overheating in its economy. China's economy grew by 10.7% in the fourth quarter. Weak global cues and sustained selling spree by foreign investors had weighed on the domestic bourses in recent trading sessions. From a high of 17,641.08 on 18 January 2010, the Sensex had lost 1,351.26 points or 7.65% to 16,289.82 on Wednesday, 27 January 2010.

In the derivatives segment, rollover of Nifty futures from January 2010 series to February 2010 series was about 60% and for Mini Nifty futures it was about 64% at the end of Wednesday's trading. Among individual stocks, higher rollover has been seen in stocks like Idea Cellular, Hindustan Unilever, Bhel, Tata Steel, and Mahindra & Mahindra. Stocks where rollover is low include Sun Pharma, Andhra Bank, ONGC, Bajaj Hindustan and Orchid Chemicals.

On the macro front, the government said today that food price index rose 17.40 % in the year to 16 January 2010 slightly higher than previous week's rise of 16.81%. Fuel price index rose 5.70% while primary articles price index rose 14.66% in the year to 16 January 2010 .

The Reserve Bank of India need not take monetary measures to contain food inflation, farm minister Sharad Pawar said on Wednesday. Pawar also said the wholesale sugar prices have already come down and retail prices may also follow suit soon.

Market men expect a 50 basis point increase in the cash reserve ratio (CRR), or the proportion of deposits banks must keep with the Reserve Bank at the Reserve Bank of India (RBI)'s quarterly monetary policy review scheduled to be announced on Friday, 29 January 2010. Statements from the central bank in its macro-economic review would be watched as it will provide final clues on the policy outlook.

Inflation has surged, primarily driven by a sharp rise in food prices after a weak monsoon. Signs of economic recovery are also evident in strong GDP and industrial output data. The RBI says the rise in inflation driven by food prices is a supply-side issue that monetary policy cannot address. Still, it is worried about inflation pressures spilling over to the broader economy, and will watch for signs of demand-side price pressures in indicators such as asset prices, credit growth, and manufacturing prices.

The widely watched wholesale price index rose in December by 7.3% over a year earlier, its fastest pace since November 2008 and jumping from 4.8% in November 2009. 16.81%

European equities gained on Thursday, bouncing back from a sharp one-week slide after Obama moderated his tone on bank restrictions in the State of the Union speech. The key benchmark indices in France, Germany and UK were up by between 0.44% to 0.55%.

Asian stocks gained on Thursday after Federal Reserve left interest rates unchanged at record low. The key benchmark indices in Hong Kong, Japan, Indonesia, South Korea, Singapore and Taiwan rose by between 1.04% to 1.9%.

However, the upside in Chinese stocks was capped by lingering concerns over credit tightening. The Shanghai Composite index rose 0.25%.

US index futures cut most of its initial gains. Trading in US index futures indicated Dow could gain 5 points at the opening bell on Thursday, 28 January 2010.

US stocks eked out gains led by tech stocks and financials on Wednesday, which rebounded amid relief that the Fed's statement offered no surprises. Stocks had languished for much of the day amid some disappointing earnings outlooks and an unexpected drop in home sales but recovered in late trade. Annualized new home sales for December declined 7.6% against expectations of 3% rise. The Dow Jones Industrial Average added 41.87 points, or 0.4%, to 10,236.16. The Standard & Poor's 500 index gained 5.33 points, or 0.5%, to 1,097.50, while the Nasdaq Composite Index added 17.68 points, or 0.8%, to 2,221.41.

Closer home, the BSE 30-share Sensex rose 17.05 points or 0.1% to 16,306.87. It shed 107.68 at the day's low of 16,182.14 in afternoon trade. The Sensex rose 234.87 points at the day's high of 16524.69 in morning trade.

The S&P CNX Nifty rose 14.15 points or 0.29% to 4867.25.

BSE clocked a turnover of Rs 4989 crore, lower than Rs 5782.95 crore on Wednesday, 27 January 2010.

The market breadth, indicating the overall health of the market, was weak. That was in complete contrast to a strong breadth earlier in the day. On BSE, 1117 shares advanced as compared with 1727 that fell. A total of 53 shares remained unchanged.

Among the 30 share Sensex pack, 12 rose and rest declined.

The BSE Mid-Cap index rose 0.24% and outperformed the Sensex. The BSE Small-Cap index fell 0.17% and underperformed the Sensex.

Most of the sectoral indices on BSE rose. BSE Realty index (up 1.62%), BSE Healthcare index (up 1.32%), BSE Metal index (up 1.03%), banking sector index Bankex (up 0.83%), BSE Power index (up 0.83%), BSE Oil & Gas index (up 0.49%), BSE IT index (up 0.48%), BSE Auto index (up 0.43%), BSE PSU index (up 0.31%), and BSE Consumer Durables index (up 0.16%), outperformed the Sensex. BSE FMCG index (down 0.24%) and BSE Capital Goods index (down 0.31%), underperformed the Sensex.

Index heavyweight Reliance Industries (RIL) rose 1.13% to Rs 1037.40. The stock was volatile. It hit a high of Rs 1046 and a low of Rs 1025.10. 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.

India's largest engineering and construction firm by sales Larsen & Toubro fell 1.97%. The government is reportedly considering selling its stakes in the firm in tranches to state-run financial institutions.

India's largest power equipment maker by sales Bharat Heavy Electricals fell 0.4%. Bharat Heavy Electricals said on Wednesday it would sign an agreement with the Madhya Pradesh state utility to jointly set up a 1,600 megawatts thermal power plant in the central Indian state.

Among other capital goods stocks, Areva T&D, BEML and Praj Industries fell by between 0.67% to 5.67%.

Metal stocks rose on bargain hunting after recent sharp fall. India's largest private sector steel maker by sales Tata Steel rose 4.81% as net profit surged 155.6% to Rs 1191.75 crore in Q3 December 2009 over Q3 December 2008. The company announced the result during market hours today. Tata Steel will report consolidated third-quarter results, to include the Corus numbers, next month. The Indian operations account for a quarter of the group's annual global capacity of about 30 million tonnes.

Jindal Saw, JSW Steel, Jindal Steel & Power rose by between 0.72% to 2.89%.

Steel Authority of India (Sail) rose 1.69%. Sail on Wednesday reported a 99% jump in its net profit at Rs 1,675.55 crore in Q3 December 2009 over Q3 December 2008.

But, India's largest non-ferrous metal firm by capacity Sterlite Industries India fell 0.88%. The company's net profit slumped 77.16% to Rs 46.59 crore on a 39.83% increase in sales to Rs 3611.99 crore in Q3 December 2009 over Q3 December 2008. The stock had lost 4.04% on Wednesday.

India's largest private sector aluminum maker by sales Hindalco Industries fell 1.37%. The company's net profit fell 21.60% to Rs 427.10 crore on a 29.56% increase in sales to Rs 5286.10 crore in Q3 December 2009 over Q3 December 2008.

National Aluminium Company lost 6.09% after net profit declined 29.3% to Rs 155.18 crore in Q3 December 2009 over Q3 December 2008.

Rate sensitive realty shares gained on bargain hunting. Unitech, Ackruti City, Housing Development & Infrastructure, Sobha Developers rose by between 2.01% to 4.17%.

India's largest realty player by sales DLF rose 2.37%. The company's net profit rose 26.04% to Rs 224.43 crore on 109.03% rise in sales to Rs 887.16 crore in Q3 December 2009 over Q3 December 2008. The company announced the Q3 result after market hours on Wednesday.

Rate sensitive banking shares fell ahead of RBI's monetary policy review on Friday, 29 January 2010. India's second largest private sector bank by net profit HDFC Bank fell 0.12% as its ADR fell 4% on Wednesday. But, India's largest private sector bank by net profit ICICI Bank fell 0.2%. Its ADR fell 0.75% on Wednesday.

India's largest bank by net profit and branch network State Bank of India rose 0.82%. The bank's net profit remained flat in the third quarter ended December 2009 to Rs 2,479 crore against Rs 2,478 crore in the year-ago period. Net interest income increased by 9.69% in the quarter under review compared with the same period in the previous fiscal. However, net interest margin declined to 2.82% from 3.10%.

Banks' outstanding loans fell by Rs 11,900 crore in the two weeks to 15 January 2010 because companies repaid some loans as is typical at the beginning of a quarter, the central bank's data showed on Wednesday. The Reserve Bank of India data showed loans fell to Rs 30,08,000 crore in the two weeks to 15 January 2010 and deposits fell by around Rs 22,000 crore to Rs 42,43,000 crore. In the two weeks to 1 January 2010, outstanding loans rose by a massive Rs 78,192 crore and deposits also went up by Rs 82,769 crore.

IT stocks reversed early gains on fears the Obama administration's bank reform plan will crimp outsourcing demand. India's largest IT exporter by sales Tata Consultancy Services fell 0.42%. India's second largest IT exporter by sales Infosys fell 0.16%. Its ADR rose 0.68% on Wednesday. But, India's third largest software services exporter Wipro rose 2.82%. Wipro said on Wednesday it signed a multi-year outsourcing deal with British American Tobacco Plc, the world's second-biggest cigarette maker. Its ADR fell 3.03% on Wednesday.

Healthcare stocks rose after healthcare firms reported good Q3 result. Pfizer, Dr Reddy's Laboratories, Biocon, Sun Pharmaceutical Industries, Ranbaxy Laboratories rose by between 0.33% to 4.54%. Cipla rose 1.8% ahead of its Q3 result today.

Shares of India's largest cigarette maker by sales ITC fell 0.53%. The government is reportedly considering selling its stakes in consumer goods maker ITC in tranches to state-run financial institutions. The company posted 26.67% rise in net profit to Rs 1144.17 crore in Q3 December 2009 over Q3 December 2008. The company announced Q3 result during market hours on 22 January 2010.

India's largest FMCG major by sales Hindustan Unilever fell 1.48%. The company's net profit rose 5.4% to Rs 649 crore in Q3 December 2009 over Q3 December 2008.

Among other FMCG stocks, Tata Tea, Godrej Consumer and United Breweries fell by between 1.15% to 3.44%.

Stocks from interest rate sensitive auto sector were mixed. Auto stocks underwent profit booking in the past few days after auto major Mahindra & Mahindra's earnings fell short of street expectations.

India's largest tractor maker by sales Mahindra and Mahindra (M&M) rose 1.09%. The stock had slumped 5.64% on Wednesday after Monday's over 5% slide

M&M's net profit surged 849% to Rs 413.70 crore on a 56.32% rise in sales to Rs 4478.70 crore in Q3 December 2009 over Q3 December 2008. The result was announced during trading hours on Monday, 25 January 2010. Meanwhile, the company on Monday also approved a 2-for-1 stock split.

India's top small car maker by sales Maruti Suzuki India rose 1.25%. But, India's top truck marker by sales Tata Motors fell 0.1% ahead of its Q3 December 2009 earnings on Saturday, 29 January 2010. The stock had lost 6.8% on Wednesday.

India's largest motorbike maker by sales Hero Honda Motors fell 0.76% extending Wednesday's 4.24% decline. After market hours on 25 January 2010, the company reported a 78.34% rise in net profit to Rs 535.77 crore on a 32.72% rise in sales to Rs 3814.42 crore in Q3 December 2009 over Q3 December 2008.

Cals Refineries clocked the highest volume of 2.18 crore shares on BSE. Unitech (0.84 crore shares), Ispat Industries (0.84 crore shares), Suzlon Energy (0.7 crore shares) and Rashtriya Chemicals & Fertilisers (0.65 crore shares) were the other volume toppers in that order.

Aban Offshore clocked the highest turnover of Rs 273.57 crore on BSE. Tata Steel (Rs 202.34 crore), State Bank of India (Rs 140.63 crore), Jai Corp (Rs 128.33 crore) and ICICI Bank (Rs 123.86 crore) were the other turnover toppers in that order.