Market snaps three-day winning streak

The key benchmark indices edged lower, snapping a three-day winning streak, as weak global stocks marred investor sentiment. Nonetheless, the market ended off the day's low, mimicking a recovery in many Asian stocks from an intraday steep slide. Reports that monsoon has revived after being stalled by a cyclone last week, also aided intraday recovery on the domestic bourses. Index heavyweight Reliance Industries (RIL) cut losses. Some auto stocks also pared losses. The BSE 30-share Sensex fell 336.62 points or 1.97%, up about 95 points from the day's low.

All the sectoral indices on the BSE were in the red. Both Mid and Small-Cap indices on BSE outperformed the Sensex.



Strong macro economic data, good Q4 March 2010 results of India Inc and recovery in global stocks had triggered a solid rebound on the domestic bourses recently. The Sensex jumped 1,095.21 points or 6.83% in 8 trading sessions to settle at 17,117.69 on Friday, 4 June 2010, from recent low of 16,022.48 on 25 May 2010.

The Sensex has lost 1,188.95 points or 6.6% from a recent peak of 17,970.02 on 7 April 2010. It has lost 3.9% in calendar 2010 so far after jumping 81% in 2009.

Euro zone debt worries caused massive outflow of foreign funds from India recently as investors shunned risk. Foreign funds sold shares worth a net Rs 185.86 crore in the first four trading sessions this month, as per data from the stock exchanges. Foreign institutional investors (FIIs) had dumped shares worth a net Rs 12071.14 crore in May 2010.

Domestic funds have absorbed part of the selling by FIIs. Domestic bought stocks worth a net Rs 328.17 crore in the first four days this month. Domestic funds bought stocks worth a net Rs 6361.17 crore in May 2010.

Coming back to today's trade, NSE's volatility index India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, jumped 13.23% to 27.99. India VIX is calculated based on the S&P CNX Nifty options prices. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days.

The Sensex fell below the psychological 17,000 mark at the onset of the trading session on weak global stocks. The market trimmed losses in morning trade. The market weakened once again in mid-morning trade. The key benchmark indices hovered near the intraday lows in early afternoon trade. Bank stocks led a recovery from lower level in afternoon trade. Volatility was high in the last 30 minutes of trade.

India's monsoon rains have revived after being stalled by a cyclone last week. The monsoon is expected to cover more areas of the southern Karnataka state, from today, 7 June 2010.

The monsoon rains were 11% below normal in the week to 2 June 2010, the weather office said on Thursday, 3 June 2010. The June-September monsoon rains hit Kerala on 31 May 2010, a day ahead of schedule. The south-west monsoon usually covers the entire country by mid-July. The weather office late April 2010 said rainfall is likely to be 98% of the long-term average. Good monsoon rains would help raise farm output, boost rural incomes and lower food inflation.

Last month, Australia's weather bureau said the El Nino weather pattern was over. El Nino is caused by an abnormal warming of the eastern Pacific Ocean and can play havoc with weather patterns across the Asia-Pacific region.

The south west monsoon is important for India as about 60% of the country's farmlands are rain-fed and more than half of the workforce is employed in the agriculture sector. The quantum of rainfall in the crucial sowing month of July and distribution of rainfall during the monsoon season also holds key.

European shares edged lower on Monday, extending losses from the previous session, with banks and miners sharply lower as investors fretted about global economic-growth trends. However, many markets were off early lows. The key benchmark indices in UK, France and Germany were down by 0.11% to 0.67%.

Asian stock markets tumbled on Monday, after Wall Street on Friday closed at its lowest level since February 2010, spooked by disappointing non-farms payroll data and concerns over Hungary's debt problems. But, many markets were off lows. The key benchmark indices in China, South Korea, Singapore, Japan, Indonesia, Hong Kong and Taiwan fell by between 1.57% to 3.84%.

US index futures reversed initial losses. Trading in US index futures indicated that the Dow could rise 13 points at the opening bell on Monday, 7 June 2010.

US Stocks fell to their lowest close since February on Friday after May's jobs figure slammed investors already reeling from worry over another developing debt crisis, this time in Hungary. The Dow Jones Industrial Average dropped 323.31 points, or 3.15% to 9,931.97. The Standard & Poor's 500 Index lost 37.95 points, or 3.44% to 1,064.88. The Nasdaq Composite Index tumbled 83.86 points, or 3.64% to 2,219.17.

The latest data showed the US economy added fewer-than-expected jobs last month, with a large portion of those being temporary hirings for the US Census. The Labor Department said the US economy added 431,000 jobs in May 2010, far short of the 513,000 that Wall Street had expected. The unemployment rate dropped to 9.7% in May from 9.9% in April.

Fears that Europe's sovereign debt troubles could spread flared again after a Hungarian official, late last week, said the country was at risk of a Greek-style crisis, driving the euro to a more than four-year low against the dollar. Hungary isn't a euro member.

The Hungarian government rushed to calm markets Saturday with a pledge to keep the country's official budget deficit goal for 2010 while stressing that Hungary isn't facing any sovereign credit default.

Back home, Indian government after trading hours on Friday said all listed companies are required to maintain a minimum public float of 25%. Existing listed companies having less than 25% holding have to reach the stipulated level by an annual addition of not less than 5% to public holding, it said.

On the macro front, data last week showed business activity remained strong for India's vast services sector in May 2010, with a key gauge growing for a 13th consecutive month even as some momentum was lost over the previous month. The HSBC-Markit Business Activity Index stood at 58.2 in May 2010 from a 21-month high of 62.1 in April 2010. A reading above 50 indicates expansion. Services make up about 55% of India's $1.2 trillion economy.

HSBC Markit Purchasing Managers' Index (PMI), based on a survey of 500 Indian firms, surged to a 27-month high of 59 in May 2010 from 57.2 in April 2010, bolstered by steady growth in output, new orders and employment. The rate of growth had slowed in March 2010 and April 2010.

On a flip side, another data showed that the food articles index rose 16.55% in the year to 22 May 2010, accelerating from previous week's rise of 16.23%. The primary articles index, which also includes food articles, rose 16.89%, higher than previous week's 15.90% rise. The fuel price index increased to 14.14 % versus 12.08% rise in the previous week.

India's economy grew at 8.6% in the March 2010 quarter driven by robust manufacturing sector on the back of government and consumer spending, data released by the government on Monday, 31 May 2010, showed. The growth was significantly higher than the revised 6.5% expansion in Q3 December 2009 and a 5.8% growth in Q4 March 2009. The manufacturing sector grew 16.3%, farm output rose 0.7%, mining sector expanded 14% and services increased by 8.4% in January-March 2010 quarter from a year earlier.

For the full year to March 2010, the economy expanded 7.4%, above a government forecast of 7.2%. Economic growth had slowed down to 6.7% in year ended March 2009.

The RBI expects India's economy to expand 8% in the year ending March 2011 (FY 2011) with an upward bias, assuming a normal monsoon this year and sustenance of good performance of the industrial and services sectors on the back of rising domestic and external demand. The RBI at its annual policy review on 20 April 2010 said it will continue to monitor macroeconomic conditions, particularly the price situation closely and take further action as warranted. Meanwhile, a revenue bounty for the government from the sale of telecom spectrum would help bring down fiscal deficit in the current financial year.

Investors will eye the first installment of the corporate advance tax payment which will give some clue about Q1 June 2010 corporate results. The first installment of corporate advance tax falls due on 15 June. The combined net profit of a total of 3,572 companies rose 13.7% to Rs 87,241 crore on 24.70% rise in sales to Rs 9,27,168 crore in the quarter ended March 2010 over the quarter ended March 2009.

The BSE 30-share Sensex fell 336.62 points or 1.97% to 16,781.07. The Sensex fell 430.96 points at the day's low of 16,686.73 in early trade. The Sensex fell 47.92 points at the day's high of 17,069.77 in early trade.

The S&P CNX Nifty declined 101.50 points or 1.98% to 5034. Nifty hit a low of 5,004.25.

The BSE Mid-Cap index fell 1.37% and the BSE Small-Cap index fell 1.45%. Both these indices outperformed the Sensex.

All the sectoral indices on BSE fell. BSE Metal index (down 3.99%), Realty index (down 3.89%) underperformed the Sensex. BSE Healthcare index (down 0.72%), FMCG index (down 0.75%), Teck index (down 1.6%), Consumer Durables index (down 1.68%), Power index (down 1.71%), IT index (down 1.72%), Banking sector index Bankex (down 1.73%), Auto index (down 1.73%), Capital Goods index (down 1.84%), Oil & Gas index (down 1.92%), PSU index (down 1.95%), outperformed the Sensex.

The market breadth, indicating the overall health of the market, was weak. On BSE, 1917 shares declined as compared with 881 that advanced. A total of 68 shares were unchanged.

From the 30 share Sensex pack, 27 fell and only three stocks rose.

BSE clocked turnover of Rs 2917 crore, lower than Rs 3547.01 crore on Friday, 4 June 2010.

Index heavyweight Reliance Industries (RIL) fell 2.08% to Rs 1009.35. But, the stock came off the day's low of Rs 1000.30. RIL may reportedly foray into nuclear energy after being freed from a non-compete agreement with the Anil Dhirubhai Ambani Group (ADAG) that barred it from investing in some businesses, including power. Recently, reports had also suggested that RIL may make its first big-ticket investment in coal-fired power plants.

PSU OMCs declined on profit taking ahead of a meeting of an empowered group of ministers (EGoM) today, 7 June 2010, to consider the Kirit Parikh committee recommendations on decontrol of fuel prices. BPCL, HPCL and Indian Oil Corporation fell by between 2.81% to 3.07%. The Kirit Parikh committee had in February 2010 recommended freeing pump prices of petrol and diesel and raising kerosene prices by Rs 6 a litre and cooking gas prices by Rs 100 a cylinder.

As per reports which came trading hours, no decision was taken at the EGoM meeting held today because all the members of the panel were not present.

Shares of PSU OMCs had risen sharply over the past few days on expectations that the government may partially decontrol fuel prices.

Oil exploration stocks also fell after a firm start. Oil India and ONGC fell by between 0.72% to 1.97% after initial gains triggered by hopes possible deregulation of fuel prices may reduce subsidy burden for these two state-run firms.

India's second largest mobile services provider by sales Reliance Communications (RCom), jumped 4.61% after company's board gave an in-principle approval for induction of strategic/private equity investors into the company. The approval is for sale of up to 26% stake. The RCom stock had jumped 14% last week, with speculation rife that Abu Dhabi's Etisalat and South Africa's MTN could be potential partners. However, MTN had denied merger talks with the firm.

But other telecom stocks fell. Bharti Airtel and Idea Cellular fell by between 2.06% to 3.04%.

Auto stocks fell on profit taking after recent gains triggered by strong sales in May 2010. India's largest tractor maker by sales Mahindra & Mahindra (M&M) fell 1.16% to Rs 578.40. But, the stock came off the day's low of Rs 560. M&M's auto sales rose 69% to 28,486 units in May 2010 over May 2009.

India's largest small car maker by sales Maruti Suzuki India fell 1.27% to Rs 1314.20. The stock came off the day's low of Rs 1285.55. Maruti's total sales rose 27.90% to 1,02,175 units in May 2010 over May 2009. The company's domestic sales rose 27.2% to 90,041 units in May 2010 over May 2009. This is highest ever monthly domestic sales. Exports increased 33.5% to 12,134 units in May 2010 over May 2009. The company announced the sales figures during trading hours on 1 June 2010.

India's top truck maker by sales Tata Motors fell 4.25%. Its ADR fell 2.07% on Friday, 4 June 2010. The company reported 41% growth in vehicle sales in May 2010 over May 2009. The company sold 56,779 units in May 2010 as against 40,196 units sold in May 2009. The company unveiled the monthly sales data after trading hours on 1 June 2010.

India's largest bike maker by sales Hero Honda Motors was flat at Rs 1990. The stock came off the day's low of Rs 1956.25. The company recently raised prices of its products by up to Rs 1,000 due to rising input costs.

High beta realty stocks slumped. Ackruti City, DLF, HDIL, Indiabulls Real Estate, Unitech, Orbit Corporation, Phoenix Mills, Peninsula Land fell by between 0.75% to 6.19%.

Metal and mining stocks slumped as LMEX, a gauge of six metals traded on the London Metal Exchange slumped 4.13% on Friday, 4 June 2010. Hindalco Industries, Hindustan Zinc, Steel Authority of India, Tata Steel fell by between 2.37% to 5.63%. Sterlite Industries fell 4.24% as its ADR fell 4.71% on Friday, 4 June 2010.

Select PSU bank stocks rose after bond prices scaled 2-week highs on speculation Europe's widening debt crisis will hamper a global recovery, delaying interest-rate hike by the Reserve Bank of India Governor (RBI). RBI governor D Subbarao said last week the central bank would take into account global developments while formulating monetary policy. RBI next reviews policy on 27 July 2010. Bank of Baroda rose 0.36%. The stock hit an all time high of Rs 753.35 today.

Among other PSU banks, Vijaya Bank, Dena Bank, UCO Bank, Bank of Maharashtra, Canara Bank and Oriental Bank of commerce rose by between 0.39% to 2.05%.

But shares of most front line banks fell on profit taking. India's largest bank in terms of branch network State Bank of India fell 2.34%, snapping last three days' gains. Among other state-run banks, Bank of India and Punjab National Bank fell by between 1.33% to 2.02%.

India's largest private sector bank by sales ICICI Bank fell 2.79%, snapping last three days gains. Its ADR fell 2.29% on Friday, 4 June 2010. India's second largest private sector bank by sales HDFC Bank fell 0.4% to Rs 1880.20. Nevertheless, the stock came off the day's low of Rs 1825. Its ADR fell 2.82% on Friday, 4 June 2010.

Bank credit to businesses and individuals has seen a pick-up of around Rs 5,600 crore while deposits with banks have fallen by nearly Rs 5,000 crore during the fortnight ended 21 May 2010.

India's largest cigarette maker by sales ITC fell 1.13% on profit taking. The stock hit an all-time high of Rs 292 on Friday, 4 June 2010. The board of the company will meet on 18 June 2010 to consider the bonus share issue. The company had last issued bonus shares in the ratio of 1:2 in 2005.

India's largest FMCG maker by sales Hindustan Unilever fell 0.26%, on profit taking after a two-day rally. The company said after market hours on Thursday, 3 June 2010, that its board of directors will meet on 11 June 2010 to consider buyback of shares.

Capital goods stocks fell on profit taking. Larsen & Toubro, Bharat Heavy Electricals, SKF India, BEML, Crompton Greaves, Praj Industries fell by between 1.75% to 3.2%.

IT stocks fell on weak economic data in the US, the biggest market for the Indian IT firms. India's second largest software services exporter by sales Infosys fell 2.14%. Its ADR fell 1.7% on Friday, 4 June 2010. India's largest software services exporter by sales TCS fell 1.61%.

India's third largest software services exporter by sales Wipro declined 0.4% to Rs 652.70. The stock came off the day's low of Rs 634.60. Its ADR fell 4.71% on Friday, 4 June 2010. The company announced during market hours today that it has fixed 16 June 2010 as the record date for issue of bonus shares in the ratio of 2:3.

Cals Refineries clocked the highest volume of 2.68 crore shares on BSE. Reliance Communications (1.11 crore shares), Shree Ashtavinayak Cine Vision (64.34 lakh shares), FCS Software (46.18 lakh shares) and Development Credit Bank (40.86 lakh shares) were the other volume toppers in that order.

Reliance Communications clocked the highest turnover of Rs 193.93 crore on BSE. Tata Steel (Rs 118.79 crore), State Bank of India (Rs 92.93 crore), Sesa Goa (Rs 86.10 crore) and Tata Motors (Rs 59.88 crore) were the other turnover toppers in that order.