Small-cap, mid-cap indices underperform Sensex

The key benchmark indices rose for the third straight day as Asian stocks recovered. But, the market breadth was negative. The BSE 30-share Sensex rose 95.36 points or 0.56%, up close to 155 points from the day's low and off close to 35 points from the day's high. IT, auto and realty stocks reversed initial losses. Banking and FMCG stocks also gained. European shares and US index futures which were firm before close of trade in India, slumped later.

Indian stocks have risen in 7 out of the past 8 trading sessions. The Sensex has jumped 1095.21 points or 6.83% from recent low of 16,022.48 on 25 May 2010. It is off 4.74% from a recent peak of 17,970.02 on 7 April 2010. The barometer index has lost 1.98% in calendar 2010 so far after jumping 81% in 2009.

Coming back to today's trade, the market was volatile. The market slipped into the red after a positive start as Asian stocks fell. The market cut losses after hitting a fresh intraday low in morning trade. The market weakened once again to hit fresh intraday low in mid-morning trade. The market recovered from lower level to turn positive for a brief period in early afternoon trade. The intraday recovery gathered steam in afternoon trade, led by recovery in Asian markets and firm opening of European stocks. The market extended gains to hit fresh intraday highs in mid-afternoon trade. The market pared gains in late trading after hitting a 3-week high.

The 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.

European shares turned negative on Friday, with the heavyweight banking sector moving lower, led by Societe Generale on concern about its derivatives division. Key indices in UK, France and Germany were down by between 0.1% to 0.99%.

Most Asian stocks rose ahead of US jobs figures that will give a crucial reading on whether the recovery in the world's No. 1 economy is broadening. The key benchmark indices in China, South Korea, Singapore, Indonesia rose by between 0.04% to 0.47%. The key benchmark indices in Hong Kong and Taiwan fell by between 0.03% to 0.21%.

In Japan, the Nikkei 225 average fell 0.13% after the country's ruling party picked finance minister Naoto Kan as Japan's new prime minister, a fiscal conservative and viewed by some as a proponent for a weaker yen.

US index futures slumped in volatile trade. Trading in US index futures indicated that the Dow could fall 73 points at the opening bell on Friday, 4 June 2010.

US stocks rose on Thursday, led by a late-day surge in technology shares as investors geared up for a strong unemployment report on Friday. The Dow Jones Industrial Average edged up 5.74 points, or 0.06% to end at 10,255.28. The Standard & Poor's 500 Index added 4.45 points, or 0.41% to 1,102.83. The Nasdaq Composite Index rose 21.96 points or 0.96% to 2,303.03.

Lacklustre same-store retail sales for May had earlier pressured the market. In other economic news, data showed private employers added jobs in May and initial jobless claims fell last week. In other data, the services sector grew for a fifth straight month in May, according to the Institute for Supply Management, and the federal government reported that new orders received by US factories rose in April.

The crucial non-farm payroll data due on Friday, 4 June 2010, is expected to show the US economy added 513,000 jobs in May 2010, more than the 290,000 gain in the previous month.

Back home, 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.

Data on Thursday 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.

China, India, Brazil and Russia are powering ahead, the Organisation for Economic Cooperation and Development (OECD) said on 26 May 2010, revising upwards its growth outlook for all four largest emerging economies. The OECD revised India's GDP growth forecast for 2010 to 8.2% from its earlier estimate of 7.3%. It also raised the growth forecast for 2011 to 8.5% from its earlier estimate of 7.6%. The OECD also said that underlying inflationary pressures are likely to persist given the strong outlook for demand.

In its World Economic Outlook in April 2010, the International Monetary Fund (IMF) pegged India's GDP growth forecast at 8.75% in calendar 2010 and 8.5% in calendar 2011. IMF's optimism was based on expectations of strengthening of domestic demand as the labour market improves. Expectations of increase in investment on the back of strong corporate profitability, rising business confidence and favourable financing conditions, were other factors cited by IMF for its prediction of strong growth in India's economy.

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 3,545 companies rose 13.7% to Rs 87,245 crore on 24.70% rise in sales to Rs 9,27,085 crore in the quarter ended March 2010 over the quarter ended March 2009.

The BSE 30-share Sensex jumped 95.36 points or 0.56% to 17,117.69. The Sensex surged 128.09 points at the day's high of 17,150.42 in late trade, its highest level since 14 May 2010. The Sensex fell 58.41 points at the day's low of 16,963.92 in mid-morning trade.

The S&P CNX Nifty rose 25 points or 0.49% to 5,135.50. It hit a high of 5,147.90 in late trade, its highest level since its highest since 14 May 2010.

The BSE Mid-Cap index rose 0.21% and the BSE Small-Cap index rose 0.15%. Both the indices underperformed the Sensex.

Sectoral indices on BSE were mixed. BSE FMCG index (up 1.42%), Teck index (up 1.89%), IT index (up 1.69%), Banking sector index Bankex (up 1.99%), and Auto index (up 1.51%) and outperformed the Sensex.

BSE Metal index (down 0.24%), Power index (down 0.19%), Oil & Gas index (down 0.13%), PSU index (down 0.08%), BSE Healthcare index (down 0.04%), Consumer Durables index (down 0.02%), Capital Goods index (up 0.13%), Realty index (up 0.42%) underperformed the Sensex.

The market breadth, indicating the overall health of the market, was negative. On BSE, 1406 shares advanced as compared with 1435 that declined. A total of 101 shares were unchanged. The breadth moved between positive and negative zone during the day.

From the 30 shares Sensex pack, 19 stocks rose and the rest fell.

BSE clocked turnover of Rs 3371 crore, lower than Rs 3755.17 crore on Thursday, 3 June 2010.

Index heavyweight Reliance Industries (RIL) was flat at Rs 1030.80. The stock hit high of Rs 1038.65 and a low of Rs 1023. RIL is reportedly likely to make its first big-ticket investment in coal-fired power plants after getting freed recently from its non-compete agreement with the Anil Dhirubhai Ambani Group (ADAG) that barred it from investing in high-growth sectors.

Aluminum maker Hindalco Industries rose 1.23% as consolidated net profit jumped 711.22% to Rs 3925.50 crore in the year ended March 2010 over the year ended March 2009. The company announced the result during market hours today.

Sterlite Industries fell 0.28% as its ADR fell 0.93% on Thursday, 3 June 2010.

Shares of India's second largest listed cellular services provider by sales Reliance Communications (RCom) rose 2.25%, reversing early losses. South Africa's MTN Group said on Thursday, 3 June 2010, it was not in talks with RCom for a tie-up.

The RCom stock had risen 6.37% on Thursday on reports the company was considering a merger with South Africa's MTN group or roping in a strategic foreign investor to fund its foray into 3G services. The stock had jumped 11.02% on Wednesday on reports United Arab Emirates-based Emirates Telecommunications Corporation (Etisalat) is in advanced talks to buy a 25% stake in Reliance Communications (RCom) for Rs 18,000 crore.

RCom later clarified on Wednesday that it has been receiving various proposals from time to time from reputed international telecom companies expressing interest in acquiring a strategic equity stake in RCom. The company evaluates such proposals in line with the company's policy to constantly endeavor to enhance overall shareholder value, RCom said. The company will comply with all its obligations including timely disclosures at the appropriate time, RCom added.

IT stocks recovered ahead of a crucial economic data in the US, the biggest market for the Indian IT firms. India's second largest software services exporter by sales Infosys rose 1.24% to Rs 2730.55. The stock came off the day's low of Rs 2681. Its ADR rose 0.55% on Thursday, 3 June 2010. India's largest software services exporter by sales TCS rose 0.33% to Rs 765.25. The stock came off the day's low of Rs 755. India's third largest software services exporter by sales Wipro was flat at Rs 655.30. The stock came off the day's low of Rs 651. Its ADR rose 2.08% on Thursday, 3 June 2010.

Banking stocks rose on pick up in credit offtake. 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 bank in terms of branch network State Bank of India rose 2.42%, with the stock gaining for the third straight day. Among other state-run banks, Bank of Baroda, Bank of India and Punjab National Bank rose by between 0.58% to 1.1%.

India's largest private sector bank by sales ICICI Bank rose 1.6%, with the stock gaining for the third straight day. Its ADR rose 0.9% on Thursday, 3 June 2010. But, India's second largest private sector bank by sales HDFC Bank fell 0.96%. Its ADR rose 0.35% on Thursday, 3 June 2010.

Some realty stocks reversed initial losses. Ackruti City, DLF, HDIL, Orbit Corporation, Phoenix Mills rose by between 0.25% to 3.9%.

India's largest cigarette maker by sales ITC rose 2.07% to Rs 290.75. The stock hit an all-time high of Rs 292 today. 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 rose 1.74% as 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.

The market had probably got an inkling of the announcement in advance as the Hindustan Unilever (HUL) stock had surged 4.01% to Rs 247.20 on Thursday ahead of the announcement.

Auto stocks reversed early losses on strong sales in May 2010. India's largest tractor maker by sales Mahindra & Mahindra (M&M) rose 0.42% to Rs 585.20. The stock came off the day's low of Rs 572. 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 rose 2.64% to Rs 1331.05. The stock came off the day's low of Rs 1285. The 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 rose 0.61% to Rs 772. The stock came off the day's low of Rs 755.55. The company reported 41% growth in vehicle sales in May 2010 over May 2009. Its ADR gained 4.67% on Wednesday, 2 June 2010. 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 Tuesday, 1 June 2010.

India's largest bike maker by sales Hero Honda Motors rose 0.12%, with the stock gaining for the third straight day on reports the company has raised prices of its products by up to Rs 1,000 with immediate effect due to rising input costs.

Ashok Leyland, India's second-biggest truck and bus maker, fell 0.39%. The company said on Friday its total vehicle sales more than trebled to 6,502 units in May 2010. Domestic sales surged to 5,973 units compared with 1,697 in May 2009 while exports nearly doubled to 529 units, it said.

TVS Motor Company surged 6.71% extending recent gains, as the company's total two wheeler sales grew 30% to 1,54,667 units in May 2010 over May 2009.

Some capital goods stocks fell on profit taking. Bharat Heavy Electricals, SKF India, ABB, Crompton Greaves fell by between 0.14% to 1.54%.

Sugar stocks rose on reports a panel of ministers will consider whether to re-impose a tax on white sugar imports next week as millers fear a flood of cheap imports. Dhampur Sugars, Balrampur Chini, Bajaj Hindustan and Shree Renuka Sugars rose by between 1.01% to 5.59%.

Cement stocks were mixed after logging healthy dispatches growth in May 2010. Jaiprakash Associates rose 0.45%, with the stock gaining for the third straight day. Cement dispatches jumped 63% to 1.3 million tonnes in May 2010 over May 2009.

ACC fell 0.14%, after previous two days gains. The company recently said it is setting up a mega cement project of 3 million tonnes per annum at Ghughus in the Chandrapur district of Maharashtra at a cost of about Rs 1500 crore.

UltraTech Cement rose 0.13%, with the stock gaining for the third day. Aditya Birla Group's cement shipments rose 5.5% to 3.3 million tonnes in May 2010 over May 2009. Production rose 5.6% to 3.4 million tonnes. The group has decided to combine its cement operations under UltraTech Cement. The process is expected to be completed by July 2010.

Ambuja Cements fell 1.53% after a two-day rally. Cement shipments rose 13.7% to 1.86 million tonnes in May 2010 over May 2009.

Cals Refineries clocked the highest volume of 2.82 crore shares on BSE. FCS Software (81.08 lakh shares), Reliance Communications (64.56 lakh shares), Suzlon Energy (50.39 lakh shares) and Reliance Natural Resources (44.24 lakh shares) were the other volume toppers in that order.

State Bank of India clocked the highest turnover of Rs 139.98 crore on BSE. Tata Steel (Rs 136.17 crore), Reliance Communications (Rs 108.56 crore), Educomp Solutions (Rs 76.70 crore) and Sesa Goa (Rs 76.28 crore) were the other turnover toppers in that order.