BSE Mid-Cap, Small-Cap indices outshine Sensex

The market logged marginal gains in the week ended Friday, 22 October 2010, halting a two-week declining trend, on strong initial September 2010 quarterly earnings. Markets across the globe were inflicted with high volatility during the week. Closer home, the key benchmark indices -- the BSE Sensex and S&P CNX Nifty -- slipped below the psychological 20,000 and 6,000 levels respectively only to regain those levels later. The market slipped in 3 out of 5 trading sessions in the week.



Volatility rose during the later half of the week as traders rolled over positions in the derivatives segment from the near-month October 2010 contracts to November 2010 series ahead of the expiry of the October 2010 contracts on 28 October 2010.

Weird quotes were seen during the 15-minute pre-open session that began on BSE and NSE on Monday, 18 October 2010, with a wide difference in the Sensex and Nifty values. In the pre-open session, the first eight minutes are reserved for order entry, modification and cancellation. The next four minutes were set aside for order matching and trade confirmation. The remaining three minutes will facilitate the transition from call auction to normal open session.

The near term focus of the market is on Q2 September 2010 quarter earnings as brokerage update their earnings estimates to FY 2012 (year ending March 2012) taking into consideration the latest quarterly earning. The initial batch of Q2 results announced so far have been good with the combined net profit of 307 companies rising 28.90% on 19.80% rise in sales in the quarter ended September 2010 over the quarter ended September 2009.

Investors made a beeline for Coal India shares as the initial public offer (IPO) of the state-run coal giant was subscribed 15.28 times. Foreign institutional investors (FIIs) put in bids for a staggering 493.38 crore shares, compared with 28.42 crore shares reserved for the qualified institutional bidders category as a whole. Bidding for the Coal India IPO by the qualified institutional bidders (QIBs) ended on 20 October 2010.

Bidding for the Coal India IPO by non-institutional investors, which mainly consists of high networth individuals and corporates, and retail investors ended on 21 October 2010. The government has raised about Rs 15,000 crore from divestment of 10% stake in Coal India.

As per an industry body survey, the business confidence of India Inc. for the October-December 2010 quarter declined on concerns such as inflation and high interest rates. The Confederation of Indian Industry (CII) 74th Business Outlook Survey showed the industry lobby's business confidence index for October-December 2010 fell by 1.4 points to 66.2 as compared to an increase of 1.5 points during April-September 2010. The index reflects the expectation of Indian industry about the performance of companies, sectors and the economy. The survey found inflationary conditions, slackening consumer demand, cost and availability of labour and high interest rates as the top concerns

As per the data released by the Central Board of Direct Taxes, corporate tax collections grew by 21.7% to Rs 1.22 lakh crore in April-September this year, from Rs 1 lakh crore in the corresponding six-month period a year ago. Personal income tax collection - including securities transaction tax, residual fringe benefit tax and banking cash transactions tax - rose by 13.8% to Rs 59,053 crore from Rs 51,897 crore. Collection from indirect tax, comprising of customs, central excise and service taxes, climbed more than 44% to Rs 1,50,686 crore in the first half of the current fiscal, compared to the year-ago period.

The food price index rose 15.53% while the fuel price index climbed 11.14% in the year to 9 October 2010 government data on 21 October 2010 showed. In the prior week, annual food and fuel inflation stood at 16.37% and 11.14%, respectively. The primary articles price index was up 18.05% in the latest week compared with an annual rise of 18.54% a week earlier. The Reserve Bank of India next reviews monetary policy on 2 November 2010.

Finance Minister Pranab Mukherjee said on 22 October 2010 that agreement on managing currencies and adopting current account targets among group of 20 nations remain elusive. "I'm not sure whether this meeting can arrive at an agreement on this issue. It is difficult at this point in time, but we are still trying to negotiate," Mukherjee told reporters when asked about the status talks on currencies and current account targeting by G20 central bank and finance chiefs in South Korea.

Foreign funds have made heavy purchases of Indian equities this year. Net equity inflow in 2010 now stands at a record $24.17 billion, above last year's $17.45 billion, as per data from the Securities & Exchange Board of India (Sebi). The Sebi data includes FII inflow through primary and secondary market route.

A sizable chuck of FII inflow this year is from India-focused exchange traded funds as well as long-only funds.

Global emerging-market equity funds drew record inflows in the third week of October 2010 as investors sought growth in developing nations and the dollar weakened, according to global fund tracker EPFR Global. The funds took in $3.8 billion in the week ending 20 October 2010. Year-to-date inflows to global emerging-market equity funds exceed the record $44.2 billion for the whole of 2009.

Asia ex-Japan, Latin America and EMEA equity funds posted inflows ranging from $327 million to $981 million in the week ending 20 October 2010. Dedicated BRIC (Brazil, Russia, India and China) equity funds had their best week since February 2010, but were again eclipsed by Frontier equity funds, which pulled in $150 million, a 145-week high. Turkey equity funds saw inflows for the eighth week.

The BSE Sensex rose 40.81 points or 0.20% to 20,165.86 in the week ended Friday, 22 October 2010. The S&P CNX Nifty gained 3.40 points or 0.05% to 6,066.05.

The BSE Mid-Cap index advanced 1.37% to 8,425.80 and the BSE Small-Cap index rose 0.88% to 10,723.70. Both these indices outperformed the Sensex.

Trading for the week started on a positive note with the key benchmark indices posting small gains on Monday, 18 October 2010 helped by robust Q2 September 2010 financials from engineering major L&T and housing finance leader HDFC. The BSE 30-share Sensex was up 43.84 points or 0.22% to 20,168.89 and the S&P CNX Nifty was up 13.30 points or 0.22% to 6,075.95.

On Tuesday, 19 October 2010, the market tumbled in late trade after a strong start, on profit booking in a highly volatile trading session. The BSE 30-share Sensex was down 185.76 points or 0.92% to 19,983.13 and the S&P CNX Nifty was down 48.65 points or 0.80% to 6,027.30.

The key benchmark indices edged lower on Wednesday, 20 October 2010, registering their fourth decline in five days, as a strong response to the mega initial public offer of Coal India indicated diversion of funds from the secondary market to primary market. The BSE 30-share Sensex declined 110.98 points or 0.56% to 19,872.15 and the S&P CNX Nifty was down 45.20 points or 0.75% to 5,982.10.

Strong initial batch of Q2 September 2010 results, and gains in European stocks and US index futures sent Indian stocks surging on Thursday, 21 October 2010. The BSE 30-share Sensex jumped 388.43 points or 1.95% to 20,260.58 and the S&P CNX Nifty was up 119.40 points or 2% to 6,101.50.

The key benchmark indices edged lower amid high volatility on Friday, 22 October 2010, tracking weak European stocks and lower US index futures, as caution prevailed ahead of G-20 meet. The BSE 30-share Sensex was down 94.72 points or 0.47% to 20,165.86 and the S&P CNX Nifty was down 35.45 points or 0.58% to 6,066.05.

Among the 30-member Sensex pack, 17 declined while the rest gained.

India's largest IT exporter by sales Tata Consultancy Services (TCS) jumped 9.37% to Rs 1040.10 during the week and was the top gainer from the Sensex pack. The stock also struck a record high of Rs 1049.90 on 22 October 2010 following announcement of forecast beating Q2 financials.

TCS after trading hours on Thursday, 21 October 2010, reported a 14.22% rise in consolidated net profit as per US accounting standards to Rs 2106.50 crore on 13.01% growth in total revenue to Rs 9286.40 crore in Q2 September 2010 over Q1 June 2010.

India's second largest IT exporter by sales Infosys fell 0.74%. Infosys before market hours on 15 October 2010, reported a 16.7% rise in consolidated net profit as per International Financial Reporting Standards (IFRS) to Rs 1737 crore on 12.1% growth in revenue to Rs 6947 crore in Q2 September 2010 over Q1 June 2010. The core operating profit margin (OPM) surged to 30.2% in Q2 September 2010 from 28.31% in Q1 June 2010.

Infosys also raised its earnings as well revenue forecast for the year ending March 2011 in both dollar and rupee terms. But, it cautioned about the global economic environment.

India's third largest IT exporter by sales Wipro lost 5.30% as Q2 results fell short of market expectations. Consolidated net profit as per International Financial Reporting Standards rose 9.75% to Rs 1284.90 crore on 11.7% growth in revenue to Rs 7730.50 crore in Q2 September 2010 over Q2 September 2009. The results hit the market before trading hours on Friday, 22 October 2010.

Wipro expects 3.5% to 5.5% growth in revenue from our IT services business at between $1.31 to $1.34 billion in Q3 December 2010 over Q2 September 2010.

Index heavyweight Reliance Industries (RIL) advanced 3.90% at Rs 1081.45. As per reports, RIL may actively bid for oil and gas exploration blocks, including nine new areas, being auctioned by the Government. Out of 34 blocks being offered under NELP-IX, 19 blocks are new areas -- seven are in deep sea, two in shallow waters and ten onland blocks. The rest 15 (one in deep water, five in shallow water and nine onland blocks) are recycled blocks.

India's largest oil exploration firm by sales Oil and Natural Gas Corporation (ONGC) rose 0.16%. The company on 16 October 2010 said it has made two new discoveries of oil and gas reserves -- gas at the Krishna-Godavari basin block and oil in the Cauvery basin.

India's largest engineering and construction firm by sales Larsen & Toubro (L&T) rose 1.58%. Profit after tax from ordinary activities rose 19.59% to Rs 694.14 crore on 17.72% rise in net sales to Rs 9260.77 crore in Q2 September 2010 over Q2 September 2009. The company announced the result during market hours on 18 October 2010.

The L&T management maintained its revenue growth forecast at 20% for the year ending March 2011 (FY 2011). A senior executive of the company said the order book is seen rising 25% in FY 2011, maintaining the earlier guidance.

India's largest non-ferrous metal firm by sales Sterlite Industries India slumped 5.80% to Rs 168.20 and was the top loser from the Sensex pack. The Supreme Court on 18 October 2010, extended a stay on a lower court order asking Sterlite Industries to close its copper smelter in south India. The stay will continue till the second week of December 2010, allowing the unit to continue its operations.

Earlier, on 1 October 2010, the Supreme Court had stayed till 18 October 2010 an order from the Madras High Court asking Sterlite to shut its smelter in Tuticorin on environmental grounds.

India's largest mortgage lender by total income HDFC slipped 4.66%. Net profit rose 21.62% to Rs 807.54 crore on 4.2% rise in total income to Rs 2970.22 crore in Q2 September 2010 over Q2 September 2009. The company announced the results during trading hours on 18 October 2010.

Cipla (up 3.86%), Hero Honda Motors (up 2.92%), and Reliance Communications (up 1.88%), edged higher from the Sensex pack.

Jaiprakash Associates (down 3.79%), Tata Steel (down 2.93%), and DLF (down 2.89%), edged lower from the Sensex pack.

Shares of Commercial Engineers & Body Builders Company (CEBBCO) settled at Rs 112.25 on BSE, an 11.61% discount to the initial public offer price of Rs 127 on its debut on 18 October 2010.

Oberoi Realty settled at Rs 282.95 on BSE, a premium of 8.83% over the initial public offer price of Rs 260 on its debut on 20 October 2010.