Market snaps 8-day losing streak; Sensex reclaims 16,000

Key benchmark indices snapped an eight-session losing streak as bargain hunting emerged after a recent steep slide in share prices. Gains in European stocks aided recovery on the domestic bourses, with the barometer index, BSE Sensex, regaining the psychological 16,000 mark. The Sensex surged 119.32 points or 0.75%, off close to 145 points from the day's high and up about 95 points from the day's low. The market breadth was negative.

Bargain hunting emerged on the bourses today, 22 November 2011, after share prices witnessed steep slide recently. Indian stocks had tumbled recently on weak September 2011 corporate earnings and as European and US debt problems pulled world markets lower. The BSE Sensex had tumbled 1,623.43 points or 9.24% in eight trading sessions to settle at 15,946.10 on Monday, 21 November 2011, its lowest closing level since 5 October 2011, from a recent high of 17,569.53 on 8 November 2011.



The Sensex has lost 1,639.59 points or 9.26% this month so far. The Sensex has slumped 4,443.67 points or 21.66% in calendar 2011. From a 52-week high of 20,664.80 on 3 January 2011, the Sensex has lost 4,599.38 points or 22.25%. From a 52-week low of 15,745.43 on 4 October 2011, the Sensex has risen 319.99 points or 2.03%.

Coming back to today's trade, IT and metal stocks rose. Index heavyweight Reliance Industries (RIL) also edged higher in volatile trade. IT stocks gained after the rupee hit a record low against the dollar. Metal stocks rose on bargain hunting after recent steep losses triggered by poor Q2 results from leading metal firms. Auto stocks were mixed. Bharti Airtel edged lower for second day after the Central Bureau of Investigation (CBI) conducted searches at Bharti Airtel's office in Gurgaon on Saturday, 19 November 2011, in connection with 2G telecom spectrum allocation scam.

Stocks were volatile as traders rolled over positions in futures & options (F&O) segment from the near-month November 2011 series to December 2011 series. The near-month November 2011 F&O contracts expire on Thursday, 24 November 2011. The market trimmed gains after a firm start. The market regained strength in morning trade. The Sensex hit a fresh intraday high in mid-morning trade.

Intraday volatility continued as key benchmark indices regained strength after paring gains in early afternoon trade. The market surged to fresh intraday high in afternoon trade as Asian stocks moved off lows. Intraday volatility continued as the key benchmark regained strength after paring gains in mid-afternoon trade. Volatility continued in late trade.

The BSE Sensex jumped 119.32 points or 0.75% to settle at 16,065.42, its highest closing level since 18 October 2011. The index jumped 266.85 points at the day's high of 16,212.95 in afternoon trade. The index rose 24.01 points at the day's low of 15,970.11 in early trade.

The S&P CNX Nifty was up 34 points or 0.71% to 4,812.35, its highest closing level since 18 October 2011. The Nifty hit a high of 4,854 and low of 4,782.55 in intraday trade.

The BSE Mid-Cap index rose 0.34% and the BSE Small-Cap index gained 0.03%. Both these indices underperformed the Sensex.

The total turnover on BSE amounted to Rs 1968 crore, lower than Monday's (21 November 2011) Rs 2078.91 crore.

The market breadth, indicating the overall health of the market, was negative. The breadth alternately swung between positive and negative zone throughout the day today, 22 November 2011. On BSE, 1,424 shares declined and 1,348 shares advanced. A total of 122 shares were unchanged.

From the 30-share Sensex pack, 18 gained while the rest of them declined.

Index heavyweight Reliance Industries (RIL) advanced 1.04% to Rs 795.05. The stock was volatile, gyrating between Rs 804.30 and Rs 786.60. The stock rose on bargain hunting after it tumbled 10.97% in prior six trading sessions. Oil Secretary G.C. Chaturvedi today, 22 November 2011, said that the oil ministry may decide within a month on taking action against RIL for falling natural gas production at the D6 block in the Krishna-Godavari basin, off the country's east coast.

RIL last week said that it has formed an equal joint venture with BP by the name India Gas Solutions, which will focus on global sourcing and marketing of natural gas in India. The joint venture will also develop infrastructure to accelerate transportation and marketing of natural gas within the country. India Gas Solutions will be funded with equal equity from BP and RIL.

India's largest state-run oil exploration firm by revenue, ONGC, fell 0.16%. The government has cancelled plans for a more than $2 billion follow-on public offer (FPO) of ONGC, a blow to the government's target of raising Rs 40000 crore this fiscal year by selling stakes in state-run companies. Earlier, ONGC had deferred the FPO just four days ahead of its planned opening on 20 September 2011.

Auto stocks were mixed. India's largest truck maker by sales Tata Motors jumped 6.91% to Rs 172.60 and was the top gainer from the Sensex pack. The stock had lost 11.36% in prior three trading sessions. On BSE, 38.85 lakh shares were traded in the counter as against an average daily volume of 26.89 shares in the past two weeks.

Tata Motors on Monday, 21 November 2011, introduced a new version of the Nano minicar, which it said is more powerful and fuel efficient than the previous model. India's largest commercial vehicle maker by sales said it will continue to sell the Nano at the same price. The Nano, sold in three variants, is priced between Rs 1.4 lakh and Rs 1.96 lakh at showrooms in New Delhi. Tata Motors said the new version of the Nano will have a fuel efficiency of 25.4 kilometers per liter, compared with 23.6 kilometers per liter of the previous variant. The new Nano is powered by a 624 cubic centimeter gasoline engine that will deliver 38 horsepower, compared with 35 horsepower in the previous variant.

India's largest small car maker by sales Maruti Suzuki India rose 1.83%. India's largest tractor maker by sales Mahindra & Mahindra (M&M) fell 1.13%. India's largest motorcycle maker by sales Hero MotoCorp declined 0.81% while India's second largest motorcycle maker by sales Bajaj Auto slipped 1.42%.

Bargain hunting helped bank stocks recover from recent decline triggered by fears of rising defaults in a slowing economy. India's largest bank by net profit and branch network State Bank of India (SBI) rose 0.93%. India's largest private sector bank by net profit ICICI Bank gained 1.83% and India's second largest private sector bank by net profit HDFC Bank shed 0.25%.

Punjab National Bank (up 1.81%), Union Bank of India (up 0.91%), Bank of India (up 2.22%), Canara Bank (up 3.08%), and Yes Bank (up 1.41%), edged higher.

Metal stocks rose on bargain hunting after recent steep losses triggered by poor Q2 results from leading metal firms. Hindalco Industries (up 2.27%), Steel Authority of India (Sail) (up 1.98%), Sesa Goa (up 2.13%), and Hindustan Zinc (up 2.03%), nudged higher.

India's largest non-ferrous metals maker by sales Sterlite Industries India rose 1.85% to Rs 104.85. The stock had hit a 52-week low of Rs 102.30 in intraday trade on Monday, 21 November 2011.

India's largest steel maker by sales Tata Steel rose 2.77% to Rs 391.15. The stock had hit a 52-week low of Rs 378.20 on Monday, 21 November 2011. The stock had fallen recently on weak Q2 numbers. Consolidated net profit fell 89.26% to Rs 212.43 crore on 11.73% rise in total income to Rs 32918.33 crore in Q2 September 2011 over Q2 September 2010.

Tata Steel said its performance was adversely impacted by higher global raw materials costs and lower average selling prices at Tata Steel Europe. Tata Steel's net debt at the end of September 2011 stood at Rs 45056 crore, compared to Rs 46627 crore at the end of March 2011.

India's steel demand is likely to grow by 6% in the current fiscal year ending March 2012, nearly half the earlier forecast, as higher interest rates squeeze demand from the automobile and construction sector, the country's top domestic steel maker said. Maintaining the prior forecast of 10 to 12% growth in consumption for the year ending in March 2012 is difficult in the current environment, Shuman Mukherjee, director commercial at Steel Authority of India (Sail) told an industry conference on Tuesday.

Car sales in India fell 23.8% in October 2011, the biggest percentage drop since December 2000, an industry body said earlier this month, hurt by a series of interest rate increases by the central bank and high vehicle costs. The sluggish demand will keep steel prices under pressure, Mukherjee said.

IT stocks edged higher after the rupee hit a record low against the dollar. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports. The partially-convertible rupee was trading at 52.52/54, weaker than Monday's close of 52.155/165.

India's second largest software services exporter by revenue Infosys gained 2.33%, reversing five-day 5.24% decline. The company's chief financial officer V. Balakrishnan said in an interview to a news agency on Monday, 21 November 2011, that the company may miss the upper end of its sales targets for Q3 December 2011 and also for the year ending March 2012 (FY 2012) as the worsening global economic situation has made large contracts hard to come by. Balakrishnan said though the upper end of the forecast is at risk, the sales growth will still be in that range.

At the time of announcing Q2 September 2011 results early last month, Infosys had forecast 3.2% to 5.3% growth in revenue at $1.802 to $1.84 billion in Q3 December 2011 over Q2 September 2011. The company had projected 17.1% to 19.1% growth in revenue at $7.08 billion to $7.20 billion for the year ending March 2012 (FY 2012) over the year ending March 2011 (FY 2011).

In rupee terms, Infosys had forecast 8.97% to 11.2% growth in revenue at Rs 8826 crore to Rs 9012 crore in Q3 December 2011 over Q2 September 2011. The company had projected 21.8% to 24% growth in revenue at Rs 33501 crore to Rs 34088 crore in FY 2012 over FY 2011.

India's third largest software services exporter Wipro rose 1.7% while India's largest software services exporter TCS advanced 1.84%.

India's largest listed cellular services provider by market capitalization Bharti Airtel lost 2.48% to Rs 378.85. The stock extended Monday's (21 November 2011) 2.3% fall triggered by the Central Bureau of Investigation (CBI) conducting searches at Bharti Airtel's office in Gurgaon, seeking details on spectrum allocation by the government to operators between 2001-02. The CBI carried out the searches on Saturday, 19 November 2011.

"We would like to categorically state that all the spectrum allotted to us from time to time has been strictly as per the stated government policy," Bharti Airtel's spokesman said in a statement. "We are providing all details and correspondence to the authorities and shall provide complete support as needed in the matter," Bharti Airtel's spokesperson said.

Meanwhile, Bharti Airtel on Friday, 18 November 2011, said it will start selling Apple Inc.'s latest iPhone 4S on 25 November 2011. The smartphone from the Cupertino, California-based company is priced at $867 for the 16GB version. India, with 865.71 million wireless users at the end of August, is the world's second-largest telecoms market after China.

India's largest cigarette maker by sales ITC was down 1.61% to Rs 196.10 after 15 lakh shares, or 0.01% equity, changed hands in four different block deals in early trade on BSE. A block deal of 10 lakh shares was struck at Rs 199.50 per share at 10:53 IST. Another block deal of 2 lakh shares was struck at Rs 198.60 per share at 11:06 IST. A block deal of 2 lakh shares was struck at Rs 198.85 per share at 11:10 IST. Another block deal of 1 lakh shares was struck at Rs 198.85 per share at 11:11 IST.

India's largest power equipment maker by sales Bhel rose 1.2% to Rs 265.20. The stock had fallen 21.74% in preceding eight trading sessions. The stock hit a 52-week low of Rs 260.10 in intraday trade on Monday, 21 November 2011.

India's largest engineering and construction firm by order book L&T was flat. From a recent high of Rs 1392.85 on 4 November 2011, the stock fell 11.95% in nine trading sessions to Rs 1226.30 on 21 November 2011

India's largest dam builder Jaiprakash Associates gained 4.28% on bargain hunting. The stock had fallen 23.28% in preceding nine trading sessions on weak Q2 operating performance. Net profit rose 11% to Rs 128.65 crore on 2% growth in net sales to Rs 3132.41 crore in Q2 September 2011 over Q2 September 2010. A sharp surge in other income and decline in tax rate to 42% from 60% boosted bottom line. The core operating profit margin declined 80 basis points to 23.9%, mainly due to increase in employee costs.

Siemens fell 2.88%. The company announced after market hours today that net profit rose 2% to Rs 845.40 crore on 28% growth in sales to Rs 11941.90 crore in ended September 2011 (FY 2011) over the year ended September 2010 (FY 2010). Net profit fell 29% to Rs 178.10 crore on 19% growth in sales to Rs 3558.60 crore in Q4 September 2011 over Q4 September 2010. The fall in net profit was primarily due to exchange loss of Rs 158.60 crore in Q4 September 2011, Siemens said in a statement.

Both new orders and order backlog during the year were stable at Rs 12288.60 crore and Rs 13921.30 crore, respectively, Siemens said.

Commenting on the results, Dr. Armin Bruck, Managing Director, Siemens said, "In spite of difficult economic conditions in the country, our new orders and order backlog remained steady, and the overall financial results for the year compares positively against 2009-10 when we booked large orders in the fossil and transmission divisions. Our focus is on sustainable growth, innovation and environmental solutions. The goal is to expand our manufacturing presence in India. Along with leveraging our strong presence in the high-end technology segment, we will also build on our SMART base-level strategy, expand manufacturing capacities, upgrade our factories and attract talent as an employer of choice".

Rural Electrification Corporation jumped 2.67%, extending Monday's 2.02% rise triggered by reports that Tamil Nadu Electricity Board has sought the regulator's approval to increase tariffs by 38%. REC had extended financial assistance to the Tamil Nadu Electricity Board (TNEB) for augmenting the latter's power generation capacity as well as strengthen its transmission and distribution network.

Pharma major Sun Pharmaceutical Industries rose 0.6%, with the stock gaining for the fourth straight day. Consolidated net profit rose 19% to Rs 597.74 crore on 42% growth in net sales/income form operations to Rs 1894.60 crore in Q2 September 2011 over Q2 September 2010. The company announced the results on 13 November 2011.

Cipla rose 2.1%, extending recent strong gains triggered by good Q2 results. Net profit rose 17.47% to Rs 308.97 crore on 9.8% growth in income from operations to Rs 1804.28 crore in Q2 September 2011 over Q2 September 2010.

Sugar shares rose ahead of a meeting of the Empowered Group of Ministers (EGOM) on sugar exports. Bajaj Hindusthan, Shree Renuka Sugar and Dhampur Sugar rose 0.75% to 1.73%.

Suzlon Energy clocked highest volume of 1.27 crore shares on BSE. Chandni Textiles (1.26 crore shares), Cals Refineries (92.59 lakh shares), Pipavav Defence (74.27 lakh shares) and GVK Power (45.18 lakh shares) were the other volume toppers in that order.

SBI clocked highest turnover of Rs 109.85 crore on BSE. Infosys (Rs 70.90 crore), Tata Motors (Rs 67.05 crore), Tata Steel (Rs 63.88 crore) and RIL (Rs 56.43 crore) were the other turnover toppers in that order.

Sustained selling by foreign funds pulled the market lower recently. Foreign institutional investors (FIIs) sold shares worth Rs 743.02 crore on Monday, 21 November 2011, as per the provisional data from the stock exchanges. Their outflow totaled Rs 2708.49 crore in five trading session from 15 to 21 November 2011, as per data from the stock exchanges.

Corporate earnings have been weak. The combined net profit of a total of 3,785 companies declined 36% to Rs 67353 crore on 20.6% growth in sales to Rs 1136770 crore in Q2 September 2011 over Q2 September 2010.

Over the past few weeks, the government has taken some steps to encourage foreign investment. It raised the amount of government bonds that foreigners can hold and the amount of corporate debt they can hold by $5 billion each, to $15 billion and $20 billion respectively. The Union Cabinet also recently approved a pension overhaul that is expected to have a provision added allowing foreign pension-management companies to hold up to 26% of Indian joint ventures, from zero today.

The Lok Sabha got off to a stormy start, with opposition protests against home minister P Chidambaram forcing its adjournment for the day. The lower house was plunged into chaos soon after the winter session opened, with opposition MPs disregarding Prime Minister Manmohan Singh's appeal for calm. The opposition's target was Chidambaram, for his alleged links to the 2G spectrum corruption scandal. He was prevented from speaking in the Lok Sabha. Chidambaram's was not the only issue that rocked the Lok Sabha. The proposed division of Uttar Pradesh, the demand for Telangana and price rise were also taken up by opposition MPs. Amid the ruckus, the Lok Sabha was adjourned till 12 noon and then, as the din continued, for the entire day. The Rajya Sabha was adjourned to mourn the death of two members, Ram Dayal Munda and Silvious Condapen.

Among key financial Bills pending before Parliament in the current winter session is the Pension Fund Regulatory and Development Authority (PFRDA) Bill 2011, which will provide the regulatory authority statutory powers, including that to take punitive action on violations. The interim PFRDA authority, at present, is not backed by a statutory mandate.

Among other bills, the Judicial Standards and Accountability Bill is the cornerstone of the judicial reforms much touted by the government. Its intent is to bring about disclosure of assets for all high court and Supreme Court judges and lay down a 'code of conduct'. Thereby, judges can be probed over corruption allegations as that would be a violation of their code of conduct.

Among other important Bills lined up is the National Advisory Council-backed National Food Security Bill. Issues such as the extent of coverage of such food security, the amount of subsidy and the role of the PDS in such a system will be the aspects likely to be debated. The sports ministry-led National Sports Development Bill and the Nuclear Regulatory Authority Bill are among the 23 new Bills listed for introduction.

The Reserve Bank of India (RBI) recently announced its first government bond buyback under its open-market-operations program this year, in a move aimed at easing liquidity in the cash-strapped banking system. The plan to buy up to Rs 10000 crore of government bonds on Thursday, 24 November 2011 comes as banks have been borrowing between Rs 80000 crore and Rs 1.3 lakh crore daily for the past week, underscoring the cash crunch in the local banking system. The RBI said it will buy the bonds through a multi-security auction using the multiple price method. It will announce the details of the bonds that it will buy back at the auction shortly, it added.

Monetary policy has a limited role in curbing food price pressures in India but such action may still be warranted if high food inflation persists, the central bank governor said Tuesday, 22 November 2011. "A lasting solution to food price pressures lies in a supply response that raises agricultural production and productivity, improves supply chain management and sets the right incentive framework for both producers and consumers," D Subbarao said, according to a copy of his speech at a conference released by the Reserve Bank of India.

Subbarao said that the supply measures taken to meet the growing demand for protein-rich foods have been inadequate. Food prices have been hovering at their highest levels in several months due to sustained demand from the growing middle class that is increasingly consuming more of high-protein diets like milk, fish and meats, offsetting price decline in other commodities.

RBI announced a 25 basis points hike in its key policy rate viz. the repo rate to 8.5% after half-yearly review of the monetary policy on 25 October 2011. The central bank cut its GDP growth forecast for the current fiscal year through March 2012 to 7.6% from 8% earlier. But it retained its March-end inflation projection of 7%. RBI said the projected inflation trajectory indicates that the inflation rate will begin falling in December 2011 (January 2012 release) and then continue down a steady path to 7% by March 2012. It is expected to moderate further in the first half of 2012-13. This reflects a combination of commodity price movements and the cumulative impact of monetary tightening. Further, moderating inflation rates are likely to impact expectations favourably.

Emerging markets such as India must take measures to boost long-term foreign direct investment to blunt volatility in exchange rates, and any capital control measures must be selective and temporary, a senior executive of the Asian Development Bank said on 14 November 2011. While capital flows and exchange rates are likely to be volatile in the short-term amid ongoing euro-zone debt concerns, India must focus on improving its investment climate by providing better infrastructure, putting in place a coherent manufacturing policy and developing financial markets, Managing Director General Rajat M. Nag said on the sidelines of the India Economic Summit.

European stock markets were trading higher on Tuesday, 22 November 2011, after a string of losses, with hard-hit banks and resource stocks such as HSBC Holdings Group PLC and Rio Tinto PLC leading the gains. Key benchmark indices in UK, Germany and France were up by between 0.44% to 1.07%.

Standard & Poor's Ratings Services (S&P) on Tuesday said Spain's AA-minus credit rating wasn't affected by the results of Sunday's general election, which saw the opposition center-right Popular Pary win an absolute majority. S&P also maintained its negative outlook on the country's ratings. The ratings firm said the clear majority won by the Popular Party "could facilitate front-loaded implementation of reform measures." S&P noted that weak economic growth prospects due to private-sector debt reduction, high unemployment and rigid labor markets, along with significant, net external debt, have "constrained" Spain's credit ratings

Moody's Investor Services warned on Monday, 21 November 2011, that rising French borrowing costs and an uncertain outlook posed an ongoing threat for the country's AAA credit rating. French government bond yields ticked higher on Monday.

Asian stocks moved off lows in choppy trade on Tuesday, 22 November 2011, as investors appeared to temporarily look past the debt worries that have recently gripped markets to pick up shares in selected firms. Key benchmark indices in Singapore, Hong Kong, Indonesia and South Korea rose by between 0.14% to 1.51%. Key benchmark indices in China, Taiwan and Japan were down by between 0.10% to 0.61%.

Trading in US index futures indicated That the Dow could gain 31 points at the opening bell on Tuesday, 22 November 2011. Fitch Ratings said late on Monday, 21 November 2011, that it would conclude a review of US sovereign credit ratings by the end of November, in light of the congressional super committee's failure to reach a bipartisan deal to cut the federal debt. Fitch cited its previous statement in August that "failure by the super committee to reach agreement would likely result in a negative rating action -- most likely a revision of the rating outlook to negative, which would indicate a greater than 50% chance of a downgrade over a two-year horizon." It said a one-notch downgrade was possible but "less likely."

S&P reaffirmed it will keep its US rating at AA+ after stripping the government of its top AAA grade on 5 August 2011. Moody's retained its AAA rating on US with a negative outlook.

US stocks tumbled on Monday, 21 November 2011, as members of a special US debt-cutting committee confirmed on that day that they had failed to reach a bipartisan deal to reduce the budget deficit. The committee couldn't agree on how to cut the US debt pile by $1.2 trillion over 10 years, with the result that automatic spending cuts are now slated to take effect in 2013.