Key benchmark indices snapped a four-day rising streak as investors booked profits. Cigarette major and index heavyweight ITC put pressure on key indices by tumbling over 3%. The market breadth was strong as buying was witnessed in select mid cap and small cap stocks. The barometer index, BSE Sensex, fell 31 points or 0.18%, off close to 88 points from the day's high and up about 36 points from the day's low. Index heavyweight Reliance Industries (RIL) ended flat in a volatile trade.

The Sensex jumped 1,211.45 points or 7.46% in June 2012. It rose 547.82 points or 3.24% in the previous four consecutive trading sessions to 17,429.98 on Friday, 29 June 2012 from 16,882.16 on 25 June 2012. The barometer index has gained 1,944 points or 12.58% in calendar 2012 so far (till 2 July 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 2263.12 points or 14.95%. From a 52-week high of 19,131.70 on 8 July 2011, the Sensex has lost 1732.72 points or 9.05%.

Metal stocks were mostly higher as LMEX, a gauge of six metals traded on the London Metal Exchange jumped 3.85% on Friday, 29 June 2012. Realty shares extended recent gains triggered by the Competition Commission of India recently directing cement firms to cease and desist from indulging in any activity relating to agreement, understanding or arrangement on prices, production and supply of cement in the market. Most power generation stocks extended recent gains as lower international coal prices could boost profitability. HDFC Bank hit record high. India's largest car maker by sales Maruti Suzuki India gained on strong sales in June 2012. Capital goods stocks also gained.

The market slipped into the red after opening higher. The Sensex and The 50-unit S&P CNX Nifty hit their highest level in ten weeks in the opening trade. It recovered after weakening to hit fresh intraday low in morning trade. It once again trimmed losses after weakening in mid-morning trade. It was marginally lower in early afternoon trade. Key benchmark indices hit fresh intraday low in afternoon trade as mixed opening in European market triggered profit booking in the domestic market. It reversed initial gains to hit their fresh intraday high in mid-afternoon trade. It slipped into the red once again in late trade.

The BSE Sensex was down 31 points or 0.18% to 17,398.98. The index gained 56.59 points at the day's high of 17,486.57 in mid-afternoon trade, its highest level since 20 April 2012. The index fell 66.94 points at the day's low of 17,363.04 in afternoon trade.

The S&P CNX Nifty was down 0.30 points or 0.01% to 5,278.60. The index hit an intraday high of 5,302.15, its highest level since 23 April 2012. The index hit a low of 5,263.35 in intraday trade.

The BSE Mid-Cap index rose 0.90% and the BSE Small-Cap index gained 1.09%. Both these indices outperformed the Sensex.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1807 shares gained and 1033 shares declined. A total of 108 shares were unchanged.

BSE clocked turnover of Rs 1934 crore lower than Rs 3936 crore on Friday, 29 June 2012.

From the 30-share Sensex pack, 16 stocks rose. Tata Motors (down 1.53%), TCS (down 1.36%) and Hero MotoCorp (down 1.3%), edged lower from the Sensex pack. Bharti Airtel (up 1.59%), HDFC (up 1.08%) and ONGC (up 0.25%), edged lower from the Sensex pack.

Index heavyweight Reliance Industries (RIL) was flat at Rs 737.45. The stock hit a high of Rs 740.95 and a low of Rs 730.60. RIL on Wednesday, 27 June 2012, said it has bought back 3 crore shares for Rs 2144.73 crore till 22 June 2012. Under the ongoing share buyback program, RIL has set a maximum buyback price of Rs 870. The company has set aside Rs 10440 crore for share buyback. The buyback program opened on 1 February 2012 and closes on 19 January 2013.

RIL chairman Mukesh Ambani said at the company's Annual General Meeting in Mumbai early this month that the company's buyback program represents a highly accretive use of cash by the company and it will supplement earnings growth from operations, for higher EPS (earnings per share), in the near future.

FMCG stocks fell on weak progress of monsoon rains. FMCG firms derive substantial sales from rural India. Hindustan Unilever (down 1.61%), Colgate-Palmolive (India) (down 1.08%) and Dabur India (down 0.39%), edged lower.

India's largest cigarette maker by sales ITC fell 3.42% to Rs 250.10 on reports that the Uttar Pradesh government has hiked taxes on tobacco products in the state. The government has reportedly decided to increase tax from the present 12.5% to 50%.

Most power generation stocks extended recent gains as lower international coal prices could boost profitability. Lanco Infratech, Adani Power, GVK Power & Infrastructure, GMR Infrastructure, NTPC, Torrent Power and JSW Energy rose by between 0.19% to 4.69%. Fall in international coal prices this year could boost profitability of those power generation firms which buy imported coal in the spot market. Coal is the largest source of energy for electricity generation.

But, Tata Power Company fell 0.29% on profit booking after recent strong gains. The Delhi Electricity Regulatory Commission (DERC) early this week approved a steep tariff hike in Delhi. New Delhi's electricity regulator has approved higher electricity tariffs in the country's capital, by an average of 20.8%, starting July 1 to help these companies narrow their losses.

On average, the electricity tariffs for industrial and household consumers will rise to Rs 6.63 a kilowatt hour from Rs 5.49 a kilowatt hour. The four electricity distribution companies that operate in New Delhi -- Reliance Infrastructure's BSES Rajdhani Power and BSES Yamuna Power and Tata Power Company's Delhi Distribution along with provincial government's New Delhi Municipal Council had sought the raise, citing the need to cut their electricity distribution losses.

Tata Power Company said after market hours on Thursday, 28 June 2012, it has completed the purchase of 51% equity shares of Tata BP Solar India, which were held by BP Alternative Energy Holdings. Consequently, Tata BP Solar India is now a wholly owned subsidiary of the company.

NHPC rose 1.10%. The company said that with reference to the earlier announcement dated June 28, 2012, regarding Declaration of Commercial Operation of Unit No. 2 & 3 of Chamera HE Project (Stage III), NHPC has now informed BSE that consequent upon successful trial run and demonstration of peaking capability corresponding to its installed capacity of 77 mega watts (MW), Unit No. 1 of Chamera HE Project (Stage III) is declared under commercial operation with effect from July 04, 2012. Unit No. 2 and 3 of the Project are already under commercial operation from June 30, 2012. Peaking capability corresponding to installed capacity 3 X 77 (231 MW) of the station is demonstrated and commercial operation of the generating station as a whole is also declared from July 04, 2012.

Metal stocks were mostly higher as LMEX, a gauge of six metals traded on the London Metal Exchange jumped 3.85% on Friday, 29 June 2012. NMDC, Sterlite Industries, Tata Steel, Nalco, Hindalco Industries, Sail, Bhushan Steel, JSW Steel and Sesa Goa rose by between 0.03% to 5.29%. But, Jindal Steel & Power fell 2.49% after surging 8.74% on Friday.

Realty shares extended recent gains triggered by the Competition Commission of India recently directing cement firms to cease and desist from indulging in any activity relating to agreement, understanding or arrangement on prices, production and supply of cement in the market. Cement is a key raw material in housing construction. Unitech, DLF, Indiabulls Real Estate, HDIL, Phoenix Mills, Prestige Estates, Oberoi Realty and Sunteck Realty rose by between 0.04% to 6.12%.

Banks stocks were mostly higher. India's second biggest private sector bank in terms of branch network HDFC Bank rose 1.84% to Rs 573.85. The stock hit a record high of Rs 575 in intraday trade today, 2 July 2012. The bank has reduced lending rates by 20 basis points with effect from Friday, 30 June 2012. The bank has cut base rate to 9.8% from 10% and the benchmark prime lending rate (PLR) to 18.3% from 18.5%.

The country's biggest commercial bank in terms of branch network State Bank of India rose 0.95%. The bank has raised interest rate by 25 basis points to 9% on fixed deposits for the tenure of three years to less than five years with effect from Sunday, 1 July 2012. This is applicable for deposits below Rs 15 lakh.

India's largest private sector bank by net profit ICICI Bank declined 0.63%.

India's largest car maker by sales Maruti Suzuki India rose 0.93% after company said during market hours today that total sales jumped 20.3% to 96,597 units in June 2012 over June 2011.

India's largest power equipment maker by sales Bharat Heavy Electricals rose 1.31%, with the stock extending recent gains triggered by the company securing a contract worth Rs 950 crore for a 1,020 megawatts hydroelectric project in Bhutan. Bhel announced the order win early last week.

India's largest engineering & construction firm by sales L&T advanced 0.15%, with the stock extending Friday's 4.19% surge. During market hours on Friday, 29 June 2012, L&T said that the infrastructure vertical of its construction division has won a major order valued at Rs 2040 crore from a leading infrastructure developer. The highway project will be executed on EPC (Engineering, Procurement & Construction) mode, L&T said. The scope of work involves six laning of the existing road, including construction of rail over bridges, underpasses, flyovers, major bridges and viaducts. The mega project is a part of National Highway system being developed under the National Highways Development Programme (NHDP), L&T said.

The company also said during market hours Friday, 29 June 2012, its construction division has won new orders valued at over Rs 1002 crore in June 2012.

Among other capital goods stocks, Punj Lloyd, BEML, Crompton Greaves, Thermax, Praj Industries, BGR Energy Systems, Suzlon Energy, Bharat Electronics, Usha Martin, ABB, Havells India and Siemens rose by between 0.29% to 4.4%.

Foreign institutional investors (FIIs) bought shares worth a net Rs 3,046.77 crore on Friday, 29 June 2012, as per provisional data from the stock exchanges.

India's factories in June stepped up production and hired workers at the fastest rate in more than two years, but sagging demand abroad took a toll on growth in new export orders, a survey showed on Monday. The HSBC manufacturing Purchasing Managers' Index (PMI) rose to 55.0 in June, a four-month high, from 54.8 in May. It has kept above the 50 mark that divides growth and contraction for more than three years.

The services purchasing managers' index for June 2012 is expected to be out this week. The services sector grew at its fastest pace in three months during May. HSBC's services purchasing managers' index, compiled by Markit, rose almost two points to 54.7 in May from 52.8 in the previous month.

The next major trigger for the stock market is Q1 June 2012 corporate earnings, which will start trickling from the second week of July 2012. A deceleration in top line growth of India Inc amid economic slowdown and slowdown in investment cycle will weigh on bottom line growth in Q1 June 2012 as the core operating profit margin could be negatively impacted by deceleration in top line growth.

HDFC announces Q1 results on 11 July 2012. Infosys announces its Q1 results on 12 July 2012. HDFC Bank declares its Q1 results on 13 July 2012. Bajaj Auto reports Q1 results on 18 July 2012.

India's exports fell 4.16% to $25.68 billion in May, while imports fell 7.36% to $41.9 billion, government data showed on Monday. May's trade deficit was $16.3 billion, while oil imports rose 14.02% year-on-year to $14.99 billion, data showed.

India's current account deficit (CAD) shot up to $78.2 billion (4.2% of gross domestic product) for the year ended March 2012, from $46 billion (2.7% of GDP) the previous year. This is the highest level of CAD ever — both in absolute terms and as a proportion of GDP — according to the Reserve Bank of India. For the quarter ended March, CAD rose to $21.7 billion (4.5% of GDP), compared with $6.3 billion (1.3% of GDP) for the corresponding quarter the previous year.

The growth rate of eight infrastructure sectors slowed to 3.8% in May as opposed to 5.8% in the comparable year ago period, led by the poor performance of crude oil, natural gas and fertiliser. The eight core industries comprising coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity have a combined weight of 37.9% in the Index of Industrial Production (IIP).

European stocks posted slight gains Monday, extending a rally scored at the end of last week after a summit meeting of European Union leaders produced more progress than expected toward shoring up the euro-zone banking sector. Key benchmark indices in France, Germany and UK gained by between 0.75% to 1.40%.

European leaders on 29 June 2012, unexpectedly announced a raft of measures designed to alleviate the worst of the current debt crisis gripping euro-zone. European Union leaders announced a plan for a single financial supervisor for the region, as part of a range of short-term measures to try to stabilize markets, amid the ongoing debt crisis gripping the region. European banks will now have the possibility of direct recapitalization, he said, with financial assistance provided by the region's current bailout fund -- the European Financial Stability Facility (EFSF) -- until the new European Stability Mechanism (ESM) becomes available. Loans will be transferred from the EFSF to ESM without a change in seniority of the debt, he said.

Germany's parliament resoundingly approved the euro zone's permanent bailout scheme and new budget rules on Friday.

Britain's manufacturing sector continued to contract in June, but at a slower-than-expected pace, according to the Markit/CIPS purchasing managers' index (PMI) for the sector released on Monday. The index rose to 48.6 from a three-year low of 45.9 in May.

Euro zone manufacturing took another hefty blow in June and factories are preparing for worse to come, according to business surveys on Monday that showed jobs were cut at the fastest rate in two-and-a-half years. Markit's Euro zone Manufacturing Purchasing Managers' Index (PMI) was unchanged at 45.1 in June, above the preliminary reading of 44.8 and holding at its lowest reading since June 2009.

The European Central Bank (ECB) at a policy meeting on interest rates on Thursday, 5 July 2012, is expected to cut its benchmark rate by 25 basis points to an all time low of 0.75% from 1%.

The Bank of England's monetary policy committee is expected to ease monetary policy further by expanding its debt-purchase program at scheduled meeting on Thursday, 5 July 2012.

Asian stocks were mostly higher on Monday after manufacturing indicators in Japan and China beat forecasts and European leaders agreed on measures to ease the debt crisis. Key benchmark indices in China, Indonesia, Singapore and Taiwan rose by between 0.03% to 1.12%. Key benchmark indices in Japan and South Korea fell 0.04% and 0.13% respectively. The Hong Kong market is closed today for a holiday.

China's manufacturing expanded at the weakest pace in seven months as overseas orders dropped, and South Korea cut its estimate for export growth this year, underscoring risks to Asian economies from Europe's debt crisis. The Purchasing Managers' Index fell to 50.2 in June from 50.4 in May, the Beijing-based National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday. South Korea's Ministry of Knowledge Economy lowered its projection for overseas sales to an increase of 3.5% from 6.7%, citing a slowdown in major economies.

A batch of Chinese economic data due out over the next few weeks will cast new light on the scale of the ongoing economic slowdown in the world's second biggest economy. Figures due out later, over a five-day period from July 9 include second quarter gross domestic product, as well as such indicators as June fixed-asset investment, inflation, industrial production and bank lending.

Japan's large manufacturers became less pessimistic as declines in commodity prices aided profitability, boosting the outlook for the world's third- biggest economy even as a stronger yen crimps exports. The quarterly Tankan index of sentiment was minus 1 in June from minus 4 in March, the Bank of Japan said today in Tokyo.

Trading in US index futures indicated that the Dow may rise 12 points at opening of US markets on Monday, 2 July 2012. U.S. stocks surged on Friday to close out a sour quarter on a high note as investors cheered an agreement by European leaders to stabilize the region's banks, a pact that helped remove some of the uncertainty that has plagued markets.

This week is a truncated trading week for US stock markets. US market remains closed on Wednesday, 4 July 2012, for Independence Day holiday. Important US economic data is due for release this week. On Monday, 2 July 2012, Markit Economics releases its US manufacturing purchasing-managers' index for June and the Institute for Supply Management (ISM) releases its June index for manufacturing sector. On the same day, the US Commerce Department will release data on construction spending in the US in June. On Tuesday, 3 July 2012, the US Commerce Department will release US factory orders data for May 2012. On the same day, US car makers will release their US sales figures for June. On Thursday, 5 July 2012, Automated Data Processing (ADP) will release employment report on US private-sector payroll growth in June 2012. On the same day, ISM will release US services-sector index for June. On Friday, 6 July 2012, the US Labor Department will release the influential US non-farm payroll figures and the unemployment rate for June 2012.

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