Key benchmark indices edged higher for the second straight day after data showed that foreign funds remained buyers of Indian stocks on Tuesday, 3 July 2012. The barometer index, BSE Sensex, and the 50-unit S&P CNX Nifty both attained their highest closing level in almost 11 weeks. Expectations of measures from the government for revival of the slowing economy aided gains on the domestic bourses. The Sensex rose 37.10 points or 0.21%, up about 90 points from the day's low and off close to 61 points from the day's high. The market breadth was strong. BSE Small-Cap and Mid-Cap indices both outperformed the Sensex.
Foreign institutional investors (FIIs) bought shares worth a net Rs 557.10 crore from the secondary equity markets on Tuesday, 3 July 2012, as per data released by the Securities & Exchange Board of India (Sebi).
The Sensex has risen 63.83 points or 0.36% in two sessions from a recent low of 17,398.98 on 2 July 2012. The Sensex has jumped 2,007.89 points or 12.99% in calendar 2012 so far (till 4 July 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 2326.95 points or 15.37%. From a 52-week high of 19,131.70 on 8 July 2011, the Sensex has lost 1668.89 points or 8.72%.
Coming back to today's trade, many power generation stocks rose, extending their recent gains triggered by hopes that a recent fall in international coal prices could boost profitability. Metal stocks surged on hopes further monetary policy easing from China, the world's largest consumer of copper and aluminum.
Realty shares extended their recent gains triggered by the Competition Commission of India directing cement firms last month 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. FMCG stocks fell on weak progress of monsoon rains. IT stocks were mostly lower on rupee's recent rally against the dollar.
There are expectations of measures from the government for revival of the slowing economy. Prime Minister Dr. Manmohan Singh last month said he is chalking out plan for the country's economic revival. Singh last month took additional charge at the finance ministry after Pranab Mukherjee resigned as finance minister on 26 June 2012 to contest the presidential polls scheduled on 19 July 2012. Mr. Mukherjee is the leading contender in the July 19 presidential election, having been nominated by the Congress party-led United Progressive Alliance government for the largely ceremonial post.
The market trimmed gains after a firm opening triggered by higher Asian shares. The 50-unit S&P CNX Nifty pared gains after hitting its highest level in more than 10-1/2 weeks. The market regained strength after hitting fresh intraday low in morning trade. A bout of volatility was witnessed as key benchmark indices recovered after paring intraday gains to hit fresh intraday lows in mid-morning trade.
Volatility continued as key benchmark indices reversed direction and hit fresh intraday lows in early afternoon trade. Key benchmark indices hit fresh intraday lows in afternoon trade. The market regained positive zone in mid-afternoon trade.
The BSE Sensex rose 37.10 points or 0.21% to settle at 17,462.81, its highest closing level since 19 April 2012. The index jumped 98.06 points at the day's high of 17,523.77 at the onset of the trading session. The index fell 53.26 points at the day's low of 17,372.45 in afternoon trade.
The S&P CNX Nifty rose 14.60 points or 0.28% to settle at 5,302.55, its highest closing level since 19 April 2012. The index hit a high of 5,317.65 in intraday trade. The index hit a low of 5,273.30 in intraday trade.
The BSE Mid-Cap index rose 0.87% and the BSE Small-Cap index rose 0.88%. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,771 shares gained and 1,121 shares declined. A total of 123 shares were unchanged.
BSE clocked turnover of Rs 2066 crore, slightly higher than Rs 2053 crore on Tuesday, 3 July 2012.
From the 30-share Sensex pack, 20 stocks rose and the rest fell. ONGC (down 1.68%), Dr Reddy's Laboratories (down 1.57%) and Coal India (down 0.79%), edged lower from the Sensex pack.
Index heavyweight Reliance Industries (RIL) fell 0.26% to Rs 734.05, off the day's high of Rs 740. RIL last week 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.
Last month, RIL chairman Mukesh Ambani said at the company's Annual General Meeting in Mumbai 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.
Power generation stocks rose, extending their recent gains triggered by hopes that a recent fall in international coal prices could boost profitability. Reliance Power (up 2.4%), GMR Infrastructure (up 2.38%), JSW Energy (up 2.29%), Lanco Infratech (up 1.99%), GVK Power Infrastructure (up 1.25%), Adani Power (up 1.16%) and Tata Power (up 0.58%), edged higher.
According to reports, the spot coal prices globally are down 20-30% from their year ago levels and almost 40% below their peak in early 2011. 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.
Reliance Infrastructure rose 1.38% to Rs 572.80 after the company said during trading hours today, 4 July 2012, that it commissioned another 400 kilovolt (kV) double circuit transmission line between Solapur and Kolhapur in Maharashtra through its wholly-owned subsidiary -- Western Region Transmission (Maharashtra).
Metal stocks rose on hopes further monetary policy easing from China, the world's largest consumer of copper and aluminum. Sterlite Industries (up 5.27%), JSW Steel (up 4.42%), Sesa Goa (up 4.33%), Jindal Steel & Power (up 3.37%), Hindustan Zinc (up 3.11%), Sail (up 2.16%), Bhushan Steel (up 2.15%), Tata Steel (up 1.45%), Hindalco Industries (up 1.33%), Nalco (up 1.24%) and NMDC (up 0.25%), edged higher. LMEX, a gauge of six metals traded on the London Metal Exchange gained 2.78% on Tuesday, 3 July 2012.
India's largest engineering & construction firm by sales Larsen & Toubro (L&T) rose 0.92% to Rs 1416.75, with the stock reversing initial losses. The company said during trading hours today, 4 July 2012, its construction division secured new orders worth over Rs 1523 crore across various business segments in June 2012.
India's largest power equipment maker by sales Bharat Heavy Electricals rose 0.69%. Bhel last week said it had secured a contract worth Rs 950 crore for a 1,020 megawatts hydroelectric project in Bhutan.
IT stocks were mostly lower on rupee's recent rally against the dollar. India's second largest software services exporter by revenues, Infosys, declined 0.66%. India's third largest software services exporter by revenue, Wipro, dropped 1.47%. But, India's largest software services exporter by revenues Tata Consultancy Services (TCS), rose 0.43%.
The rupee strengthened for a fourth straight session on Tuesday, its longest winning streak in four months, as foreign banks sold dollars likely on behalf of their offshore clients looking to invest in the domestic share market. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports.
FMCG stocks fell on weak progress of monsoon rains. FMCG firms derive substantial sales from rural India. Monsoon rains are also a key determinant of rural incomes and consumer spending. United Spirits (down 1.97%), United Breweries (down 1.88%), Tata Global Beverages (down 0.67%), Nestle India (down 0.65%), Marico (down 0.6%), Godrej Consumer Products (down 0.47%) and Britannia Industries (down 0.14%), edged lower.
India's largest cigarette maker by sales ITC fell 0.28%, with the stock extending recent losses triggered by reports that the Uttar Pradesh government has hiked value added tax (VAT) on tobacco products in the state.
Hindustan Unilever fell 0.98% as the stock turned ex-dividend today, 4 July 2012, for final dividend of Rs 4 for the year ended 31 March 2012.
Realty shares extended their recent gains triggered by the Competition Commission of India directing cement firms last month 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.
Anant Raj Industries (up 4.65%), Phoenix Mills (up 3.97%), HDIL (up 3.71%), Peninsula Land (up 3.1%), Sobha Developers (up 2.78%), Indiabulls Real Estate (up 2.38%), Prestige Estates (up 2.2%), DLF (up 1.73%), Parsvnath Developers (up 1.26%), Unitech (up 1.26%), D B Realty (up 0.67%), Oberoi Realty (up 0.58%) and Godrej Properties (up 0.32%), edged higher.
KEC International rose 1.56% after the company said it has completed the phase-1 expansion by commending the commercial production of high tension power cables at its green-field facility at Vadodara in Gujarat.
State Bank of India clocked a highest turnover of Rs 117.36 crore on BSE. HDIL (Rs 49.48 crore), JSW Steel (Rs 49.01 crore), L&T (Rs 46.95 crore) and Reliance Capital (Rs 36.53 crore), were the other turnover toppers on BSE in that order.
OnMobile Global reported a highest volume of 73.68 lakh shares on BSE. 3i Infotech (66.16 lakh shares), HDIL (54.43 lakh shares), Cals Refineries (50.24 lakh shares) and Lanco Infratech (44.44 lakh shares), were the other volume toppers on BSE in that order.
India's services sector in June expanded for the eighth straight month although at a slower clip, but new orders picked up and firms hired workers at the fastest pace in a year, a business survey showed on Wednesday. HSBC's services purchasing managers' index, which gauges the activity of around 400 firms in India, dropped to 54.3 in June from 54.7 in May. However, it has kept above the 50 mark that signifies growth since November. The survey showed order books filled at their strongest pace in four months, riding high on domestic consumption.
India's factory output rose at a faster pace as production and employment levels increased but reduced foreign demand has taken its toll on new export orders, another PMI showed early this week.
Farm Minister Sharad Pawar on Tuesday, 3 July 2012, said that the two-week delay in the monsoon rains' progress across India is not cause for concern and sowing of summer crops is likely to pick up from this month as rainfall improves. The amount of monsoon rain was 31% below the long-term average at this point in the June-September season, Mr. Pawar said.
The progress of the monsoon, which reached the mainland four days later than scheduled, has been erratic this year. The delay has affected sowing of summer crops in five states, Mr. Pawar said. Sowing has been affected as the rains have failed to advance from the central region to the grain-bowl northern states in the last few days. The rains usually cover most of the country by July 1. The monsoon rains--which make up around 70% of India's annual rainfall--are crucial to the nation's agriculture sector and broader economy. More than 60% of the country's farmland is rain-fed.
India's merchandise 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.
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. Investors and analysts will closely watch the management commentary that would accompany the result which could cause revision in their future earnings forecast of the company for the current year or the next year. 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. IT heavyweights, Infosys and TCS unveil Q1 results on 12 July 2012. HDFC Bank declares its Q1 results on 13 July 2012. Axis Bank announces Q1 results on 17 July 2012. Bajaj Auto reports Q1 results on 18 July 2012. Kotak Mahindra Bank and Dr Reddy's Laboratories unveil Q1 results on 19 July 2012. Asian Paints announces Q1 results on 20 July 2012. Mahindra & Mahindra announces Q1 results on 8 August 2012.
Losses for banks proved a drag for European stock markets on Wednesday, with attention fixed on the interest-rate-fixing scandal, while energy stocks also weighed as crude prices pulled back from five-week highs. Key benchmark indices in France, UK and Germany were down 0.18% to 0.73%.
Bob Diamond will testify in front of the UK parliament's Treasury Select Committee on Wednesday, 4 July 2012, a day after resigning as Barclays chief executive in the wake of the inter-bank interest rate-fixing scandal. Amid reports that Mr Diamond was pressured to resign, there is speculation that he will use the Treasury Committee hearing to hit back at senior political and City personnel. The Libor inter-bank rate plays a key role in global markets, affecting what banks, businesses and individuals pay to borrow money.
Meanwhile, weak manufacturing data in the euro zone early this week has supported market expectations of possible easing measures from the European Central Bank to spur growth. The European Central Bank (ECB) at a policy meeting on interest rates tomorrow, 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 tomorrow, 5 July 2012.
Sweden's central bank left its repo rate unchanged at 1.5%, saying it needs to remain low to support economic activity and ensure inflation is in line with its 2% target.
Most Asian stocks rose on Wednesday, heading for the longest winning streak this year on speculation Chinese and European central bankers will ease monetary policy. Key benchmark indices in Indonesia, Japan, South Korea, Taiwan and Singapore rose by between 0.06% to 0.64%. Hong Kong's Hang Seng index was down 0.13%. China's Shanghai Composite fell 0.08%.
China's services firms grew at their slowest rate in 10 months in June, easing back from May's 19-month peak, as new order growth cooled albeit while marking 43 months of consistent expansion, a private sector survey showed on Wednesday. The China HSBC services purchasing managers index (PMI) stood at 52.3 in June, down from 54.7 in May, indicating a marginal expansion of activity that capped job creation at a three-month low and bolstering expectations that Beijing will deliver further policy measures to boost growth.
Chinese banks face severe challenges from economic slowdown both at home and abroad, and growth in their profits is likely to drop significantly this year, the central bank-run Financial News reported on Wednesday, citing a report by the China Banking Association. Growth in credit demand may decline due to lower growth in exports, investment and consumption, the newspaper cited the association as saying.
Important Chinese economic data is due over the next few days. During a five-day period from 9 to 13 July 2012, China will unveil data on second quarter gross domestic product, data for June 2012 on fixed-asset investment, inflation, industrial production and bank lending.
Australian retail sales climbed 0.5% in May, the Australian Bureau of Statistics (ABS) reported on Wednesday. Sales were up 0.1% in April. The ABS said that most industries recorded higher retail sales in May, with cafes, restaurants and takeaway food, along with household goods the main drivers of the growth.
US stocks rose on Tuesday in a shortened trading session ahead of the July 4 holiday, helped by a surprise lift in factory orders. US market remains closed today, 4 July 2012, for Independence Day holiday. Weak US manufacturing data released early this week has stirred speculation that the Federal Reserve would consider launching fresh easing measures.
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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