Bargain hunting in index pivotals after five straight days of fall lifted once again lifted key benchmark indices to positive zone after a shaky start. Intra-day volatility was immense with market swinging rapidly either ways. Weak global stocks weighed on early sentiment. US stocks declined sharply on Friday, 30 October 2009. Asian stocks dropped on Monday, 2 November 2009 when the Indian markets were closed on account of a public holiday. The BSE 30-share Sensex was up 35.41 points or 0.22%, up 169.96 points from the day's low and off 25.37 points from the day's high. The market breadth was weak.
Intraday volatility was high. After an initial slide, the market recouped almost the entire losses shortly. However, the intraday rebound was short-lived. The market weakened again later. The market once again staged a strong intraday rebound with the Sensex entering the positive zone. However, weak global stocks pulled the market into the red again later. Bargain hunting in index pivotals once again pulled the market in positive zone in early afternoon trade.
Telecom shares saw divergent trend with Bharti Airtel rebounding from a 52-week low on bargain hunting after a steep recent slide. However, Reliance Communications dropped on poor earnings. Auto stocks gained on the back of robust monthly sales. Whereas, shares from healthcare sector gained on defensive buying.
The HSBC Markit Purchasing Managers' Index (PMI), based on a survey of 500 Indian companies, fell to 54.5 in October 2009 from 55 in September 2009. A reading above 50 means activity expanded during the month. Growth in domestic new orders may be beginning to suffer from the impact of a drought, but stronger foreign demand was helping to cushion the blow, HSBC senior Asian economist Robert Prior-Wandesforde said.
Most Asian stocks fell on Tuesday, 3 November 2009, as concern over the withdrawal of stimulus measures overshadowed Ford Motor Co.'s unexpected profit and a rally in gold prices. Key benchmark indices in Hong Kong, Singapore, Taiwan, and South Korea were down by between 0.17% and 0.71% respectively. However China's Shanghai Composite index rose 1.10%.
Japanese markets were closed today, 3 November 2009, for a national holiday.
Australia's central bank on Tuesday raised its key policy rate for a second month in a row, hiking it by a quarter of a percentage point to 3.50%, as expected. The Reserve Bank of Australia left some analysts speculating that policy could be on hold in December 2009 after it said that interest rate rises in October 2009 and November 2009 would work to temper inflation and ensure a sustainable upswing in the economy.
Asian markets had dropped on Monday, 2 November 2009 as worries about the US financial sector resurfaced after CIT Group Inc, the lender to small and mid-sized US companies, filed for bankruptcy.
But Wall Street edged higher on Monday, 2 November 2009 as manufacturing expanded more than expected last month. The Dow Jones industrial average gained 76.71 points, or 0.8%, to 9,789.44. The S&P 500 index added 6.69 points, or 0.7%, to 1,042.88, and the Nasdaq Composite index rose 4.09 points, or 0.2%, to 2,049.20.
Among the economic data, the ISM reported its gauge of manufacturing activity at 55.7 in October 2009, the third straight month of growth and the highest reading since April 2006. Also pending-home sales rose to their highest level in nearly three years in September 2009, boosted by the first-time homebuyer's tax credit. Also construction spending rose 0.8% in the month of September.
Trading in US index futures indicated Dow could rise 15 points at the opening bell today, 3 November 2009.
It is widely expected that the US Federal Reserve at a regular two-day policy meeting on 3-4 November 2009 will hold interest rates at their lowest-ever range of 0% to 0.25%, where they stood since December 2008. However, there's plenty of unease about the contents of the Fed's accompanying policy statement. A section of the market sees the Fed altering its statement to a less dovish tone. There is speculation that the Fed might drop or alter its pledge to keep rates low for an extended period.
Financial markets are also looking for clues from other central banks about when stimulative policy may have to come to an end. The European Central Bank (ECB) meets on Thursday, 5 November 2009. No rate change is expected and few expect it to offer clues on when it might change tack. The Bank of England (BOE) meets the same day and the market is waiting to see if it tops up its quantitative easing programme after the economy unexpectedly contracted between July-September 2009 period.
Governments and central banks around the world have injected trillions of dollars in the past year or so to pull the world out of a most severe recession since the 1930s Great Depression.
Back home, the Reserve Bank of India (RBI) at its monetary policy review on 27 October 2009 left its key rates unchanged, but raised the wholesale price-based inflation projection for end-March 2010 sharply to 6.5% with an upward bias, from 5 % earlier.
The IMF said on 29 October 2009 the economies of India, China and Australia were recovering especially rapidly, suggesting it notices growing pressures for authorities there to tighten monetary policy ahead of others in the region. It called the three economies special cases, while adding a tightening of monetary policy seemed unnecessary elsewhere in the region in the near future.
It also advised Asian central banks not to raise interest rates only to calm asset price growth, saying lifting rates ahead of advanced economies could attract carry trade-type capital inflows and aggravate asset price pressures.
Closer home, there are concerns that a fund raising spree by Indian firms will suck liquidity from the secondary equity market. As per reports, Indian firms have garnered about $9 billion (Rs 32,400 crore at the current exchange rates) through sale of shares and convertible bonds to institutional buyers since April 2009. Indian companies are taking advantage of a surge in liquidity to recapitalize and fund capital expenditure after being starved of cash last year.
Unlisted Reliance Infratel announced on 22 September 2009 its intention to raise Rs 5,000 crore from the primary market. Divestment of state-run firms by the government may also increase the supply of paper in the market.
The government recently approved stake sales in state-run power producer NTPC and another unlisted power firm Satluj Jal Vidyut Nigam which reflects the country's resolve to speed up reforms and raise more resources for social schemes.
The government has approved a follow-on public offering of 20% of state run Steel Authority of India, the steel minister said on 21 October 2009. The Government of India owns nearly 86% of Sail. Also the government gave its approval for 15% follow on public offer for Rural Electrification Corporation on 29 October 2009.
At 12:25 IST, the BSE 30-share Sensex rose 35.41 points or 0.22% to 15,931.69. The Sensex opened 57.65 points lower at 15,838.63. It lost 134.55 points at the day's low of 15,761.73 in early trade. The Sensex rose 78.78 points at the day's high of 15,957.06 in early afternoon trade.
The S&P CNX Nifty gained 10.55 points or 0.22% to 4722.25
The market breadth, indicating the overall health of the market was weak. On BSE, 1528 shares declined as compared with 928 that rose. A total of 71 shares remained unchanged.
The total turnover on BSE amounted to Rs 2164 crore by 12:25 IST as compared with Rs 1579 crore by 11:25 IST
Among the 30-member Sensex pack, 17 gained while the rest of them slipped.
Telecom pivotals witnessed divergent trend. India's largest cellular services provider by sales Bharti Airtel surged 4.07% to Rs 304, on bargain hunting after a sharp recent slide. The stock rebounded from an initial slide which had taken the stock to a 52-week low of Rs 280.05. It was the top gainer from the Sensex pack
Bharti Airtel on Friday introduced a 'pay per second' plan across the country. In this plan, called Freedom Plan, Airtel customers will be charged one paise per second for all local and STD calls to Airtel numbers and 1.20 paise per second for local and STD calls to other networks.
Meanwhile, Singapore Telecommunications has bought additional 1.52% stake in Bharti Airtel and will pay up to Rs 3008.4 crore in three installments ranging over 18 months. In a notice to Singapore Stock Exchange, SingTel said it has entered into a conditional share purchase agreement with Bharti Group entity to buy an additional 7,30,000 issued shares in Bharti Telecom, a promoter company of Bharti Airtel.
However India's second largest telecom company by sales Reliance Communications slumped 4.58% to Rs 167.90 and was the top loser from the Sensex pack. The company reported 51.66% decline in its consolidated profit at Rs 740 crore in Q2 September 2009 over Q2 September 2008. Consolidated revenue increased to Rs 5,703 crore in the quarter under review from Rs 5,645 crore in the year-ago period. The result was declared on 31 October 2009.
India's largest private sector bank by net profit ICICI Bank advanced 3.38% after a 4.29% spurt in its American depository receipt (ADR) on Monday. The bank's net profit moved up 2.6% to Rs 1040.13 crore on a 12.7% decline in total income to Rs 8480.73 crore in Q2 September 2009 over Q2 September 2008. The result was announced during trading hours on 30 October 2009.
India's largest bank by net profit State Bank of India fell 2.79%. The bank's consolidated net profit rose 28.29% to Rs 3,133.16 crore on 22% rise in consolidated income to Rs 33,101.65 crore in Q2 September 2009 over Q2 September 2008.
India's largest firm by market capitalisation and oil refiner Reliance Industries (RIL) slipped 1.48% to Rs 1902. The stock oscillated in a band of Rs 1925 - 1891 so far in the day. The company had reported a 6.4% fall in net profit at Rs 3,852 crore despite 6% rise in total income to Rs 47,476 crore in Q2 September 2009 over Q2 September 2008. Refining margins more than halved to $6 a barrel from $13.3 a barrel a year earlier. The results were announced after market hours on Thursday, 29 October 2009
The government on 27 October 2009 allocated additional 50 million cubic metres a day (mmscmd) of gas from Reliance Industries-operated east coast block D6. Power plants and refineries will get the bulk of Reliance Industries' gas from the Krishna-Godavari basin beyond the previously allotted 40 million metric standard cubic metres per day (mmscmd).
The empowered group of ministers (eGoM) also made some allotments for Reliance's petrochemical plants and refineries.
Auto stocks rose as auto firms reported strong growth in sales in the month just gone by as low interest rates and attractive benefits offered by companies pushed the aggregate sales of the industry.
India's largest tractor maker by sales Mahindra & Mahindra rose 0.53% after its overall sales climbed 32% in October this year to 18,410 units against 13,935 units in the same month last year.
India's largest truck marker by sales Tata Motors rose 1.50% after total sales grew 18% to 20,011 units last month against 17,014 units in the same period last year.
India's largest small car marker by sales Maruti Suzuki India rose 1.25% after total sales grew 32.4% to 85415 units in October 2009, compared with 64490 units posted in the same month a year ago.
India's second largest bike marker by sales Bajaj Auto rose 2.59% after it reported 51.06% rise in total two-wheeler sales to 2,49,974 units in October 2009 as compared with 1,65,477 units in the same period a year ago.
However India's largest bike marker by sales Hero Honda Motors fell 2.16% after it reported a marginal increase in October sales at 354,156 units as against 352,449 units in the same month last year.
India's largest engineering & construction firm by sales Larsen & Toubro rose 1.61% after the company won an order worth Rs 6897 crore from Maharashtra State Power Generation Company. The announcement was made before market hours today, 3 November 2009.
India's largest dam builder by sales Jaiprakash Associates (JAL) gained 0.53% on reports its subsidiary Jaypee Infratech (JIL) is preparing to raise Rs 2,500-3,000 crore through an initial share sale. JAL is eyeing a valuation of Rs 20,000-25,000 crore and expects to divest 10-15% in JIL through the public offer.
Shares from healthcare sector gained on defensive buying. Dr Reddy's Laboratories (up 6.68%), Nicholas Piramal (up 5.49%), Sun Pharmaceuticals (up 2.78%), Ranbaxy Laboratories (up 2.24%), and Cipla (up 0.92%), gained.
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