The key benchmark indices regained strength in mid-morning trade after initial volatility as most Asian stocks. The Sensex fell below the psychological 20,000 mark in morning trade only to regain that level shortly. The Sensex was up 70.75 points or 0.35% to 20,076.12, up 103.21 points from the day's low and off 43.65 points from the day's high.
The market breadth was positive. Interest rate sensitive realty stocks declined on fears the Reserve Bank of India (RBI) may tighten key rates further to curb high inflation. Oil and gas stocks were in demand on fresh buying. Most auto stocks edged higher, with Tata Motors striking a record high above Rs 1,200, in anticipation of robust earnings and on expectations of strong sales in the ongoing festive season sales.
Stocks witnessed choppy trading earlier in the day. The market slipped into the red in morning trade, reversing initial rally. The market regained positive zone later. The market extended gains in mid-morning trade. Volatility may remain high for the rest of the day as the near-month October 2010 derivatives contracts expiry today, 28 October 2010.
NSE's volatility index, India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, was down 0.28% at 20.96. The index had risen 2.29% to 21.02 on Wednesday, 27 October 2010. The index had lost 3.79% to 20.55 on Tuesday, 26 October 2010. India VIX is calculated based on the S&P CNX Nifty options prices. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days.
The focus of the market is currently on the second quarter September 2010 results. The results announced so far have been encouraging. The combined net profit of a total of 721 firms surged 65.70% to Rs 46895 crore on 19.30% growth in sales to Rs 284380 crore in Q2 September 2010 over Q2 September 2009.
The government will unveil data on some wholesale price indices for the year through 16 October 2010 viz. the food price index, the primary articles index and the fuel price index at about 12:00 IST today, 28 October 2010.
Asian stocks rose on Thursday as a rebound in the dollar paused after the greenback recovered all of its losses against major currencies this year and as a sell-off in commodities halted. The key benchmark indices in Hong Kong, Indonesia, Taiwan and Singapore were up by between 0.28% and 0.76%. But, the key benchmark indices in China, Japan and South Korea were down by between 0.17% and 0.33%.
The Bank of Japan's policy board decided Thursday to leave its key overnight call rate unchanged, as widely expected, offered details of its asset-buying program and moved forward its next policy meeting to 4-5 November 2010. The November meeting had previously been scheduled for on 15-16.
The Japanese central bank also announced details of the asset-buying program it unveiled at its last meeting earlier this month, when it also surprised markets by cutting the unsecured overnight call loan rate to a range of 0.0%-0.1%, from 0.1% previously. The Bank of Japan said it will buy corporate bonds rated BBB or higher, and commercial paper rated a2 or higher.
China's Cabinet said Wednesday it will take additional action to curb property prices and do what it can to foster stability in commodity prices. The State Council's statement came in the wake of a meeting chaired by Premier Wen Jiabao, and shows a renewed determination to rein in property prices. However, the language was consistent with the Cabinet's earlier-expressed views on the housing market and conforms to China's policy approach emphasizing the use of administrative measures to cool prices.
Moody's Investors Service said Thursday it raised the outlook on Thailand's Baa1 local- and foreign-currency government bond ratings to stable from negative. Moody's decision to change the outlook was prompted by the robust economic recovery and the stabilization of government finances despite continuing domestic political turmoil, the rating service said in a statement. In what it said was a related action, Moody's also raised the country's foreign-currency bond ceiling by one notch to A2, with a stable outlook, while the outlook for the Baa1 foreign-currency deposit ceiling was changed to stable from negative.
US stocks dropped on Wednesday, 27 October 2010, amid concerns that the Fed's plan to boost the economic recovery may not be large enough. The Dow Jones Industrial Average fell 43.18 points, or 0.39%, to 11126.28 and the Standard & Poor's 500 dropped 3.19 points, or 0.27%, to 1182.45. But, the Nasdaq Composite rose 5.97 points, or 0.24%, to 2503.26.
A Commerce Department report showed new home sales jumped 6.6% in September from August to a pace of 307,000 units. That beat economists forecast of a rise of just 4.2% to a pace of 300,000 units. Median prices rose 3.3% annually to $223,800. The weekly initial jobless claims data, due to be announced today, will be closely watched.
Trading in US index futures indicated that the Dow could gain 10 points at the opening bell on Thursday, 28 October 2010.
Back home, the Reserve Bank of India governor D Subbarao on Wednesday, 27 October 2010, said managing the exchange rate in the face of volatile flows contains a cost, and the challenge was to minimise that cost. Buying dollars adds liquidity to the banking system, which aggravates inflation. Sterilising resultant liquidity can push up interest rates, which in turn attracts further inflows, the Reserve Bank of India governor said.
Managing currency tensions will require a shared understanding on keeping exchange rates aligned to economic fundamentals, and an agreement that currency interventions should be resorted to not as an instrument of trade policy but only to manage disruptions to macroeconomic stability, Subbarao said. The Group of 20 advanced and emerging economies agreed, late last week, to move towards market-determined exchange rates and to pursue the full range of policies needed to reduce excessive external imbalances.
Subbarao said managing capital flows is not a problem that should be managed only by emerging market economies. In as much as lumpy and volatile flows are a spillover from policy choices of advanced economies, the burden of adjustment has to be shared, Subbarao said.
Finance Minister Pranab Mukherjee on Tuesday, 26 October 2010, said the government has no plan to put any cap on flow of funds from foreign institutional investors (FIIs), which have pumped in nearly $25 billion so far this year. He said a sharp increase in inflow of funds from FIIs has provided cushion in controlling current account deficit. I am confident with the flow of FIIs and foreign exchange availability, I will be able to contain current account deficit at around 3% of the GDP, Mukherjee said. The Finance Minister admitted that inflows of foreign funds have put pressure on the Indian currency.
He added that said steps to mop-up liquidity in India, as part of inflation-fighting measures, must not affect economic growth. He said the economy is on the path to regaining the growth momentum seen before the global economic slowdown. The Reserve Bank of India has taken steps to moderate demand to levels which India's economy can support in the light of high inflation, Mukherjee said.
India's economy is seen growing by 8.5% to 9.7% in the 2010/11 fiscal year and monetary tightening should ensure the pace of recovery is not hit, the finance ministry said in a report released on Tuesday, 26 October 2010. The report also said measures to temporarily ease liquidity were consistent with the Reserve Bank of India's (RBI) policy stance of containing inflation and anchoring inflationary expectations. It has to be ensured that monetary tightening does not adversely affect the pace of recovery at this stage, the Finance Ministry wrote in the report.
The government may lift controls on diesel pricing in a phased manner, instead of in one go, to cushion any blow on the poor, the oil ministry said in a report on Tuesday, 26 October 2010. It is proposed that increase in prices of diesel will be staggered over time to minimise the overall impact on the poor and the vulnerable, the report said. It also said the government may intervene in the pricing of petrol and diesel in case of a sharp rise or volatility in global crude oil prices.
Foreign funds sold equities worth a net Rs 9.07 crore and domestic institutional investors sold shares worth Rs 518.30 crore on Wednesday, 27 October 2010, as per provisional data from the stock exchanges.
Foreign funds have made heavy purchases of Indian stocks this year. Net equity inflow in 2010 now stands at a record $24.89 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.
While global liquidity remains ample, a section of the market is worried that a strong equity issuance pipeline over the next six months will soak liquidity from the secondary equity markets. Indian companies are estimated to raise about Rs 80000 crore from equity and debt issue over the next three to six months. State-run Power Grid Corp, Steel Authority of India and Indian Oil Corp are some of the companies that are planning large share sales in coming months.
Currently, a large sum of money is blocked in the Coal India IPO, which was subscribed more than 15 times. Pressure on fund outflows will ease in late October 2010 or early November 2010 as Coal India begins to refund excess subscriptions received towards its initial public offering.
At 11:25 IST, the BSE 30-share Sensex was up 70.75 points or 0.35% to 20,076.12. The Sensex rose 114.40 points at the day's high of 20,119.77 in early trade. The index lost 32.46 points at the day's low of 19,972.91 in morning trade.
The S&P CNX Nifty was up 19.65 points or 0.33% to 6,032.30. Nifty had slipped to day's low of 6,003.25 in morning trade.
The market breadth, indicating the health of the market was positive. On BSE, 1418 shares advanced while 1199 shares declined. A total of 122 shares remained unchanged.
The total turnover on BSE amounted to Rs 2009 crore by 11:25 IST compared with Rs 1245 crore by 10:25 IST
Among the 30-share Sensex pack, 16 declined while the rest gained. Hindalco (down 1.44%), Bhel (down 1.12%), and ICICI Bank (down 0.84%), edged lower from the Sensex pack.
Infosys (up 0.86%), HDFC Bank (up 1.72%) and ITC (up 0.39%), edged higher from the Sensex pack
Interest rate sensitive realty stocks declined on fears the Reserve Bank of India (RBI) may raise rates further to curb high inflation. DLF (down 0.88%), Unitech (down 0.73%), HDIL (down 0.64%), Parsvnath Developers (down 1.08%), declined.
Index heavyweight Reliance Industries (RIL) rose 0.47% to Rs 1097.70 in volatile trade oscillating between Rs 1088.80-1102 so far during the day. As per recent reports, RIL is expected to achieve peak output of 80 million standard cubic metres per day (mmscmd) from its KG-D6 block in about 12 months, bringing down the delay in its ramp-up by a year. Currently, natural gas production from the block is stagnant at 60 mmscmd. RIL unveils Q2 September 2010 results on Saturday, 30 October 2010.
Oil and gas heavyweights Oil & Natural Gas Corporation (ONGC) rose 1.39% and Cairn India rose 0.50% ahead of their June-September 2010 quarter results earnings due today, 28 October 2010.
Oil marketing companies also rose. HPCL (up 2.23%), BPCL (up 4.48%), and Indian Oil Corporation (up 1.54%), gained.
Gujarat State Petronet lost 2.88% after net profit declined 16.85% to Rs 91.51 crore on 0.71% fall in net sales to Rs 252.97 crore in Q2 September 2010 over Q2 September 2009. The company declared its results after market hours on Wednesday, 27 October 2010.
Everest Kanto Cylinder advanced 2.58% after the company reported consolidated net profit of Rs 24.65 crore in Q2 September 2010 compared with a net loss of Rs 5.41 crore in Q2 September 2009.
Most auto stocks edged higher in anticipation of robust earnings and on hopes of strong sales in the ongoing festive season. India's top small car maker by sales Maruti Suzuki India rose 0.77% ahead of its Q2 September 2010 results on Saturday, 30 October 2010.
India's biggest commercial vehicles maker by sales Tata Motors advanced 0.50% to Rs 1200.20. The stock hit record high of Rs 1206.60 today.
India's top bike maker by sales Hero Honda Motors rose 1.06% ahead of its Q2 earnings on Friday, 29 October 2010.
India's largest tractor maker by sales Mahindra & Mahindra fell 0.19%. The company announces its Q2 result on Friday, 29 October 2010.
India's largest listed cellular services provider by sales Bharti Airtel surged 2.89% to Rs 331.30 on reports it is interested in buying the yet-to-be-launched Indian wireless broadband business of Qualcomm. It was the top gainer from the Sensex pack. Reportedly, Bharti Airtel is primarily interested in Qualcomm's airwaves and permits for Delhi, complementing the 3G frequencies it won in the circle earlier this year.
India's second largest listed cellular services provider by sales Reliance Communications rose 0.16%.
Everonn Education jumped 2.57% after consolidated net profit rose 32% to Rs 15.55 crore on 47.8% increase in net sales to Rs 108.06 crore in Q2 September 2010 over Q2 September 2009. The result was announced after market hours on Wednesday, 27 October 2010.
Hindustan Copper rose 1.73% after net profit soared 272.25% to Rs 56.21 crore on 31.16% rise in net sales to Rs 324.41 crore in Q2 September 2010 over Q2 September 2009. The result was announced after market hours on Wednesday, 27 October 2010.