The key benchmark indices opened on a buoyant note, extending Wednesday's (18 August 2010) strong gains, tracking gains in Asian stocks. Data showing sustained buying by foreign funds underpinned sentiments, as the barometer index BSE Sensex and the 50-unit Nifty struck their highest levels in 2 1/2 years. The market breadth was strong. Index heavyweight Reliance Industries (RIL) was firm. Thomas Cook India was the top traded counter on BSE on multiple bulk deals in early trade.
Stock brokers have advised clients to refrain from selling shares today, 19 August 2010, which they had bought in the cash segment on Wednesday, 18 August 2010, so as to avoid auction of shares due to clubbing settlements on account of a bank holiday today, 19 August 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 1.89% at 16.09. The index had slumped 6.98% at 16.40 on Wednesday, 18 August 2010. The index had lost 2.65% at 17.63 on Tuesday, 17 August 2010. The index had jumped 8.18% to 18.11 on Monday, 16 August 2010, a day after it had lost 7% on Friday, 13 August 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.
Foreign funds have made heavy purchases of Indian stocks over the past 2-1/2 months. As per provisional data from the stock exchanges, foreign funds bought equities worth a net Rs 674.52 crore on Wednesday, 18 August 2010. Domestic funds sold shares worth a net Rs 113.51 crore on that day.
Foreign funds have bought equities worth a net Rs 5544.79 crore so far this month, till 18 August 2010, absorbing selling of Rs 3262.51 crore from domestic funds, as per data from the stock exchanges.
Foreign funds had bought shares worth a net Rs 8320.50 crore in July 2010, absorbing selling by domestic institutional investors. Domestic funds sold shares worth a net Rs 6323.13 crore in July 2010.
Foreign funds had pumped in Rs 7713.97 crore in equities in June 2010, absorbing selling by domestic funds in that month. Domestic funds had dumped shares worth a net Rs 4777.05 crore in June 2010.
Asian markets edged higher on Thursday, 19 August 2010, led by technology and industrial companies. The key benchmark indices in Japan, South Korea, Indonesia, Singapore, Hong Kong, Taiwan and China rose by between 0.07% to 1.10%.
US stocks ended little-changed on Wednesday, 18 August 2010, as investors looked in vain for clear economic and corporate signs amid a flagging economic recovery. The Dow Jones Industrial Average ended 1.14 points, or 0.01%, lower at 10,302.01. The Nasdaq Composite gained 0.39% to 2181.87, while the Standard & Poor's 500-stock index inched up 0.13 point to 1079.38.
In economic data, US mortgage applications soared last week on the strongest demand for home refinancing loans in 15 months. Meanwhile, the US government data showed crude inventories rose to the highest level since weekly records began in 1990. The data follows Tuesday's report from the American Petroleum Institute, which showed a surprisingly large build in supplies.
Trading in US index futures indicated Dow could rise 11 points at the opening bell on Thursday, 19 August 2010.
Back home, the Cabinet Committee on Economic Affairs (CCEA) is set to meet today to decide on the Direct Tax Code and imposition of import duty on power equipment.
The Centre and states were unable to clinch a deal at a meeting of the empowered committee of state finance ministers on Wednesday on the constitutional amendments, clouding prospects for rollout of the most ambitious indirect taxes reform viz. the Goods and Services Tax (GST) -- next year.
Finance Minister Pranab Mukherjee on Wednesday offered concessions on most major demands by states on the constitutional amendments needed to allow an ambitious tax reform to take effect from next April. After states objected to a clause in the draft GST bill giving the union finance minister veto power over state tax matters, the finance minister dropped this clause altogether. In a major concession to dissenting states, Mukherjee said decisions taken by a proposed GST council will be taken by consensus. Mukherjee also promised states another revised draft of the GST bill to reflect these concessions. It is critical for meeting the April 2011 deadline, Mukherjee said.
However, some states, especially those ruled by the opposition Bhartiya Janta Party, wanted one month to consider the draft GST bill which also needs approval from state legislatures before the new tax system can be introduced. Some media reports suggested that even if the GST bill is introduced in the next session of parliament starting towards the end of the year, the deadline for the rollout of GST from 1 April 2010, could be met.
India needs to channelise more pension and insurance funds into the infrastructure sector, Finance Minister Pranab Mukherjee said in a government statement released on Wednesday, 18 August 2010. India plans to spend $1.5 trillion between 2007 and 2017 to upgrade its infrastructure to support double-digit economic growth rates.
India's exports in July grew an annual 13.2% to $16.24 billion, Trade Secretary Rahul Khullar said on Tuesday, 17 August 2010, the ninth straight month of expansion. Imports for the month rose 34.3% to $29.17 billion, he said.
Meanwhile, the easing of inflation in July 2010 has raised expectations that the central bank may lessen the scale and pace of increase in interest rates. The latest data showed the wholesale price index (WPI) rose an annual 9.97% in July 2010, slower than expectations. The annual food inflation rate fell to 10.29% in July 2010 from 14.6% rise in June 2010, with prices of vegetables and sugar falling on the month. Manufacturing inflation, which the RBI uses as a proxy for assessing demand, cooled to 6.15% from 6.66% in June 2010. On the flip side, the headline inflation for May 2010 was revised upwards to 11.14% from 10.16%.
The Reserve Bank of India will undertake a mid-quarter monetary policy review on 16 September 2010, as per the schedule.
The Reserve Bank of India (RBI) at its Q1 monetary policy on 27 July 2010 raised a key lending rate by 25 basis points to curb surging inflation. With growth taking firm hold, the balance of policy stance has to shift decisively to containing inflation and anchoring inflationary expectations, the RBI said at that time. The RBI also signaled its strong preference for tight liquidity, saying it would ensure that excess liquidity in the system doesn't dilute the effectiveness of policy-rate actions.
The industrial output rose 7.1% in June 2010 compared with revised 11.3% rise in May 2010, the latest data showed. Manufacturing grew 7.3%, mining sector grew 9.5%, consumer goods sector rose 8.3%, capital goods sector expanded 9.7% and electricity generation rose 3.5%.
The industrial production growth rate for May 2010 was revised marginally down to 11.3% from 11.5% reported earlier. The growth rate for March 2010 was revised upward to 14.5% from 13.9% reported earlier.
The cumulative rainfall during the period from 1 June 2010 to 18 August 2010 was 5% below normal. The Southwest monsoon was vigorous over Sub-Himalayan West Bengal & Sikkim and Konkan & Goa and active over Assam & Meghalaya and North Interior Karnataka during past 24 hours, the India Meteorological Department (IMD) said in its daily update on Wednesday, 18 August 2010. The IMD expects widespread rainfall activity over Sub-Himalayan West Bengal & Sikkim, Bihar, Uttar Pradesh, Uttarakhand, Himachal Pradesh and northeastern states over the next few days.
Rainfall over the country as a whole for the second half (August to September) of the 2010 southwest monsoon season is likely to be normal, according to the India Meteorological Department (IMD). Quantitatively, rainfall for the country as a whole during the period August-September 2010 is likely to be 107% of long period average (LPA) with a model error of plus/minus 7%, according to the weather office.
The south west monsoon is important for India as about 60% of the country's farmlands are rain-fed and more than half of the workforce is employed in the agriculture sector. The weather office expects this year's monsoon rains to be at 102% of the long-period average. If the southwest monsoon for the June-September monsoon season turns out good and if it is well distributed, it will help raise farm output, boost rural incomes and lower food inflation.
At 9:20 IST, the BSE 30-share Sensex was up 53.78 points or 0.29% to 18,310.90. The Sensex gained 93.61 points at the day's high of 18,350.73 in early trade, its highest level since 5 February 2008. The index rose 19.38 points at the day's low of 18,276.50 in early trade.
The S&P CNX Nifty was up 19.50 points or 0.36% to 5,498.65. Nifty struck day's high of 5,505.85 in early trade, its highest level since 4 February 2008.
The market breadth, indicating the health of the market was strong. On BSE, 1177 shares advanced while 361 shares declined. A total of 43 shares remained unchanged.
The total turnover on BSE amounted to Rs 545 crore by 09:25 IST
From the 30-share Sensex pack, 25 stocks advanced while only 5 of them declined. Hindalco Industries (up 0.70%), ITC (up 0.68%), and Bharti Airtel (up 0.43%) edged higher from the Sensex pack.
State Bank of India (down 0.90%), Infosys (down 0.54%), and Reliance Communications (down 0.43%), edged lower from the Sensex pack.
India's largest mortgage lender by total income HDFC rose 1.26% to Rs 629 on momentum buying. It was the top gainer from the Sensex pack. The stock had turned ex-split for a 5-for-1 stock split on Wednesday, 18 August 2010.
Index heavyweight Reliance Industries (RIL) gained 0.67%. The company recently denied a media report that the company may sell treasury stocks worth more than $1 billion. The company has no such plans, Reliance spokesman Manoj Warrier clarified to the media on Wednesday, 11 August 2010.
India's top truck maker by sales Tata Motors lost 1.20% to Rs 1035 and was the top loser from the Sensex pack. As per reports, the company plans to raise $700-750 million through issue of shares with differential voting rights to retire debt. Tata Motors' ADR fell 1.06% on the NYSE on Wednesday, 18 August 2010.
India's second largest private sector bank by net profit HDFC Bank was up 0.48% after its ADR gained 4.47% on the NYSE on Wednesday, 18 August 2010.
Thomas Cook India was down 0.13% to Rs 65.90 on high early volume of 1.14 crore shares. Multiple bulk deals were struck in the counter in early trade. It was the top traded counter on the BSE with turnover of Rs 75.74 crore.