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Monday Closing Report: Bulls might run amok again

Adding to the last-minute gains of Friday, the market opened higher this morning on positive economic data from across the region but a technical snag on the Bombay Stock Exchange (BSE) forced the bourse to close trading from 12 noon till 2.30pm. However, unfazed by the development, the market ended with smart gains.

 The local market opened firm this morning, tracking positive cues from across the Asian region and upbeat manufacturing output numbers for September, as announced by the HSBC Markit Purchase Managers’ Index (PMI). The gains were supported by banking, realty and consumer durables stocks. The Sensex suffered a setback as trading was halted at noon today due to “technical glitches.” However, the Nifty continued its north-bound journey amid a fair degree of choppiness.
The Sensex, which resumed trading at 2.30pm, recouped and touched the day’s high but declined to its pre-closure levels to trade in a narrow range and close near those figures. The Nifty also pared some of its earlier gains at the end of the day, choosing to temporarily ignore the Reserve Bank of India’s (RBI) possible move to hike key rates in its mid-term policy review tomorrow.
The Sensex closed 323.29 points (1.61%) higher at 20,355. The barometer touched an intraday high of 20,609 and a low of 20,267. The Nifty settled at 6,117, a gain of 100 points (1.66%) over its previous close. The index touched a high of 6,132 and a low of 6,084, respectively.
The overall market breadth was tipped in favour of the gainers today. The Sensex ended with 26 gainers and four declining stocks while the Nifty had 42 advancing stocks against eight losers. The broader indices also ended in sync with the key benchmarks. The BSE Mid-cap index settled 1.69% higher while the BSE Small-cap index surged 1.21%.
The top Sensex gainers were ICICI Bank (up 5.97%), Mahindra & Mahindra (up 4.65%), Jaiprakash Associates (up 3.62%), HDFC (up 3.16%) and DLF (up 3.10%). The losers included Maruti Suzuki (down 2.74%), Hero Honda (down 1.37%) and NTPC (down 0.92%).
All sectoral indices ended in the green today. The top performers were BSE Consumer Durables (up 3.61%), BSE Bankex (up 3.38%), BSE Realty (up 2.90%), BSE Capital Goods (up 2.18%) and BSE Healthcare (up 1.82%).
The HSBC Markit Purchase Managers' Index (PMI) for India, based on a survey of 500 companies, rose to 57.2 in October from 55.1 in September and 57.2 in August. The rise indicates a robust growth in the country's manufacturing sector.
This was the 19th successive month where an increase in incoming new business was indicated. Whilst the rate of new order growth accelerated from September’s 10-month low, it remained softer than the notably steep expansions recorded at the start of 2010, according to the HSBC PMI press release.
India’s exports grew by 23.2% in September, recording a two-year high of $18.02 billion, while faster import growth raised concerns over the country’s widening trade gap. Imports grew even faster, by 26.1% to $27.14 billion in September.
During the April-September 2010-11 period, exports increased by 28% to $103.64 billion compared to the same period in the previous fiscal, according to official data released today.
Imports in the first half of the current fiscal stood at $166.4 billion, an increase of 29.9% year-on-year, translating into a massive trade gap of $62.83 billion during April-September 2010-11 period. The trade deficit in September was $9.11 billion.
The Asian pack, with the exception of the Japanese Nifty, finished with splendid gains on the first trading day of November buoyed by the six-month high rise in the official Purchase Managers’ Index. On the other hand, the Japanese market settled in the red as the stronger yen worried exporters.
The Shanghai Composite jumped 2.52%, the Hang Seng surged 2.41%, Jakarta Composite and the KLSE Composite were up 0.27% each, Straits Times rose 1.58%, Seoul Composite gained 1.69% and Taiwan Weighted advanced 1.12%. On the other hand, Nikkei 225 shed 0.52% in trade today.
The US markets ended flat with a mixed bias on Friday as investors awaited the outcome of the US mid-term polls and the FOMC meet. Meanwhile, the Commerce Department reported Friday that the economy expanded at a 2% annual rate in the July-September quarter. The 2% rise marked an improvement from the feeble 1.7% growth in the June quarter.
The Dow added 4.54 points (0.04%) to 11,118. The S&P 500 fell by 0.52 points (0.04%) to 1,183. The Nasdaq was a tad higher by 0.004 points to 2,507.
Foreign institutional investors (FIIs) infused a record $6.4 billion in October, accounting for nearly one-fourth of the total inflows in the stock market so far this year.
As per the data available with capital market regulator Securities and Exchange Board of India (SEBI), overseas fund houses were net buyers of Indian equities worth $6.42 billion (Rs28,562 crore) during the current month, the highest amount pumped in by FIIs in any single month.
FIIs were net buyers of stocks worth Rs735 crore on Friday. Domestic institutional investors were net buyers of equities worth Rs344 crore on the same day.
Infrastructure construction firm Tecpro Systems (up 10.40%) has received a letter of intent (LoI) for two Balance of Plant (BoP) orders worth Rs1,978 crore from the Andhra Pradesh Power Generation Corporation (APGENCO), which includes orders worth Rs1,255.00 crore from Rayalaseema Thermal Power Project and Rs723 crore from Kakatiya Thermal Power Project.
The company’s scope of activities for the projects include designing, engineering, manufacturing, procurement, testing at manufacturer’s works, supply, delivery, transportation to site, transit and site storage insurance, storage, construction, erection, testing at site, commissioning and handing over of Balance of Plant including civil works.
Automaker Tata Motors (up 0.94%) today reported 21.26% increase in its sales to 64,757 units during October compared to 53,404 units in the same month last year.
Total passenger vehicle sales in the domestic market stood at 24,478 units in October, a jump of 22.32% while exports grew by over two-fold to 5,950 units compared to 2,852 units in the same month last year.
Pratibha Industries (up 0.78%), in a joint venture with Nagarjuna Construction Company, SMC Infrastructure and Electrosteel Castings, has bagged a water supply and fluorosis mitigation project worth Rs387.54 crore from the Tamil Nadu Water Supply & Drainage Board. The company’s share in the joint venture is 20%.
The project involves construction of 166 ground level reservoirs, 332 ESR/overhead tanks and 10 re-chlorination buildings, 13 big booster pumping stations, 232 small booster pumping stations, 67km of MS pipeline, 575km DI pipelines, 2,513km HDPE pipeline and other allied works.


RBI hints at tightening monetary policy

Mumbai: The Reserve Bank of India (RBI) hinted at a marginal hike in key policy rates when it reviews its monetary stance tomorrow, saying inflation was still above the comfort zone and that there was uptick in credit to non-food sectors, reports PTI.

"Elevated inflation remains a challenge for monetary policy," RBI said today in its report on macroeconomic and monetary developments, ahead of tomorrow's second quarter review of FY10-11.

Overall inflation was 8.62% in September, although the government expects it to slip to 6% by December.

"Food inflation continues to remain high despite a good monsoon, as price pressures have amplified for certain non-cereal items like milk, eggs, fish and meat whose output is less responsive to monsoon," the central bank said.

Food inflation was 13.75% for the week ended 16th October. It has remained in double digits for the past three months.

The RBI also noted that credit to non-food sectors was healthy, although loan disbursals to the agriculture sector had declined.

The bank said its objective was to maintain growth and moderate inflation - a hint that a nominal hike may be on the cards tomorrow.

The RBI's professional forecasters' survey pegged gross domestic product (GDP) growth at 8.5%, which is a tad higher than the 8.4% it had forecast at the last review.

RBI governor D Subbarao will announce the busy season credit policy tomorrow, and he is widely expected to go for another hike in the short-term lending (repo) and borrowing (reverse repo) to rein in inflation.

The central bank has raised the key rates five times so far this year.

While there are lots of factors to propel economic growth, the RBI indicated a few downside risks such as weak external demand, pressure from capital inflows, some moderation in capacity utilization and persistent inflation in food items needed to be kept in mind.

"The uncertain global outlook and the dominance of supply rigidities in certain sectors that impart rigidity to the inflation path, pose greater challenges for monetary policy in its objective of anchoring inflationary expectations without hurting growth," the report said.

"Going forward, the growth-inflation outlook will dominate the policy response," the apex bank.


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