Thursday Closing Report: A break below 19,800 will be disastrous

The high degree of volatility associated with the futures and options (F&O) contract expiry, coupled with institutional selling, resulted in the indices closing below their crucial levels.

The Indian market opened on a firm note this morning taking cues from its Asian counterparts, which were trading with marginal gains in early deals. Nervousness on the expiry day of the October futures and options (F&O) contract led the market into the negative terrain for a short while after which the indices bounced back into the green on news that food inflation for the week ended 16th October had eased.

The market stayed in a narrow range near the neutral line but got a boost in the noon session as the European markets opened higher. A sudden bout of selling in the last half-hour saw the indices tumbling into the red once again touching the day's lows. However, a marginal reversal resulted in the market settling off the day's low, but in the red for the third day in a row.

The Sensex ended 64.33 points (0.32%) down at 19,941 after touching an intraday high of 20,185 and a low of 19,869. The Nifty stood at 5,987, a decline of 24.95 points (0.41%) over its previous close.

The losers outnumbered the gainers in terms of market breadth today. The Sensex ended with 22 stocks in the red against eight gainers. The Nifty had 32 declining stocks and 18 in the advancing list at the end of trade. The broader indices underperformed the key benchmarks today. The BSE Mid-cap index tanked 0.64% while the BSE Small-cap index shrank 0.53%.

The top Sensex gainers were Bharti Airtel (up 2.62%), Hero Honda (up 2.20%), HDFC (up 1.88%), HDFC Bank (up 0.74%) and Tata Power (up 0.65%). Today's losers included Jaiprakash Associates (down 2.24%), DLF (down 2.22%), NTPC (down 1.79%), Tata Steel (down 1.57%) and Sterlite Industries (down 1.50%).

BSE Auto was the lone gainer in the sectoral space, up 0.25%. The sectoral losers were led by BSE Realty (down 1.72%), BSE Consumer Durables (CD) (down 1.51%), BSE Power (down 1.08%), BSE Metal (down 0.85%) and BSE PSU (down 0.75%).

Food inflation fell sharply to 13.75% - down 1.78 percentage points - for the week ended 16th October, on improved supplies but economists said the Reserve Bank of India (RBI) will still raise short-term rates.

Food inflation was 15.53% in the previous week, and 12.15% in a year ago period. This is the second straight week of decline in food inflation.

Finance minister Pranab Mukherjee recently attributed the rise in overall inflation to high food price. The overall inflation for September stood at 8.6%, much higher than the RBI's comfort level of 5%-6%.

The Asian pack ended mixed on concerns about the pace of the global economic recovery. Meanwhile, Bank of Japan brought forward its 15th-16th November policy meeting to next week in a bid to launch its five trillion yen asset-buying initiative to boost the country's economy. Investors expect volatility to continue till next week until a clearer picture emerges.

The Hang Seng was up 0.20%, Jakarta Composite gained 0.40%, KLSE Composite added 0.02%, Straits Times was up 0.16% and Taiwan Weighted surged 0.76%. On the other hand, Shanghai Composite fell 0.15%, Nikkei 225 lost 0.22% and Seoul Composite shed 0.09%.

Wall Street closed lower on Wednesday as investors preferred to stay on the sidelines, awaiting the outcome of the two-day Federal Reserve meeting next week. On the economic front, sales of new US single-family homes rose more than expected last month while demand for durable goods, excluding aircraft, unexpectedly fell in the same month.

The Dow fell 43.18 points (0.39%) to 11,126. The S&P 500 fell 3.19 points (0.27%) to 1,182. On the other hand, the Nasdaq rose 5.97 points (0.24%) to 2,503.26.

Institutional selling was seen in both segments yesterday. While foreign institutional investors were net sellers of stocks worth Rs9 crore, domestic institutional investors net sold equities worth Rs518 crore.

Amid reports of suicides by small loan borrowers and talk of a regulator to monitor the microfinance industry, market leader SKS Microfinance (down 1.48%) on Wednesday announced that it had "voluntarily" slashed interest rates. The company said it has reduced interest rate from 26.69% to 24.55% (depreciating) or a flat 12.55% per annum.

The move is seen as a damage control exercise by the Hyderabad-based company given the negative publicity starting from the sacking of SKS Microfinance CEO S Gurumani and a spate of suicides by borrowers, although SKS has maintained they were unrelated.

Wind turbine major Suzlon Energy (down 0.70%) has said it is looking to enter new regions, mainly Latin America and the African continent in the coming years. The company, which has added over 5,000MW of wind power capacity for around 1,500 customers in India, has operations across Asia, Australia and Europe.

Suzlon is the third largest player in the global market with 10% share worldwide, and more than 50% share in the Indian market.

IT services firm Religare Technova (down 5%)  has completed the de-merger of its global Banking, Financial Services and Insurance (BFSI) led products business from its healthcare IT businesses.

The company also announced a recast of its global management team and its board, with Ralph Horne now being appointed as Global CEO and managing director, Religare Technova said in a statement.


Core sector registers sluggish 2.5% growth in September

New Delhi: The growth of six infrastructure industries slowed to 2.5% in September, pulled down by contraction in output of coal and petroleum refinery, reports PTI.

The six core sectors - crude oil, petroleum refinery products, coal, electricity, cement and finished steel - had expanded by 4.3% in September 2009.

Petroleum refinery output and coal production contracted by 10.2% and 2%, compared to a growth of 3.4% and 6.5% respectively during the same month last year, an industry department release said today.

While crude oil production grew by 12.5%, electricity generation growth slowed to 1.3% in September.

Cement production grew by 5.2% and finished steel by 5.8%.

During April-September period the core sector, which contribute about 27% in the Index for Industrial Production (IIP), grew by 4%, against 4.5% in 2009-10.

In August the core sector industries grew by 3.9%.


PFC inks pack with NPCIL to provide financial assistance

New Delhi: State-run Power Finance Corporation (PFC) today said it has signed an agreement with the Nuclear Power Corporation of India (NPCIL) for providing financial assistance, reports PTI.

"The company has signed a memorandum of understanding (MoU) with NPCIL for offering financial assistance to it for its new power projects as well as renovation, refurbishment arid life extension projects," the company said in a filing to the BSE.

Power Finance Corporation is a state-run company, which finances power projects in the country. Besides it is a nodal agency for implementing Ultra Mega Power Projects (UMPPs) in the country.

NPCIL, the sole player in nuke segment in India, is setting up nuclear power generation projects in the country.


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