The key benchmark indices hit fresh intraday lows in early afternoon trade as investors made room for investment in the initial public offer (IPO) of Coal India, billed as the country's largest issue ever. The IPO of Coal India opens for bidding on 18 October 2010. FMCG and consumer durables stocks fell. But, fertilizer and healthcare stocks rose. Index heavyweight Reliance Industries (RIL) reversed initial gains. Two other heavyweights ICICI Bank and Infosys, also edged lower.
The market breadth was positive, weakening from a strong breadth earlier in the day. The BSE 30-share Sensex was down 89.67 points or 0.44%, up close to 25 points from the day's low and off close to 185 points from the day's high. Most Asian stocks were in the red.
Stocks were volatile. The market edged higher after moving between positive and negative terrain in early trade. The market lost ground later with the Sensex hitting a fresh intraday low. The market regained positive zone in morning trade. The market once again slipped into the red and was marginally lower in mid-morning trade. The market extended losses to hit a fresh intraday low in early afternoon trade.
NSE's volatility index, India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, was down 1.82% at 22.04. The index had risen 3.31% to 22.45 on Thursday, 7 October 2010, a day after it had lost 1.98% to 21.73 on Wednesday, 6 October 2010. The index had fallen 2.76% to 22.17 on Tuesday, 5 October 2010. It had risen 6.39% to 22.80 on Monday, 4 October 2010. The index had dropped 3.68% to 21.43 on Friday, 1 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 National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) have decided to implement 'pre-market call auctions' which is a special 15-minute trading window starting at 9:00 IST from 18 October 2010. The aim of this exercise is to enable better price discovery in the market at the opening bell.
The Reserve Bank of India (RBI) on Thursday, 7 October 2010, relaxed norms governing restructuring of loans given to corporates, granting promoters more time to repay their share of funds to the bank. The promoters could be allowed to bring in 50% of their sacrifice, i.e. 50% of 15%, upfront and the balance within a period of one year, the RBI said in a notification. The RBI said besides cash payment, the promoter can also bring in contribution in the form of de-rating of equity, conversion of unsecured loan brought by the promoter into equity and interest free loans.
Finance Minister Pranab Mukherjee said on Thursday, 7 October 2010, that global tensions over currencies should be resolved through consensus-building negotiations. With regard to currency valuation, my approach is that we should engage the countries in negotiation and try to build up a consensus through which the matter can be resolved, Mukherjee said in Washington on the sidelines of the IMF and World Bank meetings.
Foreign funds continue to aggressively mop up Indian stocks. As per provisional figures on BSE, foreign institutional investors (FIIs) bought shares worth Rs 1182.91 crore on Thursday, 7 October 2010.
Net equity inflow in 2010 now stands at a record $21.03 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.
But, a section of the market is concerned 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 36000 crore from share sales over the next three to six months. This includes a large initial public offer (IPO) from Coal India this month. The government plans to raise about Rs 15000 crore to Rs 16000 crore from divestment of 10% stake in Coal India. The Coal India IPO is billed as the country's largest issue ever. The IPO of Coal India opens for bidding on 18 October 2010.
Reserve Bank of India deputy governor Subir Gokarn on Tuesday, 5 October 2010, said the central bank is considering measures to deal with an influx of foreign fund flows. The rupee hit a two-year high against the dollar on Thursday, 7 October 2010. A rising rupee is a bad news for exporters, particularly the labour-intensive segments such as textiles and leather. The government has recently extended sops to some of the labour intensive export sectors.
On Monday, 4 October 2010, Finance Minister Pranab Mukherjee said there was no need to intervene in the foreign exchange market or cap foreign portfolio inflows. As long as the capital flows are in excess of the current account deficit the pressure to appreciate will continue and it could potentially disrupt, RBI's Gokarn said on Tuesday.
India requires sustained foreign investment to plug its widening current account deficit, which has been worsened by a yawning trade deficit.
Mukherjee said on Thursday, 7 October 2010, that huge surpluses in some countries and large deficits in others are unsustainable and should be addressed in multilateral discussions. He also called for an early conclusion to the stalled Doha Round of world trade talks.
The next major trigger for the stock market is Q2 September 2010 results. Brokerage earnings estimates will now roll over to FY 2012 (year ending March 2012). The Q2 September 2010 earnings season kick-starts next week.
The International Monetary Fund (IMF) on Wednesday, 6 October 2010, raised its India growth forecast for 2010. Indian economy will grow 9.7% in 2010, up from July forecast of 9.4%, the IMF said. IMF has forecast 8.4% growth for India in 2011. The world economy, led by emerging markets, is forecast to grow by 4.8% in 2010 and 4.2% in 2010 and a sharper global slowdown is unlikely, the IMF said.
Annual food inflation eased in late September 2010 on improved supplies, which could soothe the Reserve Bank of India's concerns high food prices could spill over to other parts of the economy. The food price index rose 16.24% while the fuel price index climbed 10.73% in the year to 25 September 2010, government data released on Thursday, 7 October 2010, showed. In the prior week, annual food and fuel inflation stood at 16.44% and 10.73% respectively.
The primary articles index was up 18.53% in the latest week compared with an annual rise of 18.31% in the previous week, both under a new series of data with a different base year of 2004-05, new components and weightings. The wholesale price index, the most widely watched gauge of prices in India, rose 8.5% in August 2010.
Most Asian stocks fell on Friday, 8 October 2010, on caution ahead of the key US jobs report due later in the global day. The key benchmark indices in Taiwan, South Korea, Japan, Indonesia and Singapore fell by between 0.2% to 0.72%.
But, Chinese stocks rose sharply as they played catch-up on their first trading day after the Golden Week holiday. News Moody's Investors Service is reviewing China's government bond rating for a possible upgrade, also aided the rally in Chinese stocks. The key benchmark indices in China and Hong Kong rose by between 0.73% to 3.31%.
Moody's Investors Service said Friday it is considering upgrading its A1 rating on Chinese government debt, citing the nation's growth outlook, the determined and effective stimulus program enacted during the global meltdown, and the likely containment of risks arising from the historic credit expansion in 2009. Moody's said it will conclude its review in three months. The ratings agency lifted its view on China's fiscal situation to positive from stable in November 2009 after assessing China's resilient and strong economic performance in the wake of the global crisis.
Trading in US index futures indicated that the Dow could fall 4 points at the opening bell on Friday, 8 October 2010. US index futures reversed initial gains.
Investors will pay attention to the US non-farm payrolls data for September 2010 due later in the global day. The data is likely to show a 10,000 decline in jobs from August 2010, when jobs fell by 54,000
Meanwhile, finance ministers from the Group of seven are preparing to meet in Washington later in the global day, and traders expect some discussion on currency markets following recent sharp falls in the dollar and intervention by several countries to weaken their currencies.
At 12:20 IST, the BSE 30-share Sensex was down 89.67 points or 0.44% to 20,225.65. The index rose 93.87 points at the day's high of 20,409.19 in early trade. The Sensex fell 115.13 points at the day's low of 20,200.19 in early afternoon trade.
The S&P CNX Nifty was down 26.30 points or 0.43% to 6,094.
The BSE Mid-Cap index fell 0.14%. The BSE Small-Cap index rose 0.13%. Both these indices outperformed the Sensex.
The market breadth was positive. On BSE, 1466 shares advanced while 1355 shares declined. A total of 92 shares remained unchanged. The breadth was much stronger earlier in the day.
From 30 share Sensex pack, 17 rose and rest fell.
Index heavyweight Reliance Industries (RIL) fell 0.15% to Rs 1036.90. The stock came off the day's high of Rs 1047.10. RIL may reportedly be sitting on yet another gold mine -- its D4 block. RIL is the operator of the block with 85% stake. RIL's partner Niko Resources, which owns 15% in the block located on the east coast of India, has raised initial estimates of gas reserves in the D4 block.
Edward S Sampson, Chairman and CEO of Canada-based Niko Resources, told investors in a conference that it feels that reserves at the D4 block are twice the size of the D6 block and have prospectivity of up to an exceeding potential for 100TCF gas. RIL said that the appraisal process is presently being undertaken and, therefore, will not comment at this juncture.
Two other index heavyweights ICICI Bank and Infosys fell 0.93% and 0.17% respectively.
Mahindra & Mahindra, Tata Steel, Jaiprakash Associates, HDFC and TCS fell by between 1.54% to 2.78%.
Some FMCG stocks fell on profit taking. Marico, Dabur India, ITC and United Spirits fell by between 0.26% to 1.46%.
Consumer durables stocks also fell on profit taking. Blue Star, Rajesh Exports and Videocon Industries fell by between 0.12% to 1.93%.
Some fertilizer stocks rose on renewed buying. National Fertilizer, GSFC and Deepak Fertilser rose by between 0.08% to 1%.
Healthcore stocks rose. Ranbaxy Laboratories, Dr Reddy's Laboratories, Lupin and Cipla rose by between 0.26% to 1.74%.
Greaves Cotton lost 2.81% after the stock turned ex-dividend today, 8 October 2010, for a total dividend of Rs 10.50 per share for the year ended June 2010.
McNally Bharat Engineering Company gained 0.6%, after the company secured a contract worth $18.3 million from Konkola Copper Mines Plc, Zambia for its copper concentrator plant and flotation circuit.
Surya Pharmaceutical rose 1.13% after the company's board decided to raise $25 million by issuing global depositary receipt.
