Key benchmark indices retained positive zone mid-morning trade as most Asian stocks rose. The BSE Sensex was up 41.44 points or 0.24% up about 120 points from the day's low and off close to 20 points from the day's high. The market breadth was positive. Index heavyweight Reliance Industries (RIL) trimmed initial losses. Interest rate sensitive realty stocks edged higher on bargain hunting after heavy losses over the past few months triggered by worries that higher interest rates will dent demand for residential and commercial property.
Airline stocks fell as a surge in crude oil prices and a weak rupee heightened concerns about the impact of high jet fuel prices on operating costs. Shares of oil exploration firms rose as crude oil prices surged. Software stocks rose on positive economic data in US and on a weak rupee.
The market slipped into the red soon after a positive opening. The market once again regained positive zone. The market pared gains shortly thereafter. Volatility continued as key benchmark indices recovered after hitting fresh intraday lows in morning trade. The barometer index BSE Sensex regained the psychological 17,000 mark after falling below that mark for a short while. The market retained positive zone in mid-morning trade.
Data on second quarter September 2011 corporate advance tax payment due on 15 September 2011 may provide cues on Q2 September 2011 results.
At 11:20 IST, the BSE Sensex was up 41.44 points or 0.24% to 17106.44. The index rose 60.84 points at the day's high of 17,125.84 in early trade. The index fell 77.63 points at the day's low of 16,987.37 in early trade.
The S&P CNX Nifty was up 7.55 points or 0.15% to 5,132.20. The Nifty hit a high of 5,140.70 and a low of 5,098.25 in intraday trade.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,457 shares rose and 819 shares declined. A total of 82 shares remained unchanged.
Among the 30-share Sensex pack, 18 fell while rest of them rose. Wipro, Infosys and TCS rose by between 1.9% to 4.07%. HDFC Bank, Jindal Steel & Power, Jaiprakash Associates and Bajaj Auto fell by between 0.66% to 1.82%.
Index heavyweight Reliance Industries (RIL) declined 0.54% to Rs. 827.25 on profit taking. The stock came off the day's low of Rs. 818.10. Europe's second largest oil company BP Plc, last month, completed the acquisition of a 30% stake in 21 oil and gas blocks that RIL operates in India. BP will pay RIL an aggregate consideration of $7.2 billion subject to completion adjustments for the interests to be acquired in the 21 production sharing contracts, the two companies said in a joint statement late last month. Further performance payments of up to $1.8 billion could be paid based on exploration success that results in development of commercial discoveries, the two companies said.
Maruti Suzuki India rose 0.8% after the chairman of the country's largest auto maker by sales R.C. Bhargava said that the company is considering building a new factory in Gujarat and may take a final decision in the next two to three months. Bhargava also said that a delegation from Maruti Suzuki, comprising Osamu Suzuki, chairman and chief executive of Maruti's parent Suzuki Motor Corp., will meet Gujarat Chief Minister Narendra Modi and other state senior government officials later Thursday to hold discussions about the proposed factory. This is still at an exploratory stage, Mr. Bhargava said. He said the auto maker is also considering other locations in India for the new factory, but he declined to give details.
Interest rate sensitive realty stocks edged higher on bargain hunting after heavy losses over the past few months triggered by worries that higher interest rates will dent demand for residential and commercial property. Purchases of both residential and commercial property are largely driven by finance. Phoenix Mills, DLF, HDIL, Orbit Corporation and Unitech gained by between 1.01% to 2.51%.
Shares of Oil exploration firms rose as higher crude oil prices will result in higher realization from crude sales. Cairn India rose 1.9%. India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) gained 0.11%. India's second biggest oil and gas exploration firm by revenue, Oil India, rose 1.29%.
Airline stocks fell as a surge in crude oil prices and a weak rupee heightened concerns about the impact of high jet fuel prices on operating costs. Kingfisher Airlines, Jet Airways and SpiceJet shed by between 0.01% to 1.32%. Aviation turbine fuel, or jet fuel constitutes more than 50% of operating cost for airliners. Prices of jet fuel are directly linked to crude oil prices. State-run oil marketing companies--Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation revise jet fuel prices on the 1st and 16th of every month based on the average international crude price in the preceding fortnight.
Oil traded near the highest close in more than a month in New York on speculation a storm building in the Gulf of Mexico poses a threat to supplies in the US, which were reduced last week by an earlier cyclone. US crude futures for October 2011 delivery were down 2 cents or 0.02% at 89.32 a barrel.
Jyothy Laboratories fell 1.83%, after the stock turned ex-dividend today, 8 September 2011, for dividend of Rs. 5 per share for the year ended March 2011.
ANG Industries gained 4.3% after the company sold its trailer axle division located at Greater Noida, Uttar Pradesh to Automotive Axle and Meritor Heavy Vehicle System India.
Foreign institutional investors (FIIs) bought shares worth Rs. 262.43 crore on Wednesday, 7 September 2011, as per provisional data from the stock exchanges. FIIs bought shares worth a net Rs. 2972.63 crore during six trading sessions from 29 August 2011 to 7 September 2011, as per data from the stock exchanges.
The government moved a step closer to an overhaul of century-old land acquisition laws on Wednesday by introducing a long-delayed bill in parliament that aims to draw infrastructure investment while compensating farmers and land-owners. The current parliamentary session ends on Friday, 9 September 2011 and the bill is unlikely to be passed before parliament reconvenes later this year. Compulsory land acquisition for the public good is a contentious issue as crowded India seeks to industrialize, with major factories, housing and transport projects held up by conflicts over land.
On the macro front, the government will unveil data on some wholesale price indices viz. the food price index, the primary articles index and the fuel price index for the year through 27 August 2011 today, 8 September 2011. The Reserve Bank of India (RBI) has said that a change in anti-inflationary monetary stance will be motivated by signs of a sustainable downturn in inflation.
Data on 12 September 2011 on industrial production for July 2011 and on 14 September 2011 on headline inflation for August 2011 will provide cues on the central bank's likely policy stance at its mid-quarter monetary policy review on 16 September 2011.
Moody's Investors Services affirmed its Baa3 rating for India's foreign currency government debt and its Ba1 rating for local currency debt in an annual credit analysis released early this week. The ratings firm assigned a positive outlook to India's rupee-denominated bonds, saying it will consider a unified Baa3 rating for all bonds if India improves its fiscal position and its commitment to strengthening the domestic market. The outlook for foreign-currency debt is stable.
The report was upbeat about India's ability to weather a global economic downturn. While it is not immune to an international growth slowdown, the strength of domestic demand and the diversity of the economy provides a buffer against a deceleration in globally exposed sectors, the report said. It noted that India's foreign currency reserves equal four times its foreign debt obligations.
A debt-to-GDP ratio of 71% is cause for concern, as interest on this debt eats up 25% of India's revenues annually. However, Moody's expects that continued GDP growth and incremental fiscal consolidation efforts will continue to lower the government debt/GDP ratio, the report said.
India's services sector grew at its slowest pace in more than two years in August 2011, throttled by feeble expansion in new business as a faltering global economy and tight domestic monetary conditions weighed, a survey showed on Monday, 5 September 2011. The HSBC Markit Business Activity Index, based on a survey of around 400 companies, slumped to 53.8 in August from 58.2 in July, the index's biggest one-month decline since January 2009. It was also the weakest growth since June 2009, but the index has stayed above the 50 mark that separates growth from contraction for 28 consecutive months.
The new business sub-index fell to its lowest level in three months in August, at 54.9 from July's 59.3, as dampening global economic conditions knocked orders. Expectations for new business were also scaled back in August. The survey also showed a reduction in service sector employment levels for the second consecutive month as new business growth slowed while input costs and output prices continued to march ahead.
India's manufacturing activity in August 2011 slowed to a 29-month low as exports took a beating amid the lingering uncertainty in the global economic environment, a survey showed last week. The seasonally adjusted HSBC Purchasing Managers' Index, prepared by Markit, fell to 52.6 in August from 53.6 in July. The pace of new order flows in August decelerated to the slowest in 29 months as export orders contracted at the sharpest rate since the series was started, HSBC said.
Production backlogs fell for the first time since March 2010 as pressure on operating capacity subsided. Also, inflationary pressures intensified as both input and output prices rose.
Exports surged 81.79% to $29.3 billion while imports jumped 51.5% to $40.4 billion in July 2011 over July 2010, leaving a trade deficit of $11 billion, data showed last week.
Most Asian stocks gained in a volatile trade on Thursday, 8 September 2011, ahead of key policy statements due out of the US and Europe. The key benchmark indices in South Korea, Singapore, Taiwan, Japan, and Indonesia were up by between 0.02% to 0.71%. The key benchmark indices in China and Hong Kong fell by between 0.25% to 0.75%.
The Bank of Korea held off from raising borrowing costs today, amid mounting risks that the global recovery will stall.
China will unleash a host of economic data on Friday, 9 September 2011, with the focus squarely on inflation. Any upside surprise, especially a number above the July inflation, would be negative for stocks in China, and would likely also hurt equities elsewhere in Asia. With food and fuel prices spiking, Chinese inflation hit a three-year high of 6.5% in July 2011, prompting some monetary tightening moves from the People's Bank of China.
The European Central Bank (ECB) is expected to keep its key interest rate unchanged at 1.5% at its monthly policy meeting on interest rates today, 8 September 2011. At its policy meeting today, the Bank of England's (BOE) Monetary Policy Committee is also expected to maintain its key benchmark rate at 0.5%, the thirty-first consecutive month at such a rate.
Trading in US index futures indicated that the Dow could fall 43 points at the opening bell on Thursday, 8 September 2011.
Federal Reserve Chairman Ben Bernanke is due to speak on Thursday, 8 September 2011, on the outlook for the US economy and the possibility of further quantitative easing, his last scheduled speech ahead of the Federal Open Market Committee's two-day meeting on 20 and 21 September 2011. Bernanke on 26 August 2011 refrained from stating that the Federal Reserve will immediately introduce new measures to support the US economy, saying instead that options would be discussed at the Fed's meeting in September 2011.
Global stock markets put in a strong performance on Wednesday, 7 September 2011, after a German court ruled in favor of proposed euro-zone bailouts, the Federal Reserve's Beige Book indicated that the US economy is still growing, and as details emerged on the US president's job-creation proposals to be unveiled later on Thursday, 8 September 2011. In an address to a joint session of Congress Thursday night, US president Barack Obama plans to propose bolstering employment by injecting more than $300 billion into the economy next year, mainly through tax cuts, infrastructure spending and aid to state and local governments.
