Wednesday, January 19, 2011

Market ends choppy trading session lower

High volatility was witnessed in late trade as the key benchmark trimmed losses after sliding to fresh intraday lows. Index heavyweights Reliance Industries extended losses in late trade. IT and capital goods stocks declined. FMCG and consumer durables stocks reversed initial gains. Bajaj Auto gained in volatile trade after Q3 result. The BSE 30-share Sensex was provisionally down 94.73 points or 0.5%, off close to 170 points from the day's high and up close to 100 points from the day's low.

The BSE Sensex provisionally closed below the psychological 19,000 mark, having alternatively moved above and below that mark earlier in the day. The 50-unit S&P CNX Nifty provisionally settled below 5,700 level. The market breadth turned negative compared with strong breadth earlier in the day.

Stocks were volatile. The market slipped into the red after a firm start. The market moved into positive zone after hitting fresh intraday low in morning trade. The Sensex moved between gains and losses in mid-morning trade. The market firmed up in early afternoon trade. The market held positive zone in afternoon trade. The market reversed direction after a sudden slide in mid-afternoon trade. The Sensex later trimmed losses after hitting a fresh intraday low. High volatility was witnessed in late trade as the key benchmark trimmed losses after sliding to fresh intraday lows

Prime Minister Manmohan Singh will reportedly reshuffle his cabinet on Wednesday in a mid-term effort to refresh a coalition government snared by corruption scandals and year-high food inflation as it faces key state elections.

K.C. Chakrabarty, a Reserve Bank of India deputy governor, said on Wednesday that inflation was in a difficult situation but manageable.

European stock markets reversed initial gains on Wednesday as profit taking emerged after a recent surge. The key benchmark indices in France and UK shed by between 0.13% to 0.28%. Germany's DAX rose 0.08%.

Asian stock markets were mostly higher Wednesday, with many technology shares rising around the region after upbeat results from Apple and International Business Machines. The key benchmark indices in China, Hong Kong, Japan, South Korea, and Taiwan rose by between 0.36% to 1.86%. However, Singapore's Straits Times fell 0.23% and Indonesia's Jakarta Composite fell 0.88%.

US stocks shook off concerns on Tuesday, 18 January 2011, surrounding Apple Inc, which was hit by news of Chief Executive Steve Jobs' medical leave, helped by strong earnings for the iPhone and iPad maker whose share rose more than 4 percent in extended trade. Optimism about earnings has helped bolster US stocks in recent weeks, fuelling hopes that the world's No.1 economy could return to a sustainable recovery path.

Trading in US index futures indicated a flat opening of US stocks on Wednesday, 19 January 2011.

Back home, the initial Q3 earnings have been a mixed bag. After disappointing Q3 results from IT bellwether Infosys, which also gave a muted guidance for Q4 March 2011, IT giant TCS reported stronger-than-expected results. Housing finance major HDFC came out with decent Q3 results, which also showed asset quality remain strong. Engineering & construction major L&T expects revenue growth to remain strong over the medium term on a healthy order book. The company also said while it is facing a substantial increase in the cost of raw materials such as steel and copper, margins are expected to remain healthy. Private sector bank Axis Bank has reported strong Q3 results, with asset quality remaining healthy.

On the macro front, high food prices have raised fears of aggressive hike in policy rates by the central bank in 2011. As per a poll by Capital Market, economists widely expect 25 basis points increase each in repo rate and reverse repo rate at 25 January 2010 policy review. Reserve Bank of India governor Duvvuri Subbarao said on Monday, 17 January 2011, that the country is facing surging inflation and that the RBI needs to calibrate monetary policy in order to manage inflation and also support growth.

The wholesale price index (WPI) rose an annual 8.43% in December 2010 on higher food prices, government data showed on Friday, 14 January 2011. The annual reading for October 2010 was revised upwards to 9.12% from 8.58%. Rising food and commodity prices are major challenges facing the government, Finance Minister Pranab Mukherjee said on Friday, 14 January 2011. Finance Secretary Ashok Chawla said on Monday, 17 January 2011, inflation is expected to ease to around 6.5% by end-March 2011.

As per provisional figures, the BSE 30-share Sensex was down 94.73 points or 0.5% to 18,997.32. The index rose 75.01 points at the day's high of 19,167.06 in early afternoon trade. The index fell 193.49 points at the day's low of 18,898.56 in late trade.

The S&P CNX Nifty was down 24.90 points or 0.44% at 5,699.15 as per provisional figures.

The BSE Mid-Cap index rose 0.27%. The BSE Small-Cap index gained 0.17%. Both these indices outperformed the Sensex.

The market breadth, indicating the health of the market, turned negative. On BSE, 1,450 shares declined while 1,419 shares advanced. A total of 112 shares remained unchanged. The breadth was strong earlier in the day.

Among the 30-member Sensex pack, 21 declined while the rest rose.

BSE clocked turnover of Rs. 3463 crore, higher than Rs. 3055.47 crore on Tuesday, 18 January 2011.

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