INDIAN MARKETS / QUICK REVIEW

Key benchmark indices ended a choppy trading session lower as pivotals underwent correction after two straight sessions of gains. European markets came off initial highs which provided the trigger for profit taking on the domestic bourses after the Sensex and the 5 unit S&P CNX Nifty struck their highest level in more than a month at the onset of the trading session.

The BSE 30-share Sensex was provisionally down 49.05 points or 0.29%, off 180.46 points from the day's high and up 6.86 points from the day's low. Earlier in the global day, the MSCI Asia Pacific Index hit a six-week high today after US stocks surged on Tuesday as worries over Dubai World's debt problems receded.

The market surged in opening trade on firm global stocks. The Sensex and the S&P CNX Nifty struck their highest level in more than a month. The market pared gains after an initial surge. It regained strength in mid-morning trade. The market slipped into the negative zone in early afternoon trade. It regained positive zone later. The market regained positive zone after sliding to a fresh intraday low in early afternoon trade. But the intraday rebound proved short lived. The market hit fresh intraday low at the fag end of the trading session as European stocks came off highs.

The World Bank has committed to increase its lending to India to about $7 billion this year from an average $2.3 billion in the previous four years, the finance ministry said in a statement. India has also sought early completion of the process of voice and quota reforms at the World Bank to increase the representation of emerging and developing countries, the ministry said.

In September, the World Bank approved $4.3 billion in loans for India to help finance infrastructure building and to shore up the capital of some state-run banks as the economy recovers from the global financial crisis. The loans are part of the bank's $14 billion lending for Asia's third-largest economy over three years through 2012.

Meanwhile, the government has reportedly drawn up 25 state firms for stake sales. These include Nuclear Power Corporation of India, National Bank for Agriculture and Rural Development, Exim Bank of India, Punjab & Sind Bank, Indian Railways Finance Corporation and National Housing Bank. Other companies planning initial public offers (IPO) include SBI Caps and SBI Fund Management, both subsidiaries of government-controlled State Bank of India, reports suggested.

Many of these IPOs could hit the market after the follow-on public offers of 5% each in NTPC and Rural Electrification Corporation, and a 10% stake sale in unlisted Satluj Jal Vidyut Nigam are completed in the current financial year, the report added.

On Tuesday, Finance Minister Pranab Mukherjee told parliament the government would sell up to 10% of its stake in the profit making state-run firms.

The market breadth was strong. Auto shares saw across the board rally following robust November sales figures with Tata Motors striking a fresh 52-week high of Rs 739.45 on BSE. Realty shares extended Tuesday's gains. Banking shares also logged gains on fresh buying. But FMCG shares dipped on selling pressure as investors shifted from the so-called defensive sector to high growth sectors.

European markets reversed early gains as bank shares declined. Key benchmark indices in UK, Germany and France were down by between 0.03% and 0.18%

Asian stocks rose for a third day today, 2 December 2009 following rise in commodity prices. Key benchmark indices in Hong Kong, Japan, South Korea, China, and Taiwan were up by between 0.37% to 1.40%.

The Reserve Bank of Australia on Tuesday raised its cash rate target by one quarter of a percentage point to 3.75%, further unwinding emergency policy settings no longer appropriate for the country's recovering economy.

Dubai World, the holding company at the heart of the Dubai crisis, on Monday announced a restructuring plan involving $26 billion in debt. However, the Dubai government said it was not responsible for Dubai World's debts, dealing a blow to creditors' assumptions that the Arab emirate would guarantee the government-controlled conglomerate's liabilities.

Dubai World, one of the emirate's main state holding companies, last week, asked for a delay on maturities until at least 30 May 2010. The company has total debts of $59 billion, including $3.52 billion of Islamic bonds due 14 December 2009 from its property unit Nakheel.

US index futures swung between positive and negative zone albeit in a narrow range.

US markets kicked off December with a rally and posted solid gains, on the heels of a rebound in global share prices, helped by upbeat economic news and fading fears about the Dubai debt crisis. The Dow Jones Industrial Average surged 126.74 points or 1.23% to 10,471.58. The tech-heavy Nasdaq Composite index climbed 31.21 points or 1.46% to 2,175.81 and the broad-market Standard & Poor's 500 advanced 13.23 points or 1.21% to 1,108.86

In key economic news, the Institute for Supply Management said its manufacturing index expanded for a fourth consecutive month in November but at a weaker pace, falling to 53.6% from 55.7 in October.

Philadelphia Federal Reserve Bank President Charles Plosser on Tuesday said the US Federal Reserve must be prepared to raise interest rates if needed before the jobless rate has fallen to an acceptable level, or risk losing its inflation-fighting credibility. Plosser said he has become more confident in the sustainability of the US economic recovery even once government stimulus fades, and stressed the Fed must take a forward-looking approach.

Plosser, who will not have a vote on the Fed's policy-setting committee until 2011, said he expects the US economy to grow at around 3% over the next two years.

Back home, the government on Tuesday said it would not withdraw the fiscal stimulus, provided in the last one year to help the economy deal with the global slowdown, in the current financial year. Minister of State for Finance Namo Narain Meena told the Rajya Sabha that the fiscal measures announced by the government and the monetary measures by the Reserve Bank of India were aimed at mitigating the effects of the economic downturn.

Expressing concern over price rise, Finance Minister Pranab Mukherjee on Tuesday said it is mainly due to shortage of essential commodities like pulses, sugar and edible oil. He also suggested strengthening of the public distribution system to provide relief to the common man.

Replying to questions in the Rajya Sabha, Mukherji said the government is regularly monitoring the problem of hoarding and has been holding discussions with state governments on measures to curb it. For checking price rise, Mukherjee said the government has taken measures like reducing import duties on wheat, pulses, maize and raw sugar and banned export of non-Basmati rice.

Exports fell 6.6% to $13.19 billion in October 2009 over October 2008, their 13th straight monthly fall, the government said on Tuesday. Imports dropped 15% from a year earlier to $22 billion. The trade deficit shrunk to $8.8 billion in October 2009 from $11.74 billion a year earlier.

Exports for April-October, the first seven months of the 2009-10 fiscal year, were down 26% at $91.05 billion from the same period in the previous year.

C. Rangarajan, chairman of the prime minister's Economic Advisory Council on Tuesday said the robust growth of the economy in July-September indicated it could expand at around 7% in 2009-10. The latest numbers do indicate that industry and services are growing very strongly, Rangarajan said adding that this could help offset to a very large extent the impact of the decline in agricultural production.

Mukherjee told parliament on Tuesday that the current trend in inflation in India is a result of a shortage of food items and not due to a demand-push factor. The food articles index rose an annual 15.6% as at 14 November 2009, up from the previous week's 14.6% rise. Weak monsoon and floods in parts of the country have hurt farm output and pushed up food prices. The government is keeping a close watch on futures trading in commodities, Mukherjee said

The finance minister said buoyancy in government's revenue seen earlier may not be there till 2011/12. He said the government will time stake sale in state-run firms so as to get maximum value. He added that there is no plan for a strategic stake sale in state-run firms. The government, last month, decided to cap its holdings in state-run firms at 90% and said it would sell off shares in the firms where this limit was exceeded.

India's manufacturing activity expanded for the eighth straight month in November 2009 but at its weakest pace since March 2009 due to a slowdown in growth of output, new business and employment, a survey showed on Tuesday. The HSBC Markit Purchasing Managers' Index (PMI), based on a survey of 500 companies, fell to 53 in November 2009 from 54.5 in October 2009. A reading above 50 means activity expanded during the month.

Government data released on Monday showed the gross domestic product (GDP) grew by 7.9% in Q2 September 2009, from 7.1% in the previous year, shattering forecasts as stimulus measures boosted demand and manufacturing activity surged. The economy had registered a 6.1% growth in the first quarter.

Reacting to the GDP figures Montek Singh Ahluwalia, Deputy Chairman, Planning Commission said economic growth forecast for the year to March 2010 may have to be revised upwards as data released on Monday showed a faster expansion in September quarter. He added that there was no serious concern on inflation as of now and conventional monetary policy was unlikely to be effective in curbing food price rise.

Pranab Mukherjee on Monday said he expects the economy to grow around 7% in the fiscal year ending March 2010. Earlier, the finance minister said that Dubai's debt crisis would not affect India much, but the government is keeping a close watch and will act to prevent any fallout.

Meanwhile, after witnessing substantial redemption and erosion in assets under management (AUM), the mutual funds industry seems to have got its cheer back. The AUM of 22 fund houses, out of 39, have seen an increase of 7% in the overall average in November over the previous month of the same year.

The BSE 30-share Sensex was down 49.05 points or 0.29% to 17,149.22 as per provisional closing. The Sensex opened 28.22 points higher at 17,226.49. It gained 131.41 points at the day's high of 17,329.68 in early trade, its highest level since 20 October 2009. The Sensex lost 55.91 points at the day's low of 17,142.36 at the fag end of the trading session.

The S&P CNX Nifty was down 3.30 points or 0.06% to 5118.70 as per provisional closing. Nifty hit a high of 5161.75 in early trade, its highest since 20 October 2009.

The market breadth, indicating the overall health of the market was positive. On BSE, 1551 shares advanced as compared with 1284 that declined. A total of 99 shares remained unchanged.

The total turnover on BSE amounted to Rs 5703 crore as compared with Rs 4179 crore by 14:25 IST

Among the 30-member Sensex pack, 20 declined while the rest gained.

Auto stocks advanced following robust monthly sales figures for November 2009. India's top truck maker by sales Tata Motors jumped 3.89% to Rs 728 after total sales zoomed 65.49% to 54,108 units in November 2009 over November 2008. The stock struck a fresh 52-week high of Rs 739.45 in intra-day trade today. It was the top gainer from the Sensex pack.

Tata Motors' total passenger vehicle sales in the domestic market grew by 44.52% at 20,706 units last month, against 14,327 units in the same month last year, the company said in a statement released after market hours on Tuesday. Exports jumped by 86.64% at 3,994 units, compared with 2,140 units in the same month last year, it added.

India's largest small car maker by sales Maruti Suzuki India rose 1.12% after total vehicle sales spurted 66.60% to 87,807 units in November 2009 over November 2008. The announcement was made during trading hours on Tuesday. Domestic sales spurted 60.10% to 76,359 units, while exports surged 128.60% to 11,448 untis in November 2009 over November 2008.

However, India's top tractor marker by sales Mahindra & Mahindra (M&M) slipped 1.11% on profit booking. The stock surged 4.94% on Tuesday after domestic auto sales soared 105.1% to 21,387 units in November 2009 over November 2008. M&M sold a total of 22,587 vehicles (domestic plus exports) in November 2009 as against 11,515 vehicles sold in November 2008.

India's second largest bike maker by sales Bajaj Auto shot up 2.90% after the company said total vehicle sales rose 73% to 2.76 lakh units in November 2009 over November 2008. Motorcycles sales jumped 84% to 2.42 lakh units.

Banking shares gained on fresh buying. India's second largest private sector bank by net profit HDFC Bank rose 1.17% after its ADR rose 1.53% on Tuesday. India's largest private sector bank by net profit ICICI Bank settled almost unchanged at Rs 887. It struck a day's high of Rs 916.50 following a 2.69% rise in its American depository receipt on Tuesday.

India's largest bank by net profit and branch network State Bank of India gained 0.47%. Reports on Monday indicated the bank has invited bids for sale of 1% stake in National Stock Exchange of India (NSE) as well as 5.91% stake in Multi Commodity Exchange (MCX).

India's largest mortgage lender by total income Housing Development Finance Corporation (HDFC) was down 1.75% to Rs 2752.90 in volatile trade. The stock slipped from day's high of Rs 2823.90 to register a day's low of Rs 2735 in the day. After market hours on Tuesday, the firm announced a dual-rate loan scheme under which a borrower will be charged a fixed rate up to March 2012 and a floating rate thereafter. For a 20-year loan of Rs 30 lakh, a borrower will pay a fixed rate of 8.25% up to March 2012 and then a floating rate that's 500 basis points below the prime lending rate (PLR) - the institution's benchmark rate. Currently, the PLR is 13.75%.

India's largest private sector firm by market capitialisation Reliance Industries (RIL) slipped 0.17% to Rs 1096.40. The stock was volatile. It gyrated between Rs 1118 and Rs 1080 in the day.

Anil Ambani's Reliance Natural Resources (RNRL) on Tuesday told the Supreme Court that the government has no role to play in the issue of supply of gas from the Krishna-Godavari basin by Reliance Industries (RIL) to it. RNRL's claim on supply of KG gas is based on the state run NTPC draft and till date there is no mention that supply of gas to NTPC by RIL requires government's approval, it said. India's largest power generation firm by capacity NTPC fell 0.38%.

India's largest oil exploration firm by market capitalisation Oil and Natural Gas Corporation (ONGC) was down 1.07%. As per reports, the company's unit has signed agreements to pick up stake in a giant gas field and an LNG plant in Iran.

Cement stocks saw mixed trend. India's largest cement producer by capacity ACC fell 1.44% after cement shipments fell 4.04% to 1.66 million tonnes in November 2009 from 1.73 tonnes in November 2008.

India's largest dam builder Jaiprakash Associates gained 0.20% after it posted 48.77% jump in its cement sales to 1.03 million tonnes in November 2008 over November 2008.

India's largest copper producer Sterlite Industries lost 1.36%. As per reports the government could mop up close to Rs 3000 crore from the sale of its residual stake in Bharat Aluminium Company (Balco) to Sterlite Industries. Sterlite had bought 51% of Balco in March 2001 for Rs 552 crore from the government.

Other metal shares were mixed. The LMEX, a gauge of six metals traded on the London Metal Exchange, rose 1.93% to 3,220.10 on Tuesday, 1 December 2009.

India's largest private sector aluminium maker by sales Hindalco Industries rose 0.32%. However India's largest private sector steel maker by sales Tata Steel fell 1.16% on profit booking

India's biggest developer by sales DLF jumped 3.02% to Rs 382 after a domestic brokerage firm rated the stock as buy with a price estimate of Rs 445.

Shares prices of three firms belonging to the Anil Ambani group saw mixed trend following reports of government probe into alleged violations of overseas borrowing rules.

India's second largest private sector power generation firm by net profit Reliance Infrastructure lost 1.90%. India's second largest cellular services provider by sales Reliance Communications also fell 1.19%. However Reliance Natural Resources rose 0.42%

India's largest pharma company by market capitalisation Sun Pharmaceuticals retraced sharply from day's high of Rs 1592 to settle 2.84% lower at Rs 1495.05. It was the top loser from the Sensex pack. The company has received the support of the US-based equity fund Templeton Asset Management in its year-long legal tussle to acquire Israeli drugmaker Taro Pharmaceuticals. Templeton chairman Mark Mobius was quoted by media as saying that the Supreme Court in Israel should pass a decision quickly so that Sun can take control of Taro. Templeton owns a 10% equity stake in Taro. The Sun Pharma stock had surged 6.07% on Tuesday.

India's largest FMCG company by sales Hindustan Unilever extended Tuesday's 2.3% slide and was down 0.97% as investors continued to shift from the so-called defensive sector to high growth sectors. India's largest cigarette maker by sales ITC slipped 0.70%.

IT pivotals showed mixed trend. India's largest software services exporter Tata Consultancy Services (TCS) fell 0.50%. India's third largest software services exporter Wipro slipped 0.13%. However India's second largest software services exporter Infosys Technologies rose 0.30% to Rs 2401.95, rebounding from day's low of Rs 2356.40.

The partially convertible rupee was trading at 46.25/26 per dollar, higher than 46.32 on Tuesday. A firm rupee negatively impacts operating profit margin of IT firms as the sector derives a lion's share of revenue from exports.